Crypto risk management

Risk management decides how much a trading strategy can lose, and when. A strategy can be right more often than wrong and still empty an account if one trade is too large, if leverage is too high, or if losses keep piling up on a bad day. Algonney builds risk control into the platform itself: some rules are fixed for everyone, and the rest are limits you set once and that every bot then follows.

The stop loss is required

Every strategy needs a stop loss. Without one it cannot be saved, and a bot cannot run it. You can set the stop as a percent from the entry, as a fixed price, or as a price from the chart, such as the low of the signal candle or the edge of an order block.

The stop loss is the first protective order. When a position opens, its stop is placed on the exchange before anything else, and stop and close orders go first in every rate limit. If no valid stop can be placed, the trade is not opened. A stop or take profit on the wrong side of the entry price is refused.

Because the stop lives on the exchange, it stays in force even while the platform or your connection is down.

The guard is always on

The guard sits between every bot and the exchange. It cannot be turned off. It:

• admits each new entry only after the risk checks below pass;
• watches every open position and checks its orders with the exchange at regular intervals;
• closes a position whose stop loss is missing, rejected or cancelled and cannot be confirmed in time;
• moves trailing stops and handles partial exits;
• runs STOP ALL, which blocks new entries, cancels pending entries and closes every open position in one action, until you resume;
• after a restart, compares open orders and positions with the exchange before doing anything else.

Limits you set

In Settings › Trading & risk you set limits that apply to all bots on each exchange account, and to each paper balance:

• Maximum daily loss in USDT. Realized and open losses for the day, after fees and funding, counted in your time zone.
• Maximum daily loss in percent of the equity at the start of the day. When both are set, the smaller one applies.
• Maximum open positions at the same time.
• Maximum position size in USDT notional.

The daily loss check is strict. Before an entry the guard adds today's realized result to what every open position would lose at its stop loss, then checks that the new trade's risk still fits. If it does not, the entry is skipped and the reason is recorded. Open positions are not closed by this check; they keep their stop loss and take profit.

Position sizing

Each bot sizes its positions with one of three methods:

• a fixed USDT amount per trade;
• a percent of the bot's allocation;
• a risk percent: the loss at the stop loss equals that percent of the allocation.

The risk percent method ties the size to the distance of the stop. A wide stop gives a small position and a tight stop a larger one, so each trade risks about the same amount. Leverage never changes the size, only the margin used and the liquidation price.

Leverage and liquidation

On USDT perpetual futures your plan sets the highest leverage you can choose, and the exchange may cap it lower for each symbol.

Before every futures entry the platform estimates the liquidation price from the exchange's own margin tiers. The stop loss must sit inside that price, with a safety buffer. If it does not, the trade is refused, so the stop is always meant to close the position before the exchange would liquidate it. Lower leverage moves the liquidation price further away.

Exits that limit time in a trade

Risk is also about time. A strategy can close a position after a number of candles, optionally only when it is in profit, or at the end of the trading session it opened in. A trailing stop can lock in part of a move once the price goes your way. See Trailing stop bot for these exits.

Test before you trust

Every limit above also applies in backtests and paper trading, on the same engine as live trading. Run a backtest on real history, then a paper bot on live prices, before you put money behind a strategy. Look at the drawdown and the worst losing streak, not only at the total return.

A checklist before going live

1. The strategy has a stop loss that makes sense for the timeframe.
2. Position size comes from a risk percent you can accept on a losing streak.
3. The daily loss limit is set in Settings › Trading & risk.
4. Leverage is low enough that the stop sits well inside the liquidation price.
5. The exchange key is trade-only and IP-bound (see Exchange API key security).
6. The bot ran on paper first and its trades match what the backtest expected.

The risk management guide in the docs shows where each setting lives in the app. Plan limits are on Plans and pricing.

Related pages

• Futures trading bot
• Automated crypto trading bots
• Live trading

No limit removes the risk of loss. Read the risk disclosure before you trade live.

Past results do not guarantee future returns.