Risk management for trading bots: the rule 90% break.

Anyone who has ever bought a trading bot knows it: the first two weeks everything looks good, and then suddenly your account is empty. Not because the bot was "broken", but because the risk parameters were wrong. This article lays out the three rules we use, and that work.

Rule 1: 1% per trade. No more.

Sounds ridiculously low? It's exactly right. With 1% risk per trade you can lose 10 trades in a row and still have 90% of your account. With 5% risk per trade you can lose 10 in a row and your account is empty.

Practically on a €5,000 account:

• 1% of €5,000 = €50 max risk per trade.
• With a SL of 100 pips on XAUUSD: lot size of 0.05.
• With a SL of 50 pips: lot size of 0.10.
• Lot size grows with the account, but the percentage stays at 1%.

The lower this percentage, the longer you stay in the game. And in trading, "staying in the game" is the most important skill.

Rule 2: max 3% drawdown per day

A good trading bot has a hard stop at the account level. At 3% loss on the day, it stops trading. No new trades until 00:00 server time. Done.

Why is this so important? Because bad days don't behave linearly. If you have two losses in a row, the chance of a third loss is higher than random, simply because the market regime has changed and the bot doesn't know it yet. By stopping the bot at 3%, you prevent one bad day from spiraling into a 10% drawdown.

Rule 3: max 3 open trades at the same time

This feels unnatural but is critical. If the bot has 5 trades open at the same time, and the market moves unexpectedly hard against you, all your trades correlate. You don't lose 5 × 1% = 5%, you sometimes lose 8% because everything hits SL together and the spread widens.

With max 3 open trades:

• Worst case: 3 × 1% = 3% loss. Manageable.
• Bot focuses on the best setups and ignores the marginal ones.
• You have peace of mind to look at what's happening.

A trading bot without risk management is a time bomb. A trading bot with risk management is a tool.

Bonus: lot size scaling

If your account grows from €5,000 to €10,000, scale your lot size with it. Not directly to double. Each month review: am I in growth? Scale lot size 50% up. This prevents you from getting too aggressive in a good month and losing too much in the next.

Conclusion

Risk management isn't sexy. Nobody watches YouTube for risk management lessons. But it's what makes the difference between a trader still earning in year 5 and a trader who lost their account in week 6.

Our trading bot has these three rules hardcoded. Not as a setting you can tweak, but as a built-in limit. That's why our members have entire weeks without losses, and that's why our worst weeks are still within the -3% drawdown.