Risk management in a funded account is different from personal account trading. You're not just managing market risk — you're managing compliance with firm rules, account longevity, and scaling potential simultaneously. Here's the complete framework.
Layer 1: Per-Trade Risk
Per-trade risk is the foundation. For a funded account, the standard range is 0.5–1% of account balance per trade. At 0.5%, a $100K account risks $500 per trade. You'd need 20 consecutive full losses to breach a 10% drawdown limit. That gives you enormous runway to work through variance.
Per-trade risk calculator: Account Balance × Risk% = Max Loss Per Trade. Set this number before you even look at a chart.
Layer 2: Daily Loss Limit
Your personal daily stop-loss should be set at 50–60% of the firm's stated daily drawdown limit. If the firm allows 5% daily drawdown ($5,000 on a $100K account), your personal stop is $2,500–$3,000. This buffer absorbs spread, slippage, and emotional emergency trades made after a bad session.
Layer 3: Weekly Loss Circuit Breaker
- Set a weekly loss limit at 2× your daily personal stop
- If you hit the weekly limit by Wednesday, you're done trading until Monday
- No exceptions — if you're having a losing week, the market is not your friend right now
- This rule prevents death-by-a-thousand-cuts drawdown spirals
Layer 4: Correlation Risk
Multiple open positions in correlated assets multiply your actual risk exposure. Trading EUR/USD and GBP/USD simultaneously means you effectively have double exposure to USD direction. Assign 'currency exposure units' and limit total correlated exposure to 2–3% of account at any time.
Layer 5: Scaling Risk Down After Drawdown
After a significant drawdown (5%+ from peak), systematically reduce position size. Many professional traders use a 'half-size' protocol: once at 50% of their max drawdown limit, all positions are halved until the account recovers. This asymmetric approach prevents terminal drawdown.
The goal in a funded account is not maximum return — it's maximum account longevity. A funded account you keep for 2 years beats a blown account every time.
- FundCoupon Team
Layer 6: The Winning Day Protocol
Risk management isn't just for losing days. On large winning days (2%+ of account), consider stopping or moving to half-size for the rest of the session. Protect the gains. The probability of giving back profits through overconfidence trading increases sharply after a big win.
The Risk Dashboard: What to Track Daily
- Current account balance vs. starting balance
- Distance to daily loss limit (firm limit and personal limit)
- Distance to overall drawdown limit
- Today's P&L as % of account
- Number of trades taken vs. plan
- Current open position correlation exposure
Build the dashboard before you trade. Risk management done before the session protects you from the impulse decisions that happen mid-session.
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