An edge only pays off if the account survives
Every strategy has losing streaks. The job of risk management is to make sure the account is still standing when the edge plays out. In Mercurio, the guardrails are enforced in code — they are constraints the engine cannot trade around, not guidelines it is asked to remember.
The limits the engine cannot cross
Position sizing
Size follows from risk, not conviction. The distance to the stop determines how many shares 1.5% of capital can buy — so a wider stop means a smaller position, automatically.
- Fixed-fractional: every trade risks the same fraction of capital
- Size scales down as more positions open, spreading risk
- Loss-streak scaling: three losses in a row halve the size; two wins restore it
- Every multiplier can only reduce size — never amplify it past the risk cap
A stop on every trade
No position is ever left undefended. The stop is attached at entry and tightens as the trade works, locking in gains while giving the trend room to run.
- Bracket orders attach a protective stop the moment a position opens
- A Chandelier trailing stop rides winners below the recent high
- The stop moves to breakeven once the trade is up one unit of risk
- A catastrophe stop bounds the worst case if the market gaps hard
When to stop is a rule, not a feeling
The hardest discipline in trading is knowing when to stand down. Mercurio takes that decision out of human hands and writes it into the engine.
Daily and weekly halts
Hit the 5% daily or 7% weekly loss limit and the engine stops opening new positions until the period resets. A bad day cannot snowball into a worse one.
The drawdown breaker
If equity falls 15% from its peak, the engine closes all positions and enters a 5-day cooldown. It is the final safety net — designed to end the bleeding, not to be clever.
Healthy resume only
Trading resumes only when the cooldown is over and conditions are healthy. The breaker is not a pause button the engine can talk itself out of.
The biggest risk reduction is not trading at all
Stops and limits cap the damage of individual trades. The regime filter prevents whole categories of them. By sitting in cash through bear and choppy markets, Mercurio avoids the conditions where trend following bleeds — which matters, because over a full five-year cycle the same strategy was net negative. Choosing not to play a bad hand is the most powerful risk tool the engine has.
Paper mode is locked
The strongest risk control of all: no real capital is at stake. Mercurio is in a 12-month paper-trading validation, and that lock is enforced in code. Going live is a deliberate future decision that depends on the strategy proving itself first — not a setting that can be flipped on a whim.
Simulated paper trading
A 12-month validation, proving consistency before any live decision. Risk parameters shown here are the live configuration the engine runs in simulation.
Risk parameters describe how the engine is configured; they limit losses, they do not prevent them. All performance is simulated paper trading, not live results, and nothing here is financial advice. Trading involves substantial risk of loss, and past performance does not guarantee future results.
Risk first. Returns second.
See how these limits shaped two years of simulated trading.