5 Layers of Risk Management: How BreakOrb Protects Your Capital
Most trading bots offer a stop loss and take profit. That's one layer. BreakOrb has five. Each layer operates independently, catches different failure modes, and cannot be overridden by strategy logic. If one layer fails, the next one catches it.
This defense-in-depth approach exists because the single most important job of a trading system is protecting capital. Entries and exits generate returns, but risk management determines whether you survive long enough to collect them.
Layer 1: Position Sizer
Every trade is sized using ATR-based calculation so the maximum loss equals your specified dollar risk. Low volatility means larger positions. High volatility means smaller positions. The dollar risk is constant regardless of market conditions.
The position sizer also budgets for exchange fees, ensuring the total cost of a round-trip trade (entry + exit + fees) stays within the intended risk envelope.
Layer 2: Risk Manager
Cross-strategy risk caps prevent correlated exposure. If BTC, ETH, and SOL all signal long simultaneously during a market-wide move, the risk manager limits total concurrent exposure. This prevents a single correlated event from hitting all positions at once.
Layer 3: Guardrails Engine
Hard limits that the strategy logic cannot override: maximum concurrent positions, daily loss limit, and total account exposure cap. Once the daily loss limit is hit, no new trades are opened for the rest of the day. These are enforced at the execution layer, not the strategy layer.
Layer 4: Tiered Circuit Breaker
Escalating response to consecutive losses. After a small losing streak, the system slows down (longer cooldown between trades). After moderate losses, it pauses new entries. After critical drawdown thresholds, all trading activity halts until manual review or the next trading day.
The tiers reset daily, giving the system a fresh start each session while preventing runaway losses within a single day.
Layer 5: Dead Man's Switch
If the bot process stops responding (crash, network failure, power outage), the dead man's switch detects the loss of heartbeat and automatically closes all open positions. No orphan trades running unsupervised. The bot runs as a Windows service with auto-restart (5-second recovery), and health sweepers continuously monitor connectivity.
Why Five Layers Instead of One?
Each layer catches a different failure mode:
- Position Sizer prevents individual trades from risking too much
- Risk Manager prevents correlated multi-trade blowups
- Guardrails prevent daily account-level damage
- Circuit Breaker prevents psychological tilt from compounding losses
- Dead Man's Switch prevents unattended failure
A single stop loss on each trade addresses the first concern. It does nothing for the other four. Multi-layer risk management is what separates a serious trading system from a bot that works until it doesn't.
Risk Management You Can Trust
Five independent layers. Each one works even if the others fail. Your capital is protected at every level.
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