EA Risk Management: Position Sizing, Max Drawdown Limits, and a Simple Risk Budget – My Trading – 5 January 2026

Most individuals don’t blow accounts as a result of the EA “stopped working”.

They blow accounts as a result of they ran the EA with the mistaken threat.

An excessive amount of measurement. An excessive amount of publicity. An excessive amount of confidence after a very good week. Too many EAs stacked on the identical account.

The irony is straightforward:

Automation removes emotional execution… nevertheless it doesn’t take away emotional threat choices.

This publish is an evergreen framework you need to use to run MT5/MT4 EAs safely and constantly.

The #1 rule: threat issues greater than entry logic

An awesome entry with dangerous threat administration nonetheless fails.

A good entry with stable threat administration can survive lengthy sufficient to compound.

So if you need one mindset shift:

Cease on the lookout for the right technique.
Begin controlling the draw back.

Step 1 — Select a threat mannequin which you could really dwell with

In case you can’t sleep together with your threat settings, you’ll intervene, tweak, and sabotage the system.

Use easy classes:

Conservative (really helpful for most individuals)

Balanced

Aggressive

In case you’re testing, new to EAs, or buying and selling risky property like Gold, begin conservative.

Step 2 — Perceive “portfolio threat” (the error that destroys multi-EA accounts)

Most merchants do that:

As a result of the account isn’t experiencing “1% threat”.

It’s experiencing stacked publicity.

The repair: a easy threat finances

As a substitute of considering “threat per EA,” set a finances for the entire account:

Instance threat budgets

Then allocate that threat throughout EAs.

In case you run a 2-EA portfolio, a easy construction is:

This single rule prevents most EA blow-ups.

Step 3 — Max Drawdown limits (your actual “cease loss”)

Each technique has dropping streaks. The query is whether or not your account survives them.

So that you want a portfolio-level restrict:

3 drawdown traces that hold you disciplined

• Alert line (once you cease including threat): -3% to -5%

• Reduce line (once you cut back threat): -6% to -10%

• Arduous cease line (once you pause and reassess): -10% to -15%

You don’t want perfection. You want a rule that stops you from digging a gap.

Step 4 — The “compound insanity” lure (why many EAs die after an important begin)

That is the commonest EA killer conduct:

• account grows rapidly

• you turn to “compounding” or elevate lot measurement aggressively

• a standard drawdown arrives

• the drawdown is now enormous as a result of measurement elevated

• you give again months of progress

Right here’s the evergreen rule:

In case you improve threat, do it slowly and on a schedule — not emotionally.

A easy strategy:

Step 5 — Execution can amplify threat (particularly on Gold)

Even when your threat settings are right, execution could make drawdown worse:

• spreads widen throughout volatility

• slippage worsens entries and exits

• stop-outs occur sooner than anticipated

That’s why dealer selection is a part of threat administration.

Brokers I like to recommend for EA execution:

IC Buying and selling – Uncooked spreads / low-cost buying and selling
https://bit.ly/3KvI9RO

Pepperstone – Suitable with most EA methods
https://bit.ly/4ophy72

In case you’re operating breakouts (particularly XAUUSD), execution high quality is just not a “good to have”.

A sensible instance: a easy 2-EA threat finances (USDJPY + Gold)

If you would like a clear portfolio that’s diversified with out complexity:

1) USDJPY Pattern (H1)

JPY Pattern EA ProTrading (74 USD)
MT5: https://www.mql5.com/en/market/product/157484
MT4: https://www.mql5.com/en/market/product/157485

2) XAUUSD Breakouts (M15)

Gold Pattern Breakout EA ProTrading (74 USD)
MT5: https://www.mql5.com/en/market/product/157465
MT4: https://www.mql5.com/en/market/product/157466

Easy conservative threat finances

Easy balanced threat finances

You’re not attempting to “win on daily basis.” You’re attempting to outlive and keep constant.

In case your aim is scaling, threat self-discipline issues much more (Axi Choose)

Most merchants strategy scaling backwards:
They chase targets first, then attempt to handle threat later.

A severe system does the other:

• steady threat guidelines

• steady execution

• steady testing course of

• THEN scaling

In case you’re targeted on capital allocation and desire a mannequin that aligns higher with consistency than typical problem grinding, examine Axi Choose:
https://bit.ly/48TlcAc

Even for those who don’t use it but, it’s value understanding as a result of it rewards course of greater than “rush efficiency”.

Copy/paste EA Danger Administration Template

1. Select threat fashion

2. Set a portfolio threat finances

3. Outline drawdown guidelines

• Alert: -3% to -5%

• Reduce threat: -6% to -10%

• Pause: -10% to -15%

4. No emotional compounding

5. Use dealer execution that helps EAs

6. Scaling path to match

Fast Hyperlinks (EAs + Brokers + Axi)

JPY Pattern EA ProTrading (74 USD)
MT5: https://www.mql5.com/en/market/product/157484
MT4: https://www.mql5.com/en/market/product/157485

Gold Pattern Breakout EA ProTrading (74 USD)
MT5: https://www.mql5.com/en/market/product/157465
MT4: https://www.mql5.com/en/market/product/157466

IC Buying and selling: https://bit.ly/3KvI9RO
Pepperstone: https://bit.ly/4ophy72
Axi Choose: https://bit.ly/48TlcAc