Gold EA Risk & Drawdown Playbook — Sizing, Limits & Recovery
This is the risk framework we use with the Gold EA for MT5: fixed SL/TP, no martingale, no grid, and rules that scale from $500 to $200k+ personal accounts—or prop firm evaluations.
Position Sizing Basics (fixed % risk per trade)
Formula (generic)
- Dollar risk: Account Balance × Risk% (e.g., $10,000 × 1% = $100).
- Lot size: Dollar risk ÷ (Stop distance × \$/point for XAUUSD at your broker).
- Keep Risk% constant. The EA sets SL/TP at entry for clean R-multiples.
References: Investopedia – Position Sizing · Babypips – Risk Management
Suggested baselines
| Account | Risk / trade | Notes |
|---|---|---|
| $500 – $5k | 0.25% – 0.5% | Focus on execution; keep losses tiny. |
| $5k – $50k | 0.5% – 1.0% | Matches our 5-month test at 1%. |
| $50k – $200k+ | 0.25% – 0.75% | Size down for smoother equity. |
| Prop Evaluations | 0.25% – 0.5% | Leave cushion for daily loss limits. |
Daily & Weekly Limits (stay evaluation-safe)
Daily control
- Daily loss cap: stop for the day at −2R or long before your provider’s daily limit.
- Max attempts: 2 setups/day (avoid “tilt” trading).
- Cut time: stop trading after the overlap if equity is negative.
Weekly control
- Weekly loss cap: −4R then flat until Monday.
- Size down: after any −3R day, reduce next day risk by 50%.
- Green week rule: stop trading once +3R is banked.
Prop-firm rules vary. See Compare prop firms and FTMO US: pricing & scaling.
Drawdown Math (know your “pain budget”)
What is drawdown?
The decline from a peak in your equity. With fixed % risk, drawdowns scale predictably and recover faster than martingale/grid systems.
- Keep max daily and max weekly drawdown rules, not just per-trade risk.
- Use R-multiples (risk units) to evaluate streaks.
Loss streaks happen
Even edges with high win rates hit clusters. Fixed risk + a circuit breaker contain damage and make recovery realistic.
Recovery Table (how much gain to get back to peak)
| Drawdown | Gain required to recover | Comment |
|---|---|---|
| −5% | +5.3% | Stay calm; quality over frequency. |
| −10% | +11.1% | Cut size by 50% until flat. |
| −20% | +25.0% | Pause & review broker fills and news windows. |
| −30% | +42.9% | Re-validate on small size; avoid overtrading. |
Formula: required_gain = DD / (1 − DD). Example: 0.10 / 0.90 ≈ 11.1%.
Correlation & Stacking (don’t accidentally “go all-in”)
- Gold correlates with USD and real yields; stacking XAUUSD with EURUSD/GBPUSD can multiply USD exposure.
- Total open risk cap: keep combined exposure ≤ 1.0% intraday / 1.5% swing.
- One idea at a time per logic; let the EA do the work.
News & Event Risk
Latency & Slippage (execution is part of risk)
- Use a VPS near your broker servers to reduce ping.
- Log slippage by session; compare brokers if needed.
- Prefer the London–NY overlap for tighter spreads.
Platform choice? See MT4 vs MT5 vs cTrader vs DXtrade.
Risk Templates (copy & personalize)
Conservative
- Risk/trade: 0.25%
- Daily cap: −1.5R
- Attempts: 1/day
Balanced
- Risk/trade: 0.5%
- Daily cap: −2R
- Attempts: 2/day
Evaluation
- Risk/trade: 0.25–0.5%
- Weekly cap: −4R
- Stop after +3R week
Trade the Plan, Not the Emotion
Use fixed risk, clean sessions, and a circuit breaker. The Gold EA helps by enforcing SL/TP on every trade. Prefer hands-off? Ask about Managed Hosting.
Risk disclosure: Trading CFDs/FX involves significant risk. Past performance and backtests do not guarantee future results.
Risk & Drawdown FAQs
What risk per trade do you recommend?
For most traders: 0.25–0.5% on evaluations and 0.5–1.0% on personal accounts, scaling down as the balance grows. Keep it constant and let the math work.
How many trades per day?
One to two A-grade setups in the London–NY overlap is enough. More trades rarely mean faster progress—usually just more variance.
How do I stop a bad day from becoming a bad week?
Daily cap (e.g., −2R), a cut-off hour, and a rule to size down by 50% after any −3R day. Reset next week.
Does the Gold EA ever remove the stop loss?
No. It sets fixed SL and TP on every trade. No martingale, no grid.
Can you host the EA for me?
Yes—Managed Hosting (paid). You keep custody of funds; I handle setup, VPS, monitoring, and weekly stats. Contact me.