How To Manage Trading Drawdown

Trading drawdown is the peak-to-trough decline in your account equity, measured from the highest balance your account has reached to the lowest point it drops before recovering. In prop trading, drawdown isn't just a performance metric. It's the rule that decides whether you keep your funded account or lose it.

I've lost more funded accounts to drawdown violations than to bad trades. That's not an exaggeration. My strategy was fine. My entries were reasonable. But I didn't respect the drawdown math, and the math doesn't care about your feelings. One bad session on an account where I'd already used 60% of my buffer was all it took. Account gone. Evaluation fee wasted. Start over.

This guide covers everything I've learned about drawdown management across 50+ prop firm accounts. Specific numbers, specific rules, and the framework I use at firms like Lucid Trading, Top One Futures, and FundingPips to stay funded instead of cycling through evaluations.

What Is Trading Drawdown and Why Does It Kill Funded Accounts?

Trading drawdown measures how far your account balance has fallen from its peak. If your account hits $53,000 and then drops to $50,500, your drawdown is $2,500 or roughly 4.7%.

At a prop firm, drawdown isn't just a number on a chart. It's a hard rule. Exceed it and your account is terminated. No second chances. No appeals. The trade that breaches your drawdown limit is your last trade on that account.

Most firms set drawdown limits between $2,000 and $3,000 on a $50,000 account. That's 4% to 6% of the account size. Sounds like plenty of room until you realize how fast it disappears. Two bad trades on NQ at 4 contracts can eat $2,000 in minutes.

I've watched traders blow $50,000 funded accounts in a single session. Not because they were reckless. Because they didn't calculate how much drawdown buffer they had left before entering a position. They were trading the chart without watching the account.

Drawdown management is the skill of knowing exactly how much room you have, how much you're willing to risk on any given trade, and when to stop. It's boring. It won't make you feel like a genius. But it's the reason some traders stay funded for years while others restart evaluations every month.

What Are the Different Types of Drawdown at Prop Firms?

Prop firms don't all calculate drawdown the same way. There are four main types, and confusing them has cost me real money. Each type behaves differently, and the type your firm uses should dictate your entire risk approach.

Trailing EOD (End of Day) Drawdown only recalculates at the market close. If your account peaks at $53,000 during the session but you close the day at $51,200, the drawdown floor only moves based on $51,200. The intraday spike to $53,000 is irrelevant. This is the most trader-friendly type because you can take heat during the session without your floor racing up in real time.

Trailing Intraday Drawdown recalculates tick by tick throughout the session. If your unrealized equity touches $53,000 at 10:15am, even for a second, your floor moves up permanently. You could close the day at $50,500 and your drawdown floor would still be based on that $53,000 peak. This punishes traders who let winners run and then give back profits.

Static Drawdown (also called fixed or maximum drawdown) is set at a fixed dollar amount below your starting balance and never moves. On a $50,000 account with $2,500 static drawdown, your floor is $47,500 from day one and stays there no matter how much profit you make. Once you're up $5,000, you now have $7,500 of breathing room. This rewards profitable trading by creating an ever-growing buffer.

Daily Loss Limit is a separate drawdown rule that limits how much you can lose in a single session, typically $1,000 to $1,500 on a $50,000 account. This exists alongside your overall drawdown limit. You can be well within your total drawdown but breach the daily limit and still lose the account.

Understanding your firm's drawdown type is step one. I've watched traders assume their account had EOD trailing when it was actually intraday. They let a winning trade run, watched equity spike $2,000, decided to hold for more, and the market reversed. Their floor had already moved up $2,000 and they didn't know it. Account breached by 3pm.

How Does Trailing Drawdown Actually Work? (Step-by-Step With Dollar Examples)

Trailing drawdown is the type that confuses most traders. Let me walk through exactly how it works with real dollar amounts on a $50,000 account with a $2,500 trailing drawdown.

Day 1: You start with a $50,000 balance. Your drawdown floor is $47,500. That means your account cannot drop below $47,500 at any point. You trade conservatively and end the day at $50,800. Your floor moves up to $48,300 ($50,800 minus $2,500).

Day 2: You open at $50,800. Your floor is $48,300. You have a great session and close at $52,100. Floor moves to $49,600. Notice what happened. You've made $2,100 in profit, but your floor moved up $2,100 too. Your buffer is still exactly $2,500.

Day 3: You open at $52,100. Floor is $49,600. Bad day. You lose $1,400 and close at $50,700. Floor stays at $49,600 because the floor never moves down. But here's the critical part: your buffer is now only $1,100 ($50,700 minus $49,600). You started with $2,500 of room. You now have $1,100.

Day 4: You open at $50,700 with only $1,100 of buffer. If you take 2 contracts on NQ and the market moves 22 points against you ($5/point 2 contracts 22 points = $220 per point... wait, let me recalculate). On MNQ at $2/point, 2 contracts, a 275-point move against you would wipe that $1,100. On NQ at $20/point, 1 contract, just 55 points wipes it. That's a normal pullback on NQ.

This is the trailing drawdown trap. You can make money every single day and still have your buffer shrink because a single bad day ate into profits that had already raised the floor. The floor follows your profits up but doesn't follow your losses down. It's a one-way ratchet.

The floor lock is the one mechanic that saves you. As of March 2026, many firms lock the trailing drawdown floor once it reaches your original starting balance. On our $50,000 example, once the floor hits $50,000, it stops trailing and becomes static. This means all profits above $50,000 become pure buffer that won't erode. At that point, you've essentially converted trailing drawdown into static drawdown.

Getting to the floor lock should be your primary objective in the first weeks of any funded account. Until that floor locks, every dollar of profit you make is temporary protection that can vanish with one bad session.

The Drawdown Recovery Math That Most Traders Ignore

There's a mathematical asymmetry in drawdown that ruins traders who don't understand it. Losses and gains are not symmetrical. Losing 10% does not require a 10% gain to recover. It requires 11.1%.

This gets worse fast.

Lose 20% and you need 25% to get back to even. Lose 30% and you need 42.9%. Lose 50% and you need 100%, a literal doubling of your account, just to return to where you started.

On a $50,000 prop firm account with a $2,500 trailing drawdown, the math works like this. If you use $1,250 of your drawdown (50% used), your account is at $48,750 and the floor is at... well, actually the floor might be anywhere depending on your profit history. Let me frame this more practically.

Say your account peaked at $52,000. Floor is $49,500. You're currently at $50,200 after a losing streak. Your buffer is $700. To restore your buffer to a comfortable $2,000, you'd need to make $1,800 in profit without dipping below $49,500 at any point. And because the floor will trail your new profits, even making $1,800 will push the floor up to $50,000 (assuming you go from $50,200 to $52,000, floor moves to $49,500... wait, it already trailed up). The floor stays at $49,500 because you're not setting new highs above $52,000.

The point is this: once you've lost a significant chunk of your buffer, the path back is much harder than the path down. You can't trade aggressively to recover because aggressive trading is what got you into the drawdown. But trading too passively means you can't rebuild the buffer before one normal losing day finishes you off.

This is why prevention is everything. Drawdown management isn't about recovering from drawdown. It's about never getting deep enough into drawdown that recovery becomes impractical.

My Drawdown Management Rules (The Framework That Keeps Me Funded)

After losing more accounts than I want to admit, I built a system. These aren't suggestions. These are hard rules I follow across every funded account at every firm.

Rule 1: Reduce position size by 50% once I've used 50% of my available drawdown buffer.

If my buffer starts at $2,500 and I've lost $1,250, I'm now in warning territory. I cut my contract size in half. If I was trading 2 MNQ, I drop to 1. If I was trading 1 NQ, I switch to 2 MNQ. The reduced size means each losing trade takes less from the buffer, giving me more sessions to work my way back.

Rule 2: Stop trading for the day (and possibly the week) once I've used 70% of my drawdown buffer.

At 70% used, I have just $750 left on a $2,500 drawdown account. One bad trade finishes me. There's no trade that justifies that risk. I close the platform, walk away, and review what went wrong. If it's midweek, I usually don't come back until Monday.

Rule 3: Consider resetting the evaluation at 80% drawdown used.

If I'm down to $500 of buffer on a $2,500 drawdown account, the account is functionally dead. I can't take any meaningful position without risking a breach. The evaluation fee is sunk cost. Pay for a new one. Start clean. The mental freedom of a fresh account with full buffer is worth more than the $100-300 you'd spend on a reset.

Rule 4: Calculate my "danger zone" before every session.

Before I place a single trade, I know three numbers: my current balance, my drawdown floor, and my available buffer. I write them on a sticky note next to my monitor. If my buffer is below $1,500 on a $2,500 drawdown account, I trade at minimum size only. No exceptions.

Rule 5: Never move stops further from entry after a trade goes against me.

This is the single worst habit in prop trading. The trade is losing, so you move your stop to give it "more room." You just voluntarily increased the amount of drawdown this trade can cause. I've breached accounts doing exactly this. My stop was $300 from entry. Market moved against me. I moved the stop to $600. Market kept going. Account done.

Why Is the First Week of a Funded Account the Most Dangerous?

The first week of a funded account is when most traders get terminated. Not the third week. Not after two months. The first week.

There are three reasons.

First, the drawdown buffer is at its smallest relative to the floor. On a trailing drawdown account, the floor starts at its lowest position. As you make profits, both the floor and your buffer move up, but until you've built a profit cushion, you're working with the minimum $2,500 (or whatever your firm sets). One bad day can end you.

Second, the emotional pressure is at its peak. You just paid for this account. You passed the evaluation. You want to prove it was worth it. This emotional state leads to overtrading, oversizing, and taking setups you wouldn't normally touch.

Third, you don't yet know how the funded account behaves. Some firms have different execution on funded accounts compared to evaluations. Fills might be slower. Data feeds might differ. The daily loss limit might be tighter. You're adjusting to a new environment while simultaneously trying not to blow the account.

My approach to the first week is simple. Trade at 50% of my normal size. No exceptions. If my normal evaluation size was 4 MNQ contracts, I start funded with 2. I'm not trying to make money the first week. I'm trying to survive it. I want to build $500-$800 of profit buffer so that on week two, I have some room to breathe.

I've lost three funded accounts in the first five trading days. All three times, I traded full size from day one. I don't do that anymore.

How Does Position Sizing Connect to Drawdown Management?

Position sizing and drawdown management are the same conversation. Your position size determines how much drawdown a single trade can cause. If your maximum loss per trade exceeds a certain percentage of your remaining drawdown buffer, you're gambling.

The formula I use is straightforward. Maximum loss per trade should never exceed 30% of my remaining drawdown buffer. On a $50,000 account with $2,500 buffer, that's $750 per trade maximum. On NQ ($20/point), that gives me 37.5 points of stop distance on 1 contract. On MNQ ($2/point), that's 375 points on 1 contract or 187 points on 2 contracts.

As the buffer shrinks, the math changes. If I've used half my drawdown and only have $1,250 left, my max loss per trade drops to $375. That's 18.75 points on 1 NQ contract. A tight stop that gets clipped by noise. This is why I switch to MNQ when my buffer gets thin. Same directional exposure, much less dollar risk per tick.

Here's a scenario that shows how position sizing kills accounts.

Trader A has a $50,000 account with $2,500 trailing drawdown. Current balance is $51,200, floor is $49,200, buffer is $2,000. Trader A enters 3 NQ contracts with a 20-point stop. Max loss on this trade: 3 20 $20 = $1,200. That's 60% of the remaining buffer on a single trade. If the stop gets hit, Trader A now has $800 of buffer. One more losing trade at 3 contracts and the account is finished.

Trader B has the exact same account. Same balance, same floor, same buffer. But Trader B enters 4 MNQ contracts with a 30-point stop. Max loss: 4 30 $2 = $240. That's 12% of the buffer. Trader B can lose this trade eight times in a row before the buffer is gone. Trader B will stay funded. Trader A probably won't.

The difference isn't skill or strategy. It's position sizing relative to remaining drawdown. That's it.

Real Scenarios: How Drawdown Kills Prop Firm Accounts

I've seen (and lived) these scenarios enough times to know they'll keep happening. Each one represents a common pattern that ends funded accounts.

Scenario 1: The Monday Revenge Trader. Friday's session ended with a -$600 loss. Over the weekend, the trader stews on it. Monday open, they go in heavy to make it back. They size up from 2 to 4 MNQ contracts. The first trade goes against them for $480. Now they're down $1,080 for the period and their buffer is critical. They take another trade, bigger, because they "need" to get back to even. Buffer breached by 11am.

I've been this trader. The fix was simple but hard: I don't trade on Monday if Friday was a losing day. I take Monday to review, reset, and come back Tuesday at normal size.

Scenario 2: The FOMC Gambler. Trader has a $50,000 account with $1,800 of buffer remaining. It's FOMC day. They hold through the 2pm announcement because "the move will be obvious." The initial reaction goes their way by $800. They hold for more. The reversal wipes the $800 gain and adds a $1,200 loss. Buffer gone. Account terminated.

News events and thin drawdown buffers don't mix. If my buffer is below 60% of the original amount, I don't trade FOMC, CPI, NFP, or any high-impact event. Full stop.

Scenario 3: The Slow Bleed. This one is sneaky. The trader doesn't have one catastrophic day. They just lose $200-$400 per session for five or six sessions straight. No single day feels devastating. But by the end of the week, they've used $1,500 of a $2,500 buffer and they're in the danger zone without realizing how they got there.

The slow bleed is why I track my drawdown usage daily in a spreadsheet. Not just my P&L, my drawdown buffer remaining. If it drops below 60% at any point during the week, I scale back immediately. Don't wait for it to feel urgent.

How to Calculate Your Danger Zone

Your danger zone is the point where your remaining drawdown buffer is too small to trade normally. I define it as having less than 40% of your original buffer remaining.

The calculation is simple.

Available buffer = Current balance minus Drawdown floor.

Danger zone threshold = Original drawdown limit * 0.40.

If available buffer is less than or equal to danger zone threshold, you're in the danger zone.

Example on a $50,000 account with $2,500 trailing drawdown. Balance is $50,300. Floor has trailed up to $48,800. Buffer is $1,500. Danger zone threshold is $1,000 (40% of $2,500). You're not in the danger zone yet, but you're close. One $500 losing day puts you there.

Once you're in the danger zone, there are only three rational choices. Trade at minimum size (1 MNQ or equivalent). Stop trading until the next week. Reset the evaluation. There is no fourth option. Trading at normal size in the danger zone is how accounts die.

As of March 2026, firms like FundedSeat offer static drawdown accounts where the danger zone calculation is different because the floor doesn't trail. At YRM Prop, the drawdown structure is more forgiving for traders who build early profits. Know your firm's rules before calculating your danger zone.

Drawdown Management Strategies for Different Firm Types

Not all firms demand the same approach. The drawdown type at your firm should shape your entire management strategy.

For trailing EOD firms (Lucid Trading, Apex Trader Funding, Top One Futures): You have the advantage of intraday flexibility. Take your profits at the end of the session whenever possible. If you have a big winning trade during the day, consider closing it before the session ends if it's pulling back. Your floor only moves based on the closing balance, so an intraday spike that you give back doesn't hurt you. Focus on building consistent daily gains of $200-$500 to slowly move the floor up while maintaining buffer.

For trailing intraday firms (Topstep, some evaluation phases): Take profits quickly. Don't let winners turn into losers. If your equity spikes $1,000 on an open trade, seriously consider taking profit immediately. That $1,000 spike already moved your floor up. If the market reverses, you've lost the profit AND the buffer space. Scalping works better here than holding for extended moves.

For static drawdown firms (FundedSeat, some E8 Markets accounts): You can be more patient. Once you've built $1,000 in profit, your effective buffer is $3,500 instead of $2,500, and the floor didn't move. This rewards traders who build gradually. The danger is complacency. Having a big buffer can make you feel invincible, which leads to oversizing.

For firms with daily loss limits alongside overall drawdown: Track both limits separately. Your daily loss limit is usually $1,000-$1,500. If you've lost $800 on the day, you need to stop regardless of how much overall buffer you have. I've seen traders with $2,200 of total buffer get terminated because they lost $1,600 in a single session and breached the daily limit, not the overall drawdown.

The Relationship Between Win Rate, Risk-Reward, and Drawdown

Your drawdown usage over time is a function of three things: your win rate, your average risk-reward ratio, and your position size. Change any one of these and your drawdown profile changes.

A trader with a 55% win rate and 1:1.5 risk-reward will experience smaller drawdowns than a trader with a 40% win rate and 1:3 risk-reward, even though both are profitable over time. The first trader loses less often. The second trader has longer losing streaks that chew through drawdown buffer before the big winners restore it.

If your strategy naturally produces losing streaks of 5-8 trades, you need to size down so that those streaks don't consume your entire buffer. If your strategy wins 65% of the time with 1:1 risk-reward, you can size slightly larger because the maximum expected losing streak is shorter.

I track my longest losing streak per strategy per month. My MNQ scalping approach has a worst-case losing streak of 6 trades across 400+ samples. At $250 risk per trade, that's $1,500, or 60% of a $2,500 drawdown. That's too close to the edge. So I risk $175 per trade on that strategy, which puts the worst-case losing streak at $1,050 (42% of drawdown). That gives me enough buffer to absorb the streak and keep trading.

Run these numbers before you trade funded. Don't find out your worst-case drawdown by living it.

What to Do When You're Already Deep in Drawdown

You read all the rules above. Great. But what if you're already in trouble? What if your buffer is down to 35% and you're staring at the screen wondering if there's a way out?

Stop trading. Right now.

I'm serious. Close the platform. The single best trade you can make when your buffer is critical is no trade at all. Every trade from here carries the risk of ending the account. The expected value of trading with a paper-thin buffer is negative because even a normal loss terminates you.

Go review your trading journal. Figure out what went wrong. Was it position sizing? One bad trade or a series of small losses? Did you trade through a news event? Did you revenge trade after a loss?

If the answer is "I got unlucky on a few trades but my process was sound," then wait a few days and come back at minimum size. Bad variance happens. If your process is genuinely good, minimum size lets you work your way back without risking termination.

If the answer is "I broke my rules," then the account is done even if it's technically alive. You won't suddenly start following rules when the pressure is at its peak. Pay the reset fee, start fresh, and commit to the rules from trade one.

I've tried to "save" accounts at 15% buffer remaining exactly twice. Both times, I was terminated within three sessions. The third time I found myself in that position, I voluntarily stopped trading and moved on to a new evaluation. Best decision I made that quarter.

The bottom line: trading drawdown management is the difference between funded traders who build careers and funded traders who cycle through evaluations forever. It's not about having a better strategy or reading charts more accurately. It's about knowing your numbers, respecting your buffer, and having the discipline to reduce size or stop trading when the math says you should. Every firm handles drawdown differently, whether that's trailing EOD at firms like Lucid Trading or static drawdown at FundedSeat. Learn your firm's specific rules before you place your first trade. Build your buffer in the first week. Cut size when the buffer shrinks. And never, ever move a stop loss further from your entry to avoid taking the loss. The traders who survive drawdown are the ones who respect it.

Frequently Asked Questions

What is trading drawdown in prop trading?

Trading drawdown in prop trading is the decline from your account's peak balance to its current low point, used by prop firms as a hard limit to determine whether your funded account stays active. If your account balance drops below the drawdown floor set by your firm, the account is immediately terminated. Drawdown limits at most prop firms range from $2,000 to $3,500 on a $50,000 account.

What is the difference between trailing and static drawdown?

Trailing drawdown moves upward as your account balance increases, maintaining a fixed distance below your highest equity point. Static drawdown stays fixed at a set dollar amount below your starting balance and never moves, regardless of how much profit you make. Static drawdown gives traders more breathing room over time because profits create an ever-growing buffer, while trailing drawdown keeps the buffer constant until the floor locks.

How does trailing drawdown lock work?

Trailing drawdown lock occurs when the drawdown floor reaches your original starting balance and stops moving upward. On a $50,000 account, once your floor trails up to $50,000, it locks there permanently. As of March 2026, firms like Apex Trader Funding and Top One Futures offer this feature, which effectively converts trailing drawdown into static drawdown once you've built enough profit.

How much drawdown should I risk per trade on a funded account?

No single trade should risk more than 30% of your remaining drawdown buffer. On a $50,000 account with $2,500 of trailing drawdown, that means $750 maximum risk per trade. As your buffer shrinks from losses, this dollar amount decreases proportionally. If you've lost $1,250 and have $1,250 of buffer remaining, your max risk per trade drops to $375.

Why is the first week of a funded account so dangerous for drawdown?

The first week of a funded account is the most dangerous for drawdown because your buffer is at its minimum starting size, emotional pressure from passing the evaluation leads to overtrading and oversizing, and you haven't yet adjusted to potential differences in execution between the evaluation and funded phases. Most funded account terminations happen within the first five trading days.

What should I do when I've used 50% of my drawdown buffer?

When you've used 50% of your drawdown buffer, reduce your position size by half immediately. If you were trading 4 MNQ contracts, drop to 2. This reduces the impact of each subsequent loss and gives you more sessions to recover. Continuing to trade at full size after losing half your buffer is the single most common path to account termination at prop firms.

Does EOD trailing drawdown or intraday trailing drawdown affect my strategy?

EOD trailing drawdown favors traders who hold positions through intraday volatility because unrealized equity spikes during the session don't move the floor. Intraday trailing drawdown penalizes holding winners because every equity peak, even unrealized, permanently raises the floor. Scalpers and quick-exit traders perform better under intraday trailing, while runners and hold-through-pullback traders should choose firms with EOD trailing.

How do I calculate my drawdown danger zone?

Calculate your danger zone by multiplying your original drawdown limit by 0.40. On a $2,500 drawdown account, your danger zone threshold is $1,000. Subtract your drawdown floor from your current balance to find your available buffer. If the buffer drops to $1,000 or below, you're in the danger zone and should either trade at minimum size, stop trading for the rest of the week, or reset the evaluation.

Can I recover from a deep drawdown on a prop firm account?

Recovering from a deep drawdown on a prop firm account is mathematically possible but practically very difficult. If you've used 70% or more of your drawdown buffer, the remaining room is too small for normal position sizing. Any recovery attempt requires minimum size, which means very slow progress, and one normal losing trade could end the account. In most cases, paying for a fresh evaluation is more cost-effective than trying to recover an account with less than 30% buffer remaining.

Which prop firms have the most forgiving drawdown rules?

As of March 2026, prop firms with static (non-trailing) drawdown like FundedSeat offer the most forgiving structure because the floor never moves up. Among trailing drawdown firms, those with EOD trailing and a floor lock feature, such as Lucid Trading, Apex Trader Funding, and Top One Futures, are more forgiving than firms with intraday trailing. Daily loss limits vary widely, with some firms at $1,000 and others at $2,000 on $50,000 accounts, so check the specific limits at each firm before choosing.

Why do losing 10% and gaining 10% not cancel each other out?

Losing 10% and gaining 10% don't cancel out because the percentages apply to different base amounts. If a $50,000 account loses 10%, it drops to $45,000. A 10% gain on $45,000 is only $4,500, bringing the account to $49,500, still $500 short of the original balance. To recover from a 10% loss requires an 11.1% gain. This asymmetry accelerates with larger losses: a 25% loss needs a 33.3% gain, and a 50% loss needs a 100% gain.

How does drawdown management differ between futures and forex prop firms?

Drawdown management at futures prop firms typically involves trailing drawdown with a fixed dollar amount (such as $2,500 on a $50,000 account) that follows your equity peak. Forex prop firms like FTMO and E8 Markets more commonly use percentage-based drawdown limits, often with both a daily maximum loss (5%) and an overall maximum loss (10%) calculated against the starting balance. Futures firms are more likely to offer EOD trailing and floor locks, while forex firms tend toward static percentage-based systems.

Should I trade during news events when my drawdown buffer is low?

No. Trading during high-impact news events like FOMC announcements, CPI releases, or Non-Farm Payrolls when your drawdown buffer is below 60% of its original amount is one of the fastest ways to lose a funded account. News events create rapid price swings that can blow through stops and wipe out remaining buffer in seconds. If your buffer is healthy (80%+), trading news is a personal risk decision, but with a thin buffer, the risk-reward is unacceptable.

What position sizing formula should I use to protect my drawdown?

Divide 30% of your remaining drawdown buffer by the product of your stop-loss distance in points and the dollar value per point of your contract. For example, with $2,000 buffer remaining, 30% is $600. On MNQ at $2/point with a 200-point stop, maximum contracts = $600 / (200 * $2) = 1.5, rounded down to 1 contract. Recalculate this number at the start of every trading session based on your current buffer, not your starting buffer.

How many losing trades in a row can I survive with proper drawdown management?

With proper drawdown management risking no more than 30% of buffer per trade, you can survive approximately 7-10 consecutive losing trades before hitting the danger zone on a standard $2,500 drawdown account. At $175 risk per trade (7% of buffer), you can absorb 14 consecutive losers before reaching critical levels. The exact number depends on your risk per trade, which should decrease as your buffer shrinks. Track your strategy's historical worst losing streak and size your risk so that streak consumes no more than 50% of your buffer.