EA Risk Controls: Building Safety Into Automated Strategies

[FXS Prop Desk]

An EA without risk controls can damage an account quickly when something goes wrong. A few controls cover most failure scenarios.

Essential controls:

• Maximum daily loss: stop trading after a set loss.
• Maximum open positions: prevent runaway order loops.
• Spread filter: no entries when spread is above a threshold.
• News filter: pause around high-impact events.
• Maximum lot size: cap regardless of calculation.
• Kill switch: a manual or external way to stop the EA immediately.

Testing these controls is as important as testing the strategy: simulate a disconnection, a spread spike, and a calculation error.

It also helps to log every time a control triggers. A spread filter that blocks trades every morning, for example, may indicate that the EA is trading at the wrong time of day.

What safety features do your EAs include?