Equity stop vs per-trade stop: why you need both

Most traders treat stop losses as a per-trade rule, but that ignores the risk of correlated systemic failure. A per-trade stop manages the risk of a specific setup going wrong, while an equity stop acts as a circuit breaker for your entire account. If you rely only on individual stops, a sudden gap or a series of rapid losses across correlated assets can drain your capital before you even blink.

Think of it as two layers of defense. The per-trade stop is your tactical protection against a bad entry or a sudden move against a specific ticker. The equity stop is your strategic safety net. If your account drops by say 5% in a single day, the equity stop should programmatically kill all active positions and prevent new ones from opening until you manually review the situation.

Implementing this in an Expert Advisor usually involves a simple check within the OnTick function. You compare your current balance against your starting balance for the day. If the drawdown threshold is breached, you call a function to close all market orders and set a flag to block trading.

Here are the common failure modes of relying on just one layer:

• Per-trade only: A flash crash or high correlation event wipes out multiple positions simultaneously.
• Equity only: A single bad trade can burn a huge chunk of your account before the equity stop ever triggers.

I prefer to calculate the equity stop based on a rolling window rather than a fixed daily reset. This prevents the system from ignoring a slow bleed that happens over several days. What is your preferred drawdown threshold for an automatic account-level shutdown?