PatternX feature
Risk controls checked before every order
By the PatternX team · Published
Risk controls
PatternX's risk engine checks every order before it is sent, whether you approved it or auto mode placed it: kill switches, trade quotas, a pattern-day-trader guard, open-trade and daily-loss limits, cooldowns, position sizing and leverage caps. The core controls apply on every plan; Elite adds optional Advanced Safety Halts and extra filters for traders who want tighter limits.
Availability: Every plan (core controls); Elite adds optional Advanced Safety Halts and extra risk filters
Checked before every order
A signal says a setup exists; the risk engine decides whether your account should take it. PatternX runs the same checks before every order, whether you approved the signal yourself or auto mode sent it. If a check fails, the order isn't placed.
The controls at a glance
| Control | Default | What it does |
|---|---|---|
| Kill switches | Off unless used | A platform pause, your own pause-trading switch or an account ban stops new orders |
| Direction and symbol lists | Your choice | Allow or block longs and shorts; blacklist or whitelist symbols |
| Plan trade quota | Free 2, Starter 20, Pro 100 (5 in AI mode), Elite unlimited | The daily ceiling set by your plan |
| Your daily trade cap | 10 crypto + 10 traditional | Your own daily ceiling |
| PDT guard | On | Blocks a 4th same-day round trip within 5 business days while equity is under $25,000 |
| Max open trades | 3 crypto + 3 traditional | Caps simultaneous positions |
| Daily loss limit | 10% of current balance | Counts losses realised since 00:00 UTC |
| Symbol bench | 5 losing trades | Benches a symbol after 5 losing trades on it in one day |
| Loss-streak cooldown | 60 minutes | Pauses new trades after 3 losses in a row, on every plan |
| Risk per trade | 1% of balance | Sizes the position from the stop distance |
| Leverage | 3 crypto (max 25), 2 traditional (max 10) | Also capped by each venue, e.g. Binance 20, Bybit 25, Hyperliquid 25, IBKR 4, Alpaca 2 |
| Free-margin check | 2% buffer | Shrinks a trade to fit uncommitted margin; refuses it below $10 notional |
| Minimum reward:risk | 1 | Applies platform-wide |
Position sizing, worked through
PatternX sizes each trade so that a stop-out costs about 1% of your balance: the amount at risk divided by the distance to the stop. Optional caps on position value and on minimum and maximum margin can trim the result, and the free-margin check then shrinks it to fit the margin you haven't committed, keeping a 2% buffer.
For example, with a hypothetical $5,000 balance, 1% is $50. If the stop sits 5% from entry, the position is $50 ÷ 5% = $1,000. At the default 3× crypto leverage that ties up about $333 of margin; if only $250 of margin were free, the check would shrink the trade to fit. Leverage changes the margin used, not the $50 planned loss, although slippage or a gap through the stop can make the real loss bigger.
How the limits layer
The controls overlap, which is easiest to see with numbers. With default settings and that same $5,000 balance, the daily loss limit sits at roughly $500 of realised losses, while each full stop-out costs about $50. It would take about ten clean stop-outs to reach the limit, so the 60-minute cooldown after three losses in a row, the symbol bench and your daily trade cap can all step in well before then. The loss limit is the backstop for days when gaps and slippage make individual losses bigger than planned.
The pattern-day-trader guard
FINRA rule 4210 restricts frequent day trading in US margin accounts holding less than $25,000 of equity. PatternX's guard is on by default: for live securities trades on US margin brokers, it blocks the 4th same-day round trip within 5 business days while equity is under $25,000. Background: the pattern day trader rule and FINRA's day-trading overview.
Elite: Advanced Safety Halts and filters
Elite adds optional controls, all off by default:
- Advanced Safety Halts: a daily losing-trade count, a consecutive-loss lockout, a daily profit lock-in, a losing-day streak and an intraday give-back halt.
- Elite filters: a trading-session window, a per-symbol cooldown after a loss, a correlation guard, a portfolio heat cap, a minimum reward:risk, an ATR band and a maximum spread.
The correlation guard caps open positions per correlated group. The groups are BTC, ETH, L1, L2, MEME, DEFI, AI, EXCHANGE, USD_FX, SPX, NDX, DOW, RUT and SEMI.
Limitations
- These are pre-order checks. They control which new orders go out; open positions are handled by their stops and the position manager.
- A stop limits loss in normal conditions but isn't a maximum loss. Gaps, fast markets and slippage can push the exit beyond it (stop-loss).
- Limits shrink the damage from a bad run; they don't make a strategy profitable.
- The defaults are starting points, not advice. Set them for your own account and tolerance for loss.
Momentum Lab has its own lab-wide breakers. For the reasoning behind each control, see the risk controls methodology and the glossary entry on the risk-reward ratio.
Frequently asked questions
Do the risk checks apply to signals I approve myself?
Yes. Approving a signal only replaces auto mode's go-ahead; the order still goes through the same risk engine, and any failed check blocks it.
Does the daily loss limit close my open positions?
No. It is a pre-order check: once realised losses since 00:00 UTC reach 10% of your current balance, new orders are refused, while positions already open keep running under their own stops. Unrealised losses on those positions don't count toward the limit until they are closed.
Why was my trade smaller than I expected?
Three things can shrink a trade: sizing to 1% risk at your stop distance, your venue's leverage cap, and the free-margin check, which fits the trade into uncommitted margin with a 2% buffer. Optional position-value and margin caps can trim it too.
What is the correlation guard for?
It stops positions that tend to move together from piling up. With a group cap of one, for example, an open position in the L1 group would block a second L1 position until the first closes.
Are the Elite halts switched on automatically?
No. Advanced Safety Halts and the Elite filters are all off by default, so they change nothing until you enable the ones you want.
References
- day-trading overview (finra.org)