A four-part review that protects capital before emotion gets involved
The best risk process is the one you can execute under stress because it was defined in advance.
- Do not let recent outcomes rewrite your risk standards.
- Do not deploy anything you are not prepared to stop.
- Do not trade a strategy you cannot explain under pressure.
Pressure-test assumptions before deployment
Ask what market condition would make the strategy wrong, how much damage is acceptable, and whether the live environment can surface those signals quickly.
Write hard stop conditions
Define the drawdown, technical failure, or behavior drift that ends the strategy's right to keep trading.
Limit exposure like the thesis might be wrong
Even good systems fail. Capital allocation should assume uncertainty rather than reward confidence.
Review and retire decisively
When evidence says the system no longer fits its environment or its risk budget, close it. Replacement beats denial.