Risk Management
Drawdown is the decline of an account from its most recent peak to a subsequent low, measured in currency or percent; a $10,000 account that falls to $8,500 before recovering has experienced a 15% drawdown.
Drawdown is the number that ends most trading, not the average return. A 50% drawdown needs a 100% gain to recover; a 20% drawdown needs 25%. Prop-firm accounts are usually terminated at a fixed drawdown from the initial or trailing balance, so exceeding it once cancels the whole challenge regardless of the earlier profit. Drawdown also compounds emotionally: it is when traders enlarge positions to "make it back" and turn a survivable loss into a fatal one. A rule that halts trading at a chosen drawdown is the difference between a bad month and a closed account.
Every AlgoVesta bot can carry a drawdown brake: when the account equity falls by your chosen percentage from its peak, or by a chosen amount within the day, the bot stops opening new positions and reports the reason on its card and in the dashboard. Existing positions are not force-closed by the brake; they keep their stop-loss and take-profit, and AlgoVesta never closes a position on its own initiative. On MetaTrader 5 the equity is read from the terminal; on crypto exchanges from the account balance reported by the exchange. The signals blocked while the brake is active are listed with the reason, so you can see what would have been traded. Prop-firm users combine the brake with the daily loss limit to stay inside the firm's rules. Read more on the prop firm automation page and in the protection settings guide.
A funded account starts at $100,000 with a 10% maximum drawdown rule from the firm. The trader sets AlgoVesta's brake at 6%. After a bad week equity is $94,200, the brake triggers, and the next 14 signals from the channel are blocked and logged. The account is still alive, 4% away from the firm's limit, and trading resumes when the trader lifts the brake after reviewing the log.