Some high risk/returns automated trading systems requires an on/off switch as a fail-safe feature and to minimize drawdowns.
Besides using a moving average on the equity P&L curve to turn on/off the trading program, what other creative risk management ways are fund managers using?
I have my program running on both a demo and a real account. If real account gets a drawdown ≥10%, the program on the real account is turned off but the demo continues running.
If the balance on the demo recovers by ≥5%, the real account is re-activated but trades at half of the previous position %size until the drawdown is fully recovered.
If, however,the demo never recovers at all and gets another 15% drawdown, the trading system is discarded.
Is there a way to improve this money management strategy?