Financial & Forex Operations
Turning discretionary trading into a documented risk framework
Independent market operation · client withheld under confidentiality · 12 weeks
Market structure research consolidated into a written, rule-based system with explicit position sizing, correlated-exposure caps and a drawdown ceiling enforced independently of the trader.
3
Documented limits
Per-position risk, aggregate correlated exposure, drawdown ceiling
Periodic
Reporting
Returns, risk-adjusted metrics and rule deviations reported on a fixed cycle
Independent
Governance
Stand-down review separated from the trading function
The challenge
- Entry logic was well developed; exposure and drawdown rules existed only as intentions.
- Correlated positions were being sized independently, so real risk exceeded stated risk.
- There was no reporting loop to distinguish a sound process from a lucky one.
How we approached it
Volatility regime research
Instrument behaviour was segmented by volatility regime so position sizing could scale with measured conditions instead of a fixed lot convention.
Written specification
Entry conditions, exit conditions, sizing formula and stand-down triggers were documented and dated. Rules not in the document are not rules.
Backtesting with honest assumptions
Testing included spread and slippage assumptions and reported drawdown distribution, not only aggregate return.
Independent enforcement
The drawdown ceiling triggers a mandatory review conducted by someone other than the person holding positions.
What changed
- Real exposure became measurable rather than assumed.
- Rule deviations are now visible in reporting instead of being absorbed silently.
- The specification is reviewable by an external party — a prerequisite for any capital conversation.