Risk Management
A comprehensive, multi-layered approach to capital preservation and disciplined risk control.
“The first rule of investing is don't lose money. The second rule is don't forget the first rule. Our entire infrastructure is built around this principle.”
— Arsalan Sarguru, Founder & CEO
Hard cap on capital at risk per individual position
Maximum aggregate exposure across all open positions
Automated circuit breakers triggered by predefined thresholds
Strategy pause and risk reduction at drawdown threshold
Priority capital protection protocols during volatility spikes
Continuous surveillance with real-time alerting infrastructure
At PrysmAlgo, capital preservation is not a feature — it is the foundation. Our risk philosophy prioritizes survival and consistency over aggressive return targets. Every trading decision passes through multiple validation layers before execution, ensuring that no single trade or market event can materially impair investor capital.
Our proprietary position sizing engine calculates optimal trade size based on account equity, current volatility, correlation with existing positions, and predefined risk parameters. Maximum risk per trade is capped at 1.5% of portfolio value, with dynamic adjustment during elevated volatility regimes.
Automated drawdown protection protocols activate at predefined thresholds. At -5% drawdown, position sizes are reduced by 50%. At -8% drawdown, all new positions are halted and existing exposure is systematically reduced. Full strategy review is triggered before resumption.
Circuit breaker systems monitor real-time market conditions, portfolio exposure, and system health. Emergency stops can be triggered by abnormal volatility spikes, liquidity deterioration, correlation breakdowns, or technical infrastructure anomalies.
Every potential trade passes through a multi-factor filter including liquidity assessment, spread analysis, news event proximity, correlation impact, and risk-reward validation. Trades failing any criterion are automatically rejected regardless of signal strength.
Dynamic capital allocation distributes risk budget across strategies and asset classes based on current market regime, strategy performance, and correlation matrix. Underperforming strategies receive reduced allocation while maintaining overall portfolio diversification.
Positions are diversified across uncorrelated instruments, timeframes, and strategy types. Maximum correlation between any two positions is limited to 0.6, and no single asset class may exceed 40% of total portfolio exposure.
24/5 real-time monitoring infrastructure tracks every open position, pending order, and risk metric. Automated alerts notify the risk team of threshold breaches, and a dedicated operations center maintains oversight during all market hours.