Your Stop Is a Request: Slippage and Prop Account Limits

You sized the position to lose $400. The stop sat one percent away, the math was clean, and you had twenty of those in the tank before the account was gone.

The fill came back at minus $1,240.

Nothing malfunctioned. A liquidation cascade ran through the book, your stop became a market order in a market with no bids where you needed them, and the trade you had budgeted at 0.4 percent of the account cost 1.24 percent instead. You did not break a rule. You just spent three trades' worth of your loss budget on one of them.

This is the gap between intended risk and realised risk, and on a funded account it is the difference that ends evaluations. Every risk calculation a trader makes assumes the stop fills where the stop is. In crypto, during the exact conditions that trigger stops, it frequently does not.

The Buffer You Thought You Had

Take a $100,000 account with an 8 percent maximum loss. Your budget is $8,000.

Plan to risk $400 a trade and you have twenty attempts. That is a reasonable number, enough to survive the losing streaks a real strategy produces.

… Continue reading the full article at the original source below.