# Risk Controls

Automated risk management protects vault capital through real-time monitoring and enforcement of drawdown limits.

## How Risk Protection Works

Atract protects investor capital by continuously monitoring vault balances and enforcing agreed-upon risk limits.

**Protection Features:**

* Real-time balance monitoring
* Automatic enforcement when limits are breached
* Continuous peak balance tracking
* Daily performance monitoring

## Drawdown Limits

### Max Drawdown

The maximum percentage loss from peak balance before trading is automatically paused.

**Example:**

* Peak Balance: $100,000
* Max Drawdown: 20%
* Pause Trigger: $80,000

When vault balance drops to $80,000, trading is paused automatically. You can close existing positions but cannot open new ones.

**Recovery:** Even if balance improves, vault remains paused until manually unpaused by the trader.

### Daily Drawdown

The maximum percentage loss within any 24-hour period.

**Example:**

* Balance at Start of Day: $100,000
* Daily Drawdown: 5%
* Pause Trigger: $95,000

If balance drops to $95,000 within 24 hours, vault pauses. Limit resets at midnight UTC.

**Purpose:** Prevents catastrophic single-day losses while allowing longer-term strategies to play out.

## What Happens When Paused

**Automatically:**

* Vault status changes to PAUSED
* All new trades are blocked
* Position increases are prevented

**Allowed:**

* View positions and balance
* Close existing positions (reduce-only)
* Check vault status and history

**Blocked:**

* Opening new positions
* Increasing position sizes
* Any action that adds risk

## Unpause Process

**Manual Unpause:** After balance recovers above the limit, trader can request unpause:

1. Verify balance is above threshold
2. Request unpause via vault dashboard
3. Trading resumes after confirmation

**Vault Closure:** If recovery is unlikely, close vault and trigger settlement:

1. Close all open positions
2. Initiate vault closure
3. Settlement distributes remaining capital according to profit-sharing terms

## Balance Requirements

Before every trade, Atract verifies balance data is current:

* **Fresh**: Trade proceeds normally
* **Warning**: Trade allowed with caution
* **Stale**: Trade rejected

**Why This Matters:** Trading with outdated balance data could violate risk limits without detection.

## Deal Deadline

Every vault has a deal deadline based on the agreed duration.

**After Deadline:**

* Vault becomes eligible for closure
* No new trades permitted
* Parties must settle and close vault

## Best Practices for Traders

**Stay Within Limits:**

* Keep a 5-10% buffer below maximum drawdowns
* Don't trade right to the edge of limits
* Use stop-losses to prevent auto-pause

**Monitor Status:**

* Check vault balance regularly during active trading
* Watch daily drawdown progress throughout the day

**Plan for Recovery:** If paused, evaluate your options:

* **Close and Accept**: Lock in losses, close vault
* **Wait for Recovery**: Keep positions, hope for reversal
* **Partial Close**: Reduce risk while maintaining some exposure

**Communicate:** Keep investors informed when approaching limits or if paused.

## Risk Monitoring Dashboard

**Key Metrics Displayed:**

* Current vault balance (real-time)
* Current drawdown from peak (%)
* Daily drawdown from day start (%)
* Time remaining until deal deadline
* Vault pause status

**Alert Levels:**

* **Warning**: Within 5% of limit
* **Critical**: Within 2% of limit
* **Paused**: Limit breached

## Related Topics

* [Vault Lifecycle](/funding-and-vaults/vault-lifecycle.md) - Complete vault journey
* [Position Management](/trading/position-management.md) - Managing positions safely
* [For Traders](/getting-started/for-traders.md) - Getting started guide
* [For Investors](/getting-started/for-investors.md) - Getting started guide


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