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Risk Management

agent-wallet has hardcoded safety limits to protect your capital. These limits cannot be overridden by the AI or by users.

Built-in Limits

LimitValuePurpose
Max position size15%No single asset can exceed 15% of portfolio
Total exposure cap50%Maximum 50% can be in risk assets
Daily loss threshold5%Trading pauses if daily loss exceeds 5%
Min cash reserve50%Always keep 50% in stablecoins
Stop-loss trigger15%Auto-exit positions down 15%

How Enforcement Works

Every trade goes through alpha_risk before execution:

1. Claude wants to buy $500 ETH
2. alpha_risk checks:
   - Would this exceed 15% position size?
   - Would total exposure exceed 50%?
   - Would cash reserve drop below 50%?
   - Are we in daily loss lockout?
3. If any check fails → trade rejected with reason
4. If all checks pass → trade proceeds to alpha_swap

Example Scenarios

Scenario 1: Position Size Limit

Portfolio: $1000 total
Current ETH: $100 (10%)
Requested: Buy $100 more ETH

Check: Would ETH be 20%? > 15% limit
Result: REJECTED - "Would exceed 15% position limit"

Scenario 2: Cash Reserve

Portfolio: $1000 total
Current cash: $600 (60%)
Requested: Buy $200 of tokens

Check: Would cash be 40%? < 50% minimum
Result: REJECTED - "Would violate 50% cash reserve"

Scenario 3: Daily Loss Lockout

Portfolio started day: $1000
Current value: $940 (-6%)

Check: Daily loss > 5% threshold
Result: ALL TRADES REJECTED until next day

Scenario 4: Approved Trade

Portfolio: $1000 total
Current cash: $700 (70%)
Current ETH: $50 (5%)
Requested: Buy $100 ETH

Checks:
- ETH would be 15% ✓ (at limit, not over)
- Cash would be 60% ✓ (above 50% minimum)
- Total exposure would be 40% ✓ (below 50% cap)
- No daily loss lockout ✓

Result: APPROVED

Why These Limits?

15% Max Position

Prevents overconcentration. Even if AI is confident, diversification protects against being wrong.

50% Cash Reserve

Ensures you always have capital to:

  • Average down on good opportunities
  • Cover unexpected losses
  • Exit positions gradually

50% Exposure Cap

Combined with cash reserve, this means:

  • Max 50% in risk assets
  • Min 50% in stablecoins
  • Balanced exposure regardless of market conditions

5% Daily Loss Threshold

Circuit breaker to prevent catastrophic losses. If the day is going badly, stop trading and reassess.

15% Stop-Loss

Automatic exit to prevent holding losing positions indefinitely. Losses are cut, not hoped away.

What You Cannot Do

Even if you ask Claude to:

❌ "Buy 50% of my portfolio in PEPE" → Rejected (exceeds position limit)

❌ "Go all-in on ETH" → Rejected (violates cash reserve)

❌ "Ignore the risk limits" → Limits are hardcoded, not prompts

❌ "Override safety for this one trade" → No override mechanism exists

What You Can Do

✅ Trade within limits freely

✅ Ask Claude to optimize within constraints

✅ Use multiple smaller positions

✅ Let Claude manage risk automatically

Viewing Current Risk Status

What's my current risk status?

Claude will show:

  • Current positions as % of portfolio
  • Remaining room in each limit
  • Whether any limits are close
  • Daily P&L status

Best Practices

  1. Start small — Test with amounts you can afford to lose
  2. Trust the limits — They exist to protect you
  3. Review trades — Check alpha_memory for decision history
  4. Monitor daily — Check portfolio and P&L regularly

Customization

Currently, risk limits are fixed. Future versions may support user-configurable limits with minimum safety floors.

Next Steps