The Risk Ladder

Where this fits. A progressive risk-tier system inside TradingApp. Every order's base risk percentage is determined by the current ladder tier, multiplied by the regime gate. The trader cannot manually set a higher tier — promotion is earned by recent trade outcomes.

What it does

The Risk Ladder defines three sizing tiers, each with a fixed base-risk percentage of net liquidation value:

| Tier | Base risk | |------|-----------| | Quarter | 0.25% | | Half | 0.50% | | Full | 1.00% |

Every order takes its base risk from the current tier. The trader does not set this number; it's a function of the engine's record of recent outcomes.

Promotion. Two consecutive "de-risked" trades — defined as taking the 2R partial and moving the remaining stops to break-even — promote the trader to the next tier up. The pattern that earns promotion is mechanical: the engine fired its planned partial, the rest of the position is risk-free, repeat once. After the second one, the next order goes out at the higher tier.

Demotion. One stopped-out trade — defined as the position closing at the hard stop without first reaching the partial — demotes the trader to the next tier down. There is no buffer, no "give it another chance." A stop-out is the market saying the current size isn't being earned, and the system reduces size in response.

The ladder is asymmetric on purpose. Promotion takes two successes; demotion takes one stop-out. The trader can lose tier faster than they can gain it.

Why the asymmetry

A winning streak feels like skill. A losing streak feels like bad luck. Neither feeling is reliable.

The ladder uses the asymmetry the market actually rewards: pressing into proven performance and pulling back fast on the first sign of trouble. The two-trades-to-promote rule prevents promotion on a single fluke. The one-stop-to-demote rule prevents pressing into a regime that's stopped paying.

This is the inverse of what the trader's nervous system wants. After a stop-out, the urge is to "make it back" — which means trading bigger to recover faster. The ladder forces smaller. After two clean wins, the urge is to "lock in gains" — which means trading smaller to protect the profit. The ladder forces larger.

Both forced moves are the right move, statistically. They're hard to make manually because they invert the emotional response.

How it combines with the regime gate

The Risk Ladder produces the base risk percentage. The regime gate (the Ampel) produces a multiplier that adjusts for market conditions. Effective dollar risk on any order is:

dollar risk = net liq × base risk % × regime multiplier

At Quarter tier in a yellow regime: 0.25% × 0.5 = 0.125% of net liq. Tiny. At Full tier in a green regime: 1.00% × 1.0 = 1.00% of net liq. Standard. At Full tier in a red regime: 1.00% × 0.25 = 0.25% of net liq. Even at the highest earned tier, the regime overrides.

The two systems compound. A trader can be at Full tier and still trading 0.25% size because the regime gate says so. A trader can be in a green regime and still trading 0.25% because the ladder demoted them after a recent stop-out. Both have to align for full size.

What this rule replaces

A trader without the ladder has two failure modes that compound:

• Pressing into losses. Recent stops feel like signals that the next trade has to work to recover. The trader sizes up. The next loss is bigger.
• Reducing into wins. Recent wins feel like the streak is ending. The trader sizes down right before the regime that's been paying continues to pay.

The ladder inverts both. Recent stops trigger smaller size; recent wins trigger larger size. The trader doesn't have to override their own instincts in the moment — the system does it for them.

What it costs

The ladder produces a slower return-to-full-size after a setback than aggressive sizing would. A trader who's been at Full tier and takes one stop-out then has to grind back through Half tier with two clean trades before returning to Full. During that grind, the trader is making real profits but at half the historical size — which means real opportunity cost on trades that would have worked at full size.

This cost is the entire point. The ladder's value is that the trader doesn't get to choose to skip the grind. The grind is the price of having taken the recent stop, and paying it is what prevents the much larger drawdowns that come from sizing up through losing streaks.