Open Risk
Think of it as your current drawdown, the one you're carrying right now, before anything closes.
What it is
Open risk is a ceiling on how much you're allowed to have exposed to loss across your currently open positions, at any given moment. The rule is always some version of "no more than X% at any given time." Everything else, what counts as "exposed," what happens when you cross the line, what it's called on the website, is just per-firm tuning on top of that one sentence.
Not the same as drawdown
Open risk and daily drawdown sound similar and get confused constantly, but they measure different things. Drawdown tracks the decline that has already happened, realized losses accumulated over a day or since your starting balance. Open risk measures what's currently floating, unrealized, still live. You can be well within your daily drawdown and still breach an open risk limit with one oversized position that hasn't closed yet. The two are stacked on top of each other, not substitutes: an account with a 3% daily drawdown and a 1% open risk cap has an effective real-time ceiling of 1% on everything currently open, regardless of how much drawdown room is technically left for the day.
Per position, per idea, or per account
The X% ceiling gets measured three different ways, and which one applies changes how much room you actually have. Check which version applies before assuming you have more room than you actually do.
- Per position: each individual trade is checked on its own. Size one trade big and another small, and only the big one risks tripping the limit.
- Per idea: positions on the same asset, same direction, get summed and treated as one combined exposure. Splitting a 3-lot trade into three 1-lot entries doesn't reduce your risk in their eyes, it's the total floating loss across everything tied to that idea that counts. InstantFunding runs this on its non-Clarity accounts: no more than 50% of the account's starting daily drawdown (a flat 1% of balance on the Micro line) in any one trade idea, hard breach on the first violation, closing and reopening in the same direction within 10 minutes still counts as the same idea.
- Per account: everything currently open, across every instrument, gets summed into one floating balance-vs-equity number against the whole account, unrelated positions included. This is the version behind most auto-close/penalty systems, and behind some straight hard-breach rules too, see below.
Same rule, different endings
Here's the part most traders miss: a hard breach limit and an auto-close/penalty system are the same underlying constraint, just enforced differently. In practice, firms land on one of three endings once you cross the line:
| Hard breach | Penalty (auto-close) | Plain loss | |
|---|---|---|---|
| What happens | Account terminated | Positions auto-closed, Profit split reduced | Position auto-closed |
| The message | "Manage your risk or lose everything" | "We'll manage your risk, but it'll cost you" | "Active account protection, no consequences" |
Real examples of the first two: FundingPips Zero checks this per account, comparing balance against equity, and enforces a hard breach the moment the agreed limit is crossed, no exceptions. Blue Guardian's "Guardian Shield" and InstantFunding's Clarity-line "Risk Management Toolkit" measure the same way, per account, but auto-close into a penalty instead: first activation costs you a reduced split, second activation is a hard breach anyway. Scope and ending are independent choices, InstantFunding's own non-Clarity accounts run the same hard-breach ending as FundingPips, just measured per idea instead of per account. The third ending, capped loss with no extra penalty attached, is the version firms talk about least, because it's the least profitable one for them to offer.
What isn't a judgment call is the psychological effect. The threat of a hard breach is what makes you manually close an oversized position before it becomes a problem. A penalty that only costs half your split doesn't carry that same weight, "yeah, whatever, I'll just earn less on this one" is a genuinely worse habit than "I need to manage this now," and it's exactly the mindset that lets a position sit open past the point it should have been cut. More on this in position sizing.
On paper, a penalty beats termination. In practice, it can cost more
A halved split sounds like a mercy compared to losing the account outright, and on a single occurrence, it usually is. The problem shows up over time. Auto-close locks in a loss at the worst possible moment, a position sitting at -4.8% might have recovered to -1% within the hour, but the close already crystallised it. And once the penalty split kicks in, it doesn't go away after one bad day, it's a standing repricing of the entire deal, meaning the firm now earns more per trade from a struggling trader on a reduced split than it did from that same trader before the trigger. That incentive is worth thinking about every time it's marketed as protection.
The marketing matters as much as the mechanics
Not all implementations are presented the same way, and the framing changes how fair the same rule actually feels:
- Upfront and priced in: the rule is disclosed before purchase, and the price already reflects it. A known constraint, not a surprise penalty.
- Retroactive penalty: the split reduction lands after you've already been trading at better terms. The firm is repricing the deal once things go badly, but only in one direction.
- Opt-in add-on: some firms sell the protection as an optional purchase. At least you're choosing to pay for it, but "insurance" framing tends to obscure that the house still wins on insurance products.