Drawdown Circuit Breaker

Overview

Evaluate whether the trader should take new trade risk today based on account-level realized P&L and recent terminal trade outcomes. This skill reads trader-memory-core thesis YAML files only. It produces a circuitbreakerdecision artifact that complements the market-side exposure_decision from exposure-coach.

The circuit breaker is a recommendation and recordkeeping tool. It does not replace human judgment, and it does not enforce broker-side blocks or automated order rejection.

When to Use

• Before screening or sizing any new swing trade candidate
• After a losing trade or partial trim to check whether a cooldown is active
• During daily planning when trader-memory-core contains recent closed or partially closed positions
• As a workflow gate before swing-opportunity-daily proceeds to candidate generation
• When reviewing whether daily, weekly, or monthly loss limits have been breached

Prerequisites

• Python 3.9+
• Local trader-memory-core thesis YAML files, usually under state/theses/
• Account size in dollars
• No API keys or network access required

Workflow

Step 1: Read Trader Memory State

Point the script at the thesis state directory:

python3 skills/drawdown-circuit-breaker/scripts/check_circuit_breaker.py \
  --state-dir state/theses \
  --account-size 100000 \
  --output-dir reports/

The script scans every th*.yaml file and reads realized P&L from each thesis statushistory[] ledger entry. It does not use _index.json for P&L, because the index is a lightweight lookup file and does not contain the required realized-P&L ledger.

After validating each file, the script groups valid theses by the case-sensitive, whitespace-trimmed thesisid. If two or more valid files share an ID, it excludes the entire duplicate group from P&L and losing-streak calculations, reports every actual source path, and returns PARTIAL + HALTED until the duplicate state is repaired and the decision is rerun. metrics.thesesscanned counts only accepted theses with unique IDs.

If the state directory is missing or is an empty directory, the skill returns TRADINGALLOWED with dataquality: EMPTY_STATE so a new user is not blocked by the absence of history. If the configured state path exists but is not a directory, the skill fails closed as incomplete state data.

If state exists but a thesis, ledger event, or terminal result must be skipped or conflicts with another recorded value, the skill fails closed with dataquality: PARTIAL, recommendation: HALTED, and an incompletestatedata rule. Repair the warnings and rerun before taking new risk. The one recoverable exception is a finite terminal outcome.pnldollars fallback for a legacy thesis with no realized-P&L ledger entry; it remains visible as PARTIAL but does not by itself override the calculated recommendation. For ACTIVE, PARTIALLYCLOSED, CLOSED, and INVALIDATED theses, each history event must be an object with a recognized status and parseable at, and the last history status must match the thesis status. ACTIVE and PARTIALLYCLOSED theses must also carry entry actuals; PARTIALLYCLOSED must carry a position. Malformed, stale, or skeletal lifecycle history disqualifies terminal fallback and halts. Ledger-shaped events whose realizedpnl is missing, untyped, or non-finite also halt instead of being coerced.

Step 2: Evaluate Circuit Breaker Rules

The default rules are:

Day, week, and month boundaries use America/New_York. Date-only producer timestamps from trader-memory-core are counted on the named ET date. Set --as-of for deterministic evaluation; date-only --as-of values cover the full ET day, while timestamp values exclude future events after that time:

python3 skills/drawdown-circuit-breaker/scripts/check_circuit_breaker.py \
  --state-dir state/theses \
  --account-size 100000 \
  --as-of 2026-07-02T12:00:00-04:00 \
  --output-dir reports/

Step 3: Override Thresholds When Needed

Override individual thresholds on the CLI:

python3 skills/drawdown-circuit-breaker/scripts/check_circuit_breaker.py \
  --account-size 100000 \
  --max-daily-loss-pct 1.5 \
  --losing-streak-n 3 \
  --cooldown-hours 48 \
  --weekly-drawdown-pct 4 \
  --monthly-drawdown-pct 6

Or provide a JSON config file:

{
  "max_daily_loss_pct": 1.5,
  "losing_streak_n": 3,
  "cooldown_hours": 48,
  "weekly_drawdown_pct": 4.0,
  "monthly_drawdown_pct": 6.0
}

CLI arguments override config-file values.

Step 4: Interpret the Decision

Use the generated decision as a gate for new trade risk:

Existing position management remains a human decision. The circuit breaker is designed to prevent new risk escalation after realized damage, not to force liquidation.

Time-based rules carry an ISO 8601 activeuntil. The non-time-based incompletestatedata rule uses activeuntil: null; its Markdown report says the halt lasts until the state is repaired and the decision is rerun.

Output Format

The script writes circuitbreakerdecisionYYYY-MM-DDHHMMSS.json and, unless --json-only is set, a matching markdown report.

{
  "schema_version": "1.0",
  "generated_at": "2026-07-02T16:00:00+00:00",
  "as_of_date": "2026-07-02",
  "recommendation": "COOLDOWN",
  "triggered_rules": [
    {
      "rule": "losing_streak_cooldown",
      "threshold": 2,
      "observed": 2,
      "active_until": "2026-07-02T15:30:00-04:00",
      "detail": "2 consecutive losing closes; last loss exit 2026-07-01T15:30:00-04:00."
    }
  ],
  "metrics": {
    "realized_pnl_today": 0.0,
    "realized_pnl_wtd": -250.0,
    "realized_pnl_mtd": -250.0,
    "consecutive_losses": 2,
    "last_loss_exit_at": "2026-07-01T15:30:00-04:00",
    "theses_scanned": 12
  },
  "account_size": 100000.0,
  "config": {
    "max_daily_loss_pct": 2.0,
    "losing_streak_n": 2,
    "cooldown_hours": 24.0,
    "weekly_drawdown_pct": 5.0,
    "monthly_drawdown_pct": 8.0
  },
  "data_quality": "OK",
  "warnings": [],
  "rationale": "Recent losing closes triggered a cooldown. Avoid new entries until the cooldown expires."
}

Exchange Calendar Contract

Install requirements.txt before running the checker. Daily, weekly, and monthly halt dates use actual XNYS sessions. activeuntil remains compatible: the halt ends at 00:00 America/NewYork on the next eligible session date, not at that session's opening bell. Use --as-of for deterministic evaluation.

Resources

• scripts/checkcircuitbreaker.py - Main CLI and rule engine
• references/circuitbreakerframework.md - Rule definitions, defaults, and data-source notes
• skills/trader-memory-core/schemas/thesis.schema.json - Source schema for thesis state

Key Principles

1. Realized damage only - Use recorded realized P&L, not unrealized P&L or thesis-level cumulative fields for daily calculations.
2. Survival first - A circuit breaker exists to prevent escalation after losses.
3. Advisory, not automatic execution - The output informs the workflow gate; it does not place, cancel, or block broker orders.
4. Fail closed on incomplete state - Empty state allows a new user to begin, but malformed, discarded, conflicting, or non-finite risk data returns PARTIAL + HALTED without crashing. A finite legacy outcome fallback is reported as recoverable PARTIAL and remains non-blocking.