Risk Stewardship — Faithful Servants Capital

Framework Overview

Multi-Layer Risk Management

FSC operates a comprehensive risk management framework with six distinct protection layers, each addressing a different category of market risk. No single layer is relied upon exclusively — together they form an interlocking system that protects capital under all market conditions.

"Risk management is not an afterthought — it is the foundation upon which every trade is built. Capital preservation is the prerequisite for Kingdom impact."

FSC Investment Philosophy

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VIX Circuit Breaker

Threshold: VIX > 30.0

All new entries are automatically halted when the VIX exceeds 30.0. Existing positions continue to be monitored and managed toward expiration, but no new risk is added during crisis conditions.

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Hard Stop Loss

2.0× Credit Received

Every position carries a 2.0× credit stop loss that cannot be overridden by any condition. If a spread reaches 2× the received credit in debit cost, it is closed immediately — automatically, without exception.

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Position Limits

Max 3 Concurrent Positions

Maximum 3 concurrent open spread positions. Maximum 10 contracts per trade. Buying power allocation capped at 2% per trade. These limits prevent concentration risk and ensure capital is never overcommitted.

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PDT Protection

3-Trade Day Limit Monitor

Pattern Day Trader rules are actively monitored throughout every trading session. Day trade count is tracked in real time and new entries are automatically blocked when approaching the 3-trade limit.

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Pre-Flight Liquidation

Every System Startup

On every system startup, unexpected positions not recognized by the trading system are automatically identified and liquidated before any new activity begins. The system never trades into an unknown position state.

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Correlation Awareness

DSR Asset Class Diversification

DSR rotation naturally diversifies across asset classes — Broad Market, Sector, Fixed Income, Commodities, and International ETFs. The near-term roadmap includes an explicit correlation filter to prevent simultaneous positions in highly correlated instruments.

Stop Loss Architecture

The 2.0× Rule

When FSC sells a credit spread, it collects a premium — say $0.30 per spread. The 2.0× stop loss means the position is automatically closed the moment it costs $0.60 to buy back (2× the original credit received).

This defines the maximum loss at entry. There are no moving stop losses, no "let it breathe" exceptions, and no override conditions. The rule is hardcoded and non-negotiable — because discipline in loss management is the cornerstone of long-term capital preservation.

AAS Layer 4 (Dynamic Profit & Delta Optimization) further refines this by adjusting the profit target based on VIX regime — taking profits faster in high-volatility environments to reduce exposure time.

Stop Loss Visualization — Example Trade

Credit Received

$0.30 / spread

Entry: $0.00 Stop: $0.60 Max Loss

Profit Target (Low VIX) 65% of credit → $0.20

Profit Target (High VIX) 35% of credit → $0.11

Stop Loss Trigger 2.0× credit → $0.60

Override Possible? Never

System Integrity

Pre-Flight Sequence

Every time the FSC trading system starts — whether after a planned restart or an unexpected outage — it executes a pre-flight sequence before initiating any new trading activity. This ensures the system always begins from a known, clean state.

Position Inventory

System reads all open positions from the broker and compares against its internal position register.

Unrecognized Position Detection

Any position not tracked in the internal register is flagged as unrecognized and queued for liquidation.

Automatic Liquidation

Unrecognized positions are automatically closed at market. The system never assumes a position is safe without verification.

State Verification

System verifies buying power, account balance, and position counts match expected state before enabling new entries.

Trading Enabled

Only after all verifications pass does the system enable new trade entries and begin its monitoring cycle.

Continuous Monitoring

Position Sync Cycle

The system runs a continuous monitoring cycle, syncing open positions with the broker every 5 minutes. Positions must be at least 5 minutes old before the system considers removing them from its register — preventing false removals from timing delays.

Monitoring Frequency

Every 5 minutes during market hours

Fill Confirmation

Orders confirmed filled before position registration — prevents phantom positions

Wash Trade Prevention

3-minute cooldown per symbol after any trade — prevents wash trade violations

Real-Time Alerting

Splunk Enterprise + ntfy push notifications for ITM alerts, assignment risk, and system events

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Biblical Foundations of Risk Stewardship

"Suppose one of you wants to build a tower. Won't you first sit down and estimate the cost to see if you have enough money to complete it?"

— Luke 14:28

"The prudent see danger and take refuge, but the simple keep going and pay the penalty."

— Proverbs 27:12

"Be sure you know the condition of your flocks, give careful attention to your herds."

— Proverbs 27:23

Every risk management rule in FSC's system is an expression of biblical stewardship — caring for what God has entrusted with diligence, discipline, and wisdom.

RiskStewardship

Multi-Layer Risk Management

The 2.0× Rule

Pre-Flight Sequence

Position Sync Cycle

Biblical Foundations of Risk Stewardship