Safety Systems¶

Pre-trade checks and circuit breakers to protect your portfolio.

Overview¶

Safety systems prevent:

Excessive losses
Position concentration
Runaway algorithms
Data errors causing bad trades

Pre-Trade Checks¶

Every order is validated before submission:

YAML

safety:
  pre_trade_checks:
    - position_limit
    - sector_limit
    - loss_limit
    - liquidity_check
    - price_sanity

Position Limits¶

YAML

safety:
  max_position: 0.05        # No position > 5%
  min_position: 0.001       # No position < 0.1%
  max_sector: 0.25          # No sector > 25%

If an order would violate limits, it's rejected:

Text Only

[REJECTED] Order would exceed position limit
  Ticker: AAPL
  Current Position: 4.2%
  Order Would Create: 6.1%
  Limit: 5.0%

Loss Limits¶

YAML

safety:
  max_daily_loss: 0.02      # 2% daily loss limit
  max_weekly_loss: 0.05     # 5% weekly loss limit
  max_monthly_loss: 0.10    # 10% monthly loss limit
  max_drawdown: 0.15        # 15% max drawdown

Liquidity Checks¶

YAML

safety:
  liquidity:
    min_adv: 1000000        # Min $1M average daily volume
    max_participation: 0.10  # Max 10% of daily volume
    max_order_pct_volume: 0.01  # Max 1% of daily volume per order

Price Sanity¶

YAML

safety:
  price_checks:
    max_spread_bps: 50      # Reject if spread > 50 bps
    max_price_move: 0.10    # Reject if price moved > 10% from reference
    stale_quote_seconds: 60 # Reject if quote older than 60s

Circuit Breakers¶

Automatic trading halts when thresholds are breached.

Configuration¶

YAML

safety:
  circuit_breakers:
    enabled: true

    triggers:
      - name: daily_loss
        type: loss
        threshold: 0.02     # 2% daily loss
        window: 1d
        action: halt_trading

      - name: rapid_loss
        type: loss
        threshold: 0.01     # 1% loss
        window: 1h          # In 1 hour
        action: halt_trading

      - name: drawdown
        type: drawdown
        threshold: 0.10     # 10% drawdown
        action: halt_trading

      - name: consecutive_losses
        type: streak
        losses: 5           # 5 consecutive losing trades
        action: pause_30min

      - name: volatility_spike
        type: volatility
        threshold: 3.0      # 3x normal volatility
        action: reduce_exposure

    # Recovery
    recovery:
      auto_resume: false    # Require manual intervention
      cooldown_minutes: 30

Circuit Breaker Actions¶

Action	Description
`halt_trading`	Stop all trading immediately
`pause_30min`	Pause for 30 minutes
`reduce_exposure`	Reduce positions by 50%
`flatten`	Close all positions
`alert_only`	Send alert, continue trading

Manual Override¶

Bash

# Check circuit breaker status
sigc safety status

# Reset circuit breaker (after investigation)
sigc safety reset --breaker daily_loss

# Force halt
sigc safety halt

# Resume trading
sigc safety resume

Order Validation¶

Size Validation¶

YAML

safety:
  orders:
    max_order_value: 100000     # Max $100K per order
    max_order_pct: 0.03         # Max 3% of portfolio
    min_order_value: 100        # Min $100 per order

Price Validation¶

YAML

safety:
  orders:
    max_slippage_bps: 50        # Reject if execution > 50 bps from limit
    require_limit_price: true    # No market orders
    limit_price_offset_max: 0.01 # Limit within 1% of market

Duplicate Detection¶

YAML

safety:
  orders:
    duplicate_window_seconds: 5  # Block duplicate orders within 5s
    max_orders_per_minute: 20    # Rate limit

Data Validation¶

Freshness Checks¶

YAML

safety:
  data:
    max_stale_hours: 2          # Data must be < 2 hours old
    require_complete: true       # All expected symbols present
    min_data_points: 252         # At least 1 year of history

Anomaly Detection¶

YAML

safety:
  data:
    anomaly_detection:
      enabled: true
      max_return_1d: 0.50       # Flag returns > 50%
      max_volume_ratio: 10      # Flag volume > 10x average
      check_gaps: true          # Flag missing data

Action on Data Issues¶

YAML

safety:
  on_data_error: use_cache      # use_cache | hold | halt
  on_stale_data: alert          # alert | use_cache | halt
  on_missing_symbol: exclude    # exclude | halt

Signal Validation¶

Sanity Checks¶

YAML

safety:
  signals:
    max_turnover: 1.0           # Reject if turnover > 100%
    max_position_change: 0.10   # No single position change > 10%
    require_neutral: true       # Must be dollar neutral

Anomaly Detection¶

YAML

safety:
  signals:
    anomaly_detection:
      enabled: true
      historical_comparison: true
      max_deviation_sigma: 3    # Flag if signal > 3σ from history

Kill Switch¶

Emergency stop for all trading:

Manual Kill Switch¶

Bash

sigc kill

This immediately:

Cancels all open orders
Halts new order submission
Sends alert to all channels
Requires manual restart

Automatic Kill Switch¶

YAML

safety:
  kill_switch:
    # External kill file
    file: /var/run/sigc/kill

    # Network-based kill
    endpoint: https://kill-switch.example.com/sigc
    check_interval_seconds: 10

Create kill file to stop:

Bash

touch /var/run/sigc/kill

Remove to resume:

Bash

rm /var/run/sigc/kill
sigc safety resume

Position Reconciliation¶

Automatic Reconciliation¶

YAML

safety:
  reconciliation:
    enabled: true
    frequency: "*/5 * * * *"    # Every 5 minutes
    tolerance_pct: 0.01         # 1% tolerance
    on_mismatch: alert          # alert | halt | sync

Manual Check¶

Bash

sigc reconcile

Output:

Text Only

Position Reconciliation
=======================
Status: MATCH

Internal Positions:
  AAPL: 1000 shares ($185,640)
  MSFT: 500 shares ($187,255)
  ...

Broker Positions:
  AAPL: 1000 shares ($185,640)
  MSFT: 500 shares ($187,255)
  ...

Discrepancies: None

Risk Monitoring¶

Real-time Risk¶

YAML

safety:
  risk:
    monitor_interval_seconds: 60
    metrics:
      - daily_var_95
      - portfolio_beta
      - sector_exposure
      - concentration

Risk Alerts¶

YAML

safety:
  risk:
    alerts:
      - metric: daily_var_95
        threshold: 0.03
        action: alert

      - metric: portfolio_beta
        min: 0.5
        max: 1.5
        action: alert

      - metric: max_sector_exposure
        threshold: 0.30
        action: reduce

Safety Dashboard¶

Bash

sigc safety dashboard

Text Only

Safety Systems Dashboard
========================

Circuit Breakers:
  daily_loss:      OK (current: -0.5%, limit: 2%)
  drawdown:        OK (current: 3.2%, limit: 10%)
  consecutive:     OK (losses: 1, limit: 5)

Position Limits:
  max_position:    OK (largest: 4.2%, limit: 5%)
  max_sector:      OK (largest: 22%, limit: 25%)

Data Status:
  freshness:       OK (age: 15 min)
  completeness:    OK (100% symbols)

Reconciliation:
  status:          MATCH
  last_check:      2 min ago

Open Orders: 3
Pending Risk: 1.2% of NAV

Best Practices¶

1. Start Conservative¶

YAML

safety:
  max_position: 0.02        # Very conservative
  max_daily_loss: 0.01      # Tight loss limit

Loosen gradually with experience.

2. Test Circuit Breakers¶

Bash

sigc safety test --breaker daily_loss

3. Require Manual Recovery¶

YAML

safety:
  circuit_breakers:
    recovery:
      auto_resume: false    # Always investigate

4. Multiple Alert Channels¶

YAML

alerting:
  channels:
    - slack       # Primary
    - pagerduty   # Escalation
    - email       # Backup

5. Regular Reconciliation¶

YAML

safety:
  reconciliation:
    frequency: "*/5 * * * *"  # Every 5 minutes

6. Document Override Procedures¶

Create runbook for:

When to override safety
Who can authorize
Required documentation

Next Steps¶

Alerting - Notification configuration
Monitoring - Metrics and dashboards
Configuration - Full config reference