How to manage trading risk

A prop account has several floors underneath it at once: the daily loss floor, the entry drawdown floor, the peak drawdown floor and the floating-risk cap. Position size has to come from whichever floor is nearest, not from a stop you picked — because that floor is the one that reaches you first.

We do exactly that calculation: measure the current distance to each floor, take the smallest, and derive the size from it. We finish by writing a stopping rule simple enough to hold against "one more, I'll make it back".