How I Added a Circuit Breaker to My AI Trading Bot (And Why Every Algo Needs One)

My TradeSight algo was generating 83% annual returns in backtests. Live paper trading? It burned through 8% of the portfolio in 3 days during a volatile session. The problem wasn't the strategy. It was the absence of a circuit breaker . What's a Circuit Breaker in Trading In distributed systems, a circuit breaker stops cascading failures. If a service is down, you don't keep hammering it — you open the circuit, stop requests, and try again later. Same idea applies to trading systems: if something is going wrong (drawdown, bad fills, market conditions), stop trading and wait . The Failure Mode My bot had no circuit breaker. When it hit bad trades in a choppy session, it kept entering positions, compounding losses. By the time I intervened manually, the damage was done. The backtester never caught this because: Backtests don't simulate slippage accurately Backtests don't have intraday drawdown limits Backtests don't model cascading position entries The Implementation Here's the circuit b