# Exposure Reduction

Instead of closing the entire recovery basket at once, the EA selectively reduces exposure by using profits from recent recovery trades to close positions with the highest drawdown.

This helps stabilize equity during extended recovery phases.

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#### How Exposure Reduction Works

* Exposure Reduction becomes available **only after a defined number of recovery trades** is reached.
* When enabled, the EA monitors:
  * Net basket profit
  * Recovery depth
  * Market conditions
* If conditions are met, the EA attempts to close the **oldest position**, either partially or fully, using profits from newer recovery trades.

The goal is to **lower overall exposure without forcing a full basket closure**.
{% endhint %}

{% hint style="success" %}

#### Activation Conditions

Exposure Reduction logic requires **all** of the following:

* Recovery is active
* The configured recovery trade count is reached
* Net profit meets the defined minimum (if enabled)
* Safety filters allow trade closure

If any condition is not met, exposure reduction is skipped.
{% endhint %}

{% hint style="info" %}

#### Inputs in This Group

* **Reduce exposure after X recovery trades (<2 = Disabled)**\
  Defines when exposure reduction becomes active.
* **Minimum net profit to close oldest position (0 = Disabled)**\
  Prevents exposure reduction unless net profit is positive.
* **Oldest position close style**\
  Controls whether the oldest trade is closed partially, fully, or automatically based on market conditions.

Each input refines *how and when* exposure is reduced.
{% endhint %}

{% hint style="warning" %}

#### Impact on Risk & Drawdown

* **Risk Control**
  * Gradually lowers exposure during prolonged recovery.
  * Helps prevent excessive basket growth.
* **Drawdown Behavior**
  * Can reduce peak drawdown by removing deeply negative trades earlier.
  * May delay full basket closure in exchange for smoother equity behavior.
* **Recovery Efficiency**
  * Uses profits from newer entries instead of waiting for full market reversal.
  * Particularly useful during choppy or slow-reversing markets.
    {% endhint %}

{% hint style="info" %}

#### Interaction with Other Systems

Exposure Reduction works alongside:

* Recovery system (R)
* Adaptive Profit Scaling
* Time-Based Profit Reduction
* Hard Stops and Equity Stops

It **does not override** global safety limits.
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#### Important Notes

* Exposure Reduction is **not martingale**.
* It does not guarantee reduced drawdown or faster recovery.
* Exposure Reduction may not trigger if market conditions are unfavorable.
* Partial closes depend on broker permissions and minimum lot size rules.
  {% endhint %}

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#### Recommended Practice

Exposure Reduction settings should always be tested on a **demo account first**, especially when adjusting:

* Recovery depth
* Profit scaling
* Net profit thresholds

Improper configuration may increase trade duration or reduce recovery efficiency.
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[Reduce exposure after X recovery trades (<2 = Disabled)](/smartchoise-manual/options/exposure-reduction/reduce-exposure-after-x-recovery-trades-less-than-2-disabled.md)
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[Oldest position close style](/smartchoise-manual/options/exposure-reduction/oldest-position-close-style.md)
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[Minimum net profit to close oldest position](/smartchoise-manual/options/exposure-reduction/minimum-net-profit-to-close-oldest-position.md)
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