The first step is not capital management. You should first build a trading system. Next you should analyze the strong and the weak points of this system. And based on this analysis you should organize capital management. If you want to avoid big capital losses you should first know where the risks are. Risks are different for different tradingsystems. Working with a capital management system without knowing what you should watch at is difficult. There is no universal capital management system that is optimal for all kind of traders or tradingsystems.
Like iamnobody indicates you cant just look at this in isolation. In the current bull market, as long as earnigns are holding up and I dont think a recession is near, then a few times a year I have put 5% of total equity into a x20 long positions if indexes have fallen 10% and a bottom seems to have formed. Then pyramid into it if it moves your way. Exit if you fall back to breakeven or the market upwards momentum fades which is often near the pre-correction level. If forced to exit near breakeven then wait for another bottom and try again. Doesnt always work but big returns when it does. Works a treat as long as your in a bull market...
The art here (as Bob pointed out) is determining where the stop limit should be in the first place. After that it's trivial to determine the amount of notional you can