$ Forex Warrior: money management

Тема в разделе "Forex Warrior EA_eng", создана пользователем loopsider, 12 Декабрь 2013.

  1. loopsider

    loopsider Бывалый Команда форума Модератор

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    Money management (MM) is one of the most crucial issues in trading, especially in trading with martingale EAs. So, be very careful here.

    The basic MM rules for trading with Forex Warrior are very simple: use a starting lot of 0.01 per each 10,000 currency units on your account for each currency pair. So, for trading one currency pair you need at least 10,000 currency units and for trading 3 pairs you need at least 30,000 currency units. If you have a regular $ or EUR account with minimal lot of 0.01, you need at least 10,000 (better, 30,000) $ or EUR. If your deposit is less than 10,000$, you HAVE to use a cent account (or an account with non-standard lot size). On a cent account, you see your, say, 1,000$ as 100,000 (cents), so you can trade with Forex Warrior with just 100$ (=10,000 cents) if you wish.

    Here are some simple examples.
    1. You have a deposit of 50,000$. The correct total starting lot is then 0.05. So, you can trade 3 pairs with starting lots 0.02, 0.02, 0.01 (0.02+0.02+0.01=0.05), or trade 5 pairs with starting lot 0.01, or trade one pair with starting lot 0.05 (nor recommended).
    2. You have a deposit of 5,000$. You open a cent account and see your deposit as 500,000 (cents). The correct total starting lot is 0.5. You can trade as many pairs as you wish as long as the sum of all starting lots is 0.5.

    What is the recommended trading configuration? The optimal configuration seems to be 3 currency pairs per account. The best pair to trade is GBPUSD. The second best is EURUSD. Then come AUDUSD and NZDUSD. So, a trading configuration to start with might be GBPUSD + EURUSD + (AUDUSD or NZDUSD) on one trading account. If you are a new user and/or trading on a large deposit and would like to be on the conservative side, use the low-risk settings provided with the EA.

    If you are trading on the mininal deposit (10,000), we strongly recommend you to trade one pair (GBPUSD) and use low-risk settings only.
     
    Последнее редактирование: 12 Декабрь 2013
  2. loopsider

    loopsider Бывалый Команда форума Модератор

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    Money management for non-standard lot size

    Calculation of the starting lot might be a bit more complicated for those (very few) brokers who have a non-standard lot size. Most brokers have the standard lot size: 1 lot (contract) = 100,000 base currency units. So, for USD accounts 1 lot = 100,000 USD and for USD cent accounts 1 lot = 100,000 USD cents. However, some brokers (e.g., InstaForex) have the value of the lot ten times smaller 1 lot = 10,000, and some others (XEMarkets micro account) even hundred times smaller, 1 lot = 1,000.

    How to check that my broker has a non-standard lot size? Check the price of 1 pip. Open a trade with 0.1 lot on EURUSD pair and look for the profit you get when the price moves by one 4-digit pip (= 0.0001). If your account has the standard lot size, the price of 1 pip will be 1$ (that is, one base currency unit).

    For brokers with the value of the lot ten times smaller than usual (InstaForex, 1 lot = 10,000), the basic MM rule is: starting lot of 0.01 per each 1,000 currency units on your account.
    For brokers with the value of the lot hundred times smaller than usual (XEMarkets, 1 lot = 1,000), the basic MM rule is: starting lot of 0.01 per each 100 currency units on your account.
     
    Последнее редактирование: 14 Декабрь 2013
  3. loopsider

    loopsider Бывалый Команда форума Модератор

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    Porfolio approach and risk management

    Diversification and portfolio approach is the basis of virtually any investment strategy. I hope you all well aware that there is no holy grail in trading. Trading is risking, and the only way not to risk is not to trade. The most popular way to reduce the trading risks is portfolio approach, whose essence can be formulated as "never put all your eggs in one basket". This is what we recommend to all our users. Splitting your deposit in parts and trading different currency pairs and different settings and possibly using different EAs will allow you to distribute your trading risks and make your trading much less stressfull.

    A very simplified example. Assume, I have 10 deposits and on each of them, I run a different EA/different pair/different settings, each producing 10% profit per month. In this case, if one of these EA happens to blow-up a deposit, it will be just a 1% loss in the months results.
     
    Последнее редактирование: 14 Декабрь 2013
  4. KING

    KING Новичок

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    Hi fellow warriors,
    im currently trading micro account with xm 1 lot = 1000 ( 1.0 = $0.01 , 0.01 = $.001 ) . i'm using 1.0 lots with $2,800 . I have three instances running on GBPUSD, EURUSD, AUDUSD . i'm a bit worried about the martingale part of the system . My approach has been to limit the max % drawdown to 20% of account for each currency pair ( approx $500 each) . was wondering what other people have been doing to reduce risk of martingale without compromsing performance
     
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  5. loopsider

    loopsider Бывалый Команда форума Модератор

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    Your total starting lot is 3.0, which is about OK (the recommendations give 2.8). However, settings for the maximal drawdown are not. EA needs some money to trade with. If you set the maximal drawdown limit, you effectively remove money from your deposit. 20% of your account is $560 -- it is not enought to trade one currency pair. The minimum is $1000, and in this case you should trade low-risk settings only.
     
  6. ttk

    ttk Интересующийся Аргонавт

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    Hi,
    As developer of ea, do you believe in hedging if the ea is in big DD. What the recommendation if the recommendation is no yo hedging.
    Thanks
     
  7. loopsider

    loopsider Бывалый Команда форума Модератор

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    I haven't seen a hedging scheme that would be of any use to help EA out of DD.
    In Forex Warrior, we use some hedging by working long and short at the same time, but trading long and short is independent.
     
  8. ttk

    ttk Интересующийся Аргонавт

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    FW,
    I looking for an equivalent feature in FW that will reduce the risk of multiplier. I'm currently using one Grid system where there is one parameter
    setting call Risk. If risk is =1, the ea will utilize 100 percentage of the lot size computed by the multiplier. If i set it to 50%, the computes lot size will be reduce by half when new level are creased.

    Can you also advise what is the max level for FW, it is 15? What is the SL and TP for each level if you do not mind.

    Thanks
    TTK
     
  9. loopsider

    loopsider Бывалый Команда форума Модератор

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    If you reduce the starting lot by 2, the lot size of all next levels will be reduced by 2.

    Depends on settings. SL about 200, TP about 40.
     
  10. ttk

    ttk Интересующийся Аргонавт

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    Hi,
    Soon I'm switching to Live after testing demo for 6 weeks now. I'm pretty comfortable at the way FW handle the GBPUSD trade. I also know that one pair the min. amount needed is 100,000 cents or 10k real dollar. I'm thinking should I start with 10k real dollar or 100,000 cents. For real dollar which broker is better. Alpari UK or IC Markets? Last question if I decided to go with real dollar, is 10k good enought or maybe I should put 12k?
     
  11. loopsider

    loopsider Бывалый Команда форума Модератор

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    With 10k$ deposit you will have to trade one currency pair only, which might be somewhat risky under current market conditions.
    It is better to trade 3 pairs on one account, so 300,000 cents on cent account is a good choice.
     
  12. ttk

    ttk Интересующийся Аргонавт

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    Hi,
    Which 3 pairs will you recommend. I will start trading live to mid dec. Then continue in Jan 15.
     
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  13. loopsider

    loopsider Бывалый Команда форума Модератор

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    GBPUSD, EURUSD, EURGBP
     
  14. Gabriel

    Gabriel Интересующийся

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    Hi,
    It's strange I would say the recommandation for total starting lot with 2,800$ deposit give 0,28.
    For XM, 1 lot = 1000 so the MM rule is starting lot of 0.01 per each 100 currency units right ?
     
  15. loopsider

    loopsider Бывалый Команда форума Модератор

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    The rule is 0.01 for each 10k for the standard lot size (1 lot = 100k).
    On XM (1 lot = 1k) 2.8k$ is equivalent to 280k$ on usual brokers. So, the starting lot is 0.01*280/10 = 0.28.
     
    Gabriel нравится это.

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