This is a trading item or a component that was created using QuantShare by one of our members.
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Implements traditional fixed fraction position sizing (fixed percentage risk per trade). In this case, risk = (entry price - stop) * nbshares. If you have an account of $100,000, @ 1.5% risk, the first trade risk will be $1500. $1500 is not the same as margin used which depends on how tight a stop you choose. It is very easy to run out of margin in your account before you get to the amount of total risk you want on the account. In this case, the rejected trades will be logged in the statistics tab.
THis position sizing method allows three different account equity models: 1) core equity, 2) total equity, 3) reduced total equity. Core equity reduces available equity by the amount of open risk. If you risk 1% of your account per trade and have 4 positions open, the next trade that is opened (before others are closed) is 1% of 96%.
Total equity does not reduce amount risked byamount of open risk. If you risk 1% of your account per trade and have 4 positions open, the next trade that is opened (before others are closed) is 1% of 100%.
Reduced total equity is the same as core equity but adds back amount of locked in profits r reduced risk. So if you have 4 positions opened @1% risk, but 3 stops are rolled-up to break even, the next trade risk will be 1% of 99%.
VERY IMPORTANT: you should set the allowed # of positions to 10x what you intend in the strategy tab but set the # of allowed positions to your intended # in teh MM script input. I.e. if you want 4 allowed simultaneous positions, set the number to 40 in the trading strategy tab and select a value of 4 in the MM script input.
Trading financial instruments, including foreign exchange on margin, carries a high level of risk and is not suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in financial instruments or foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with trading and seek advice from an independent financial advisor if you have any doubts.
