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Author Topic: Setting The Level of Risk  (Read 722 times)

Castellers de Vilafranca

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Setting The Level of Risk
« on: October 11, 2019, 11:16:47 PM »
Hi there,

I am hoping that someone can help me set up risk properly before I attach any EA.

To keep it simple I will always use an assumption of $10,000 in an account.

Firstly is there an exact place or thread that I can find the recommended risk/lot sized used per amount on each EA.

Here is an example I would like help with is anyone can that would be awesome.
Below is copied from stealth thread from Joel

Recommended Risk:

For low risk, the recommendation is 0.01 each 500 USD, for max. expected DD about 15%. The max. recommended risk is 0.01 / 300 USD. In the signal account, I will use for the moment low risk with 0.01 / 450 .     I expect an average yearly profit about x4 / x5 times the DD, keeping always the account in a healthy position.

So here it is suggested that for a $10,000 account the recommendation for low risk would be 0.20 lots ($10,0000/$500=20 thus 0.01 lots x 20 = 0.20 lots)
This would give me an potentially expected 15% account drawdown risk.

So here are my 2 questions

1) If my account is AUD 10,000 or EUR 10,0000 then how should I calculate my lot sizes to keep the risk identical to the recommendation? How large should my lot size be on AUD 10,000?

2) What is the current recommended lot sizing risk on each EA and what is the expected drawdown risk on that setting?

Hope someone can help.



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Re: Setting The Level of Risk
« Reply #1 on: October 12, 2019, 11:00:21 AM »
1. If your account is in AUD then your risk will be 1 / 0.68 (the current AUDUSD exchange rate) = 1.47 times the risk of a USD account if you use the same lot size. So to achieve the same risk you should reduce the lot size by multiplying the lot size by 0.68 to keep the risk the same on your AUD account. If your account is in EUR then you would actually multiple the lot size by 1.103 (the current EURUSD exchange rate) to keep the risk the same as the USD account.

2. The recommended risk for each EA is as follows, in USD (you can find them in the description of the EAs on their MQL5 pages or on the forum here):

SFE Price Action - 0.01 Lot per $1000
SFE Attractor - 0.01 Lot per $1000
SFE EURUSD - 0.01 Lot per $600
SFE Night Scalper - 0.01 Lot per $500
SFE Stealth - 0.01 lot per $500 (low risk) up to 0.01 lot per $300 (max recommended risk)

At recommended risk I believe the max expected drawdown should be somewhere between 15-20%.

I hope it helps. :)
« Last Edit: October 12, 2019, 11:03:42 AM by Jimmy »


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Re: Setting The Level of Risk
« Reply #2 on: October 12, 2019, 11:29:20 AM »
Welcome Casteller!

The information of Jimmy is right.

I will elaborate some charts of recommended risk, also taking into account combination of EAs.

For the moment, for launch Stealth, and using a low risk ratio, the ratio is 0.01 / 500 USD$, or about 0.01/  735 AUD$  if you account is in AUD$. 

And if you use a portfolio with different systems, obviously you will not assign the 100 % of the balance to all the systems, because the can overlapp some DD and be above the theoric max. DD. Then decide what % of the balance to assign to each EA is the next step.
For the moment, I think that in a portfolio for example with Attractor, Stealth and NS, the % of balance should be for example (70%, 50%, 30%). In total, they use 150% of the balance, but not 100+100+100 300%. After review Attractor I will test all together, and I will have a better picture of how works all them at the same time.

There is also a parameter  in the EAs for put the % of balance assigned to the EA.

Last point, 'low risk' in forex means see variations of +-5% or even 10% in one day. I will add a 'very low risk' setting in the charts, and also some comment about the needed leverage.

Castellers de Vilafranca

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Re: Setting The Level of Risk
« Reply #3 on: October 12, 2019, 11:40:09 PM »
Yes this helps very much. Much appreciated.

And yes the charts would be great to see too. Cool!

For me I am interested in very low risk so I will probably even reduce a bit more :) But it is always good to have some expectation to set risk nd even I may change the risk with certain times of year or drawdown status like Jimmy does too. I will set up a little portfolio risk tool for myself.

Thank you Attractor and Jimmy.