The key parameter in our algorithmic strategies is the risk profile which is applied to every decision made during all trading hours. The reason being, that even a system with a low success rate (low % of winning trades vs high % of losing trades) can be highly profitable with the right risk and money management rules in place.
The risk profile is determined by:
Based on those three parameters the algorithm will determine whether to trade or not, as well as, the size of the position in combination with market volatility.
In order for the system to trade, it is not enough to have available funds. It is mandatory to have available risk. Otherwise, we would not be managing risk accordingly.
If the market moves on our favor and the stop loss can be positioned above or below the entry point (depending whether we are long or short), then risk will be released and further trades will be generated when new signals arrive and if there are remaining funds.
The risk parameters of the trading algorithm are adjusted based on the client’s capital and risk profile. Please see below a couple of possible examples.
| Capital | Number of Trades | % Risk per Trade | % Total Risk | Value Risk per Trade | Value Total Risk |
|---|---|---|---|---|---|
| 10.000 | 2 | 2 % | 4 % | 200 | 400 |
| 25.000 | 4 | 1 % | 4 % | 250 | 1.000 |
| 50.000 | 6 | 0.67 % | 4 % | 333 | 1.998 |
| 100.000 | 8 | 0.5 % | 4 % | 500 | 4.000 |
| 500.000 | 16 | 0.25 % | 4 % | 1.250 | 20.000 |
| 1.000.000 | 40 | 0.10 % | 4 % | 1.000 | 40.000 |
| Capital | Number of Trades | % Risk per Trade | % Total Risk | Value Risk per Trade | Value Total Risk |
|---|---|---|---|---|---|
| 10.000 | 4 | 2 % | 8 % | 200 | 800 |
| 25.000 | 8 | 1 % | 8 % | 250 | 2.000 |
| 50.000 | 12 | 0.67 % | 8 % | 334 | 4.002 |
| 100.000 | 16 | 0.5 % | 8 % | 500 | 8.000 |
| 500.000 | 32 | 0.25 % | 8 % | 1.250 | 40.000 |
| 1.000.000 | 80 | 0.10 % | 8 % | 1.250 | 80.000 |
More options and combinations are available and could be discussed upon request.