smith1973
15th April 2007, 01:12 PM
Hi David,
As a suggestion for further releases, I would like to raise the issue of the risk parameters such as capital or % risk per trade that is increased by the margin amount. I feel that the magnification of Risk with the trade size is confusing. I think I figured out how the program treats this looking thru the trade database. As I understand it today, if I have a 10 % margin & want to risk $200 or 2 %, I have to enter $20 or 0.2 % which is then multiplied by 10.
I have noticed a number of MS users getting confused with this function. I believe the margin should increase the position size, but all other parameters for risk control are always related directly to the capital available not the margined amount. When calculating risk I always relate it to the capital I have, not the margined capital. Hence 2 % risk on a $10,000 account is $200 etc, even though I may have $100,000 theoretically possible thru margin. Similarly for compounding, the risk is always calculated on capital / cash, no leveraged value.
If I have this wrong, please advise but I think it is simpler & better understood by relating the risk in % or $ to the capital without adjusting for margin. Your thoughts?
Cheers, Dave
As a suggestion for further releases, I would like to raise the issue of the risk parameters such as capital or % risk per trade that is increased by the margin amount. I feel that the magnification of Risk with the trade size is confusing. I think I figured out how the program treats this looking thru the trade database. As I understand it today, if I have a 10 % margin & want to risk $200 or 2 %, I have to enter $20 or 0.2 % which is then multiplied by 10.
I have noticed a number of MS users getting confused with this function. I believe the margin should increase the position size, but all other parameters for risk control are always related directly to the capital available not the margined amount. When calculating risk I always relate it to the capital I have, not the margined capital. Hence 2 % risk on a $10,000 account is $200 etc, even though I may have $100,000 theoretically possible thru margin. Similarly for compounding, the risk is always calculated on capital / cash, no leveraged value.
If I have this wrong, please advise but I think it is simpler & better understood by relating the risk in % or $ to the capital without adjusting for margin. Your thoughts?
Cheers, Dave