Indicator for Risk Management

I designed an indicator for the visual display of the risk management options that all of my Entry Apps have built-in.

 

This may be useful for traders to quickly grasp the position size for a new trade to be entered on the chart instrument of MarketScope.

 

It allows to select four different modes on how to calculate the position as a percentage of the

1. Account Balance
2. Account Equity
3. Account Margin
4. Discounted Account Balance

 

The Discounted Balance uses the Account Balance minus the maximum possible loss of all open positions of the account, whose StopLoss is set to a possible loss. Positions, whose stop level is at break-even or beyond at a profit level, are not accounted for.

 

The indicator also plots the envisaged Stop Level onto the chart, which I find quite useful.

 

There is one constraint for the use of this indicator:

 

If you are looking to open a long position, the indicator needs to be applied to an ASK price series of the chart instrument.

If you are looking to open a short position, the indicator needs to be applied to an BID price series of the chart instrument.

 

Happy Trading!

 

 

 

 

I posted the indicator for download at:

http://forexforums.dailyfx.com/indicator-sdk-support/613943-risk-position-manager-indicator.html

http://www.fxcodebase.com/code/viewtopic.php?f=39&t=40698

New Risk Management Option is now available - Try it out!

The former Entry Apps have had risk management options to calculate the position size as a percentage of the available account equity, balance, or margin, thus giving the user three options.

A new risk management option has been added as a fourth option, which is to use a percentage of what I call a "Discounted Balance".
The discounted balance is simply the account balance minus the maximum possible loss of all open positions of any instrument of the account, depending on their current StopLoss price level.

It is worth-wile noting that an open position, whose StopLoss level has already reached break-even or any further profit level, does not contribute to the reduction of the position size. Only open positions, whose StopLoss level will yield a possible loss, contribute to the reduction of the size of the Position to be opened.

Hence, this is a more conservative risk management for traders who work with a larger number of open positions at the same time and provides for the most realistic risk scenario, since all possible losses are acccounted for when calculating the available money to trade with.
Examples can be downloaded from http://forexforums.dailyfx.com/signal-strategy-fxcm-marketscope/606777-multiple-take-profit-position-management-fully-automated.html#post1637430 or from http://www.fxcodebase.com/code/viewtopic.php?f=39&t=34297&sid=ca17c8bf9653224bfb76b7588ae4ac39.

Happy Trading!

Request a Demo License

In case you want to try out an App with a specific configuration of your choice, send a request for a demo license key to smarttradingapps@gmail.com.

New Risk Management Option

There is a further risk management option being developed as to calculate the position size.

The current options are based on calculation of a user-defined percentage of available equity, balance, or margin, which in turn yields the number of lots of the size of the position to be entered.

The new option will be named "Balance Discounted" and will calculate the available balance minus the worst-case risk of all open positions of any instrument of the user account, which is derived from the StopLoss distance of these open positions.

This may slow down the entry a bit since the App will need to request data from the trading server for any of these instruments, which the App itself does not intend to open a position. But, this remains to be tested to see if there is any serious impact on entry latency or not.

Advanced Risk Management

I am collecting valuable inputs from users as to add more features to the Risk Management.

One is to account for the maximum possible losses of open positions of an account, as to determine the available equity, balance, and margin.

Another one is to define an optional global risk, such that only a limited number of open positions can be made at a time, which respects the global maximum risk.

If you have more suggestions, you are welcome to drop me a note with your ideas.

Happy Trading!