How to optimally choose the parameters of money management?

Trade in the financial market requires maximum control and a systematic approach. Without observing certain rules (fix api trader should be guided by his own trading system), the result will be negative and lead to a loss of investment capital. Namely because of the absence of a system, many traders take an inefficient approach of trading.

However, the presence of a system alone does not give a result. The trading algorithm must be honed and improved in order to achieve a stable result. But this is only 20% of the success. The remaining 40% depends directly on the trader, his emotional stability from working with money, as well as psychological factors such as greed, fear, desire to win back and so on. The last 40% depend on the trading risk control. Even if the system is unprofitable and the trader lends himself to the psychological factor, but there will be a stable capital management, the loss of investment funds will not be sudden. Moreover, sometimes introducing a competent structure of risk distributions helps to improve the performance of the system and enter a positive profitability zone.

That is why every trader must develop and implement rules for managing capital in his trading on the fix api forex market. Of course, it all depends on the trading strategy and parameters that determine the entry and exit from the position.

If you nevertheless decided to control the risks in your fix api trading, then you should implement these optimal parameters:

  1. Determine the risk for the entire deposit. The trader should be aware of the maximum risks even before the commerce. Thus, in the system’s rules he should write down the key maximum value, upon which you should stop trading.
  2. Determine the maximum risk in the context of each trading operation. Similarly, like the parameter above, the trader should understand what will be the maximum percentage of loss in one trade operation. It is optimal to choose a parameter that would help keep all positions to maximum risk. For example, if your TS has a maximum loss risk of 20%, the risk to deal should not be more than 0.25%. Thus, you can wait 80 unprofitable transactions in a row.
  3. It is necessary to determine the volume of the trading operation based on the risk, or a fixed lot in the fix api MT4. If you set the maximum risk parameter in the transaction, then it is more logical to choose the option of automatic lot determination for opening positions. Fixed lot will solve the problem of large volumes, but not the risks, because the system should determine the exit from a position under certain conditions. If you make a fixed lot, the loss in the transaction will always be different. But it will also restrain the yield in case of a correct forecast. Therefore, I recommend determining the volume based on the risk, as well as the distance to the stop loss level

( ). The formula is quite simple: the distance in points to SL is initially determined, after which the cost of the item is calculated and this value is calculated from the capital. The result will be the required volume.

To sum it up, I want to note the fact that each trader must develop his own rules for capital management. If you have not realized this yet, you will come to this soon. Running the parameters of money management allows each trader to create an algorithmic approach in the future, because the robot is a program that needs to set the circumstances and parameters when it is worth to close the position ( ). And the robot should initially know and calculate the risks. Therefore, creation of quality parameters for money management will allow to improve the trading result in the moment and automatize the fix api trading in the future.

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