Risk management with only starting lot

c00l

7 months ago
updated 7 months ago
Completed

Hello friends, I would like to propose a new idea for risk management in CP. As we all know, the initial amount has a strong influence on the subsequent behaviour of the opening of subsequent lots in martingale.

We already have two options to manage the maximum lot opening (max lot and max lot/1000) but I have noticed that working only on the opening lots (and leaving unchanged the maximums that can be reached later with the martingale) would result in a more effective risk management:

Let me explain better: if I now select as opening lot 0.01/1000 I will open with 1000USD 0.01 lots, with 10000USD 0.1 lots.

What I would like is for example to start with 1000USD with 0.03/1000 lots (and would open 0.3 with 10000USD) and move on from 5000USD with 0.01/1000 opening lot.

You can do something like this by now setting 0.03 lots "fixed" but it is not the same. Because it is true that you go to reduce the risk but, above a certain amount, they would be too few to increase exponentially.

I therefore intend a non-"fixed" starting option but one that can be scaled up (even once) once X amount of USD has been reached. So start with 0.03 lots (accepting a higher risk in the initial stages to gain as much as possible in less time) and then "lower the risk" by setting 0.02 or 0.01 lots (NOT fixed).

I have tested this setup on several sets in my possession and, where before they would have burnt the account with 0.03/1000, reached a certain amount and set a lower value, the account continued with large gains and very low risk and drawdown.

I hope this is feasible and that I have explained myself well

Replies 15

Oldest first
Newest first Oldest first

Andrey Khatimlianskyi

7 months ago
Under review

Do you need it for backtesting only?

Why not to withdraw some profit from time to time?

7 months ago

Yeah, mainly for backtesting, my idea can be executed manually once a certain amount is reached.
I have tried that the withdrawal every X amount of time, but it is not quite the same thing because it would take maybe a 'withdraw when a certain amount is reached', i.e. not based on time but on the amount of money.
That is, withdraw X if you have reached the amount of 5000USD for example. Regardless of the time taken.

Also, withdrawing every X amount of time is not the same as the initial batch would remain set at e.g. 0.03/1000 and that is not what I would like.
If I start with 0.03/1000 and go from 1000USD to 5000USD and withdraw 4000USD, I will be left with 1000USD at 0.03/1000.
Instead I would like the initial lot to be set at 0.01/1000 (but it will start at 5000USD not 1000USD).

I get your idea.

But I still can't see how it will help you.

You can use fixed risk for backtest. You only need it (backtest) to see how the EA will work.

In real trading, you can start with the highest risk and then lower it every [week / month / X% profit / etc].

Usually you want to withdraw your profits as soon as you have them ;)

So for me it doesn't make sense to add this parameter.

It is not a question of withdrawing profits (which would be partially withdrawn anyway). The idea is to have EA continue automatically with less risk.

If for example I start with 0.03/1000 on 1 January 2020 and in June 2020 I am at 5000USD, the idea is that I withdraw 2000USD (invested capital+1000USD profit) and am left with 3000USD at 0.01/1000 lots. And the EA proceeds automatically with this parameter.

In addition to setting itself automatically in real trading, of course it is also convenient for backtesting.

Obviously the EA is yours and if you don't think the idea is useful we would miss it :-)

EA is not mine, it belongs to community :)

So, if the community likes your idea, it will be implemented.

I'm just trying to keep it clean and simple.

And for me it doesn't make much sense to add this risk management for 1st entry, it will not help to build a better strategy.

I understand your point of view and indeed it is certainly not an indispensable function. Personally I found it useful for my own way of setting up strategies and testing but certainly if the community doesn't find it useful for them too, patience! CP is still the best EA on the market

7 months ago
Planned (collecting votes)

So, let's call it "Decrease the first entry risk every X USD of profit" and vote for it.

th0mas51

To me this setting should be called "* Max initial lot (0 - disable limit)" or "* Max first order lot (0 - disable limit)" or "* Max 1st lot (0 - disable limit)", under "Lot properties".

Quote from th0mas51

Does it makes any sense for you?

It will limit the lot at some point, and then it will work with fixed start lot.

This might be useful for a live account to avoid mistakes with settings, but not for backtesting (in my opinion).

Anyone using a martingale need this option.

Since the broker is enforcing a Max Lot size (usually 100), this means that if I use a dynamic Lot Size calculation based on the balance, it could lead to a point where the if the balance grows enough, we would need to limit the size of the initial lot to allow keeping enough room for increasing the martingale lots.

If we don't cap the initial lot, then the martingale increased lots will hit the broker Max lot limit at some point.