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Currency Suggestion

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  • Currency Suggestion

    Hey guys - we have a new feature that we are building at the minute after the discussion regarding different master/slave currencies.

    Please have a look over this screenshot


  • #2
    Full of win Will

    Does it update dynamically based on what you input in the risk box?

    i.e. If I put 0.5 risk will it show me what the new calc for 0.5x risk of the master will be, after currency conversion?


    • #3
      It will do soon yea

      At present its completely static, but I'm working on it to make it fully dynamic.


      • #4
        The following video shows how this is going to work:



        • #5
          Looks good Will.

          However, in your example, I think you may have things the wrong way round.

          We agree that the GBP is in the ratio 1:1.78 against the Aussie. Therefore, if the slave is in GBP and the Master is in AUD, the multiplier should be 1.78 to maintain risk parity (ie 1.78 divided by 1).

          If, on the other hand, the master is in GBP and the slave is in AUD, then the multiplier for risk parity should be the reciprocal of that: thus 1 divided by 1.78, which is roughly 0.56.

          Put in another way, one unit of GBP is worth 1.78 units of AUD, therefore you need to multiply by 1.78 if you are using a GBP account to follow an AUD master at parity.

          Conversely, one unit of AUD is worth 0.56 units of GBP, so to follow at 1:1, an AUD slave would need to multiply by 0.56 to follow a GBP master.



          • #6
            You aren't wrong! My bad


            • #7
              Will, sent you PM about an issue with ST risk calculator lot sizes using acc balance


              • #8
                Hello Traders and Subbers,

                I have had a large number of private messages and emails over the last few weeks regarding risk in general and the risk multiplier on Simple Trader in particular. Rather than replying to all of these individually, which I have been doing and which is time-consuming, I thought I’d post a typical question on here and reply to it publicly so that we have a reference point for future enquiries, to which new subs can be directed.

                This post as I mention, is really for new subscribers for whom the Risk Settings are obviously causing some confusion. I understand that for Control Panel veterans the following advice is self-evident. Furthermore, I know that Will is building an advisory into the Control Panel which should ultimately make all the calculations much more simple, particularly if a subscriber simply wants exact risk parity with the Master Account.

                Anyhow, with apologies to the initiated if this seems patronising, the following is an example of the kind of query I have been receiving and is reproduced with permission.

                I have decided to open an AXI account in accordance with the recent VIP offer to get a feel for how things work. I have opened the account in GBP, leverage is 1:400
                I hope the spread bet account does turn out to be viable and will transfer to it, if not I will have to look at FXCM.

                I was thinking of of the following signals but would appreciate some assistance with the risk multiplier
                Smart Trader at 1 x risk
                Smart Scalper at 1 x risk
                Trade Alerter at 2 x risk
                Possibly Fox at 1 x risk
                If I use all 4 signals, do I divide 10,000 us, by 4 to get 2500 per signal
                So would I set the risk multiplier at 0.25 for three signals and 0.5 for trade Alerter giving me risk of 1.25

                If I did not go with Day Fox as he is a little new, would I calculate at 0.33 for Smart Trader & Scalper & 0.66 for Trade Alerter giving me risk of 1.33.
                Please can you advise if my calculations are correct and if you feel the risk settings are prudent.
                Also on the set up in Simple Trader from watching the Video there is a max lot setting in case the signal provider makes an error, do you use this, and if so, on this size of account what should it be set at.
                Also are there any other settings within Simple Trader that I should consider.


                Obviously this is a two-pronged type of enquiry. There is a question about the objective mechanics of the Simple Trader risk multiplier and there is a much more subjective question about how much risk a subscriber should take on in his or her account.

                Let’s deal with the objective question first regarding the calculation and application of the risk multiplier.

                The risk applied to each Team Trader needs to be calculated individually according to the account currency used by the Master and the account currency used by the Subscriber (or Slave) account.

                Once new subscribers have grasped this fact, the Simple Trader formula is the easy. It is as follows:

                Master Account Currency divided by Slave Account Currency multiplied by Desired Risk

                So if we apply this formula to the settings desired by the subber who wants Trade Alerter at 2x risk on a GBP account we do the following.

                Establish that Trade Alerter is using AUD as his account currency.

                Establish that 1 unit of GBP is worth 1.78 units of AUD.

                Establish that the slave currency comes first in the pair (more on this later – see Day Fox settings below).

                Apply the formula: Master Account divided by Slave Account multiplied by Desired Risk.

                So: 1.78 divided by 1, multiplied by desired risk, which is 2, to give us a Risk Multiple of 3.56.

                The subscriber now puts 3.56 into the Simple Trader risk multiplier and whatever Trade Alerter does, the proportionate risk taken on by the subscriber account is twice as much. Obviously the subscriber will need periodically to check exchange rates, since as they change, the risk multiplier will be affected, although in my experience this doesn’t make a massive difference in the short term.

                Now considering Smart Trader and Smart Scalper we follow exactly the same process.

                This time we establish that the currency of the Master Account is in USD.

                The slave currency is, as before, GBP and in the pair quotation we can see that the GBP comes first.

                Apply the formula: Master Account divided by Slave Account multiplied by desired risk.

                Which for Smart Trader generates 1.66 divided by 1, multiplied by 1.

                And for Smart Scalper generates exactly the same multiplier because the two currencies and the desired risk are the same.

                Therefore, the subscriber would input 1.66 into the Control Panel for the Risk Multiplier to get parity.

                Now in terms of Day Fox, the calculation is very slightly more difficult because in the MT4 quotations we can see EUR/GBP, and Day Fox, who runs the Master, has an account in EUR. What this means is that the Master comes first in the quotation, and we therefore need to find its inverse.

                All this really amounts to is trying to discover what the Slave Currency is worth in terms of the Master. Since the EUR comes first in the quotation, we know that 1 unit of Euro is worth 0.8 units of GBP. But we actually want to know what 1 unit of GBP is worth in terms of Euro, and the way to do that is to find the inverse, in other words put 1 as the numerator and 0.8 as the denominator.

                So for Day Fox, we get 1 divided by 0.8 multiplied by 1 to give us a value of 1.25 that we put into the Risk Multiplier on the Control Panel if we want risk at exact parity with the Master.

                Now for the second part of the new subscriber’s question which involves the much more subjective issue of whether the risk settings are prudent, and this is obviously a much more difficult issue to deal with.

                I can’t really comment very much on that except to give the generalised advice that people should not risk money they are not prepared to lose and they should not tamper with the settings in the Control Panel unless they want to turn risk up or delete a signal entirely.

                Nick’s traders generally make good money over time and yet many people come on the Forums or go on Chat with stories of losing money. This is probably more than anything else a consequence of starting out with risk too high. What happens in this scenario is that a Team Trader loses a trade, and perhaps has a heavy drawdown, when the subscriber is fully invested. The subscriber then gets cold feet, turns down the risk, and loses out on the recovery. The subscriber feels reassured, turns up the risk again, and suffers another loss, at which point he or she then turns the risk back down. This is a sure fire way to lose money and is a consequence of going in too heavily in the first place.

                The message is to start off with risk as low as you can, wait for a worst case scenario, and then reassess how you have dealt with your loss emotionally. If you are happy with it, multiply that loss in your head and imagine how high a potential loss you would feel comfortable with. Then gradually increase the risk multiplier until it is in your comfort zone. Once you are in your comfort zone, stay there and do not increase your risk to a level at which a further loss would make you question your decision to subscribe.

                The take away points:

                Decreasing your risk during your subscription is a mug’s move and it will lose you money over time.
                Start off subscribing with low risk so that you can increase it once you are comfortable.
                If you come to the rational conclusion that a trader’s style is not for you delete the signal.

                Given the points made above, I would start off with Trade Alerter at 0.5 risk; Smart Trader at 0.2 risk; Smart Scalper at 0.1 risk and Day Fox at 0.2 risk. These settings would give plenty of scope for a gradual increase of risk over time as the subscriber gradually becomes attuned to his or her levels of comfort.

                Obviously there is then the question of how to deal with the problem of all the traders going into drawdown at the same time, particularly if your total risk setting on a single account with multiple traders goes above one. The obvious answer to this, I guess, is to open multiple accounts and keep total risk on each of them to one, although others will have different opinions on this.

                As I say, the matter of acceptable risk is very different for each person and there will be as many views on this as there are subscribers to a signal. This post has gone on a bit longer than intended, so I’ll stop going rambling, but I hope it has made some sense and can be a useful starting point for those new to this site.



                • #9
                  Thanks Roger

                  In my view this post should be given quite high prominence in the site given its importance and helpfulness.



                  • #10

                    I still don't think this feature is quite right, looking at the suggestion I've just had from the copier regarding DayFox risk.

                    User inputs Account Currency (say GBP).

                    Alert from Copier that Account Currency differs from Signal Currency.

                    Exchange Rate provided (in this case Euro to GBP = 1:0.796 and GBP to Euro of 1:1.256).

                    So far so good. But then the suggestion from the copier is that the risk multiplier should be 1.57 in order to follow at parity.

                    Surely it should be 1.26?


                    • #11
                      No it didn't. It gives a suggestion nothing more


                      • #12
                        Great idea and keep up the good work!


                        • #13

                          My currency risk doesnt seem to work in control panel and am now pretty confused.

                          If someone could tell me what value i need to put in risk to have it at default 1 vs the master for the following scenarios would really help me

                          Master (signal provider) EUR Slave (me) is GBP
                          Master EUR Slave USD

                          Master USD Slave GBP
                          Master USD Slave EUR

                          Thanks for the help