Risk Management 1.2
Metatrader Indicator (MT4)
This indicator monitors the vital constants of your trading account to keep it healthy and away from excessive risks. It monitors all trades, absolute exposure, account floating point and leverage currently in use, using different color codes for your interpretation.
- Amazingly easy to understand
- The indicator is clean and simple
- It calculates exposure by pairs and currencies
- Keep your used leverage controlled at all times
- Find out your currency exposure at a glance
- Orange labels indicate caution
- Red labels indicate danger
Using too much leverage is the reason why most retail traders fail. Respect the following rules to keep your trading account healthy.
- Keep your used leverage between 1:1 and 1:5
- Never allocate more than 1:10 leverage on your account
- Avoid trading more than 5-6 forex pairs at the same time
- Avoid excessive exposure to a single currency
Most brokers offer up to 1:400 leverage, but this should not be confused with the leverage you actually decide to allocate. Leverage is the ratio between your equity and the total market exposure of your trades, and more leverage means more odds of decimating your trading account. Think of leverage as hamburgers: if you go into a fast food restaurant, you can probably order and eat 4000 burgers, but you'll probably die of indigestion.
- The indicator is evaluated tick by tick
- Load the indicator just once in an empty chart
- The indicator calculates net exposure for each symbol
- ≡ Input parameters
When loading the indicator or EA to any chart, you will be presented with a set of options as input parameters. Don't despair if you think they are too many, because parameters are grouped into self-explanatory blocks.
- Caution Drawdown Level
- Drawdown level for the indicator to indicate caution (default is 10%)
- Danger Drawdown Level
- Drawdown level for the indicator to indicate danger (default is 20%)
- Caution Leverage Level
- Leverage level for the indicator to indicate caution (default is 1:5)
- Caution Leverage Level
- Leverage level for the indicator to indicate danger (default is 1:10)
- Color Settings
- Set colors for labels and alert levels.
- ? FAQ
- My trading account has 1:100 leverage, how can I keep it at 1:10?
- Most brokers offer up to 1:400 leverage, but this should not be confused with the leverage you actually decide to allocate. Leverage is the ratio between your equity and the total market exposure of your trades. The more leverage you use, the smaller the market movement needed to decimate all your investing capital.
- How should I use the currency exposure table?
- It should be used to avoid over-exposure to any given currency. For example, if you already have too much long exposure to the EURO, it is wise to look for charts where to short the EURO, or at least stop trading it and focus on other currencies. If you don't and the EURO suddenly moves against your deals, you could be facing an unexpected big drawdown.
- When are the caution and alert labels displayed?
- The caution label is displayed when your drawdown reaches 10% or your used leverage goes above 1:5. The danger label is displayed when your drawdown reaches 20% or your leverage used reaches 1:10. If you see a red or orange label on the indicator, do not open new trades and try to close existing ones.