Money Management

[edu]

Hello Petko,

i found EA very interesting and i have created in the last days many EAs. I was wondering how do you manage your risk, for example:

I have 10K euros, how many Eas should you use contemporary? I have different Money managment strategy (for other strategies) but i don’t know which to use for Eas.

Also i was thinking, after how many consecutive losses do you remove the EA from the live account? 3?4?5?

thank you
Edu

[Petko Aleksandrov]

Hello Edu,

Money management is the key into trading. Many traders lose money because they have wrong money management.

My systems in trading teach that we should trade many Expert Advisors instead of one, and this is for two reasons:

1. We achieve better diversification of the risk

2. We achieve more stable profits, because we catch different market conditions

Now, have in mind that when trading many Expert Advisors nearly half will be buying, and half will be selling. This means that you will not really have an issue with the margin in the account.

Here is how I keep trading the total lot amount:

1. If you trade $500 to $1000 – go for 0.01 lot size on each Expert Advisor.(maximum 10 EAs)

2. If you trade with 1k to 2k – go for 0.1 lot size(maximum 10 EAs)

3. If you trade with 5k to 6k – go for 0.5 to lot size.(maximum 10 EAs)

4. Above 10k – you can trade with 1.0 lot size per EA(maximum 10 EAs)

But this is how I am doing my money management.

Try it out with a Demo and figure out what lot size fits you the best in order to feel safe while trading.

Also, keep in in mind that instead of 10 EAs with 0.1, you can trade 100 EAs with 0.01. Just what I showed in the last course – Trading Portfolio Expert Advisors.

Let me know if there is anything else about the money management.

[Petko Aleksandrov]

And I would remove the EA due to consecutive losses if they reach the maximum consecutive losses this strategy had in the backtest. So if in EA Studio I see that a strategy has 10 consecutive losses for the whole period tested, and on Demo it goes to 11-12 consecutive losses, this means that probably the strategy was over optimized. Same with the drawdown, and the other parameters

[edu]

Thank you very much, i appreciate it.

I will test

probabily tomorrow i will buy also the course about the three opening markets strategy (i forgot the name).

[Petko Aleksandrov]

Hello Edu,
You are welcome, let me know if there is something more. Actually there are two courses for the Markets opening, one is for manual trading, the other one is fully algorithmic. Both systems are very different. But in all trading strategies, the money management is key point.

[edu]

Thank you, i already have the manual and i was thinking about the algo one.

Another question, if in the backtest it says

MAXIMUM CONSECUTIVE LOSS 4

and this strategy (one of the top 5 strategy of a ….) can open 3 orders of 0,01 if all go in SL they count like 1 LOSS or 3 LOSSES?

I tried to understand but wasn’t able

thank you

[edu]

and also please when you say, i wait at least 10 trades. In the same situation if the stretgy open 3 x0,01 orders they count as 1 or 3?

[Petko Aleksandrov]

Hello Edu,

good question here! When we have adding to the position we consider it as one loss, because we close one position. Even we added few times, at the end it is one position that closed.

Some platforms add to the position, and when you open 0.1 lot for example, and you add another 0.1, you will see 0.2 opened trade. But Meta Trader shows it as different position. However for the strategy/expert advisor it is one.

And if we say 10 trades, it means 10 different positions.

Kind regards,

[Author]

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