レバレッジは、ほとんどの外国為替トレーダーは、彼ら自身を掛けるロープです。. まだ, when this powerful tool is used carefully it greatly improves trading performance. 実際, prop traders can use maximum leverage for the best gains while also minimizing risk; below we’ll describe how Shaun does it.
Legacy risk-management strategies
Most traditional forex risk-management strategies are based on either limiting the amount of loss per trade or per market as a percentage of the account’s equity, or else tightening the parameters of trades going forward based on current losses.
Most traders typically increase or decrease their degree of leverage and position size according to wins or losses over some period of time.
Max leverage for minimum risk
まだ, even though it may seem counter-intuitive, savvy prop traders use maximum leverage to minimize risk. It’s true – Traders like Shaun use leverage to minimize at-risk capital while maximizing the compounding power of a series of winning trades while using a good system.
どのように? By limiting the amount of money allowed to accumulate in the brokerage account during the monthly trading cycle.
Throughout the month, a successful trading system harvests gains from the marketplace. Most traders allow those gains to accrue and use them to trade ever-larger lot sizes, even while using the original system and risk-management strategy. During a winning streak by any given system, the results can be impressive.
もちろんです, the trouble is that nearly all trading systems, if operated over a sufficient period of time, will “blow up.” When a system “blows up,” it can lose the majority of the trading account equity very quickly. それです, the system fails to the extent that it either runs out of money or the original trading rules must be significantly modified.
どのように? By limiting the amount of money allowed to accumulate in the brokerage account during the monthly trading cycle.
Exacerbated by leverage, the occasional system failure is what keeps most traders poor. During a period of deep drawdown, weak traders go out of business because they lack trading capital. They haven’t put anything aside for “seed” funding.
Manage risk by sweeping excess cash from the account each month
To reduce both the technical risks of a trading system failure as well as the psychological pressure of facing drawdowns, Shaun and other prop traders “sweep” excess cash from trading accounts each winning month, so that the months’ beginning equity balances are all the same.
Keep the least amount of money with the broker
That limits the total risk in case of a blow up to a maximum of only a single month’s preset trading account limit. Gains from previous winning months are safely sequestered in a different account, away from the trading account.
“Prop shops” minimize risk under leverage
Proprietary trading firms generally use sophisticated risk-management systems to monitor individual risk management and prevent monthly drawdowns from exceeding threshold levels.
Everyone wants to make sure prop traders manage risks effectively while leveraging their own capital, as well as the firm’s money.
Risk every dime in the account, each month
When a system works well, traders like Shaun leverage their capital to maximize gains and trade the largest practical position size. The profits from a string of successful trades can accumulate exponentially.
と, to ensure gains are protected, each month Shaun “sweeps” any gains from the trading account, reducing it to its predetermined par level. It’s critically important to pull profits on a regular basis, so they won’t be subject to loss.
Whenever a losing month does happen (and it will!), you top up your balance. The idea here is that instead of trading a $50,000 アカウント, all of which is subject to loss, you only put something like $5,000 into an account. That’s money that you’re truly able to lose.
Are you happy if you lose it? コースではないです。. But as a risk-focused trader, you know that even if you lose the money, your financial situation shouldn’t be severely impacted.
$5,000 probably isn’t the exact number for you. Maybe it’s more. Maybe it’s less. The point is, once you know your max loss number, it’s a lot easier to kiss it goodbye and put it into the account. その後、, if you get the performance that you’re expecting from your trading system, the return on investment (ROI) can yield some eye popping numbers.
This chart is the Myfxbook verified performance of my trading account.
If you’d like to learn about pulling profits from your account and other prop trading tips, stay tuned for the next article in this series.
why do you publish the results of your trading account?
偉大な質問, Piotr. First and foremost, it’s to establish credibility with readers. I’m giving advice on my site; I want people to know it’s coming from a good source.
Secondly, my Irish company offers managed accounts to non-US customers. I’m pretty picky with who I take due to the high risk nature of my trading style. I’m comfortable with the idea of losing; most people are not.
When you say you move your excess cash to separate account, does your maximum drawdown for next month–say 3%– come from the total money you earn (using your example, 、 $50,000) or come from the threshold level (、 $5,000)? Kindly please clarify. おかげで.
Hi Didi,
My current base threshold is $2,000. My plan for the high risk account is to withdraw two months of trading capital ($4,000) before I increase the base threshold. これまでのところ, I’ve taken out 1.5 months of capital.
Once the $4,000 is safely not at risk, I’ll then risk a percentage of the profits after the 4k to let the money compound. That’s only after the money is out, しかし.
Hi Sean,
I am always concerned about the fine print with the broker which states that you can lose more than the balance in your account, what is your view on this?
Ashley,
Pardon my getting your name wrong 🙂
Hey Ashley,
The fine print is in there for a reason. The broker does have the legal right to pursue you for losses in excess of the account balance. That is primarily a holdover of the futures markets where trading goes “lock limit” and traders are stuck in positions for days (or even weeks!).
Getting stuck in trades is theoretically possible in FX, although the idea of the world’s largest OTC market going bidless for days seems absurdly remote. It’d take a true black swan to make that happen, by which point every FX broker in the world would probably be bankrupt.
最後に, the broker has to pursue you in the jurisdiction of the contract. My Irish company holds its account in Australia. Is an Australian company going to sue an Irish company in Melbourne? いいえ – it has no chance of recovering the funds.
An example of this: when I worked at FXCM, a guy in Kuwait opened an account with $250,000 the night before NFP. Feeling greedy, he opened a position worth about $25 million right ahead of the news announcement. He of course picked the wrong direction. Because it was a volatile news event, we couldn’t get the trade for him closed exactly at his margin call. His account balance was about -$20,000 by the time he got the trade closed. You read that right: a negative 20k balance.
FXCM never went after him. He’s in Kuwait. It’s a US company. It creates bad press when you go after ignorant traders like that and besides, the chances of recovering the money are nill.
The short answer: theoretically possible, but impractical in the real world.
Is the objective of sweeping to use house money to fund your trade? Is going out of the U.S. to allow hedging or FIFO restrictions? If the later is the case how would a U.S. citizen find a way around the FIFO rule. IMHO FIFO takes away a great weapon for trading.
thanks in advance.
ミルトン
Hi Milton,
The objective for sweeping profits is to ensure that you cannot lose them. You can’t lose what’s not in the account.
I don’t care about FIFO restrictions because I don’t and never will hedge trades. The only way around the US regulations is to set up an offshore company, but that’s an expensive proposition that comes with a lot of tax consequences. I wouldn’t recommend doing it unless you’re trading an account worth in excess of $100,000.
おかげでショーン