Margin Call is a vey bad situation and unfortunately it is a something that I experienced in the past. When it happens traders usually blame providers but they do not realize that in most cases the problem is the risk management settings of their accounts. So let see how to control risk on ZT.
Margin Call is the nightmare of forex traders.
You would receive a margin call from a broker if one or more of the position you had opened (with borrowed money) decreased in value past a certain point. You would be forced either to deposit more money in the account or to close your positions. It practically means you have lost all your money.
When it happens, traders usually blame providers but they do not realize that, in most cases, the real problem is the risk management settings of their accounts. So let see how to control risk on ZT.
The first basic rule to follow is the choice of few providers. I usually follow just one provider per account as more provider you add, more risk you add and it does not automatically offset as per portfolio theory.
Secondly it is important to manage settings.
Fortunately Zulutrade helps us with 2 modes of choosing settings Auto Mode or Custom Mode and with a graphic indicator of risk named Margin Call o' Meter.
I would suggest to keep this indicator well below 100%. I have seen large accounts that keep it under 20%. As my account has still few funds I usually keep between 30 and 65% as a maximum. In any case a percentage higher than 100% means high probability of margin call, which results in the need of fresh capital to keep on trading.
This strategy is protecting it from drawdown and crazy moves from my favorite providers. Of course it is also limiting profit, but I have no doubts it is the best strategy.
Another good risk management setting is Zuluguard that allows protecting automatically your capital in case it goes under a certain amount. In fact if you loose too much money or a single trade is too negative or the provide opens too many trades you can decide to close all positions, disable the trader or replace it.
I am still deciding if implementing it on my account; for the time being I am just monitoring constantly my account in order to avoid crazy behaviors of my beloved traders.
You would receive a margin call from a broker if one or more of the position you had opened (with borrowed money) decreased in value past a certain point. You would be forced either to deposit more money in the account or to close your positions. It practically means you have lost all your money.
When it happens, traders usually blame providers but they do not realize that, in most cases, the real problem is the risk management settings of their accounts. So let see how to control risk on ZT.
The first basic rule to follow is the choice of few providers. I usually follow just one provider per account as more provider you add, more risk you add and it does not automatically offset as per portfolio theory.
Secondly it is important to manage settings.
Fortunately Zulutrade helps us with 2 modes of choosing settings Auto Mode or Custom Mode and with a graphic indicator of risk named Margin Call o' Meter.
I would suggest to keep this indicator well below 100%. I have seen large accounts that keep it under 20%. As my account has still few funds I usually keep between 30 and 65% as a maximum. In any case a percentage higher than 100% means high probability of margin call, which results in the need of fresh capital to keep on trading.
This strategy is protecting it from drawdown and crazy moves from my favorite providers. Of course it is also limiting profit, but I have no doubts it is the best strategy.
Another good risk management setting is Zuluguard that allows protecting automatically your capital in case it goes under a certain amount. In fact if you loose too much money or a single trade is too negative or the provide opens too many trades you can decide to close all positions, disable the trader or replace it.
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| Zuluguard |
I am still deciding if implementing it on my account; for the time being I am just monitoring constantly my account in order to avoid crazy behaviors of my beloved traders.
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