Monitoring
open risk is paramount to effective money management. Markets
are volatile, changing from minute to minute, and you must be
ready to react to these changes. Reducing open risk by moving
stops or scaling out of positions minimizes your losses, increasing
the number of profitable trades.
Risk
can be divided into two primary categories: account risk and individual
open position risk. STOPS provides risk management tools for both
categories, providing flexibility for a variety of systems and
market conditions. Tools are fully configurable for your requirements,
can be overridden on any position and contain active alerts.
Risk
management tools include: maximum percent account risk, maximum
percent monthly equity loss, maximum percent position risk and
minimum reward / risk ratio.
STOPS
Risk Control features:
- Maximum
percent account risk.
- Maximum
percent monthly equity loss.
- Maximum
percent position risk.
- Minimum
reward / risk ratio.
- Includes
broker commission.
- Risk
targets are fully user definable.
- Risk
targets can be overridden on any position.
- Fully
integrated with all STOPS money management tools.
The
following example illustrates STOPS Risk Control:
- Maximum
percent total or core equity per trade, minimum reward / risk
ratio per trade, maximum percent account risk and maximum
percent monthly loss risk targets are entered. Each target
optionally raises an alert when reached.
Risk Targets and alerts are defined by the user. (View
Full-Size)
In
this example, 2.0% maximum total equity per trade will be risked.
Initial stop-loss is calculated using reward / risk ratio of
1.50. Maximum account risk of 8.0% overrides default of 6.0%
(denoted by red highlight) and maximum monthly equity loss is
6%. Alerts will be raised when any of the targets are reached.
- Maximum
percent total or core equity per trade and minimum reward
/ risk ratio per trade risk targets can be overridden for
any position. Once overridden, the original defaults can be
viewed by holding cursor over the revised value.
Risk Targets and alerts can be overridden for any position.
In
this example, position PHHM uses default maximum total equity
of 2.0% and minimum reward / risk ratio of 2.50 which overrides
default of 1.50 (denoted by red highlight).
-
Per
trade or per share / contract broker commissions are included
in all risk calculations.
-
Account
portfolio is automatically updated with account percent open
risk and percent monthly equity loss. Values reaching targets
are denoted by red highlight.
Account
Portfolio tracks account risk. (View
Full-size)
In
this example, account open risk is 2.8%. Monthly equity loss
of -6.5% has reached target of -6.0% and is highlighted in red.
- Position
risk is displayed in the securities screen. Values reaching
targets are denoted by red highlight.
Securities screen tracks position risk. (View
Full-size)
In
this example, position PHHM with 1.52 reward / risk ratio has
reached target of 2.50 and 2.8% position risk has reached target
of 2.0%, therefore both values are highlighted in red.
