Friday, September 9, 2011
Maximum Price Excursion
Now that I am finally working with a programmer for automation, margin levels are as important as ever. A basic standard to follow is whatever the highest price excursion from the backtesting results, the margin level should be some multiple of that. I have chosen two times that as the benchmark. On average, price excursion reaches 60-100 pips per week per standard lot. For every 10,000 usd risked, the account should have at least 1,300 in available margin. The maximum lot risk per trade is 4. If we take 100 pips as the MPE per lot and double it (for black swans...) we are at 1200 margin per 10,000. 1,300 seems the best number to work off of going forward.
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