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The Signalator Money and Risk Management

1 NO MINIMUM ACCOUNT BALANCE
2 VARIABLE DRAWDOWN LEVELS
3 FOUR TYPES OF LOT SIZING
4 AI EFFICIENT POSITIONING
5 LOW LEVERAGE TRADING

The Signalator Money and Risk Management section is devoted to the proper and efficient money allocation and risk management. Trading prosperity is not only based on profitable trades. The money and risk management is the key factor for successful investment in any kind of trading including commodities and currency trading.

These rules and recommendations are for informational purposes only. There is no minimum required balance amount to use Signalator services. You are not obliged to follow the offered levels. This information is not a piece of advice. This is simply the Signalator point of view on the risk assessment matter. However, following these simple rules will help you benefit the most from the services our company provides.

 

The Maximum Drawdown Approach

Trading always involves both profits and losses. Money management itself may either ruin good profitable trading or benefit from a moderate results system. To make profits we have to maximize profits and to minimize losses. Losses are part of the trading process. If you can't withstand a certain number of losses, you will be out of the market when it is a profit period. The consecutive losses or the maximum equity decrease is called the drawdown. Please note: each trade signal and signals set is offered with a currently available maximum drawdown level. This is the maximum reduction of a balance which is considered acceptable from the trading process point of view. It may happen you will face such a reduction right after you begin your subscription.

All offered forex signals, signals for commodities trading or CFD Indices signals are provided with the two drawdown levels: the one already occurred in the past and the maximum possible level defined by a trading strategy. These two levels may vary significantly. When we provide the recommended deposit levels, all these calculations are based on maximum hypothetical levels of drawdown.

By increasing the allocation for 0.1 lot you reduce the relative drawdown of your trading and profits. By decreasing the capital allocation for 0.1 lot, you increase both the relative drawdown level and relative profits.

Further, you will find the table with all signals and signals set with the four different relative drawdown levels and recommended deposits.

Title Drawdown Expected DD Deposit for 35% DD Deposit for 25% DD Deposit for 15% DD
Signalator EA -1495 pips (-41.5%) -1300 pips $3600 / 0 lot $5200 / 0 lot $7800 / 0 lot
Signalator -224 pips (-14%) -1300 pips $1600 / 0 lot $5200 / 0 lot $7800 / 0 lot
Complete -876 pips (-24.3%) -1300 pips $3600 / 0 lot $5200 / 0 lot $7800 / 0 lot
               
EA GBPJPY 0 pips (0%) -650 pips $1900 / 0 lot $2600 / 0 lot $3900 / 0 lot
EA GOLD 0 pips (0%) -1200 pips $3600 / 0 lot $4800 / 0 lot $7200 / 0 lot
EA GBPAUD 0 pips (0%) -700 pips $2100 / 0 lot $2800 / 0 lot $4200 / 0 lot
EA EURUSD 0 pips (0%) -650 pips $1800 / 0 lot $2600 / 0 lot $3900 / 0 lot
EA GBPCHF 0 pips (0%) -700 pips $2100 / 0 lot $2800 / 0 lot $4200 / 0 lot
GBPJPY -372 pips (-21.3%) -550 pips $1750 / 0 lot $2200 / 0 lot $3300 / 0 lot
GBPUSD -183 pips (-12.2%) -500 pips $1500 / 0 lot $2000 / 0 lot $3000 / 0 lot
EURUSD -496 pips (-33.1%) -550 pips $1500 / 0 lot $2200 / 0 lot $3300 / 0 lot
NZDUSD -90 pips (-6%) -500 pips $1500 / 0 lot $2000 / 0 lot $3000 / 0 lot

 

Position Lot Size Approach

While trading with Signalator signals, you may choose from the four available lot size options: fixed lot size, risk lot size, flexible lot size and AI lot size. As you will see, the results may be quite different depending on the chosen risk management approach.

FIXED LOT SIZE

Fixed lot trading uses a fixed amount of lots when opening a new trade. You define the size of a position and then trades are executed with this number of lots. For example, you use 0.25 lots to trade. You will maintain this level if your account grows or declines (at least within a certain level). Once your account reaches any critical value (either after growth or decline), you may update a trading lot. On the one hand, it may be reasonable to have the same level of exposure - you get both losses and profits with the same amounts and hence your trading will be balanced.

RISKING A PERCENTAGE OF YOUR DEPOSIT FOR EACH TRADE

This type of lot is widely used among the forex traders. Every new trade will risk a certain fixed amount of an equity balance (e.g. 2%). This is the reason why traders prefer to use this type of lot. You control the maximum level of risk for every trade based on a percentage of your deposit. So profits and losses will have results relative to account equity. The more funds you have the more profit you will be getting (and losses as well). If an account value goes down, both losses and profits will be lower as well. This kind of trading makes trading very flexible.

FLEXIBLE LOT SIZE

Flexible lot is an advanced way of a fixed lot with elements of risk management similar to the % of Deposit lot type. Position size is calculated for every new trade. The calculation is based on the account equity value. The higher equity you have the more lots you open and vice versa. Once you decided how many lots you will be opening for your current equity size, you define two parameters: lot size and flexible deposit level. Deposit level will be used to calculate the number of lots you shall open. In other words, autotrader will be opening as many lots as required based on a simple rule: open Y lots for every X deposit level.

AI ADVANCED LOT SIZING

AI lot sizing uses a special algorithm for analysing past performance for each trade within a single trading system (e.g. one currency pair signal) and for each signal individually within a group of signals traded together. By increasing money allocation to well-performing signals and lowering the volume of worse-performing signals, your trading gets both marginal incomes and reduces losses. This type of lot size is considered to be the most advanced and is recommended to use with all Signalator services.

Overall Trading Results Examples

Please get acquainted with the overall final results for the same trades executed with the same starting balance using four different lot size approaches. Regardless of any illustrations and figures, you are free to choose any type of lot sizing including not provided herein. Both examples are provided for the initial balance of $100,000. AI lot sizing profits during the profitable period are higher and losses within the loss period are smaller.

Details Profit Period Loss Period
Period of Trading 1 July 2019 – 17 July 2019 29 November 2019 – 14 November 2019
Profit Pips 1,540 pips -527 pips
Total Trades 192 240
Fixed lot result (5 lots per trade) $76,955 -$26,322
Flexible lot result (0.1 lot for every $2,000 deposit) $111,495 -$23,736
Risk trading (2% for each trade) $108,687 -$22,568
AI Lot sizing $124,558 -$16,699
Questions and Answers
What is the minimum deposit to trade with the Signalator signals?
Basically, there are no requirements. You can trade with our signals with any deposit amount (even on a demo account). The recommended deposit levels are to be followed if you would like to increase your efficiency of the trading and to lower risks.
What do standard, mini and micro-lots mean?
Every time you open a trade you buy / sell a certain amount of currency. In the case of GBPUSD currency pair, you buy or sell GBP. The Standard lot means you trade with 100,000 units. The Mini lot is 10,000 units and the Micro lot is 1,000 units.
What will happen if I don't follow Signalator recommended deposit levels?
If you open too many lots, even a small loss may ruin your deposit. On average we use $1,500 deposit for each 0.1 Standard lot. Which means you can withstand 1,400 pips drawdown for a pair to stay on the market. If you increase the trading size by 10 times, the loss of 150 pips will cut your account totally.
What is a drawdown? Why it happens?
Drawdown is the maximum decrease of capital during the trading. For example, you are trading and your account has a value of $15,000. If under any circumstances (loss trades, a combination of profit and loss trades) your account decreases to $14,000 then the Drawdown is $1,000 or 6,6% (1,000 / 15,000).
How to use the lot sizing?
After the subscription, you will get the personal page with the subscription details. Under lot trading section, you will find the easy-to-follow setting page with all subscribed signals. At any stage of using of Signalator services, we will be happy to assist you via all available support options. By your request, we will adjust all required fields to make your trading profitable.
I know nothing about lot sizing. Can you do it for me?
If you require any assistance in setting lot size, choosing the most appropriate signals, etc. our professional customer support will help you to meet your high demands and expectations.
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