Development – “Dynamic Money Management”

28 November 2014
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Here at SimpleTrader, we have been working hard in developing a new and more precise form of money management when copying the signal providers.

We have taken big steps in making sure that the Copier (Slave) – irrespective of what their account currency is – can now far more closely mimic the Masters (Signal Provider) percentage returns.

This is a huge improvement for Copiers who have a different account currency than the Signal Provider. How this works is we are factoring in the exchange rate differential between the Master (Signal Provider) account currency, against the Slave (Copier) account currency when the trade is placed. This means that on a trade by trade basis, your percentage risk will be very closely reflecting the same risk profile of the Signal Provider.

In this new method (“Dynamic Lots“) if your account currency is different to the Signal Providers account currency, you will no longer have to concern yourself with the exchange rate differential under the “Multiplier” function here:

multiplierInstead, we are now taking care of this for you within the Copy Technology. This Multiplier will now simply increase or decrease your risk in relation to the Signal Providers. A Multiplier of “1” will copy their percentage risk profile and “2” will be doubling the risk in your account. You can also precisely control this risk profile to 2 decimal places (e.g. 1.25).

Lets look at a more precise example of how these trades may look to a copier with a different account currency than the signal providers (this will also be available to you on launch within the Simple Trader Control Panel):

illustration

In this particular example, the Master (Signal Provider – left side) is trading a GBP account currency. The Slave (copier – right side) is trading an AUD account currency. Both accounts are the same size in this illustration. What’s important to realise is that the lot size will vary but the overall risk percentage (as shown) will remain constant or very close to what the signal provider is risking(%). This is because “lots” are not made equal to each and every account currency. They’re worth different values depending on the lot size, market traded, account size and account currency. Using percentages allows us to clearly see what each trade is truly worth to the Copier (Slave) when comparing against the Signal Provider (Master). To reiterate this point using the example above, if you (The Copier – right side) were to have traded the same lot size as the Master (Signal Provider – left side), then you would have actually been taking on more risk than what was otherwise taken by the Master (Signal Provider).

We are excited to roll this out in the coming weeks and we hope you are too. In the meantime we continue to test and quality assure every aspect to make sure that this will be integrated onto our platform without any issues.

Stay tuned over the coming weeks for more updates and information of this new Money Management method!