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Updating Margin Factor During Drawdown

by QuantShare, 2371 days ago
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Margin could be defined as the percentage of initial capital that you can invest. A default margin factor of 1 indicates that you can invest 100% of your capital. A margin factor of 1.5 indicates that you can invest 150% of your initial capital. In this case, 50% of the initial capital is borrowed.

What happens if you decrease or increase your portfolio's margin factor when the portfolio's drawdown decreases below -10 or -20?
This money management script will answer this question for you.

Add it to your trading system then update the different MM fields:
DefaultMarginValue: Sets the default margin factor of the portfolio (1 for example)
DrawdownBelow-10: Sets the new margin factor when the portfolio's drawdown decreases below -10
DrawdownBelow-20: Sets the new margin factor when the portfolio's drawdown decreases below -20

You can even optimize each one of these fields to see which combination works best for your trading system.

The implementation of this script is very easy. Here is how to load the code source behind this money management script:
- Update your trading system
- Select "Money Management" tab
- Click on "Update Script"
- Select "OnEndPeriod" event

You can update or add additional drawdown thresholds by simply adding more conditions (else if).



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Type: Advanced Money Management

Object ID: 1296


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Trading financial instruments, including foreign exchange on margin, carries a high level of risk and is not suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in financial instruments or foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with trading and seek advice from an independent financial advisor if you have any doubts.