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Hi,
I have a 25k account and am trying to run some math here to determine the proper auto scaling amount on his system which trades with a capital of 1.8 million dollars. What would be the most optimal scaling in relation to that number with a 25k account?
Thx
I put scaling at 1% but still had margin issues with certain currencies and IB. I am on a reg t margin account with about 40:1 leverage on your top pairs. I still don’t know if I am maximizing the system with my account size though or am I leaving some money on the table.
NZD/USD for example is up around 90 pips and pnl is $60-$65 but with a 25k account I think I should be leveraged a bit more with that kind of move. None of this is making a lot of sense to me yet.
I agree to use 1 percents in your case but keep in mind, when he added more position, it is not necessary you were automatically added more positions because your scale is only 1%. This is something you have to add position manually. Make sure you don’t over trade. You should expect, he will add more positions
JarrettCasesa,
Thanks for starting this topic. I’m interested, even eager, to subscribe to Zip4x, but have been struggling with how to set the scaling for over a week now. I also have same money in an IB account and would use auto-trading. I did some math in a spreadsheet and was thinking I’d be OK at a 5% scaling, but now I guess 1% is safest. I’m stuck wondering if, with $1,800,000+, is Zip4x is a fit for the small money subscribers just starting out on collective2 and/or with forex.
As a backward looking sense check to see if it’s worth the subscription fee with $25k account at 1% scaling, I did a quick analysis using the Closed Trades CSV on the Zip4x page. I took the past 12 months trades - 482 closed trades from 4/24/15 - 3/31/16. Perhaps there are some open trades in this time frame that I’m not able to see because I’m not yet a subscriber - those would be excluded from this assumption. At 100% scale the P/L on those trades is a very impressive $1,245,807. If, hypothetically, a subscriber used a 1% scale over the same time period the PL would be $12,458. This assumes linear relationship in the scaling - collective2 please correct me if I’m wrong.
A hypothetical $12,458 at 1% scale for 482 closed trades from 4/24/15 - 3/31/16 before subscription and auto-trade fees. After subscription ($400 x 12 = $4,800) and auto-trade ($99 x 12 = $1,188), PL is $6,470. A 25.8% increase before taxes and broker fees.
As someone who hasn’t jumped in yet, I think the math works well enough for me on paper. Do you have any more real world experience to share as Zip4x subscriber at 1% scale using IB? Any advice as I prepare to subscribe?
Thanks,
Matt
This is what I use. I use 5 percents bcs I wants every time the developer add positions, I want to ride that positions. Before you join, you have to know what is the maximize position you can take based on your capital size, margin n risk tolerance. If I am at home, once I received notification if the developer take a new position, I will look at my indicators before I jump in. This is me bcs I know how read what chart telling me. If I’m comfortable, I don’t mind to use 5 percents positions in open markets, but , let say I have no knowledge or I can not see my indicators, I will do conservative , I will cut my position to become 3-4 positions in C2 instead of 10 position if I use 5 percents. and add more positions whenever the developer adding positions. My points are, I want to minimize my risk and increase my profit. This is the beauty when I use this strategy n follow the developer style and it works for me.
I was looking into auto scaling Zip4x and there is a thread that might be of interest “what is Autoscaling”. I looked into Autoscaling at 1% and it wasn’t profitable, too many trades aren’t placed because they don’t round down. 2% works much better and gives you a max capital risk of $36k.
Or if you can watch the trades and manage the risk like Sam mentions you can take it higher to 5% which is a lot of capital.
Problem is although the total account size for Zip4x is huge typically he only uses $25k and rarely up to $1m, though he could use the whole account in a draw down situation so you have to size for that.
Dont trust the autoscaling estimate at 1%. The zip4x is at $100,000 lots and at IB you can trade $10,000 lots, so you will be trading most (if not all) trades at 1%. The autoscaling estimates assumes you cant trade 10,000 lots.
That is a pretty big flaw if that is the case. The C2 returns calculator showed a paltry $22 return for 2 weeks at 1%. Considering the outstanding returns this strategy generates something is wrong. A trial at 1% scale would be probably be informative, and would require $18k capital to cover the $1.8M account size.
