Hmmm…some systems go nuts on a average down spree and virtually lose all profits plus interest. Can auto-trading be set up to limit/suspend the number of contracts traded, to protect against "reckless" vendor money management? Goodness gracious how does a auto-trade subscriber protect against vendors that suddenly change their trading method for the worse. Scary.
As far as I know the only protection is that you can limit the number of contracts and/ or the $ value per signal in the autotrade permissions. This gives no protection if the vendor adds to the position one by one. I agree, protection against a too large total position size would be an improvement.
Just subscribe to a system that you feel totally comfortable with in terms of risk. A system with a reasonably long history (e.g. a year) that has never averaged into a trade will most likely not suddenly change its behavior.
If you start trading a system that averages down, but don’t follow it when it averages down, you have no idea what your profits will be.
If you trade forex (I guess futures as well), you can set a hard stop on the entire system, if you hold part of your equity outside of your broker account (e.g. in a savings account). This means you will get a margin call if the system reaches your predetermined stop-loss level and the broker will close all your positions automatically.
The problem is that you can never be sure that a system will not change its behavior.
You can know what the profits will be without averaging down, if you drill down in the trade details and select only the first and last signal of each trade. It will cost you some time, but it can be done.
The margin call method is rather crude. It will not protect your initial capital and previous profits except if you withdraw them from the account.
So I would still prefer a feature in the autotrade permissions where you can say "no more that $x on each position", regardless of how many signals are given. I presume such a feature can be made at C2 without changing TradeBullet.
I agree that the margin call method is somewhat crude. Ideally you would have two accounts with the same broker and be able to transfer money between the accounts quickly and without cost. To keep your stop-loss level at the same % of capital, you’d need to rebalance regularly. So it requires some effort, but on the other hand, it’s the most failsafe way to protect capital, as it works completely independent of C2 and your auto trading software.
I would prefer the feature you suggest for auto trade permissions too.
