Hi there
I have two questions please:
1. I notice that as the value of my broker account changes, this change is not reflected on the Autotrade set up page. Should I go and change it manually on the Setup page each day?
2. Say I have USD20k in a broker account which I wish to autotrade. Does it make any difference to the lot sizes whether this account is a standard or mini account? Or will the autotrade system simply adjust the lot sizes in either case to conform to the percentage?
Thanks
Max
I think someone should verify what I have written below.
If I understand correctly, AT places NEW trades at position sizes according to the scaling factor in your account. Lets say that the system you are trading has an account size (Ill call this the model account) of 100K and you have an account size of 10K. If you wanted to trade at the same risk profile as the model account, you specify a scaling factor of 10%. So if on Monday morning the model account went short 10 lots of Gold say, your account would sell 1 lot. Say however you wanted to halve the risk of the model account in your own account, you would specify a scaling of 5%. This is where problems of oscillation can arise, since the system cant buy half a lot, and it may purchase one lot and then sell that lot to keep you within your risk profile. C2 warns you about this when you set up trading for a system.
Now lets say that your account was drawn down 50% (a scenario not too far off from my current forex situation but thats another story) from that 10 lot short of gold you made 3 weeks ago because George W. decided to invade Iran. AT keeps track of your equity and would place NEW trades according to your current equity. AT doesnt however have the ability to teach the system vendor the basics of risk management (If only it did). Namely if the account was drawn down 50% and the vendor was still taking the same position sizes as when it had double the money, you could be heading for trouble.
Now this is the important bit. AT will NOT rescale your EXISTING positions to reflect current drawdowns. Ie if you are short 10 gold and your account gets drawn down over a period of a week by 50% while still holding the positions, AT will not cover 5 lots of gold over the period of that week. Its the job of the vendor to take this action.
In answer to your second question, unless your broker disadvantages you in some way for having a mini account, always go for the mini, it gives AT 10 times more flexibility in sizing the positions of the trades it makes (hopefully avoiding oscillation). If you are trading a system that had 100K in the model account and you only have 10K, this would be critical. If on the other hand you have 1000K, then its not going matter to you at all.
Actaully one thing I should get cleared up is whether AT tracks account balance or account equity.
I can speak only for gen 1 autotrading. It does not really track the balance of the account. (That would make no sense, because you do not necessarily assign the whole account to one system). From what I have seen in my autotrade setup, it will keep the scale percentage fixed, regardless of you account value.
Suppose that at the time that I setup the autotrading, the system has $200K at C2 and I have $20K in my account, but I want to use only $10K for this system. Then I will specify that I want to use $10K available for the system. Next, the scale will be computed as 5%. So if the vendor sends a signal for 100 mini-lots, I will get 5 mini-lots.
After the setup, the scale (5% in this example) will remain fixed unless you change it manually. In the ideal case, if your account is perfectly synchrone with C2, this will work fine: If the vendor looses 50% then you loose 50% too; his orders should be 50% smaller and then the signals that your AT software receives will be 50% smaller too.
The only problem happens if your account is not perfectly synchrone. For example, VN Forex sent a signal for a NZD trade, which is unavailable at IB. So this trade will be filled at C2 but it will not be executed if you have an IB account. If this happens frequently, then after a while your account value (or the part that you assigned to the system) will not be 5% of the C2 account value anymore. But C2 will still send signals that are 5% of what the vendor specifies. Then you have to adjust this percentage manually.
This is at least how it worked previously. I did not hear about any changes, so I assume that it still works this way.
Thanks, that answers my question about whether I need to change the autotrade balance daily - clearly not if I’m in synch with the Signaller.
How about the other question? Does it make any difference whether my USD20k is in a mini account or in a standard account?
About the other question: I have no experience with that, but I think Zsolt gave the answer.
Max:
"Account Balance" in the autotrading setup is a bit misleading, IMHO. When you enter a figure here, a scaling percentage is calculated. This percentage appears to remain constant, regardless of changes in either the C2 simulated account or in your own personal account. eg - if whatever figure you put in originally in the "Account Balance" box calculated to 34%, the scaling factor will always continue to be 34% unless you manually change it.
I’m sorry Zsolt, I missed your answer there. Many thanks for the detail. It’s now clear to me.
Best wishes
Max
Hans and Jules are correct: C2 does not track account balance and the scaling factor remains constant. You can change it as often as you wish and your open positions/orders will be adjusted accordingly.
Francis
Does anyone know if Autotrading tracks account balance or account equity? I would hope it’s the latter.
I think the answer is the post above yours… or I don’t understand what you mean.
OK. That was a valuable post, Jules - for me anyway. I just sat down and rethought everything logically. Sometime when I first joined here, MK posted me an explanation of how Autotrading worked and somehow I read something into it which is false. So the following which I wrote above is complete horseshit:
"Now lets say that your account was drawn down 50% (a scenario not too far off from my current forex situation but thats another story) from that 10 lot short of gold you made 3 weeks ago because George W. decided to invade Iran. AT keeps track of your equity and would place NEW trades according to your current equity. AT doesnt however have the ability to teach the system vendor the basics of risk management (If only it did). Namely if the account was drawn down 50% and the vendor was still taking the same position sizes as when it had double the money, you could be heading for trouble."
When you logically think through how autotrading and scaling works, it’s completely clear why the above is wrong. My apologies to all.
I need more sleep…
The other important issue is that since the autotrading Fees are not included in any of the "theoretical" history, over time your account will always be lower than the theoretical. Thus with the fixed scaling factor working off the theoretical balance, your leverage gradually increases over that intended. So it is important to check the real balance of your account periodically, and reset the autotrade levels to get back to your desired leverage.
