Money Management: Possible Implementation?!
Written by anjinitoHello traders,
To stay in the trading pit for a very long time your Money Management has to be number one. After using eToro for a year and a half I have a few ideas what can be improved to make it better than it already is. So let me take you by the hand and walk you past some ideas that might be implemented.
You all know this screen in your WebTrader. We can see a trader being copied and I have added 2 extra buttons. First of all (1) the FREEZE button.
Wouldn’t it be nice that when you go on vacation that you can hit that FREEZE button and all the open trades, stay open until they are closed. BUT new trades are not opened UNTIL? Yes until you hit that button again, and DEFREEZE it all. It’s that simple and I’ll bet you’ll enjoy your vacation more. You can also use it when you expect a difficult period or some news that has a high impact on the markets.
On to the next goodie! What have we here? A (2 MM) Money Management button? When you click this button the following screen appears.
You can enable (3) the Money Managementoption by simply clicking the checkbox. Then you will get some more options that you can configure:
(4) We have enabled the Money Management. We have all seen traders that first risk 10% and then all of a sudden change their Money Management and risk more. And then it goes wrong and a big part of your account is gone to the other side! So this nice screen will prevent that from happening.
(5) For a single trade a copied trader makes, you can configure how much % the trade can use from your total allocated amount of cash. So for example you used $100 to copy a trader. Then in this example you will only risk a maximum of 5% or $5. When the trader risks less than 5% than the amount will be left unchanged. You can also specify nothing then the trade amount will be left unchanged.
(6) Sometimes traders try to use up all of your account and have no room left for more trades. To make sure this does not happen you can enter an amount of % risked for all of the open trades. In this example a trader can use 25% so $25 of your copied amount. You can also specify nothing then the trade amount for all trades will be left unchanged.
(7) When you want to adjust the risk a bit. So risk less or more than a copied trader wants then you can use this option named Multiply trade. You can use for example ½ to make a trade half as big, or you can multiply by 2 or another number to increase the risk. This is a useful option for traders that just use 0.1% or so and you want to increase the risk let us say to 1% (multiply 10). This option works together with Amount risk for one trade, or all trades. So you can not risk more then the amount of % for a single trade if this is filled in.
(8) When I was writing this I added an option to protect your cash even more. You allocated $100 and let us say you had a profit (10$) on some trades and would like to set it aside for safe keeping. You just enable the Take out Profit option and there you go. Your copied amount is back to $100 and the $10 is set aside in your (unallocated) account balance. Can life get any easier I want to ask? An automatic safekeeping option!
(9) Suppose you are going away from your screen (on a trip) and you want to make sure that a trader does not burn through your cash. In that case you can put in how much a trader can lose of your allocated funds and after that the FREEZE button is automatically activated! That is nice. You know in advance what your risk is!
I do not know how you feel but I feel happier after writing this, just imagining it was already incorporated in our WebTrader! You can’t blame a man for dreaming, right?
Best regards,
Anjinito
eToro Note: “The Freeze button and Money Management button as explained above are only a concept suggested by the author of this blog post. These are not actual functions of WebTrader, however they may be incorporated in a future upgrade of WebTrader functionality.”
These are very important change requests. There is a lot of money I could save with these tools. Thanks a lot Anjunito to share this with us and eToro: please implement these changes as quick as possible because I need these tools to survive in this world of trading with you. Thanks!
one more function is missing - if I copy a trader, who is copying same traders as I do (or too risky traders), it will add extra risk to my trades due to my outbalanced portfolio... it would be excellent if I could select what components of user trading I want to copy (usually only users manual trades)
Hi Anjinito, wonderful work! Freeze and defreeze is “most wanted”. Freeze copying when trader loses x% does that include intraday drawdowns or only closed positions? I would prefer only closed positions because only these are final or real losses. But what about intraday drawdowns resulting from open positions? My experience is that huge intraday drawdowns signal very often serious problems with bad positions. So I would vote to add an “automatic close all positions with intraday drawdown of x%”, e.g. 50%. You can change that percentage. Here an example what could happen if a trader makes some bad trades during your vacation. He has 4 positions which were automatically closed when they reached -50%. Now the loss of closed positions exceeded predefined level of e.g. 30% of the funds that were allocated to the trader. Result: Trader is freezed. Muliply position size is wonderful too. It allows copying traders who use very small position sizes, like Pawel. About the take out profit option. Good idea, but there should be more flexibility. Some traders like the idea to take profits out, but I for example prefer the idea to remove cash from traders who lose and add cash to traders who win. So I would do this as follows: If allocated funds reach x$ then change these funds with a specified percentage and in a speciied direction. And this order can be given in multiple times. Examples: You allocate 100$ each to traders A,B, C. If funds reach 120$ then add +10% or 12$ to that trader’s allocation. If funds reach 80$ (before freezing) remove -10% or 8$. If a trader reaches 145$ then add another +15%. If he reaches 65$ then remove another -15% if the trader is still not freezed. That would be my thoughts on this. You have my deepest respect for this work. Thank you!
[...] Hi Anjinito, wonderful work! Freeze and defreeze is “most wanted”. Freeze copying when trader loses x% does that include intraday drawdowns or only closed positions? I would prefer only closed positions because only these are final or real losses. But what about intraday drawdowns resulting from open positions? My experience is that huge intraday drawdowns signal very often serious problems with bad positions. So I would vote to add an “automatic close all positions with intraday drawdown of x%”, e.g. 50%. You can change that percentage. Here an example what could happen if a trader makes some bad trades during your vacation. He has 4 positions which were automatically closed when they reached -50%. Now the loss of closed positions exceeded predefined level of e.g. 30% of the funds that were allocated to the trader. Result: Trader is freezed. Muliply position size is wonderful too. It allows copying traders who use very small position sizes, like Pawel. About the take out profit option. Good idea, but there should be more flexibility. Some traders like the idea to take profits out, but I for example prefer the idea to remove cash from traders who lose and add cash to traders who win. So I would do this as follows: If allocated funds reach x$ then change these funds with a specified percentage and in a speciied direction. And this order can be given in multiple times. Examples: You allocate 100$ each to traders A,B, C. If funds reach 120$ then add +10% or 12$ to that trader’s allocation. If funds reach 80$ (before freezing) remove -10% or 8$. If a trader reaches 145$ then add another +15%. If he reaches 65$ then remove another -15% if the trader is still not freezed. That would be my thoughts on this. You have my deepest respect for this work. Thank you!Source: etoro.com [...]