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Using the %Risk Calculator in Alveo

 
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jeff.b.carter

Using the %Risk Calculator in Alveo

Hello All,

I just posted this in the development forum, but I thought I would post it here in the main forum so it may be seen by a broader audience.

For those who who don't already know, there is a %Risk calculator in Alveo within the One-Click Trading tool. This tool is AMAZINGLY useful. However, it isn't immediately obvious how to use it, so I'll do my best to explain how I use it, and hopefully those techniques will help you out:

1) First, make sure that you have a One-Click Trading window open. If you don't, click the button at the top that looks like a target with a $ in the middle and a mouse arrow pointing at it. Drag the window to the desired location. Before I continue, please understand that I'm not going to get into how to use One-Click Trading overall. I'll just be discussing this one feature, so be sure to read up on OCT to understand all the other features.

2) In the OCT window, you will notice a "%R" in the middle next to + and - buttons. That means %Risk. So for instance, if you have a risk limit of 2%, just type "2" into the blank.

3) Now, enter a position size in the blank next to Q (Quantity). 4) Now, enter some number of pips in the blank next to SL (Stop Loss). 5) Having entered all of the above, you will see next to the word "Loss," an "x" followed by a number. This tells you how many trades at the current position size and stop loss that you can lose before hitting your stated risk limit. 4) Now there are a few ways that I like to use this tool, all depending on my goals for a particular trade setup. (All of the following assume you've started by typing your %Risk limit into the %R box):

3-1) You know the position size you want to use, and you're curious how many pips you can lose with that position size before you hit your risk limit:

Make sure your Q is set at your desired position size. Then change your SL to 1 pip. Then look at the "Loss x ___." Whatever number is in that blank, is the number of pips you can lose with the chosen position size before hitting your risk limit.* All you have to do next is replace the SL with that number. Once you do, you should see the "Loss x ___" change to "Loss x 1" meaning if this one trade hits your stop loss, you will hit your risk limit.

3-2) Let's say you know how many pips you want to set your SL at, and you are curious what is the maximum position size you can use for that trade without hitting your risk limit:

Make sure your SL is set at your desired number of pips. Then change your Q to 1 microlot. Then look at the "Loss x ___." Whatever number is in that blank, is the max number of microlots you can lose with the chosen SL before hitting your risk limit.* All you have to do next is replace the Q with that number of microlots. Once you do, you should see the "Loss x ___" change to "Loss x 1" meaning if this one trade hits your stop loss, you will hit your risk limit.

3-3) Let's say you know you always want to use the same position size and SL, and you are curious how many trades you could lose that day without hitting your daily risk limit:

Make sure your SL and Q are set at your desired number of pips and position size. Then look at the "Loss x ___." Whatever number is in that blank, is the number of trades you can lose with the chosen parameters before hitting your daily risk limit.

3-4) Let's say you are planning to fade into a trade (i.e. adding onto your position as the market moves against you). You know how many pips you want to set your SL at, and you are curious how much you can add to your trade without hitting your risk limit:

Make sure your SL is set at your desired number of pips. Then change your Q to 1 microlot. Then look at the "Loss x ___." Whatever number is in that blank, is the number of microlots you can lose with the chosen SL before hitting your risk limit.* So while you are fading into your trade, just be sure your OVERALL position size does not exceed the max microlots you calculated from earlier. (Even better, in my personal opinion, you can move the stop loss for each of the new positions INWARDS to the level of the stop loss for the original trade. Then you know you will lose FAR LESS than your risk limit. This is because the AVERAGE stop loss is far fewer pips than the number you used in the trade setup calculation.

Finally, an important caveat, it is possible that I misspoke above, so don't take it as gospel. It's for illustrative purposes only. I strongly recommend fiddling with the calculator quite a bit before using it. Make sure you understand how its math works before you rely on it. However, once you get the hang of it, you can use it to make really quick decisions. It's a really great feature!

*VERY IMPORTANT: the calculator does NOT factor in commission or spread. Please plan accordingly. It is best to use a number that is actually somewhat lower than your actual risk limit to give extra room for the built-in loss from commission and spread. The amount lower depends on how likely the spread is to widen during your trade.

Mon, 05/11/2020 - 4:08pm
 
FXGold54

Yes It is very useful. I did a video on it awhile back.

Here is the link and I hope you find it useful.

https://youtu.be/k_Sf5ZcpwHM

Allen

 
jeff.b.carter

A while back.....or in other words, the same day as this post ;-) LOL

Thanks for sharing!

 
FXGold54

No Jeff,

it was a while ago, June actually as you can see from the charts in the video.

The video was just private for my trading group and I made it public when I saw your post.

In any event great tool

Allen