FAQ

Account Balance and Money Management Questions

For a mini account (10000 lot size) with the ability to trade .01 lots, then you could start with as little as $200, although $250 would be better.

In either of the 2 above scenarios, you would put 2000 or 2250 or 2500 as the figure in your "BalanceFactor" setting. If needed, the EA will detect that you are trading a mini account, and will adjust the 2000 to 200 internally.

If your broker only allows you to trade with 1 decimal place, ie, .1 lots is the minimum you can trade, then you would need 10x as much money in your account balance. You would still put 2000 or 2500 in your "BalanceFactor" setting, but you would need to start with $20000 in a one currency account.

The rule of thumb is, that for a standard account, ie, an account with a 100,000 lot size, you need a minimum of $2,000 for every .01 lots traded. For a mini account, ie, an account with a 10,000 lot size, you can trade .01 lots for every $200 of account balance. Setting your "BalanceFactor" to 2000 will accomplish this. If you do that, then the EA will trade .01 lots until your balance reaches $4000, and then it will start trading .02 lots. etc.

For additional safety, you could set your BalanceFactor to 2250. That means that the EA will trade .01 lots until you reach $4500, and then it will move up to .02 lots.

That may seem like a small number of lots to trade, but the system we are using dictates that we be very conservative in our lot sizes, and if you just follow these rules, you will still be rewarded nicely over time.

1. Begin on a lower BalanceFactor setting when you have little to lose and increase the settings as the account gets larger. Example: I may start with 100% trade coverage with a BalanceFactor setting of 2000 and a RangesSetting of 1 (66) until I get to $10,000 then change my BalanceFactor to 2250. After I hit $20,000 I might kick the BalanceFactor up to 2500 and set my RangesSetting at 2 (50) to trade only 75% of the range, then at $40,000, set the BalanceFactor to 2800. At $100,000 I might want to increase my safety by decreasing the number of trades taken in the outer reaches by setting my RangesSetting to 3, I would drop to 40 range levels (60%) leaving the BalanceFactor on 2800.

2. Take your starting amount out early. After your account doubles, watch for it to increase by how much you put in to get it started and take that amount out. After this, you are operating on zero risk. You still don't want to lose anything but if you do it this way, you can only profit.

3. The program will continue to increase your trading amount until you reach the broker's maximum. Until you reach that amount, you can open a second account with the same broker that you don't trade. When ever you take money from your trading account, take out a little extra and move it to to your second account. If you need money fast and don't want to see if taking it out would mess up your open trades, this is the way to do it. If you feel that something has happened in the world and you want to protect your account even further, you can move those second account funds back it to the primary trading account. This will not be necessary after reaching the brokers max.

4. Don't put all of your eggs in one basket. Open a second and third brokerage account and make at least one out side your home country. There isn't a lot of risk to the trading side but we have seen brokers close before. It is believed that you can get your money back or most of it, but you will have to wait for it at the very least. Also, governments can make trading the Forex Market illegal just as the US has made gambling illegal, and in the past, owning gold. Don't put all of your money in any one type of investment nor in one country.

Trading with this type of grid system is more of a money management trading strategy than a typical trading system. If you use the other money management tips as well, you will have about the safest account that can be had. Even the currency pairs used are for safety. Australia and New Zealand's economies are vary much the same. If there is something happening in the world, it would most likely effect them both equally. It would take a world class event happening to just one country but not effecting the other, to make any significant change in the currency prices.

It is important to note that these calculations were based on FXDD's rates and spread. It is recommended that you continue to use FXDD as your primary broker so you can judge other brokers against the one that we have been testing on and working with ourselves.

I would have to start with the RoboMiner first, in order for this to make sense. We wanted the RoboMiner to be very simple, easy enough for a rank beginner. So the money management for that is only the BalanceFactor. If you have a $10,000 balance, and a BalanceFactor set to 2000, then you will trade .05 lots. All it does is trade .01 lots per BalanceFactor worth of balance. Of course, it detects an IBFX mini account, so it would also trade .05 lots for a $1000 balance on an IBFX mini account.

The other EAs allow you to use that same BalanceFactor if you have UseMarginPercent and UseEquity set to false. That is for the convenience of those who started with the RoboMiner, and are used to using the BalanceFactor. But the GridWeaver and GT-Shadow also allow you to use a percentage of your balance or equity as allowed margin for each trade.

If you set UseMarginPercent to true, then you can have the EA trade a lot size based on a required margin amount that is a given percent of your total balance. If you go one step further, then you can set UseEquity to true, and it will calculate that margin percent as a percentage of your account equity instead of your account balance.

Lets say that you have a balance of $10,000 and your equity is $9,000 and you used 5.0 as the margin, and UseMarginPercent was true and UseEquity was false. It would try to calculate how many lots to trade that would cause your broker to charge you with $500 worth of equity for that single trade, because that is 5% of $10,000. If UseEquity was true, it would trade the number of lots that would use $450 of margin, because that is 5% of $9,000. Of course, that setting is way too high for grid trading. I usually recommend something like 0.125 for the margin setting. Also, I should mention that the EA does take your account leverage into account in those calculations.

The reason I have the BalanceFactor for the AUD/NZD and the EUR/CHF presets set to 3500 is because with the RoboMiner, that is the recommended minimum standard account balance and BalanceFactor setting to trade both pairs on the same account. If you were just trading the AUD/NZD alone, you could have a balance and BalanceFactor setting of 2000 (minimum). If the GridWeaver is traded by itself on an account, I likewise recommend a minimum balance of $2000 on a standard account and a BalanceFactor setting of 2000. And, if using the margin calculation instead, at 400:1, this usually works out the same if you use 0.125 for the margin setting.