Do you bet your entire capital of 60k on 1 system?
The way newbee2020 does it, I would say No. It is spread over 11 systems.
Don’t you use MM? (E.g. max. 2% per trade/system)
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For example, at 10% margin you also have a leverage of 10x over your capital.
If you apply that 10% first, the 60K has become ~600K and the problem is the same. IOW, If I had 60K in real money, I would invest 600K to begin with, right ? and if not that, I had 6K and talk about 60K. It really does not make a difference. Or, if I would not like to use the margin and had 60K, the story would still be about 60K …
… However, the nature of the problem implies these responses, @JS. You are correct of course, but it does not solve the underlaying problem – we should be able to know what the other systems are doing …
@NEWBEE2020, I think if you would work out a solution with the idea that the systems do know each other’s investments, you would find it too complicated to make something of it which is efficient. You would have to deal with so many other “knowledgement” of the other systems. All you would be able to do is let system #2 trade when #1 is closed, next #3 after #2 closes and so on. For me this would lead to assigning dates to each system, #1 trading on the 10th, #2 on the 13th (skipping weekend), #3 on the 14th, etc., each system quitting at the end of its day. … This would also lead to no-efficiency, because why quitting a system at the end of the day (unless you explicitly want to save on overnight interest).
Else I have to divide the complete amount of money in portions of 5k.
It would leave you with that, Yes. And if you sit back and think about this – including the fact that you’d know the 11-systems system is more efficient than one by one – then you would do this and find profit of them all together as if one by one traded with 60K (with less profit in the latter case, according to you which could be correct :-)).
A main message (and JS actually told you) is that you should know about – and work with that margin – now assumed that you do not know about this (apologies in advance if you “obviously” do). Thus, if you would have 60K to work with, you can easily apply that to 11 systems running in parallel, knowing that none of these systems each, would ever lose 60K over night. It would merely be in the realm of 1200 (say mentioned 2%) and all together they could lose ~12K in one day. And honesty, if I were you I would deem that too much (because it is not 2% at all but 20%) and the conclusion must be that this is not the way to think.
Next up would be the “fact” (??) that your systems and instruments (DAX vs AEX vs NASDAQ vs ASML vs Shell etc.) are carefully chosen so that this drawdown won’t happen with all of them together (but watch March 2020) and working with close to the full margin would be okay** again.
**) Don’t take this as an advice because it is not at all and I would personally not even go close to half of the margin (which again is not an advice – haha).
One thing you may or may not know : when you are out of funds, the auto trading system (actually, the underlaying broker) will protect you from entering the market by means of quitting the system which wants to enter with more money than your portfolio can bear. This is a pain in itself (because you will need to restart that system manually), but it makes all harmless, and actually “working” for the need you have. Thus, if the amount you can invest all together at each single moment in time would be 60K indeed, the broker will take care that this is not exceeded. You don’t need anything to do for that and you won’t get fines for it. ;-). Do notice, however, that just the same it can happen that the broker quits running positions (leading to aborting the system of concern) during the course of the day/night, which happens when the portfolio amount gets dangerously low (which means nothing more or less than that you don’t comply to the margin rules of concern and which again is nothing really exciting). For you it would again be a pain, because a running trade (in that system) can not be completed, which probably means it will finish with a loss.
Have fun !
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