In our previous "Create a New System" section we assembled a basic entry and exit system using the MACD indicator to create a signal of when to use a Long-Entry or Short-Entry order.  

 

All orders generated with our simple Tutorial System were sized using a fixed quantity size of 1-contract.  We used a fixed quantity order sizing process because we didn't have any risk information without simple entry order methods.  There was not any risk information because there are no protective exit prices on which to base how much risk a single contract position will have without knowing a reasonable unfavorable price move distance on which to estimate the position loss as a percentage of account value.

 

In some cases this meant that some orders created a small amount of risk and account leverage, and some orders created a larger amount of risk with a large leverage ratio.  Leverage increases the utility of the value of an account, but it can be the reason why the account is depleted quickly and a trading strategy fails.

 

In this second section of the tutorial will will introduce protective position pricing order and how they are placed and applied.  We will also give an overview of how risk is view and adjusted along with an explanation of the three primary order sizing modules included with Trading Blox.  As the lessons expand understanding we will create a method for measure price volatility and show how three different ways to size an entry order.  Adding stops to our new system is the goal of this second section and it will proceed to show how to modify our new system so it can trade with less risk.

 

 

Tutorial Steps & Topics:

Lesson:

Topic Description:

1

Protective Position Pricing

2

Copy System Items

3

Protective Exit Orders

4

Entry Order Protection

5

Active Order Protection

6

Order Sizing

7

 

 

Links:

Operator Reference

 


Edit Time: 9/25/2017 09:09:58 AM


Topic ID#: 378

 

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