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Forex Risk Management – When Not To Trade

January 6, 2011 by Forex Market

The expert advisors take into consideration the general trading trends of the market and predict a suitable investment plan. In situations of a drawdown a live account containing an amount of $1000 is warned of being low on balance. As most people start small so they cannot afford to risk an investment beyond $1000. When an expert advisor issues a warning showing a requirement of more money in the account for safe trading, it expects us to take it seriously. It suggests the required amount suitable for trading the standard lot. Failing to comply with the instructions of the expert advisors means you would be doing the trade improperly and could result in a substantial loss. So, it is usually a wise move to cease using expert advisors for trading on these initial trading live accounts. This is not due to some trust issues regarding the capabilities of the expert advisor but rather due to the realization of its limits when it comes to handling relatively smaller live accounts.

$1000 is a lot of money for some people. Naturally the variations in currency prices are relatively meager as the total drawdown at a given time is maybe half of $500. But the situation that the user should as an estimate have not less than $10,000 in a live account taking into consideration the number of currency pairs which the expert advisor can actually open trades on, it is generally sensible to halt the expert advisor’s activity till the count of open trades is becomes relatively less.

It is better to stop EA on an account undergoing a change in direction (headed towards drawdown), while continue trading on accounts that are headed in the correct direction. During this time you should sit back and let the market proceed naturally and only to observe the trades happening around. Accumulate the profits from the EA driven accounts as they come. Leaving an expert advisor working on a low money live account online, may lead to a situation where the advisor can possible open additional trades in the next few weeks, and if the currency pair continues changing direction that could end up exposing the user to the risk of a margin call.

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