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How much to Risk In Algo trading after Leverage issues ?

Posted on June 01, 2021 02:45 pm

 
 

Lot of Our Algo Clients faced confusion today due to the reduction in Leverage. I would like to explain how to take it forward from here.

 

Our algo takes about 6 trades everyday during the market open.  6 trades is the measure as we let the probability work in favour of us. We cant take 1  or 2 trade and judge the result. So 6 trades as per the multiple simulations we have done. 

Now when we do 6 trades there is a Leverage issue. Below is the list of stocks which the Alpha Program generated for trading today

                                          

A client who did with 6 lac capital and Risked 4000 per trade got the following Result. No leverage issue for him. The Algo closed Positively with 3160 Rs giving a Risk Reward of 0.79 R for today

                                                                

 

But the Client who used additional leverage to trade today could not execute all orders due to margin issues. Capital deployed was 4 lac and risk was 5000 per trade. The same algo lost -6393 for this client as two major winners LT and MRF didnt execute due to margin issues. This is a good example of probability as well as 3 winners and 3 loosers today. Since 2 missed trades and that happened to be winners the client account got negative despite Algo being a profitable day

   

 The rejection log from broker            

How to take it forward ?

we worked out, if we set the Risk per trade to 0.6% of the capital there would not be any margin issues. However we can have additional buffer placed in the account ( 10,000 to 20,000 ) 

Now there are some clients who wanted x money for example 50,000 rs as passive income , they have no choice rather increasing capital and risk 0.6% of it to match your objective. For any doubts please feel free to call /whatsapp at 7373339777

  

Enjoy Trading the markets .

Cheers !!!

Bharath Sankar.J

 

 

 

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Technical trader is born out of passion. Passion to learn, Trade and share about Technical analysis of the Stock Markets. We all know context is the important aspect of technical analysis. The Sustenance of a big move or a breakout of a particular stock depends on the context in which the breakout is happening. As a Traders coach we teach you how to develop context and trade the stock market. Especially the Nifty and the Bank Nifty.

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