Risk limit for traders (Master accounts)
How to sell it to a client
Daily Risk Limit is automated risk manager for every trader in Social Trading / MAM / PAMM. Every professional trader in hedge fund has its own so do you.
How it works
This risk limit is a daily risk limit. It resets every day.
It is calculated as a % from equity at the beginning of each day (00.00 MT server time).
After it reached, investment platform closes all opened positions and blocks account till next trading day (
00.00 MT server time).
Daily risk limit for traders helps them to protect their accounts from huge losses in a single bad day.
Risk_Limit_Signal_Equity = Equity_daystart x (1-RL%)
Equity_daystart - equity of account at
00.00MT server time
RL% - risk limit in %
If equity of account is lower than
Risk_Limit_Signal_Equity - then all positions will be closed and account will be turned into read-only till 00.00 MT server time.
How deposits/withdrawals affect risk limit
Equity_daystart is adjusted by new Deposits/Withdrawals during the day. So withdrawal will not trigger the risk limit.
But as soon as Equity_daystart_afterwithdrawal will be smaller than equity_daystart_before_withdrawal, risk limit in $$$ will be also changed as after withdrawal.
Equity_daystart_afterwithdrawal = Equity_daystart - withdrawal_amount
so the signal equity will also be changed → → →
Risk_Limit_Signal_Equity_afterwithdrawal = Equity_daystart_afterwithdrawal x (1-RL%)