Trade Amounts should reflect your situation

Strategies might be attractive on the surface but fail moving forward. Why? Here we discuss the qualities of effective trading strategies, and the many traps one should avoid.

Trade Amounts should reflect your situation

Postby Overload » Wed Feb 22, 2006 2:53 pm

The impact of commissions can be quite large, particularly on trading systems that are dependant on many small gains over time. For example, if your trade amount were $10,000 per trade, a total commission of $20 would impact your overall trade returns by just 0.2%. Thus, an average trade return of 4% would yield 3.8% after commissions.

But suppose your trade amount were $1,000 per trade. That $20 commission would now have an impact of a full 2%. Thus your average trade return would be cut from 4% to 2%, and your annual return would likely be cut in half as well.

For this reason, it’s always best to search for trading systems based on your own exact financial situation. A trading system that works for someone else might not work for you if your trade amounts are significantly different.

To set your trade amounts, enter the Setups > Trade Settings menu. Then set the Beginning Equity and Trade Adjustments and Fees values on both the Combination Trades and Detailed Analysis Trades tabs.

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