Importance of Proportion between Master and Client regarding Balance and Leverage when copying signals
Hello to everybody and specially to those who has subscribed to our signal and to those who planning to come to us.
When we started that signal service we were not aware how much people we are getting in. How much demand there is to start Forex Trading with low budget on a more or less secure system. (Note: nothing is save in this world)
We started our signal and spread this out to 21 other accounts for testing purposes. Some of us, some of friends and family
Some were in British Pounds, some in Dollars, most in Euro and one in Cents. But all had the same: the initial deposit of 10.000 and the leverage 1:200.
We did not think about it that one day our account shows 36.000 and a newbie starts with 10.000, maybe with a different leverage than ours. All 21 account did exactly that what the master account did.
But now we are on that point where we have exactly that situation.
I will attach a long explanation at the end. All it says is: Lot size is calculated automatically for each subscriber, it depends on subscriber's and provider's balances and leverages.
With other words: When you expect the exact trades as we have on our master account, you should have the same balance or more and the same leverage. More balance is no problem. Less balance is a problem. Higher leverage on a smaller account is a BIG problem.
Below it will tell you, that a lower balance with higher leverage will lead to downsizing the lots. No matter what Queens Money Collector sends out, e.g. 0.1, 0.3, 0.5 will end on the subcribers site as 0.1 lots. That means, the lot size is not proportional between Master and Client which might lead to less profit or even to loss.
SOLUTION 1: Lower your leverage. But that will not give you a full guarantee.
SOLUTION 2: Fund your account to the master's level or above.
Long explanation, boring, but in detail.
The question of how exactly the Subscriber's deposit will participate in trading via Signals service is one of the most critical ones. When solving this issue, we followed the already mentioned principle - providing maximum protection for each participant. As a result, we can offer a secure solution for Subscribers.
When enabling signals in the terminal and subscribing to one of them, Subscribers should select what part of the deposit is to be used when following the signals. There was an alternative solution of setting the ratio between Subscriber's and Provider's position volumes. But such a system could not guarantee the security of the Subscriber's deposit. For example, suppose that Provider's deposit is 30 000$, while Subscriber's one is 10 000$ and the ratio of 1:1 has been selected. In that case, the Signals Provider may just wait out temporary drawdown having a large volume order, while the Subscriber may lose all the funds with all his or her positions closed by Stop Out. The situation may get even worse if the Provider's balance suddenly changes (top up or withdraw), while previously specified volumes ratio remains intact.
To avoid such cases, we have decided to implement the system of percentage-based allocation of the part of a deposit, which is to be used in trading via the Signals service. This system is quite complicated as it considers deposit currencies, their conversion and leverages.
Let's consider a specific example of using the volumes management system:
1. Provider: balance 15 000 USD, leverage 1:100
2. Subscriber1: balance 40 000 EUR, leverage 1:200, deposit load percentage 50%
3. Subscriber2: balance 5 000 EUR, leverage 1:50, deposit load percentage 35%
4. EURUSD exchange rate = 1.2700
Calculation of Provider's and Subscriber's position volumes ratio:
1. Balances ratio considering specified part of the deposit in percentage terms:
Subscriber1: (40 000 * 0,5) / 15 000 = 1,3333 (133.33%)
Subscriber2: (5 000 * 0,35) / 15 000 = 0,1166 (11.66%)
2. After considering the leverages:
Subscriber1: the leverage of Subscriber1 (1:200) is greater than Provider's one (1:100), thus correction on leverages is not performed
Subscriber2: 0,1166 * (50 / 100) = 0,0583 (5.83%)
3. After considering currency rates of the deposits at the moment of calculation:
Subscriber1: 1,3333 * 1,2700 = 1,6933 (169.33%)
Subscriber2: 0,0583 * 1,2700 = 0,0741 (7.41%)
4. Total percentage value after the rounding (performed using a multistep algorithm):
Subscriber1: 160% or 1.6 ratio
Subscriber2: 7% or 0.07 ratio
Thus under the given conditions, Provider's deal with volume of 1 lot will be copied:
- to Subscriber1 account in amount of 160% - volume of 1.6 lots
- to Subscriber2 account in amount of 7% - volume of 0.07 lots
thanks
