As a trader of many years, I do realize that even with the best methodology in live trading environment,
surprises usually come in a form of over leveraging the account by either “loading up” because of
the trader’s bias, or worse - the revenge trading or finally because of the systemic risks such as massive data feed outage, sudden and usually fully unpredictable market price swings (past the 2nd or 3rd standard deviation) and it all happens in a matter of minutes if not seconds. The continuous involvement of machines creates the “flash crushes” and hence puts us, the traders at odds beyond the nicely upwards sloping results of the backtested system results.
I always seem to consider the risks more carefully during the live demo testing or backtesting/optimizing (although over-optimization does not really work), I would wager a bet that if all retail traders were treated like prop traders and they requested to have certain max risk parameters imposed on their accounts (similar to Prop Firms rules), many of us would probably save ourselves the grief from “blowing up” countless accounts.
Hence my question:
Q: What RISK CONTROL options exist to limit the trader’s account exposure by either limiting their max POSITION SIZE, or MAX MARGIN USE or any other combination of hard coded risk metrics that could be imposed by the FCM or IB per trader’s request, so that we can help alleviate or mitigate some risks when we need it most, namely when markets are wild or we lose sight and grip on reality and get lost in the mix of emotions while the markets mercilessly literally suck the funds out of our accounts.
I would love to be able to have the ability to limit the exposure before one gets in the hot seat because after careful studying of all of my past trading results, I see that hard coded risk parameters would save me from a few mega losing trades and days.
The typical trader-side risk modules available via different platforms are too easily overridden by the trader and hence not sufficient enough to protect from potential disasters. Just my own experience.
I would love to know what risk protection modules are available with all of the FCM’s Optimus works with.
Thank you in advance.