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Turning Up Heat on Zulu/Saxo Account

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Zulutrade has a feature called “Margin Call -o- meter”(MCOM). Generally, it is very useful tool, particularly to discourage unexperienced persons to take excessive risk. Just like warning signs on the cigarette packs …

I’ve added 7 signal providers to my account. Each is enabled for one trade and one lot only. MCOM is in the red with a reading of 103.8%. Every time I log in, there is a warning that the positions limits exceed recommended trading size and there is a risk or margin call.

However, if all the signal providers open max allowed positions, the account would be exposed to about 1:1.8 leverage. In real life, max margin utilisation in Saxo account is just about 1%. Even is all signal providers open max positions and close each and every trade with 200 pip loss (a remote, yet real possibility), the damage would be limited to about 5% of the account value.

I’ll override the recommended trade limits to increase the leverage limit to about 1:5 and set % of equity stop-loss limits. If at any time loss exceeds 10% of account equity, I’l review the limits again.

P.S. Unless you check your account at least daily, I’d suggest to stick with trading limits as recommended by zulutrade MCOM.

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Written by A.S.

November 9, 2009 at 9:03 pm

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