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signal cent account leverage

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Jonas Dikmonas
167
Jonas Dikmonas  

Hello,

 I have question for you and would be very happy to hear answer from you :)

 I want to subscribe a signal. My account is cent like the provider's one.

Providers balance is 15700 USD. My account 30000 EUR. (because my balance is in cents, in my true account is only 300 EUR, I guess the same is about the providers balance).

Providers leverage is 1:100. Mine is 1:1.

what percentage should be set in MT4 (5-95%)?

What deviation/slippage should be set in MT4? 

Why am I asking this? because Im wondering if this purchase will be profitable for me...

Lets say that providers monthly growth is about 20%. price is 30 USD. 

Im a little bit confused all about this, so your answer would be very useful for me.

Thanks!

Stuart Browne
6976
Stuart Browne  

Hi Jonas

You can get detailed info on how this is calculated here but here's a quick answer to your question. We are going to assume that you use 95% of your balance, and we're also going to assume that both you and the subscribers cent accounts report as if they are worth 100 times the value in $. This is not always the case so could screw up the calculations. Also, before even getting into the calculation, I can tell you right now that having a 1:1 leverage is going to be your stumbling block.

  • Your balance = 95% of $EUR 30000 = $EUR 28500
  • Your account as a % of the providers account = 28500 / 15700 =  181.53%
  • Leverage penalty = % of account * (your leverage/provider leverage) = 181.53 * (1/100) = 1.8153% <- This is the killer
  • Exchange rate calculation = 1.8153 * 1.08 =  1.960524%
  • MT Rounding  calculation = (greater than 1, less than 10, round up to next integer) = 2%

So you will be copying only 2% of the providers lot size. The good news is, this is so low that the lowest lot size you will get is 0.01. If the provider is only using a lot size of 0.01, you will match him. But if he is using a larger lot size, you will be stuck at 0.01

My suggestion would be to increase your leverage to 1:50. This would enable you to basically match his lot sizes. If he then continues to make 20% per month than your $ return SHOULD be the same as his  which would be 20% of 15700 = $3140 (cents) = $31.40USD = $29EUR

Obviously, that wouldn't cover subscription. So you would then have to consider bumping up your leverage to 1:100. That would double the return (and drawdown). So you could then lower your % allocation.

I suggest you download the calculator in the link I mentioned above. That should help you arrive at the correct figure :)

Cheers
Stu 

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