Stop-loss and Required Margin
Stop-loss and Required Margin
10 Sep 2023, 13:14
One of the ambiguities of copy trading is that the required margin for opening a trade is not taken into account before the automatic stop-loss is triggered. I realized this issue when reading strategy descriptions. Some copy traders caution against investing too little, as it could trigger the stop-loss at a different level. Those I managed to contact advised me to invest at least an amount equivalent to what they trade, which is 1000 euros, or 10 times more than the minimum amount often indicated in the strategies!
What are your thoughts on this ?
Thanks !!! :)
Replies
Gtmanure
11 Sep 2023, 11:28
RE: Stop-loss and Required Margin
Hi Panagiotis, thanks for your reply !!
"Our thoughts," are you a part of the CTrader team? Is this an official position? ;)
If that's the case, then I'm surprised that you're not familiar with the strategies that are offered, as most of them do not provide this kind of information. It's often stated in the description the expected return, the technique employed, and in the parameters, the minimum accepted amount. One of the few examples I found is the Sleeper strategy (which is what caught my attention), which advises a minimum of 300, but that 700 is better.
"Also, it's a good idea for your investment to be close to the amount of the strategy provider. Not much less, not much more."
This seems to be somewhat contradictory to the very principle of copy trading, doesn't it? When one reads the description of the basic principle, the investor is not supposed to take into account the money invested by the strategist.
I believe it would be beneficial for you to clarify these matters. In your FAQ, there is mention of this issue, but it's somewhat vague. I'm concerned that many people have lost money because of this problem! Strategists should be required to provide clearer guidance on the ideal investment required and reform the concept of minimum investment, as it can be misleading, sometimes as low as 100 euros for some.
@Gtmanure
PanagiotisChar
11 Sep 2023, 12:25
RE: RE: Stop-loss and Required Margin
Gtmanure said:
"Our thoughts," are you a part of the CTrader team? Is this an official position? ;)
No I am not. I did not see the question being addressed to somebody :)
If that's the case, then I'm surprised that you're not familiar with the strategies that are offered, as most of them do not provide this kind of information. It's often stated in the description the expected return, the technique employed, and in the parameters, the minimum accepted amount. One of the few examples I found is the Sleeper strategy (which is what caught my attention), which advises a minimum of 300, but that 700 is better.
I don't trust anybody's description :) Only results
This seems to be somewhat contradictory to the very principle of copy trading, doesn't it? When one reads the description of the basic principle, the investor is not supposed to take into account the money invested by the strategist.
I do. I would never invest 100k in a 100 euros. It's a matter of equal risk. Nobody forbids you from doing so :) ? I just stated my thoughts as per your request.
I believe it would be beneficial for you to clarify these matters. In your FAQ, there is mention of this issue, but it's somewhat vague. I'm concerned that many people have lost money because of this problem! Strategists should be required to provide clearer guidance on the ideal investment required and reform the concept of minimum investment, as it can be misleading, sometimes as low as 100 euros for some.
cTrader is a trading platform and FAQs are for technical questions. What you are describing is investment decisions e.g. trust the strategy's provider description a.k.a. the strategy's marketing. Don't expect investment advises from a technical portal.
@PanagiotisChar
Gtmanure
11 Sep 2023, 13:21
RE: RE: RE: Stop-loss and Required Margin
First of all, thank you again, because you are the only one who help me on this forum.
So I didn't quite understand "our thoughts," are you speaking in the first-person plural? x)
But don't you think there might be an issue in the description of the strategies if the minimum amount indicated isn't enough to cover the stop loss of certain positions?
Alright, so in that case, if I invest 500 euros in a strategy with an equity of 1000 euros, it shouldn't be a problem, right?
For now, the copy trading I tried didn't work. I invested 100 euros in two strategies, and no positions were opened for a week, even though the strategist was opening positions. I don't know the reason for this. I've since withdrawn the money without any losses, so nothing happened.
@Gtmanure
PanagiotisChar
11 Sep 2023, 05:31
Our thoughts are don't invest into strategies that do not provide proper information to followers :). Also it's a good idea your investment to be close to the amount of the strategy provider. Not much less, not much more.
@PanagiotisChar