Why and How You Need to Adjust Trading Risk

Understanding risk is the key to becoming a successful investor and/or trader. When it comes to utilizing the power of algorithmic trading, it’s crucial to understand how to adjust the risk on your software. Hopefully, if you’re using software, you have the ability to do so. If you’re using one that doesn’t allow you to adjust the risk, you might be using the wrong one. In this video, I want to show you exactly how to do that. Without further ado, let’s jump right in.

Welcome! If you’re new to the channel, my name is Matt Jimenez. I’m an entrepreneur who has worked with the greatest minds in finance over the last several years, and I’m here to pour into you everything that they poured into me. In this video, I want to go over the ability to change the settings on your algorithmic trading software. This is very important to understand.

Before I get into that, if you’re using a software that does not allow you to control the software, my question to you is: are you actually the owner of this software, and who has custodial power over your money and over the software? If you’re using a software that does allow you to change settings, turn it on and off, and have the ability to do whatever you please with the software, then this video is for you. If not, maybe it’s time to look for a better algorithmic trading software.

For those who don’t know, I’ve been documenting a journey with $50,000 in the FED bot, which is a software from Nurp that has been trading for me over the last 6 to 7 months. I have had my account on the lowest possible risk settings. The purpose of this video is to show you exactly how to change these settings if you want to have a more aggressive software and how to find the best way to do this.

Before I do any of that, I want to advise you that none of this and anything that I ever say is financial advice or recommendations for you to do. This is solely for your educational purpose. Now, let’s get straight to it.

Here are the internals of the software. All the charts here that are showing these little square boxes are all different currency pairs and time frames. On them is the FED software. As you can see in the top right corner of all the charts, you see a little FED and then a smiley face. That means that it’s on and it’s working. Over here is auto trading; this is how you would turn it on and off. As you can see, mine has a green light, which means go—green means go, red means no.

But anyway, the purpose of this video is not that. What I want to show you guys is this software and its ability to change the risk is extremely easy. You don’t need to be technologically inclined. All you’ve got to do is click this here, the smiley face, and then you would just go down to “fixed lot.” Then, you’d go ahead and just click this and change the settings to whatever number you want the account to take in terms of how big you want your position sizing to be.

In this case, there was $50,000 that started in this account. Right now, it’s over $60,000, and my lot size is 0.5. Now, with that being said, if you don’t understand lot sizes, that essentially means for every increment that the market moves, I’m making 50 cents for every single fluctuation. You can see how I could easily make a lot more money or also take on a lot more risk by adjusting this exact lot size. When I do that, I would change that pair individually, so whatever smiley face I clicked on, depending on what currency or pair that you’re looking at.

That is the one it’s going to change it for. It’s not going to change it across the board. All the other settings here also have the opportunity for you to change whatever it is that you want. For instance, you could change take profit, stop losses, break-even points, drawdowns, all of that. But I’m not going to get into that today. I’m just talking about how to change your lot sizes.

Something more important than how to change it is why to change it, and how and where to change it. So now I’m just going to go ahead and X this out and show you exactly what I mean when I say why change it. Essentially, why would anyone want to mess with the settings inside the software?

I’m going to pull up my own personal account now. Okay, so here is my FED bot with the $50,000 in there. Now, something I want to go over is why and when it is appropriate for anyone to think about adjusting their lot sizes. Over here, you see a nice pie chart of all the currencies and how active the software has been across the board of all these different pairs. You can see some are 3%, some are 10%, some are 5%, and some are 1%. The higher the percentage, the more active it is on that exact pair.

But the more important thing about it is you want to understand the risk-to-reward profile on every single currency pair. The ones that have higher profiles, like for instance, the risk-to-reward on AUD/NZD, is a 2.11. That means for every dollar I’m risking on this pair, I’m gaining two, which is really good. Look at this one here, NZD/JPY – that is a three. That means I’m gaining three times what I am risking, which is probably a good indication of why I would want to potentially push the envelope on this exact pair. If I increase the leverage on one that is extremely profitable, most likely I will affect my performance. Again, this is not financial advice whatsoever.

The most important thing for anyone to really dissect here is understanding which currency pairs are most profitable for your software and which ones are the least profitable. The most logical thing that I can think of is the currency pairs that are the least profitable. I would probably want to lower the risk on those and/or completely shut them off entirely. Better yet, do that, while increasing the risk on the ones that are most profitable. That way, I can guarantee that I’m making more on the ones that are the most profitable already. Those would be good reasons as to why I would want to change it.

I showed you exactly how to change it, and now this is the information that would allow you to make those decisions. Again, you also want to look at which ones are the most active. For example, this one right here, AUD/CAD, is pretty active considering that all of June’s activity – 11% of it – was taken on that exact pair. Over here, NZD/CAD, 10% of all the activity was done on NZD/CAD. This means that if I had a more aggressive standpoint or lot sizing on that pair, I would probably do a lot better than the 3.89% I did so far in June.

Again, it is the 22nd of June, so we still have a week or so left in the month. I’ll probably end up closing this month at about maybe 5%, but we shall see.

If you found this informative, please leave me a like and/or comment. More importantly, if you want a software that you have the power over, hit the link down in the description or in the comments, and you’ll be routed to the team to see if this software is a good fit for your portfolio to get an edge moving forward into the future. If not, and you just found entertainment and information out of this, please just give me a comment on what else you’d like to see in regards to this exact software.

As always, my friends, peace.
Please visit Why and How You Need to Adjust Trading Risk to watch the full video on YouTube!

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