The money management concept is basicly to define the risk and return variables based on client requirements. This is the mechanical formulation of risk and return expectancy levels of the investor.
The money management procedure involved inb 3 phases. The first one is setting up the risk and return parameters. The second phase is to validate the parameters with the system variables and the final phase is defining the execution rules.
The parameters setting
The following parameters must be set
1. Total portfolio margin, This shows the percentage of margin out of total portfolio. In VobOmatikwe require 2500 TL per contract. Then it means if you have 100000TL roughly 50000 Euros and TPM is 50% then you can trade 50000 / 2500 = 18 contracts
2. Maximum drawdown percentage, That shows the stoploss levels. Lets say if this is 20% then total loss will be 20% of the total portfolio value maximum. However it will not be possible to loose even more than 10% because there is a daily limit of 15% maximum up or down movements in VOB regulations as you may remember.
3. The re-entry and bounce back entry levels.
4. Account close down level that shows in which loss level the account stops trading.
5. Account reserve level shows the monthly minimum profit percentage to keep the account running.
6. Annual return expectancy
In VobOmatik we set tailormade risk profiles and money management rules for investores those have portfolios over certain amounts. However for other investors we also have preset strategies on conservative, regular and agressive behaviours.
For further details you may visit our website http://www.automatedvobtradingsystem.com
