How Mi Ahorro controls risk

-Strength in numbers-

For any trading strategy to have long term viability, risk management is a requisite. Each has its own risk management system. Some of our robots will place one trade at a time with a fixed take profit and stop loss, other robots will use recovery techniques by scaling into positions and using a global stop loss to control all open positions as one trade. Each one of our trading techniques complement each other well as a portfolio which means that is one of our three strategies enters a period of drawdown, it is likely the other two will have success and compensate for the underperformer.

 

-Accepting losses when they come-

Most of the time losses will be rather small and require minimal time to recover from. Cutting your loses early is a smart way to trade, which is why we must accept that negative days and even negative months are part of successful long term investing. The key is to have more winner than losers and never to risk more than you can afford to lose.

 

-Open position drawdown limit-

In the case that one or more of our strategy’s experiences drawdown from open positions a equity vs balance stop loss is implemented by a robot that is constantly monitoring the open positions. If drawdown reaches 15% on our master account, all open positions are closed as a mechanism to prevent a loss greater than 15%. This mechanism is dependent on our communication with the broker (connectivity) and the brokers ability to execute the closing of the open positions when our robot sends the request to have all positions closed. This includes during the weekends when the market is closed. So, it is not a bulletproof solution to maintain all losses, under all circumstances under 15%, however should work for most situations.

 

-Conclusion-

While it is impossible to guarantee a maximum loss percentage, Mi Ahorro has taken appropriate steps to minimize the risk of excessive loss.

 

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