Trading Rules and Account Limits

Trading Rules and Account Limits

If there was ever a ‘Holy Grail’ of trading it is Risk Management. To ensure all our traders are safe and to achieve a sustainable profitable trading life, we use industry standard trading rules and account limits.

Breach of ‘Trading Rules’ = Trade Closed
Breach of ‘Account Limits’ = Account Closed

Read and understand the Limits and you will never need to reset your account!

Trading Rules

The trading rules ensure that each trade that you enter does not involve unacceptable risk. If you breach a Trading Rule then your trade will be closed straight away at the current market price. Your trading account will not be closed and you may continue to trade.

  • Stop Loss
  • Weekend Trading
  • Open Risk Vs. Available Risk

Rule:
All trades must have a Valid Stop Loss attached to every trade at entry into the market.

All professional traders attach a Stop Loss to all their trades. Without a Stop Loss your whole trading account balance is at risk. It makes no sense trading without a Stop Loss and without one the trading account has a very limited life.

Explainer

Current market conditions are littered with 'risk events' Geopolitical, Major Economic Events, and Central Bank News. These risk events can turn the market against you in a second. The Stop Loss protects your previous profits, without one your whole account balance can be wiped out in a few seconds.

A Valid Stop Loss means your Stop Loss must be within your 'Risk Available' that can be found on your Trader Dashboard.  In short if your Stop Loss is triggered it must not come below either the Weekly Loss Limit Level or the Maximum Trailing Drawdown Limit Level. These are calculated for you at all times on the Trader Dashboard.

Breach

If you enter a trade without a Stop Loss then our trading server will automatically close out the trade at the current price. This will most likely result in a small loss, and you will receive an email from our server notifying you of the fact. Your account will not be closed!

Tip

One of the most dangerous functions of MT4 is that of One Click Trading. This will not enter a Stop Loss or Take Profit which indicates you have no plan, this type of trading is 'casino trading'. If you do not have any Trade Execution Software, you should hide the above 'One Click Trading' and use the 'New Order' button.

Rule:
All trades must be closed before 1900GMT on Friday.

*Important Note: The trading server will be disabled for the weekend. You will not be able place trades over the weekend.

All open or pending trades will be closed automatically by our trading server at 1900 GMT on Friday as a back stop if a trader has forgotten to close their trades. This will be done at market price at the time.

Explainer

In recent years Geopolitical risk events over the weekend have caused big gaps over the weekend, during this time you have no control over your trade. In line with industry standards until this Geopolitical risk subsides this rule will remain in place. In the future we will notify trades if this rule has been lifted.

Breach

If you havnt already closed your trades prior to 1900 GMT on Friday the server will close your open and pending trades and notify you of the breach by email. You will be able to continue trading at the beginning of the next week.

Tip

If you are in a longer term trade then you simply close your trade and re-enter at the same price at the beginning of the next week.  If the current price next week has been affected by a gap then you have the opportunity to choose a better entry level.

Rule:
Open Risk must not exceed Available Risk

Your Open Risk is the total amount of risk you have in the market (open and/or pending trades) must not exceed at any time your Available Risk.

Explainer

The Account Limits are in place to protect both your profits and our capital, they are professional industry standard limits. To ensure you do not break these account limits you will need to ensure your Open Risk does not exceed the Available Risk.

Available Risk (AR)

Your Available Risk (AR) is the maximum amount in dollars you can risk on your trades, that means all trades open or pending in the market. It is the difference between your current account/equity balance and the nearest account limit. A quick check on your Trader Dashboard will show you your current Available Risk.

Open Risk (OR)

Your Open (OR) is the total amount of risk in the market. This includes open and/or pending trades.

Tip

Before you set a trade, either at market or pending, whilst calculating your Stop Loss check that the dollar value of your Stop Loss does not exceed your Available Risk. If you are not sure please check your Trader Dashboard where this is calculated for you.

Account Limits

The account limits ensure that both your profits and our capital is protected. Breach either of the two simple limits and your account is closed. If it happens during the Practical Assessment then you will need to reset the account, if it is in the live account account you will need to retake the Practical Assessment.

  • Weekly Loss Limit Level
  • Maximum Trailing Drawdown Limit Level

Limit:
Your Equity Balance or Account Balance must not drop below this limit at anytime.

Explainer

The Weekly Loss Limit Level is exactly as it says, you have a limit level for the entire week that you may not go below. To ensure you never get near or go below that level never exceed your Risk Available found on your trader dashboard.

Practical Assessment

The Weekly Loss Limit Level is 2% of the initial Account Starting Balance (2% remains in place for the duration of the Practical Assessment, however in the Live Account when you have achieved 10% profit or above this increases to 5%). It remains static at this amount (2%) for the duration of the Practical Assessment. This provides you with a static equity balance for the week that you cannot go below. 

For example, lets take a look at a $100,000 trading account.

WEEK 1   
Starting Account Balance
= $100,000
Weekly Account Start Balance = $100,000
Weekly Loss Limit (Risk Available): 2% of $100,000 = $2,000
Weekly Loss Limit Level: $100,000 – $2,000 = $98,000 (you cannot go below this during the week)

This is the Weekly Loss Limit Level your Equity Balance must not go below.

Important: This remains a static level for the duration of the week

Lets say you get off to a great start and make $2,000 by Wednesday, your Risk Available to trade has now increased.

Account Balance = $102,000
Available Risk = $102,000- $98,000 = $4,000

Benefit: This now gives you more Risk Available to capitalize on your profits during the week. 

WEEK 2 
Weekly Starting Account Balance
= $102,000
Weekly Loss Limit (Risk Available) remains at 2%/$2,000 and is used to calculate the new Weekly Loss Limit for the week.
Weekly Loss Limit Equity Level: $102,000 – $2,000 = $100,000 (you cannot go below this during the week)

As you can see the Weekly Loss Limit Level is reset at the beginning of each week to protect your profits from the previous week.

Continue trading until you achieve the 10% profit margin and you are through the Practical Assessment.

Limit:
Your Equity or Account Balance must not drop below The Maximum Trailing Drawdown Limit Level at any time.

The is the safety net for our Capital. It is calculated by taking 4% of the starting account size, for example $100,000 and subtracting the 4% or $4,000 to obtain a Maximum Drawdown Level of $96,000.

Should you make a profit during the first week the $4,000 trails (your highest account balance/High Water Mark) just like a trailing stop on a trade until the level hits the account start balance, where it then remains static at that level for the life of the account.

For example, if you reach an account balance of $104,000 the Max Drawdown becomes $100,000 at this point it never moves. If you then increased your account balance to $106,000 the Max Drawdown remains static at $100,000.

General ‘Trading’ Terms & Conditions

You may only have 1 trading account.

You may use any strategy and EAs or Bots for your trading, however you are responsible the operation of those EAs to make sure they do not break any Trading Rules and Accounts Limits.

You may use trade copiers to copy your trades from our trading accounts to your own personal trading account.

We do not provide a facility to buy Practical Assessments for friends or family. You may not transfer your account to anyone else or divulge your password. If you buy a Practical Assessment you must trade the account yourself.

You may trade as a company. You must appoint a single trader who is responsible for the trading account.

The Maximum Trade Size is calculated using the 10:1 leverage based on your account size. If you enter a Lot size greater than is available MT4 will not allow you to trade it.

General Terms & Conditions 

You may view the general terms and conditions for trading and website use here. We have highlighted some key features below.

No quibble Refund Policy

If you order and have successfully paid for a Practical Assessment and for whatever reason you wish to have a refund and you have not traded the Practical Assessment, we will refund you you immediately and your Practical Assessment trading account will be cancelled.

If you have traded the Practical Assessment Account then you will be deemed to have used the service and no refund is available.