Min. volume divergence - Protect investors' account

ncel01
01 Mar 2022, 16:20

RE:

ncel01 said:

Hello,

I would like to be aware of the following:
Let's suppose that I publish a strategy, on a given symbol, with a broker which allows a minimum volume of 0.01.

An investor starts copying my strategy, however, his broker only allows a minimum volume of 1.0 on the same instrument.

Based on the equity-to-equity ratio, an investment volume of x < 0.500 is calculated for the investor.

Question: Is the minimum quantity of 1.0 still applicable on the investor side, in case the calculated volume < 0.500 or, is this considered a 0 volume and no orders/positions will take place?

What is the exact way to calculate the investor's final volume, after a volume based on the equity-to-equity ratio is calculated?

• (1): Calculated volume < 0.500 --> Final volume: Symbol.VolumeInUnitsMin
• (2): Calculated volume < 0.500 --> Final volume: 0 --> No orders/positions will be paced

If (1) is the applicable scenario, I am afraid it won't be possible to protect investors' money and that, in such cases, their accounts can easily blow up, which can not happen at all!

 

Thank you for clarifying,

Hello,

Could I have a clarification on the above?

Thank you.

PanagiotisCharalampous
01 Mar 2022, 16:33

Hi ncel01,

Question

Is the minimum quantity of 1.0 still applicable on the investor side, in case the calculated volume < 0.500 or, is this considered a 0 volume and no orders/positions will take place?

Answer

The minimum quantity will be considered i.e. 1.

Best Regards,

Panagiotis 

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ncel01
02 Mar 2022, 16:22

RE:

PanagiotisCharalampous said:

Hi ncel01,

Question

Is the minimum quantity of 1.0 still applicable on the investor side, in case the calculated volume < 0.500 or, is this considered a 0 volume and no orders/positions will take place?

Answer

The minimum quantity will be considered i.e. 1.

Best Regards,

Panagiotis 

Join us on Telegram and Facebook

Hi Panagiotis,

Thanks for your reply.

That will have a terrible effect on investors' margin since min. Investment amount is mainly based on volume min./step. Investors' account will certainly "blow up" when considering 100x or even 10x providers' volume .

I believe that there is here a concerning breach to the equity-to-equity ratio methodology.

How to prevent/mitigate such situation?

I am not really willing to provide brokers with "easy money" by sacrificing investors' accounts.

Is it possible, for instance, to define a set of requirements that investors must comply with, to be able to follow a certain strategy?

I am afraid that mentioning something on strategy description won't be effective, at all, on preventing such cases.

I understand this is maybe not much relevant when trading FX, as almost every broker is following the same min./step volume, however this is not the case for indices.

Thank you once again!

PanagiotisCharalampous
02 Mar 2022, 16:30

Hi ncel01,

There is nothing you can do about it besides warning your followers. If somebody decides to follow you from a broker that has different trading conditions than yours, then the only thing we can assume is that he does it consciously in full awareness of what he is doing. We cannot decide not to trade on his behalf. 

Best Regards,

Panagiotis 

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ncel01
02 Mar 2022, 16:39

RE:

PanagiotisCharalampous said:

Hi ncel01,

There is nothing you can do about it besides warning your followers. If somebody decides to follow you from a broker that has different trading conditions than yours, then the only thing we can assume is that he does it consciously in full awareness of what he is doing. We cannot decide not to trade on his behalf. 

Best Regards,

Panagiotis 

Join us on Telegram and Facebook

Panagiotis,

Please consider the possibility for the provider to define a set of requirements or, alternatively, a volume ratio < 0.5 that will reflect a 0 volume on investors' side and not the min. applicable volume.

This would be a good improvement and would definitely solve the issue.

Thanks.