To ensure the long-term stability and profitability of our WeMasterTrade accounts, we enforce a strict position sizing rule. This rule mandates that the risk per trade must remain consistent, capped at less than 2% of the initial account balance per trade idea. Note that Swap, commission rates, and fees are included in the calculation. This measure is designed to prevent large swings in the equity curve and mitigate the risk of significant losses due to sudden market movements or unforeseen events.
Key Guidelines for Risk Consistency:
1. Maximum Risk per Trade Idea:
The maximum risk, including floating loss, per trade idea is less than 2% of the initial account balance.
2. Definition of a Trade Idea:
Trades on the same symbol and direction of each other are considered a single trade idea.
3. Example of Single Trade Idea:
Multiple trades on the same asset in the same direction, opened concurrently or close together in time, are categorized as a single trade idea.
E.g., Open GOLD BUY > Open GOLD BUY > Open GOLD BUY is one trade idea with a combined maximum risk of less than 2%.
4. Example of Multiple Trade Ideas:
Trades on different assets or in different directions are considered separate trade ideas.
E.g., Open GOLD BUY > Open GBPJPY SELL > Open AUDUSD SELL are separate trade ideas, each with a maximum risk of less than 2%.
Consistent Position Sizing Practices:
Allowed:
Opening multiple positions on different assets or in different directions with up to less than 2% risk each.
Sequentially opening and closing positions on the same asset with up to less than 2% risk each.
Not Allowed:
Opening multiple positions on the same asset in the same direction with a combined risk exceeding 2%.
Principles Behind the Rule:
1. Protecting the Equity Curve:
Consistent position sizing helps maintain a smoother equity curve by avoiding large swings due to high-risk trades.
2. Instilling Discipline:
This rule promotes disciplined and consistent trading practices, crucial for long-term success.
3. Reducing Risk of Ruin:
By limiting the risk per trade idea, traders are less likely to experience catastrophic losses, allowing their trading edge to play out over time.
Additional:
For the 51010-NoPC Packages, the RC ratio will be 1%.
Conclusion:
At WeMasterTrade, we prioritize the protection of our funds and seek to build long-term partnerships with disciplined traders. We only back those who pass our evaluations and demonstrate a strong understanding of risk management and trade execution. This position sizing rule is integral to achieving sustainable trading success and fostering a mutually beneficial relationship between traders and the firm.