HOW DO WE MEASURE MAXIMUM EXPOSURE FOR OPEN POSITIONS?

December 19, 2019 | 8:16 am |
December 19, 2019 | 8:16 am

The rule-of-thumb for maximum (max.) exposure in all accounts is 5:1. However, we prefer to simplify things and consider only the lot size and not the actual $ value of a position.
For example: An account balance of $10,000 has a max. exposure allowance of $10,000 X 5 = $50,000 = 0.50 Lot. In a balance of $40,000, the max exposure is $40,000 X 5 = $200,000 = 2.0 Lots.

As we encourage holding on to running winners – any profitable floating positions with stop loss orders beyond the profit level, above break-even is not included in the exposure count. More positions can be traded at once.

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