Creating a set of trading rules for a low-risk FX Expert Funded account is crucial for managing risk and ensuring consistency in trading performance. The rules you’ve provided are comprehensive, but let’s break them down into more detailed guidelines:
Trading Account Specifications:
Leverage: The maximum leverage allowed for this account is 1:100. This level of leverage helps limit potential losses by reducing the size of positions relative to the account’s equity.
Profit Target: There is no specific profit target set for this account. Instead, the focus is on managing risk through drawdown limits and stop loss orders.
Maximum Drawdown: The maximum allowable drawdown for this account is 8%. This means that if the account’s equity drops by more than 8% from its highest point, trading activities should be paused to reevaluate the strategy.
Daily Drawdown: Daily drawdown is limited to 5%. If the account experiences a drawdown of 5% or more in a single trading day, it may be necessary to reduce position sizes or suspend trading temporarily to avoid exceeding this limit.
Profit Split: The profits generated by the trading activities will be split 50/50, with up to 65% of the profits going to the trader. This encourages responsible and profitable trading.
Trading Platform: The trading platform to be used is MetaTrader 5 (MT5), a popular platform for forex trading that provides advanced charting and analysis tools.
Trading Strategy Guidelines:
Weekly Profit Withdrawals: Profits can be withdrawn on a weekly basis. This allows the trader to enjoy the benefits of their successful trades while leaving a portion of the profits in the account to compound over time.
Stop Loss (SL): Setting a stop loss is mandatory for every trade. The maximum stop loss allowed for any trade is 2.5% of the account balance. This rule helps limit potential losses and ensures that no single trade can significantly impact the account.
Scaling Up: The trader is allowed to scale up their position size as the account balance grows, up to a maximum of $296,000. This scaling should be done cautiously to avoid increasing risk disproportionately with account size.
Diversification: Avoid overconcentration in a single currency pair or trading strategy. Diversifying trades can help spread risk.
Position Sizing: Determine position sizes based on the 2.5% stop loss rule and account balance. Never risk more than 2.5% of the account balance on a single trade.
Trade Analysis: Perform thorough analysis and research before entering any trade. Consider technical and fundamental factors, and have a clear strategy for each trade.
Record Keeping: Maintain a detailed trading journal to track all trades, including entry and exit points, stop loss levels, and reasons for trade decisions. This helps in post-trade analysis and improving strategies.
Risk Assessment: Regularly assess the risk exposure of the overall portfolio and adjust position sizes or trading strategies accordingly to stay within the drawdown limits.
Continuous Learning: Stay informed about market developments, trading strategies, and risk management techniques. Adapt and refine your trading strategy as needed based on evolving market conditions.
These detailed trading rules are designed to help the trader manage risk effectively while maximizing profit potential within the specified limits. Adhering to these rules, maintaining discipline, and continuously improving trading skills will contribute to long-term success in the low-risk FX Expert-Funded account.