This is a summarization on how the Eros Project system works both manually and automated as it relates to risk controls and money management, including profit target strategy.
The system is a hybrid of manual and automated trading. First, I will address the automated side and then the manual side of the system.
Loss control should be the number one priority because this is the number way to maintain system performance. The Eros Project already posses an extraordinary ability to turn out profits unlike any other system, therefore, focusing on risk controls improves system performance. It is like taking a team with an outstanding offense by adding an outstanding defense they become rock solid.
The automated side of things is not being touched at all. The money management and risk management on this end is phenomenal. Is it also created so that when currency pairs ATR’s expand or contract the system compensates.
- Risk to reward ratio’s range from 1:3 to 1:12
- Risk per trade (3 orders per trade) is on average limited to -1.2% of account balance
The risk controls needed to be implemented for the manual trading side. As you have seen, this is where the extreme profits come from. However, the gains are meaningless no matter how great if given back at any point.
The risk control now being implemented in order to prevent loss to the account and yet continue to allow for aggressive gains is a hard stop of -10%.
- -10% hard stop from current balance (not current equity and not starting capital)
- Total open positions running a -10% loss does not occur often
- Although a -10% of open positions can be recovered from and turn into a sizable gain (has in the past) limiting the loss to -10% prevents any type of loss from occurring that cannot be recovered from in a timely manner
I would like to see the normal drawdown between -15 and -25% with -35% being the max. I prefer to allow for three occurrences of -10% drawdowns rather than one -35% drawdown.
In November the system saw a 85% gain during “normal”market conditions. I think we will see months that crush that number in the coming future. I understand a degree of account volatility is needed in order to achieve the gains the system produces and I think these risk controls will only add to the overall system performance and not hinder them in anyway.
Related info on the Eros Project: