Any knowledge on the indicator margin cal-O-meter
Definition of the margin cal
Margin cal is a critical situation which intervenes when the positions taken by the suppliers of signals are in temporary loss and threaten your account. Your broker, to cover itself is then in the obligation to enclose all your open positions. This critical situation is the principal risk when one invested on Forex. The reason of this risk is the action leverage. The lever is a tool offered by the brokers making it possible to take a position more important than the capital than one has. And on Forex, the action leverage is about 100 or 200, which means that when you place for 100 euros of your capital, your broker buys/sells for 10.000 euros, thus gearing down the profits and the losses.
Definition of the margin cal - O meter
Margin cal - O meter is an indicator proposed by Zulutrade to help you to determine if the parameter setting of your account is at the risk or not. It is a decision-making aid for the risk management.
Example of the interest of the use of the margin cal-O-meter
In this example in image, the fact of following in its account the provider LowestDD without imposing restriction on the number of open batches (Open max Trades Total) is dangerous for your account (to read the warning of Zulutrade in the framed red one). Indeed LowestDD tends to open many positions simultaneously putting your capital in danger if your margin (margin cal) is weak. For somebody who begins on Zulutrade, it is a good means to control if its parameter setting is normal or at the risk.
How to decrease the indicator margin cal - o-meter?
Explanations in images
By modifying the number of simultaneously open batches for the provider, you vary the indicator margin cal - O meter.
Limits of the margin cal - O meter
In the example above, 5 batches of LowestDD returns a margin cal - O meter of 314%. From 6 batches, the indicator does not increase any more and returns same the margin cal - O meter. However it happened that LowestDD opens more than 20 positions simultaneously! I suspect Zulutrade of varying all the risk of the provider on only 5 open positions.
Another limit of Zulutrade is not to take into account the maximum number of batches opened simultaneously (Maximum Open Batches) by all the providers in its calculation of the margin cal-O-meter.
In this example, the fact of restricting its account with 2 maximum batches for all the providers implying 2 maximum batches for LowestDD does not have a répercution on the margin cal - O meter!
Conclusions
- The indicator margin cal - O meter is a means for the beginners to help them to obtain a correct parameter setting with a limited risk
- Through the examples in images, one could note that this indicator is partly false.
- I rigorously do not use this indicator, I prefer to limit the maximum number of batches opened simultaneously (Maximum Open Batches) by all the providers to control my risk.
- Nevertheless, this indicator informs me, when I add new a provider on my account, of the risk incurred to follow this provider. Indeed, some providers will vary with the margin this indicator of others on the contrary, like LowestDD, will vary strongly this indicator. In a certain way, the margin cal - O meter helps me to determine the profile of the providers. With you to test now!
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