fx RiskMaster

1. fxRiskMaster fxRiskMaster Trading tool…..add your text

2. Position Sizing Why? • To protect your account capital from over-margining through trades that are too large, or too many trades at one time. • To maximize the use of your capital within sensiblerisk parameters. Or to say it another way, to protect you fromunder-margining by under-sizing your trades or too few trades,thus under-utilizing your risk capital and profit potential. • “Position Sizing is the single most important element in your trading system. It can make a mediocre trading system succeed. Not understood, it can cause a very good trading system to go broke!”Van K. Tharp: Trade Your Way to Financial Freedom, 2nd Edition

3. What fxRiskMaster does: • Calculates the Optimum Position Size for any trade you want to enter, thus protecting you from both under and over-sizing your trades. • Allows you to set your desired risk parameters and fxRiskMaster does the calculations for you • Downloads current market pip values, so calculations are based on up to the minute data. • Enables you to know exactly how much you have at risk, in dollars, in pips, and in account percentage. You know whether you can afford another trade. • Enables you know the dollar value of a pip for your trade position. • Ensures that if you move your stop loss into profit, you know how much profit you’ve locked in, in pips and in dollars, and you also know whether your risk profile will allow you to enter another trade as a result of profit you locked in by moving your stop. • Displays a record of the cumulative performance of your trading system, by several measures, including % Gain/Loss, average pips per trade, average win/loss size ratio, reliability (win %) and expectancy (average Reward:Risk ratio).

4. GettingStarted Open fxRiskMaster.xls. Hit “Enable Macros” at the prompt If you get an error message that your security level is set too high to run the macros, do this: Go to Tools>Options>Security> Macro Security Set Security level to Low, hit OK, OK Close and reopen the file

5. Select Account Summary Worksheet Enter Account Name Under Transactions, enter your initial Deposit amount IF you are starting with a new account (no trades made yet), OR IF you plan to enter the data for ALL your past trades. Date you start logging trades Important!! Only enter Data for the blue headings. The gray headings areformula-driven NOTE: If you have past trades but do NOT plan toenter that data (see Step 5), then enter yourcurrent platform account balance under Deposit.Enter future Deposits and Withdrawals here aswell. fxRiskMaster will calculate new balancefigures automatically. If you decide to enter pasttrades, see section “Entering Past Trades.”

6. So you want to place a trade! Select Analysis Worksheet

7. So you want to place a trade! In the Analysis Sheet, under Risk Profile>RiskThresholds, enter the percent per trade you want to risk, and the total account percentage you want to risk for all running trades. Defaults are 5% and15%, but it’s up to you to determine the best risk profile for your trading system. The defaults are not a suggestion! 5% may be too high a risk for your trading system. If in doubt, go smaller. Some say don’t ever risk more than 2% per trade. Note: There are comments attached to most of the headings, indicated by a tiny red triangle. Hover your mouseanywhere in the same cell to see thecomment. Remember: Only enter data in blue-shaded heading areas

8. So you want to place a trade! • You can fill in the Entry Date cell now or later, but it must be in this form: 070508 (May 8, 2007). • In the first empty row (Row 17 if the Analysis Sheet is empty of data), under Currency Pair (Column B), enter the currency pair letters, such as “eurusd”, no slash. You can use caps if you prefer. (To finalize an entry in a cell, hit Enter, OR just mouse click or arrow key to another cell.)

9. So you want to place a trade! • Under Entry Price, in either the Long or the Short column, enter the current market price from your platform. • Under Initial SL Price, enter your planned stop loss price.

10. So you want to place a trade? • Next, click the Currency Pair cell that you just filled in, and then hit Control-P. The screen will go gray for a few seconds, and you’ll see some flickering as up to the minute pip values are downloaded from a web page. If you entered your account data and trade data correctly, you will now see a value under Optimum Position Size. That is your optimum position size in regular lots. Example: .87 regular lots is 8.7 mini lots, or 87 micro lots, or 8700 units. Anchor cursor in this cell and hit Control-p

11. So you want to place a trade? • See the values under Initial SL Pips, and Initial $ Risk? That’s your risk at the prices you entered, and at the calculated Optimum Position Size forthe trade. Anchor cursor in this cell and hit Control-p

12. So you want to place a trade? • Just as a sanity check, does the Optimum Position Size number look reasonable? Does the Initial $ Risk number look reasonable? If it’s clearly way off base, something’s wrong. It’s up to you to verify that thenumber it gives you generally makes sense, before you trade based onit. If not, check all your entries again. fxRiskMaster is accurate aslong as it has correct data, but of course I can take no responsibility for faulty position Anchor cursor in this cell and hit Control-p

13. Place Your Trade!

14. Once you’ve entered a trade… • Check your exact entry price on you platform, the price at which you actually • entered the trade. Make the Entry Price in the Analysis sheet match. Price often • moves a couple of pips while you are calculating position size. If you used a • slightly different initial stop loss price in the actual trade than what you entered in the Initial SL Price cell, correct that too. • If you haven’t done this already Under Entry Date (Column A), enter the date in this format: yymmdd. Example: 070508 is May 8, 2007. The system requires this exact ormat, no lead spaces, and all six digits are required.

15. Once you’ve entered a trade… • Enter the Actual Position Size you used for the trade, under the BLUE heading. It • will usually differ slightly from the calculated Optimum Position Size. • Now, enter your Current SL Price. If it’s the same as the Initial SL Price you already entered (it should be, until you move it later in the trade), you can select that cell and just drag the little dot in the lower right corner onto the Current SL Price cell to the right.

16. Once you’ve entered a trade… • You now see your Current SL Pips and Current $ Risk based on the actual trade. If later in the trade you move your stop, you need to overwrite the Current SL Price(not the Initial SL Price) with the new SL Price, so the Current SL Pips and Current $ Risk cells will update. If you move your SL into profit, the risk values will switch from red to black, indicating positive rather than negative. • The Initial Reg Lot PipValue shown is the dollars per pip for a regular lot. The • Actual Position PipValue is the dollars per pip for your actual trade position.

17. Once you’ve entered a trade… • Under Current Risk, you see all the measures of your current risk in all trades. • These too will be black if your current SL placements puts your positions into net • profit. • Floating Balance is your balance including your current trade risk, based on all • your positions and stop loss placements. This is not the same as your platform • floating balance, which reflects your positions’ actual market value at live market • prices. • Current Balance should match your platform account balance. If it does not, your entered data is not accurate.

18. Once a trade is closed… • Enter the Exit Date in this format: yymmdd. Example: 070508 is May 8, 2007. The • system requires this exact format, no lead spaces, and all six digits are required. • Enter the Exit Price, the Trade Gain/Loss, the Trade Interest, and the Account • Interest. Not all brokers pay interest on account balance. If yours does, you’ll need to keep this up to date.

19. Once a trade is closed… • Now that this trade is closed, you want to move this data to the Trade History • Sheet for posterity, and so it will be out of the way of current trading action. Hit the Move Closed Trades button, and after a little wild action, that trade will be outta here, and will be found in the Trade History Sheet. • You can move up to 40 closed trades at one time, so it’s not imperative to move • each one immediately when you close it. But it makes for less clutter to do so. • Double check your data. Once the data is moved out of the Analysis sheet • into the Trade History sheet, the process is not reversible (I may add a feature • to make it possible to reverse it, but not yet.) But as a safety net, see Backup, • below.

21. Once a trade is closed… • There’s second safety net too, in addition to Backup. If you make a mistake, you • can close the file without saving changes. When you re-open it, it’s back the way it was when you last saved it. It’s a good idea to save and backup every time you add data, once you confirm your data is correct. • The Analysis Sheet will now contain only current live trades you have running, if • any. Totals, Account Balance and risk data etc are always up to date though, • regardless of whether you have moved your closed trades. Current Balance should always match your platform balance, and provides a constant check that all data is entered accurately. If it doesn’t match, there’s an error in the data you entered. I make data mistakes. You will too.

22. Performance Data fxRiskMaster automatically calculates a lot of performance data. Scrolling to the right in the Analysis Sheet, you’ll find the following three groups of data: • Trade Performance Data • System Performance Data • Enumerative Data

23. Performance Data • Trade Performance Data • Trade Gain/Loss, Interest Gain/Loss & Account Interest; the figures that • you entered for each trade after the trade closed. • Trade Pip Gain/Loss: The pip gain or loss for the trade • Trade Reward Ratio: This is the Reward:Risk ratio result for the trade, • based on your initial SL risk. • Trade Percent Gain/Loss: The % gain or loss to your account as a result • of the trade.

24. Performance Data • System Performance Data • Total Pips Gain/Loss: Your pip total for all trades. • Average Pips per trade: Exactly that • Total Dollar Gain/Loss: For all trades • Cumulative Percent Gain/Loss: the percent your account has gained or lost. • Cumulative Account Balance: Current balance • Average Win/Loss Size Ratio: Ratio of the average size of your winning trades to that of your losing trades. • Cumulative Percent Reliability: Your overall batting percentage or winning trades percentage. • Cumulative System Expectancy: The average Reward Ratio for all trades that your trading system has produced. This also is the same as the dollar gain expectation per dollar risked. Read Van Tharp’s book to understand this more fully.

25. Performance Data • Enumerative Data • Trade ID Number: This has the format: yymm##cc • (Year/Month/MonthlyTradeCount/CurrencyPair). I have uses in mind for these ID • numbers, to be taken up in future versions of FxRiskMaster. Things like charting • results by month, or by currency, etc. But that’s a ways off. • Days in trade: If the trade closed the same day it opened, the result is 0, if it closed the next day, the result is 1, etc. I don’t have a way for it to skip weekends in the count. Sorry ‘bout that. Maybe some day when I’m smarter. • Monthly trade count: How many trades made this month. • Total Trade Count: How many trades all told. • Total Win Count: How many of all trades were winners.

26. Backup • Hitting the “File Backup” button will save a backup copy of your file called • “Backup_’filename’” to the same folder your file is in. It’s a good idea to back up the file often. If something goes wrong with your file, you can open the backup and Save As to your filename. Since the Backup button is handy, use it any time you want to. Each time you enter data and have confirmed it’s • accurate, that would be a great time to backup the file. Of course this simple backup is no substitute for a robust backup of all your data files.

27. Entering Past Trades Decision! • Decide whether you want to enter data for your past trades. • Advantage: You would then have the performance figures for past trades (fxRiskMaster will automatically calculate them for you), and ongoing performance averages will include all trades. • Disadvantage: It takes some work to enter past trades data into fxRiskMaster. The more trades, the more work. Personally, I think it’s worth the work. • If you decide to enter past trades data, DO IT FIRST, before working with current trades. Finish reading all sections of this file, then see Data Entry for how to enter past data. • If you decide not to enter past trades, you must at least enter the data for any current running trades you have.

28. Entering Past Trades • If you want to enter past trade data into fxRiskMaster, first study the three sections just above, because that describes how you would enter your past data. You cannot download the pip values as of the time you made those trades, so skip that entry. And you cannot enter the Optimum Position Size values for your past trades either. • Start with the earliest trade and enter them in chronological order by date the trade closed. fxRiskMaster tracks your trades by exit date, not entry date, so enter the trade data in order by exit date. • Enter the Entry Date, Currency Pair, Entry Price (Long or Short), Initial SL Price (if you know it), Current SL Price (your last SL price for the trade), Actual Position Size (you cannot calculate or enter the Optimum Position Size), Exit Date, Exit Price, Gain/Loss, Trade Interest and Account Interest. In other words, fill in all available data under the Blue headings.You can enter up to 40 trades (down to Row 56) before hitting the Clear Closed Trades button, but I’d suggest just a couple at first run, to make sure it all goes smoothly. Check your data carefully for • accuracy. • Remember the Move Closed Trades process is irreversible, and you cannot change any data in the Trade History Sheet.

29. Entering Past Trades When entering past trades, it important to add a “p” at the end of the entry date. The reason for this is as follows: When you select the “Move Trades” button during a current trade, if you are missing any data in the required fields, you will be prompted to add the required data. However, when entering past trades, you will be missing data. For example, you usually won’t know what your initial stop was. The “p’ at the end of Entry Date prevents the “Move Trades” from prompting you to add more data and allows the past trades to be moved into the Trade History table.

30. Entering Past Trades • When you hit the Move Closed Trades button, you’ll see some action take place on the screen, and then the closed trades will disappear from the Analysis Sheet and show up in the Trade History Sheet. • Keep an eye on the Current Balance as you run past trades through fxRiskMaster. With each batch, the Current Balance should match your platform Current Balance at close of the last trade in each batch. • After entering all past trades data, verify that the Current Balance matches your platform balance. Then enter the data for current live trades in exactly the same way. • If you do not want to enter any past data, then only the last step here applies.

31. Contact Info • Good trading to you! fxRiskMaster will help you manage your trading capital. • Please contact me with questions, problems, comments and suggestions. • I will be improving and expanding fxRiskMaster as time goes on. I have major, very useful feature additions in mind, but they will be down the road a ways. All • suggestions are welcome. • Bug fixes and minor updates will be emailed to you at no additional cost. Your • account and trade data will be automatically brought into updated versions. • Email: fxriskmaster@gmail.com

32. Data Entry Enhancements In order to eliminate errors: • If you enter two values under Entry Price, one of the values • will flash yellow. Yellow will disappear when you correct this by only entering • one value (either Long or Short)

33. Data Entry Enhancements In order to eliminate errors: • If you try to launch the Control P Hot key from any column other than Column • B (Currency Pair) you will get this message

34. Data Entry Enhancements In order to eliminate errors: • If you try to launch the Control P Hot key and have not entered required fields • you will get this message.

35. Data Entry Enhancements In order to eliminate errors: • If you try to enter data in a cell contains a formula for calculating, you will • be prevented from doing so, thus keeping the integrity of the risk calculations

36. Data Entry Enhancements In order to eliminate errors: • If you forget to enter currency pair in Currency Pair column, but start to enter • data in other columns, the cell will flash green. The green will disappear when • you enter your currency pair.

37. Last Word • I cannot over-recommend Van K. Tharp’s book: Trade Your Way to Financial Freedom, 2nd Edition. If I had to toss out all but one trading book it is the one I would keep. It is a book to read five times. Much of the thinking behind fxRiskMaster is based on Tharp.