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AlgoLab by theAlgoLab.com is trade execution assistance software. theAlgoLab.com company, software, or it's principals do not provide trading advice or recommendations. If you require personalized professional trading / investing advice, please consult with a licensed broker/CTM. Actual past performance, or simulated past performance does not guarantee future results. Trading futures assumes a high level of risk. theALgoLab.com and it's principals are not registered as investment advisors. Consult with a CPA or financial advisor, or broker to ensure that your strategy utilized is suitable for your investment profile before trading in an actual funded live brokerage account.

 

Some trading performance results posted at this web site are from back-testing systems during the dates indicated, using specific settings, from a basket of different futures contracts. Some performance results shown here benefit from hind-sight. Some results shown result not from actual funded trading accounts, but from simulated accounts which have certain limitations. Actual results will differ given that simulated results could under, or over compensate the impact of certain market conditions. Actual draw downs could exceed back-testing draw downs when traded on actual trading accounts.  While back-tested results might show profitable returns, once commission, slippage, and fees are considered, actual returns will vary. 


Futures trading has large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the futures markets. Don't trade with money you can't afford to lose. This is neither a solicitation nor an offer to Buy/Sell futures. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed on this website or on any reports. The past performance of any trading system or methodology is not necessarily indicative of future results. 

RISK OF MARGIN VIOLATION AT VARIOUS RISK LEVELS

 

When you trade using a high risk value, you do risk the chance that periodically, AlgoLab will accumulate enough open positions in your account, that your "P margin" field (on your dashboard) starts to come within 5% of your account value. When this happens, AlgoLab will automatically pause placing any new trades in your account. You will get an email from AlgoLab notifying you that your account has been paused. When your trades start to close by hitting their trailing stops, your "P margin" value will start to decrease, and AlgoLab will unpause your account and start to place new orders again.

 

There are risks by letting this happen too often. If you do exceed your minimum margin requirement, then IB will start to liquidate your account by closing your positions and canceling new orders. They will also issue a warning to you.

 

So how do you know when you are trading at a risk level where there is a risk of margin violation? As it turns out, the risk of exceeding the minimum margin level is the same for any amount of capital. 

 

Following is a table comparing various risk levels using any capital amount and the resulting approximate % of days that the account was at or over the minimum margin requirement level set by Interactive Brokers. Note that this table is generated from a 9 year period that contained many very volatile periods where there was a chance that multiple AlgoLab positions would have been opened all at the same time which is what generates a margin violation issue. In many cases, prior to reaching full violation, AlgoLab's automatic trade pause will circumvent the violation.

 

risk = % of time in violation

0.2  =  0.00%

0.24  =  0.08%

0.28  =  0.25%

0.32  =  0.70%

0.36  =  1.60%

0.4  =  2.90%

0.45  =  4.80%

0.5  =  6.80%

0.6  =  12.60%

0.75  =  21.60%

1  =  36.00%