A good broker who will manage my risk for me?

A

AshanD

Hi,

The old trading problem of being affected by dollar amount swings is an obstacle to increasing my profitability. Since I trade futures on a multi-day timeframe this keeps me from going from making decent money to good money (or more). I feel that the separation of my risk management decision making from my actual trading decisions will be a boost to my bottom line.

What I am thinking of is working with a broker who can handle my risk for me. It should be fairly straightforward, I just need someone who offers personalized service based on my risk management criteria. IE someone who could take my order with my subjective risk/reward rating (high, medium, low) and stop settings and figure out how many contracts to execute based from that.

Example: I send an order for my broker to short soybeans. The risk reward is high. Stop set at 12.80 (50 points away at the time). The broker, following my instructions, figures that since risk/reward is high, this trade can accept up to 3% of my account balance in risk. He then computes how many contracts to take based on stop settings.

I've only dealt with ultra cheap brokers so I'm not sure if any full service broker can handle this. Any suggestions for a good broker who can?

Thanks
 
Quote from AshanD:

Hi,

The old trading problem of being affected by dollar amount swings is an obstacle to increasing my profitability. Since I trade futures on a multi-day timeframe this keeps me from going from making decent money to good money (or more). I feel that the separation of my risk management decision making from my actual trading decisions will be a boost to my bottom line.

What I am thinking of is working with a broker who can handle my risk for me. It should be fairly straightforward, I just need someone who offers personalized service based on my risk management criteria. IE someone who could take my order with my subjective risk/reward rating (high, medium, low) and stop settings and figure out how many contracts to execute based from that.

Example: I send an order for my broker to short soybeans. The risk reward is high. Stop set at 12.80 (50 points away at the time). The broker, following my instructions, figures that since risk/reward is high, this trade can accept up to 3% of my account balance in risk. He then computes how many contracts to take based on stop settings.

I've only dealt with ultra cheap brokers so I'm not sure if any full service broker can handle this. Any suggestions for a good broker who can?

Thanks
More...

Instead of using crutches, why don't you reduce your positions/leverage?

Your problem is deeper than you seem to think. Money Management is as essential as an edge. Trying to dump it on someone else is the amateur way of doing things.
 
It's not a crutch, it just makes sound business sense for allowing better trading decisions. Any trader who says trading larger does not affect his decisions at least somewhat is either dishonest or very experienced.

Trading well is tough enough without unnesecary pressure on the button pusher, the guy calling the entry/exit points. IMO no need to burden that guy with the positions sizing if it is done mechanically, any unskilled guy can do that. Big firms operate this way.

When trading "small" I find decisions are relatively easy, not so when trading heavier (and not even unreasonably large) A 40 point move is the ES is $2000 which I seem to handle well, with 2 contracts suddenly it is $4000 and this is psycholigically much tougher a move to handle correctly.

I know if I could just make my decisions with the same mindset as I do when trading small, that I can increase earnings without the negative "pressure" of trading larger.

Anyways it looks like a broker may not be able to do this so I may write a script that will handle this for me.
 
grow up dude, if a broker could do this for you he wouldn't be a broker, he'd be retired on his own island.

if you can't handle it, don't do it.
 
All the accessible trading capital you have X .03

divided by your risk

your risk =


(3 * atr(10) ) .. this is your stop amount the volatility of your contract in points

Convert this number into dollars by remembering how many dollars per point your contract has.

your # of contracts = the above number / the margin required for the contract.

Thats it!


... ATr(10) this is your average 10 day true range for the stock or futures contract you own...

This is standard trend following speak....

And if you want to hedge your dollars on every trade- hedge the amount you just risked in the above trade if the dollar affects the trade outcome....
 
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