Portfolio settings define the conditions under which the strategy is executed. Portfolio Settings include Exposure, Max % of Capital at Risk per Position, Initial Portfolio Capital, Margin per Contract and Potential Loss per Contract.
Portfolio Settings can be set from the Portfolio Settings tab in Portfolio Trader application.
- Open Portfolio Trader window.
- see how.
To use the Portfolio Settings tab:
- Select the Portfolio Settings tab in the main window.
- In the Exposure box, enter the maximum percentage of capital to be exposed to risk.
- For example, with Exposure set to 50%, a maximum of 50% of the capital will be available for the sum of all positions. If an additional position causes total exposure to exceed 50%, the position size will be reduced so that the Exposure limit is not exceeded.
- In the Max % of Capital at Risk per Position box, enter the maximum percentage of capital that can be risked per position.
- For example, with Max % of Capital at Risk per Position set to 5%, a maximum of 5% of the capital will be available for a single position. If an additional position risks more than 5% of capital, then the position size will be reduced so that the Max % of Capital at Risk per Position limit is not exceeded.
- Note: Max % of Capital at Risk per Position cannot exceed the Exposure setting.
- Example 1: Max % of Capital at Risk per Position is calculated based on equity, that is a % of (initial capital value + profit/loss of the closed trades). It is a general setting for the whole portfolio of symbols and strategies that limits the amount of your position.
If Max % of Capital at Risk per Position allows you to buy 50 contracts only, while you are supposed to buy 100 contracts according to Trade Size, your strategy will buy only 50 contracts.
If according to Trade Size, you are supposed to buy 50 contracts, but Max % of Capital at Risk per Position allows you to buy 100 contracts, your strategy will buy only 50 contracts.
- In the Initial Portfolio Capital box, enter the amount of the initial trading capital.
- In the Required Capital Assumptions in Margin Trading section, choose to use either Margin per Contract settings or Potential Loss per Contract settings.
- Note: Do not use both.
Using Margin per Contract Settings
- In the Margin per Contract section,
- Select Absolute Margin value (from QuoteManager symbol settings) to get the margin value from QuoteManager. Each symbol has a margin setting in QuoteManager. If no margin setting was entered in the QuoteManager symbol settings, then the margin value is assumed to be zero, or
- Select the Margin value % of contract cost radio button to enter a margin percentage that will be applied to all contrats.
- In the Potential Loss per Contract section, input “0” into the Absolute Max Potential Loss box. This effectively disables the Potential Loss per Contract section.
Using Potential Loss per Contract Settings
- In the Potential Loss per Contract section,
- Select Absolute Max Potential Loss to enter the max potential loss in absolute dollars, or
- Select Max Potential Loss to enter the max potential loss in percentages.
- In the Margin per Contract section, set Margin value % of contract cost to "0". This effectively disables the Margin per Contract section.
In real trading, margin values and other portfolio settings may change depending on the circumstances. Portfolio Trader enables the user to calculate the margin values and change portfolio settings dynamically with PowerLanguage: https://www.multicharts.com/trading-software/index.php/Category:Portfolio_Strategy_Position.
For more information, please see PowerLanguage portfolio-related keywords (prefixed with the word "Portfolio").