Risk Parameters Explained in LTC Client EA

In this video, I explain what risk parameters you can find in MT4 Local Trade Copier and how to use them.

IMPORTANT! In Local Trade Copier 2.9.7 risk parameters have been upgraded and look differently. I would say their names are self-explanatory but I created a new risk parameters tutorial to explain them here. Note that the below parameters explained are for the older 2.9.6 version of the software.

With LTC it is possible to determine the risk factor for each slave account separately. LTC can handle different lot sizes for different accounts independent of their balance.

By default, LTC Client EA will use the same proportional volume size in the client account using the RiskRatioServer parameter which is set to 1 by default. RiskRatioServer is like a dynamic Lot Multiplier which is changing based on Account size and continuously adjusting itself based on account size. This risk control mode will generate a proportional gain in client account(s) according to the difference between master and client account size. If you want to increase the volume of each operation by 20%, as an example, simply set the RiskRatioServer = 1.2 in the Client EA.

Another popular configuration that many traders use is to copy the same position size on the client account as on the master. To set the Client EA copy the same lot size always no matter what you need to turn off the RiskRatioServer and use the LotMultiplier.

• RiskRatioServer=0
• LotMultiplier=1

Also, you can set Client EA to risk a certain percentage of a client account’s balance/equity using the RiskPercent parameter, just note that this one requires a stop loss to be present. Trades will be delayed and not copied until the stop loss is set on the master trade while Client EA is using the RiskPercent parameter.

Leverage of a client account affects the lot size

The Client EA is always looking at the leverage of the client account and compares it with the leverage of the master account.

If the leverage size match then it won’t affect the lot size.

However, if the leverage size of the client account is smaller than the leverage of the master account, it will affect the lot size by making it smaller as well.

Note that the lot size is affected only if the leverage of the client account is smaller.

This was introduced into the Local Trade Copier version 2.9.6.

Example #1

Master account leverage 1:200
Client account leverage 1:50
Client EA is set to use LotMultiplier=1.0

The master account opens a trade of 1.0 lot, but the client account will have the same trade copied only of 0.25 lot (instead of 1.0 lots). It is because the client’s account leverage size is 4 times smaller and copying a full 1.0 lot trade might damage the account.

If you want a bigger trade size on the client account despite the risk, then increase it by using money management parameters. In this example, LotMultiplier of 4.0 would do the job.

Example #2

Master account leverage 1:5
Client account leverage 1:100
Client EA is set to use LotMultiplier=1.0

The master account opens a trade of 1.0 lot. The client account will have the same trade copied at the same size of 1.0 lot regardless a higher leverage. Even though the client’s account leverage size is 20 times bigger the trade size copied will not be affected to avoid account damage and unexpected results. If you want a bigger trade size in such scenario then increase it by using money management parameters. In this example, LotMultiplier of 20.0 would do the job.

Auto-adjusting lot size between accounts of different currencies

In a situation where Master account and Client account are in different currencies, the LTC trade copier may adjust the lot size according to the current rate to preserve the same percentage risk/gain of a trade.

Let me give you an example.

SERVER Account: 100,000.00 USD
CLIENT Account: 100,000.00 EUR
Client EA is set to use RiskRatioServer=1 to reserve the same percentage risk/gain of each trade.
Master sends 1.0 lot from USD account and Client receives it as 1.18 lot to a EUR account.

Here’s an explanation of why the lot size is bigger even though the size of accounts is the same.

Client account size converted from EUR to USD and in this example when the EUR/USD rate was 1.1773 it looks like this: 100,000 EUR * 1.1773 (EURUSD) = 117,730 USD

Client EA will treat its size as 117,730 USD when calculating lot size for a trade from USD master account. So it turns out the client account is bigger by 1.1773 than the Master account.

This means 1.0 lot * 1.1772 = 1.18 lot for a Client account (rounded to decimal 2 digits).

When the 1.18 lot trade on a client close it will make a profit/loss of the same amount in percentage because MT4 will reverse back the currency conversion on that trade. In other words, many people mistakenly think that the bigger lot size makes higher profit/loss on an account of another currency when it actually does not.

In other words, if we take an example of a trade with a 1% risk when it has to risk $100 on the USD account and €100 on the EUR account, the lot size on the USD account will have to be smaller. It is because it takes a smaller lot size to risk $100 USD and a higher lot size to risk €100 EUR.

What to do if Client EA does not always use a fixed lot size when it is configured to?

If you set Client EA to use fixed lot size then there’s no way for the Client EA to use any other lot size. It’s just not possible. However, there might be a couple of scenarios for misunderstandings.

Broker’s minimum and maximum lot size limitations

The first scenario might be if your broker does not allow the lot size you are trying to use (minimum and maximum lot size limitations). For example, the broker has a maximum lot size limitation of 50 and you are trying to use a fixed lot size of 60 lots. The broker will deny such lot size and Client EA will be forced to use a lot size of 50 (maximum allowed by the broker). Obviously, there’s nothing you can do to override this because this is the limitation on the broker’s side. But you could use the Lot Split function in the Client EA to split that 60 lot trade into two trades of 50 and 10 lots.

Partially closed trades change lot size

Another scenario might be if trades are closed partially (a.k.a. scale-out) on the master account. In this case, Client EA will repeat the same actions on the client MT4 account and when you get back to the computer you might see a lot size that’s smaller than your preset fixed lot size. This is completely normal and interfering with this would usually ruin a trading logic of a strategy you copy.

If you set Client EA to you a fixed lot size then it will always use a fixed lot size always to open a trade, but as the time goes these trades might get closed partially on the master by your account manager or automated trading strategy you use (Forex EA). To copy the trades in a correct way Client EA will also close trades partially the maintain an exact same copy of those trades.

For example, the master opens a 2.0 lot trade, and the client copies it at a fixed lot of 1.0 lot. Master closes half of the position (1.0 lot) and the rest 1.0 lot is left to run. So the client will close half of the position too (0.5 lot) and the remaining 0.5 lot will be left to run. Now when you see 0.5 running on the client you might assume that the Client EA copied it incorrectly when in reality it is all fine because it was copied correctly but then closed partially by the master later.