More on the Margin Call -o- meter ™

Many thanks to Digian and James over at
http://www.zulutradeblog.com/ for bringing up the issue of the Margin Call -o- meter ™. I must confess James is the originator of the Zulutrade blog concept, and i'm just a wanna-be.

Anyway, the Margin Call -o- meter ™ is a quick, graphical way of letting the user know how likely they are to blow-up their account based on their provider and account settings. The data appears as a thermometer-like zero to 100 scale. They even color-code it so that low numbers are a nice soothing green and the higher-risk values are a high-blood-pressure inducing orange to red. As you can see above, the meter shows my current odds of blow-out at 82.8% which is pretty high for a conservative guy like myself.

By way of background, Zulutrade updated the o'Meter in the past few months to include a calculation regarding the number of open positions each provider is likely to open. To prove this, let's take a look at a few sample setups.

First, setup your account for provider Bigwin. Click the Advanced link and set him for 1 Max total open trades with a Stop value of 180 pips. The screen will look like this:






Next, setup your account with provider Pro-B5. Click the Advanced link and set him for 1 Max total open trades with a Stop value of 180 pips. The screen will look like this:






That's a pretty big difference, 58% chance of blow-up versus 2.1%. What's the difference? You can't see it on the setup screen but its the number of concurrent positions opened by the provider.

Why should Zulu so strongly consider the number of open positions? Its because Zulutrade is merely an interface which passes orders to the FCM for execution.

Consider the scenario where ZT sends a trade to the foreign currency merchant (FCM). FCM executes the order but for whatever reason the confirm doesn't make it back to ZT. Signal provider sends another order, but ZT's order limits are not honored because as far as ZT is concerned, you don't have a position open. From there it gets ugly and you can imagine what happens next.

I've had some minor issues with Zulutrade executions, but nothing that bad yet.

What's the moral of the story? Don't bet your mother's, grandmother's or your kid's college fund on currency trading. And btw...

Cheers to James and his Mrs for their new arrival!

Open a free account on Zulutrade at http://zulumon.zulutrade.com/