Trader B is an aggressive trader with $14.5k who wishes to maximize his returns.

He feels he can risk >50% loss of his account to satisfy his demanding returns.

Effectively, he is seeking high returns for higher risk. He heads straight to the performance page to see what is available.

He is seeking the best performing systems irrespective of downside risk and decides to trade the top 5 systems by performance.

He does not take into consideration the number of maximum positions, the risk adjusted, or maximum drawdown.

He settles on the top 5 systems and decides to test them on an account with a balance of $14,500 with 50K fixed lots per system as the money management setting.

The software calculates that on his $14.5K account his chosen portfolio would have leverage of 138:1 if all positions were to be open at the same time.  He proceeds to plot the graph of his chosen portfolio.

The reason his leverage is 138:1 on 5 systems is calculated as follows:

*Please keep in mind that high degree of leverage can lead to large losses as well as gains.

Trader B is concerned, his portfolio has rocketed in value to over $100K in less than 6 months but two draw downs of almost 10K would have seriously damaged his account to a point he would not have the required margin to open trades for his portfolio settings.

In addition to this, he faces an additional problem that if all signals were open on his account he would be using margin of $11K, ($2.2M / 200:1 = $11K).

This only allows trader B a small amount of room to breathe as it would take little to trigger a margin call on the account and all positions would be liquidated.

He realizes he is dangerously overleveraged and rethinks his decision. He decides to reduce the portfolio to 10K per system and redraws the graph.

Now the software tells him that his maximum leverage is down to 27:1 and drawdown potential risk has been significantly reduced.