Risk Management

Trading in the foreign exchange market carries some risks and can cause you part or complete loss of your funds. The degree of risk depends on many factors. Manually controlling these factors is an objectively difficult task.

We have developed a unique risk management system that protects investors from unplanned losses and additionally controls managers, freeing them from psychological stress.

The manager sets part of the limits (mandatory part of the system). These limits are mandatory and pre-defined for investors. The investor can establish personal risk management limits (additional part of the system). Also, indexed managed accounts are additionally controlled by ICE UK risk managers.

For the manager

Mutual approval of limits with managers (for indexed managers)
All mandatory limits are agreed with the managers such that the limits do not interfere with managers' trading activity. In most investment systems, the investor sets limits without consulting the manager and this leads to losses.
Non-indexed managers set mandatory limits
The manager sets all mandatory limits based on his risk management rules. In most investment systems, the investor sets limits without consulting the manager and this leads to losses.
Freeing the managers from psychological stress
A manager cannot alter the parameters of risk management limits at will directly in the course of trading. As a result, the probability of deviating from the trading system and the chance of an increase in risk are all minimized. The manager is protected from committing mistakes caused by the impact of strong emotions.

For the investor

Pre-defined risk management settings (mandatory part of the system)
The investor is not obliged to understand portfolio management and configure the risk management parameters of accounts by himself. In consultation with managers (for indexed-managers) ICE FX sets the mandatory risk management limits that allow the investor to be confident that his losses will not exceed the specified value. These limits can also be set by non-indexed-managers.
Additional risk management
Some investors have extensive experience and knowledge in portfolio management. So when needed, the investor can adjust the limits of risk management parameters at his/her discretion.
The risk management system does not depend on managers
The manager cannot alter the risk management parameters at any time. As a result, the investor's loss is prevented from exceeding the regulated level at the moment the investor invests in the managed account. Parameters are changed only with the consent of ICE FX and after all the investors involved have been notified and provided with the opportunity to stop working with the managed account until such changes come into effect.
Simplified portfolio management calculations
Thanks to loss limits, the investor can make accurate calculations related to distribution of portfolio shares between managed accounts and risk level of the portfolio and its components.

Risk management limits can be set in the managed account settings in the personal profile.

The risk management system allows to set the limits of 5 different parameters – once any of these parameters is triggered, trades will be closed at the current market quotes, and trading activity will be blocked for a certain time.

Types of limits

Maximum leverage limit

You can set the maximum leverage limit.

Maximum daily loss

This limit is similar to the "maximum weekly loss" limit. It limits the maximum loss for the day. This limit is calculated based on the equity value at the beginning of the trading day, regardless of how much the account equity grows within this period (unlike the maximum drawdown limit, which is calculated based on the maximum equity after this limit has been set).). It is expressed as a percentage of the deposit.

Maximum weekly loss

It limits the maximum loss for the week. This limit is calculated based on the equity value at the beginning of the week, regardless of how much the account equity grows within this period (unlike the maximum drawdown limit, which is calculated based on the maximum equity after this limit has been set). It is expressed as a percentage of the deposit.

Maximum drawdown

The maximum drawdown limit is calculated based on the maximum value of the account equity in existence after this limit has been set. If after some time the account equity falls to the value of the established maximum drawdown, this limit will be triggered (comparable to Trailing Stop in the MT 4 terminal). It is expressed as a percentage of the deposit.

Minimum balance

It indicates the minimum amount that when reached, limit will be activated and trading on the account will stop. It is expressed in the currency of the deposit.

Risk Management Schedule

____

equity

lim(max(DD)) (20%)

Maximum drawdown limit, %;

lim(Loss(W)) (10%)

Maximum loss limit for the week;

LWM (Low watermark) ($800)

Minimum balance limit, USD;

Schematic diagram of the functioning of risk management parameters

	Kind of limits	Baseline	Limit conditions	Trade continuation (not earlier than)	When parameter changes come into force
	Kind of limits	Baseline	Limit conditions	Trade continuation (not earlier than)	Reducing the Limit Value	Increasing the Limit Value
Restriction is established by the manager	Maximum loss limit for the day ⁴	The value of the account equity at 00:05 (EET) of the current trading day	The value of the account equity (in percent) falls by the size of the given limit	00:05 (EET) of the next trading day	00:05 (EET) of the Monday of next week	00:05 (EET) Monday of the following week
Restriction is established by the manager	Maximum leverage limit ^{1, 3}				00:05 (EET) Monday of the following week	00:05 (EET) Monday of the following week
The restriction is established by the manager and can be changed by the investor	Maximum weekly loss ^{1, 2}	The value of the account equity at 00:05 (EET) of the Monday of the current week	The value of the account equity (in percent) falls by the size of the given limit	00:05 (EET) of the Monday of next week	Change is initiated by the manager: 00:05 (EET) Monday the week after the current week (the soonest weekly rollover + 1 week) Change is initiated by the investor immediately.	Change is initiated by the manager: 00:05 (EET) Monday the week after the current week (the soonest weekly rollover + 1 week)
Limitation is set by an investor	Maximum drawdown limit (limitless) ⁵	The maximum value of the account equity after the limit level has been set / changed	The value of the account equity (in percent) falls by the size of the given limit	00:05 (EET) of the Monday of next week	Instantly	00:05 (EET) of the Monday of next week
Limitation is set by an investor	Minimum balance level (indefinite) ⁵		The value of the account equity (in the account currency) falls to the given value	Only after the account has been recharged or the limit size changed	Instantly	00:05 (EET) of the Monday of next week

Notes:

Is mandatory for indexed managers, subject to the risk management system of ICE FX. Set/changed by ICE FX in consultation with the manager.
Is a mandatory limit for all managed accounts. The manager indicates the current value in the offer. For non-indexed managed accounts, the manager sets the limit.
Is not mandatory for all managed accounts, except the indexed accounts. ICE FX sets the limit in consultation with the manager (for indexed managed accounts). For other managed accounts, the manager sets the limit.
Is not mandatory for any of the managed account categories. The manager sets this limit.
Is not mandatory for any of the managed account categories. The investor sets this limit.

Risk management limits can be set in the managed account settings in the personal profile.

An investor is offered two managed account investment models:

Running a deposit inside an investor pool (PAMM model).
Creating a separate investment account with subsequent proportional copying of the manager's trades (MAM model).

The functioning of the risk management system for PAMM and MAM models varies as follows:

PAMM model

For the PAMM investor, there are loss limits set by the manager account (general risk management limit):

Maximum loss for the week (required).
Maximum loss for the day (optional).
Maximum leverage (optional).

Individual loss limits cannot be customized.

MAM model

The MAM investor can adjust loss limits by the following parameters:

Maximum loss for the week (change in the loss limit set by the manager)
Maximum drawdown
Minimum balance

The limits are optional. Setting limits is optional.

The maximum loss for the week is by default equal to the value set by the manager and does not require additional configuration (can be changed)

Risk management limits can be set in the managed account settings in the personal profile.

Investing in indices is carried out both by PAMM model and by MAM model. When investing in Indices under different models, risk management functionality is similar to that when investing in a managed account (MA).

Along with limits that are inherent in the index of managed accounts, the index has an aggregate loss limit for the trading week.

All indexed managed accounts are additionally controlled by the ICE FX risk management department.

Risk Management of Indices

Risk Management

Risk management of personal indexed managed accounts. Is mandatory for all indexed managed accounts. All parameters of managed account risk management are agreed with managers in order to avoid interference with correct trading.

Index Loss Limit (%)

Additional loss limit on the index as a whole, operating independently of the risk management rules of individual managed accounts. Limit of maximum loss for the week of the index (in percentage). The limit is set by ICE FX and is dynamic (reviewed depending on the Index indicators).

Maximum leverage limit

It limits the maximum loss for the week. It is calculated based on the equity value at the beginning of the week, regardless of how much the account equity grows for this period.

It is expressed as a percentage of the deposit.

Monitoring by ICE FX risk managers

If necessary, ICE FX risk managers may stop the trading activity of indexed managers, or make adjustments to it.

Maximum leverage limit

Compulsory maximum leverage limit of indexed managed accounts.

All indexed managed accounts are additionally controlled by the ICE FX risk management department.

change the size of the Index's loss limit (in percent);
set the maximum drawdown limit (in percent);
set the maximum drawdown limit (USD).

RATING OF MANAGED ACCOUNTS

Examples of work of risk management MA How to adjust risk management?

Note!

Past performance does not guarantee future results. ICE FX cannot guarantee your future results and/or success.
ICE FX provides only managed account service for investors and managers. The company is not a representative of any of the parties to trust management.
ICE FX does not participate in managing the funds of clients that are investing in managed accounts.
Leveraged investing exposes an investor to higher risk and can lead to complete or partial loss of one's funds.
If you do not fully understand the investment process or the degree of risk you may be exposed to, consult a third-party specialist for advice.
The minimum amount required by a manager to open a managed account is $1,000.

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Risk Management

Benefits of the risk management system

Mutual approval of limits with managers (for indexed managers)

Non-indexed managers set mandatory limits

Freeing the managers from psychological stress

Pre-defined risk management settings (mandatory part of the system)

Additional risk management

The risk management system does not depend on managers

Simplified portfolio management calculations

Types of limits

Risk Management Schedule

Schematic diagram of the functioning of risk management parameters

Notes:

Differences in risk management for PAMM and MAM models

An investor is offered two managed account investment models:

The functioning of the risk management system for PAMM and MAM models varies as follows:

All indexed managed accounts are additionally controlled by the ICE FX risk management department.

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