Trading limitations act as basic constraints on trading activity, functioning as a pre-trade risk engine integrated into the automated trading strategy. These settings allow users to fine-tune entry parameters and control trading days and times.
Entries
Traders can impose various limitations on order entries to manage risk effectively:
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Maximum Orders: Limits the total number of orders that can be placed. For example, if set to 4, the trader cannot place a 5th order if 4 orders are already active.
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Maximum Positions: Similar to maximum orders but applies to the number of positions. It restricts the total number of active positions a trader can hold.
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Maximum Trades per Day: Caps the number of trades a trader can execute in a single day, helping to control overtrading and manage daily risk exposure.
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Order Execution Delay (ms): Simulates slippage by introducing a delay in order execution during backtesting. This feature is most effective when using tick data.
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Trading Days and Time
These settings differ from those in the data modeling section as they control the trading activity rather than the historical data used for backtesting:
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Weekdays: Limits trading to specific days of the week. The strategy will only open trades on the selected weekdays.
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Time Ranges: Restricts trading to specified time periods within the day. The strategy will only execute trades during these defined time ranges.
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Comparison with Data Modeling
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Data Modeling: Customizes the historical data file used for backtesting, building data for specified dates, weekdays, and time ranges.
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Trading Limitations: Uses the built data set from the Input Data section but restricts trading activity based on the defined limitations, ensuring that trades or orders are only placed according to the set constraints.
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By adjusting these limitations, traders can create more controlled and risk-managed trading strategies, ensuring trades align with specific risk parameters and operational constraints.