MATHEMATICAL TRADING SIMULATOR (MTS)

The best strategy, to minimize financial risk, is the right "confidence" that is acquired through the use of support tools such as trading simulators and can be distinguished into two categories:

  • - Valuation trading simulators
  • - Learning trading simulators

1) Valuation Trading Simulators are nothing more than a demo offert accountor broker platforms to gain confidence with online trading activity and allow, through the activation of an account, theuse ofthe trading platform with virtual money, dedicated exclusively to functional exercise through the simulation of financial transactions. The aim is therefore to givethe user the opportunity to understand how it works by evaluating its service.

This type of account is provided free of charge and is aimed at a predominantly retail user or a retail investor with little familiarity in that type of financial instruments where, in mostcases, they provide underlyings such as leverage and maintenance margin. (see CFDs). The approach, to demonstration simulators, exactly reflects the trading activity showing what, in reality, the trader will find himself having to manage where, however, the emotional aspect, of the moment, comes completely to nothing. The reason is simply because the aspiring investor, plays a completely marginal role as the virtual totally disconnects emotions by zero ingtension, fear and adrenaline. This factor means that the activity carried out is not entirely natural by distorting/distorting the results obtained.

"A particular and not a small matter in that, in reality, most users lose their money"

2) Learning Trading Simulators are un format diatticor with a technical approach. In essence they are simulators for mathematical trading or that literally perform the function of statistical/predictive calculators forthe management, in preview, of theinvestment. This type of method offers a broader and clearer view of the target to bereached, therefore, oriented or to train the individual skills on the analysis and understanding of the data produced, with a broader and highly probativeview. Also in this case you operate only and exclusively at a virtual level creating a real financial map of the position evenbefore applying to really through your broker or financial intermediary.

This software, therefore, mainly carry out the activity of economic budget planning where the problems that thefinancial assetcould encounter during the development phase are significantly identified.

One of the many critical issues, frequently found, are given bythe variables on the trend of the stock/market the occurrence of unforeseen events, the main cause of sudden deviations and oscillations, difficult to control and/or calculate unless througha "predictive planning" that crystallizes its actual size on the potential loss at the occurrence of the event.

"This type of management is part of the risk management practices that every investor should know to protect their capital"

The advantage of predictive planning therefore offers a concrete and solid utility in minimizing risk exposure by optimizing the to financial governance both in the short and long term in relation to the solidity of the committed capital and that available against possible hedges.

"The goal is therefore, to focus all possible and probable critical issues evaluating: economic robustness and relative temporal sustainability"

The concept lies precisely in establishing the relationship between the initial capital and the share allocated to the investment with the underlyings that each financial instrument inthe body (type of leverage, margin, spread.. ). The formation of the metrics produced by this match generates a series of indicators and graphs to support the understanding of the real financial exposure to beaddressed in proportion to the capital invested.

A basic calculation is given by this trivial formula: if you lose 50% of your starting capital of $100, you're left with $50 (100-(100*50/100) = $50). However, if you start with $50 and earn the same percentage you lost - 50% - you'll end up with $75 (50+ (50*50/100) = $75). If we add leverage (e.g. 1:10) to this simple formula, the final result can increase tenfold reflecting its strength (positive/negative) both in terms of profit and loss which, in this case, will be $-250. The multiplier effect therefore plays a predominant role in the calculation of risk.

If we add the leverage effect, to this simple formula, the final result can increase tenfold reflecting its strength (positive/negative) at the level of profitor.

This is just a simple example of how the mathematical simulator interprets the data by providing a basic indication of potential profits and likely losses in relation to the price/quote deviations that the betrayed security may suffer. We can say thatthe advantage generated by the didactic simulation "prepares" the investor to areal size on the risk exposure of his capital through mathematical dynamics that theevaluation simulation does not offer.