How much money do you need to copy a signal safely

When you copy a signal, your account opens the same trades as the signal’s account, scaled to a size you choose. Scaling the lots scales the result, the good and the bad. A deposit that is too small does not make the copy cheaper. It makes the copy end at the first deep drawdown.

The question is not “how little can I start with”, but “how much does this signal need to come through its own worst moments at my size”.

Two things the deposit must cover

The first is the worst drawdown: the largest fall from a peak in the history, in money. If the signal lost that much once, your copy will lose the same, scaled to your size.

The second is the margin at the heaviest moment. Every open position locks up part of the account as margin. When many positions are open at once, as in a grid, the margin can be larger than the drawdown. If your account cannot carry it, the broker closes positions, a margin call, at the worst possible time.

Monetio takes the larger of the two, multiplies it by your lot size relative to the signal’s, and doubles it as a buffer for a worst moment the history has not shown yet.

Minimum safe deposit

3,300

Margin at the heaviest moment

1,650

Worst drawdown at your lot size

1,200

Set by

the margin

Change the lot multiplier first. At 0.5 you trade half the signal’s size, and you need half the deposit. Then change the leverage: a lower leverage raises the margin, and with it the deposit when the margin is the larger of the two.

One real signal

One anonymized live signal in our fixtures traded gold only. It started with a first deposit of 1,000, made 552 trades, and had up to 3 positions open at once.

first deposit

1,000

worst drawdown

2,202

margin at the heaviest moment, 1:100

6,043

minimum safe deposit

12,086

Its worst drawdown was 2,202, already 2.2× its first deposit: the account had grown before it fell. Its margin at the heaviest moment was larger still, 6,043 at a leverage of 1:100. So the margin set the number: 2 × 6,043 is 12,086, about 12.1× what the signal itself started with.

What real signals need

We took 1,774 live forex signal histories with at least 30 trades and worked out each one’s need as a multiple of its own balance: 2 × the larger of its worst drawdown (as a share of the peak) and its margin at the heaviest moment (as a share of the balance then), at 1:100.

A quarter of signals need up to0.56

Half need up to1.07

Three quarters need up to1.75

Nine in ten need up to2.69

The margin alone was a large share of the balance for many signals. For the median signal it reached 37% of the balance at the heaviest moment, and for one in ten it was 135% or more. 287 signals had more margin open at their peak than their whole balance at 1:100. They can only have traded that way with higher leverage, and a copier at 1:100 cannot hold those positions at all.

The worst drawdown was 34% of the peak for the median signal, and 60% for one in four.

What to do with your own report

1. Find the signal’s worst drawdown in money and the most lots it held at once. Use the calculator to turn them into a deposit at your lot multiplier and leverage.
2. Compare that deposit with what you planned to put in. If it is short, lower the multiplier, not the buffer.
3. Check whether the signal’s trades are already at the smallest lot size. If they are, you cannot copy them smaller.

Monetio computes the minimum safe deposit from the full trade history, at your leverage and lot size, and tells you how far your deposit is short of it.