【ELDRA Strategy Guide 第5回】Comprehensive Lot Management: Fixed, Compound Interest, Monte Carlo, and Fund Guard
Hello, this is Hoso-no P, the author of ELDRA.
Even with the same entry and the same decision,the way you decide the lot size (order quantity)will completely change the account results. Even a winning strategy can be knocked out by one big losing streak if the lot is too large, and if it’s too small, you won’t grow much for the effort.
ELDRA’s “1-1. Types of Lot Sizes” has five methods, plus a cap on the lot size (33-4), and a margin guard that stops orders when funds are insufficient (56). In this fifth installment, we explain the mechanism of each calculation and its suitability.
Also, the “10. Martingale Setting,” which increases the second and subsequent lots after a loss, is explained in the second installment, intermediate section, article about averaging down. This time it centers onthe first lot (initial entry) sizing.
Overview of the five methods
| Option 1-1 | What determines it | Who it suits |
|---|---|---|
| 0: Fixed lot size | Always the same number of lots | Beginners, under test, prop firms |
| 1: Compounding lot size | Proportional to current balance | Long-term operation wanting to increase funds |
| 2: Monte Carlo method | History of wins and losses (sequence) | Wants to recover losses gradually |
| 3: Martingale method | If the previous trade lost, multiply the amount | Advanced traders only |
| 4: Retrieval | Depth of drawdown in the last 30 days | Wants to add lots equal to the amount lost |
1. Fixed Lot (1-1 = 0)
| Setting | Default |
|---|---|
| 1-2. Initial lot size | 0.01 |
Always place orders with the same quantity. It’s the easiest to read results, andin backtests, comparisons, and prop firm challenges, we first recommend fixed.
As a guide for determining the lot size, first calculate how much you would lose in the worst case (when averaging down reaches the maximum number of lots and hits the stop-loss level), and then work backward to see what percentage of the account that represents.
2. Compounding Lot (1-1 = 1)
| Setting | Default | Explanation |
|---|---|---|
| 1-3. └ Compounding: base amount | 100000 | |
| 1-4. └ Compounding: base lot | 0.01 |
The calculation is simple:Lot = current balance ÷ base amount × base lot. With defaults, a balance of 100,000 yields 0.01, 200,000 yields 0.02, and 50,000 yields 0.005 (rounded up to the minimum lot).
As the balance grows, the lot grows, accelerating growth; when it decreases, the lot decreases, making it harder to be eliminated than fixed. Howeverbase amount must be entered in account currency. Note that if you have a dollar account and leave it at 100,000, the lot will stay near the minimum even if balance is 10,000 dollars.
3. Monte Carlo method (1-1 = 2)
This method manages losses in a sequence and recovers them gradually.
| Setting | Default | Explanation |
|---|---|---|
| 2-1. Type of Monte Carlo | Conventional | Conventional / decomposition |
| 2-2. Initial lot size | 0.01 | The lot corresponding to “1” in the sequence |
| 2-3. CSV file name | Empty (automatic) | Where the sequence is saved |
| 2-4. Startup reset | OFF | ON resets the sequence at startup |
How it works is as follows.
- Build with the sequence’ssum of first and last elements × 2-2 lotand place
- If you lose, add the amount you bet to the end of the sequence
- If you win, remove the first and last elements of the sequence
The “conventional” starts with the sequence “1,2,3,” so the initial unit is 1 + 3 = 4 units. The “decomposition” starts with “0,1,” so the initial unit is 0 + 1 = 1 unit, making it smaller to begin with.If you don’t want to start large, the “decomposition” is easier to handle.
The sequence is saved to a CSV file, so you can resume from where you left off if you restart the EA. When redoing a test or changing accounts, set “2-4. Startup reset” to ON.
Compared to martingale, the growth is slower, but if a losing streak continues, the sequence grows and the lot increases.Always use it in combination with “33-4. Maximum entry lot”.
4. Martingale Method (1-1 = 3)
| Setting | Default |
|---|---|
| 3-1. Initial lot size | 0.01 |
| 3-2. Martingale multiplier | 2.0 |
If the immediately preceding trade loses (or breaks even), place the next order with the previous lot × multiplierand return to the initial lot when you win.
With a losing streak, 0.01 → 0.02 → 0.04 → 0.08 → 0.16… doubles each time. An 8-loss streak would be 1.28 lots, i.e., 128 times the initial amount.A method where a single loss can wipe out the account, so use it only for advanced traders and with the limit (33-4) required.
Also, some prop firms ban “increase the lot after a loss.”Always check your account rules before using it.
5. Retrieval (1-1 = 4)
| Setting | Default | Explanation |
|---|---|---|
| 4-1. Initial lot size | 0.01 | Lot when there is no drawdown |
| 4-2. Base amount | 100000 | |
| 4-3. Base lot | 0.01 |
Add up the realized P/L for the last 30 days in order, andmeasure how far you are from the best point (drawdown). The lot is determined by the following formula.
Lot = 4-1 + (drawdown ÷ 4-2) × 4-3
With defaults, when the drawdown is 100,000, 0.01 is added to make it 0.02. If there is no drawdown, it stays at 4-1. Unlike martingale’s “double after one loss,”you add a little more proportional to the amount lost. This is the feature of the retrieval method.
6. Maximum entry lot (33-4)
| Setting | Default |
|---|---|
| 33-4. Maximum entry lot (0 = unlimited) | 0.0 |
Regardless of the method,if the lot exceeds this value, stop at this value. If you use methods that increase the lot such as compounding, Monte Carlo, martingale, or retrieval, this is an essential safety device you should include.
7. Margin Guard (56)
| Setting | Default | Explanation |
|---|---|---|
| 56-1. Margin guard ON/OFF | ON | |
| 56-2. └ Minimum usable margin | 0 (automatic judgment) | If this amount falls below, do not place an order |
| 56-3. └ When funds are depleted, delete all pending orders | ON |
If excess margin falls below the margin needed to place the minimum lot,we stop sending new orders to the server. If the server returns a margin shortage error, the guard also activates immediately, and order placement is halted for at least 5 minutes. Once margin recovers sufficiently, the guard is released automatically.
If an EA keeps sending orders on an account with no funds, it can generate a large number of errors to the broker server and cause problems with the account.Keep it ON by default. Settlements and SL/TP changes continue to operate normally during the guard.
Relatedly, the “32-8. Max Margin Usage (%)” also sets a cap on margin usage (0 disables).
Common mistakes
- Not entering the base amount in account currency: Both compounding (1-3) and retrieval (4-2) use the account currency
- Increasing method and 33-4 is left at 0: in a losing streak, the lot can grow without bound
- Having a high minimum lot for certain assets: For stock indices, the minimum lot can be 0.1 or 1. If the calculation result is smaller than the minimum lot, it rounds up to the minimum
- Inheriting Monte Carlo sequence: When starting a different test, reset with 2-4
- Combination of panel’s half/partial settlements (MT5 version) with martingale-type methods: Some partially settled orders are treated as “previous trade,” which affects the next lot calculation for martingale or Monte Carlo
Summary
- If unsure, go withFixed (1-1 = 0). The challenges for prop firms also center on fixed
- If you want to grow long-term,Compounding, and if you want to slowly recover losses,Monte Carlo (decomposition) orRetrieval
- Martingale is for advanced users. Also check your account rules
- For methods where lots increase,33-4. Maximum entry lotmust be
- 56. Margin guardshould remain ON by default
Lotsa increases magnify both profits and losses by the same factor. No method guarantees profit, so please verify and use at your own risk.
Next time, in Episode 6, we’ll cover “Filters.” We’ll implement time filters, summer/winter time, stop on sudden changes, volatility/ADX, spread cap, averaging-down time filter, and intervals to embed the “courage not to enter” into the settings.
Trying ELDRA
Differences among lot methods become clear when you backtest over the same period. First, trythe trial version (MT5, 14 days free) and compare.
- Trial version (MT5, 14 days free):https://www.gogojungle.co.jp/tools/indicators/87634
- Product version MT5:https://www.gogojungle.co.jp/tools/indicators/53197
- Product version MT4:https://www.gogojungle.co.jp/tools/indicators/53092