Estimating Grid Account Survival at Broker Stop-Out

Summary

This read-only tool estimates how far an averaging or grid position chain can move against an account before broker stop-out. It accounts for cumulative floating losses across the legs, margin locked by open trades, the broker’s stop-out threshold, and the fact that legs enter progressively as price moves. It reports the adverse distance to stop-out, the number of legs open at that point, and the full-chain loss and margin burden.

To put that distance in context, it scans the instrument’s one-minute price history and counts past moves of similar size, restarting the count after each running-extreme event. The document also describes using tick value and tick size to estimate account-currency exposure, and reading the broker’s hedged-margin rule where available. Its example illustrates why cumulative losses grow faster than a simple step-times-leg count suggests, but the tool is not a strategy backtest and offers no profitability assessment. Historical move frequency does not predict future moves, and the calculation measures adverse excursions rather than whether or when a grid might recover.

Key ideas

• Grid losses accumulate across each leg’s distance from the newest entry, rather than at a constant loss per leg.
• Stop-out risk depends on both declining equity and margin consumed by open positions.
• The tool estimates the number of legs present when stop-out occurs, accounting for progressive fills.
• Historical one-minute bars provide a frequency estimate for moves as large as the calculated adverse distance.
• The calculation assesses account survival under a configuration but does not evaluate profitability or recovery.

Tags

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.