This woked example is to demonstrate the expected return on your own account should you decide to invest in the Challenge FX fund depending on your own Risk Appetite.
The Challenge FX fund expects to make a monthly return of 5r
What is 'r'?
This is the percentage (%) per trade of your account balance that you will be risking per trade.
The current risk per trade on the Challenge FX fund is set to 4%.
This means that each month you can expect to see a 20% gain. Hence 5r (5 x 4% = 20%)
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Because the 'r' value is kept constant once agreed by the account user, the following can be assumed based on your own risk appetite
Table of 'r = X %'
You decide to risk 1% per trade = 'r' is 1 = 5% per month return*
You decide to risk 2% per trade = 'r' is 2 = 10% per month return*
You decide to risk 3% per trade = 'r' is 3 = 15% per month return*
You decide to risk 4% per trade = 'r' is 4 = 20% per month return* - Optimal setting when taking back-testing into consideration
Clearly, the higher the 'r' value the more risk you are taking as an investor, however, even though a lower 'r' value results in a smaller return per month, the drawdown will also be less as a result, thus reducing the risk taken on your account.
*These are estimated returns and are not guaranteed in any way, The estimated returns do no take commission charges into account. Commission charges are agreed on an individual contract at the point of investment.
