One of the difficult things when you are trading is accurately calculating your risk for each trade. Some of the cBOTs we have written use the ATR (Average True Range) of the daily candles to work out where to put the stops and limits. What this does mean is that as volatility changes so does your stop and limit.
One impact this has is that you may not realise quite how much of your account you are risking if you use a fixed lot size or £/pip on each trade. Over a matter of days the stop may increase from 50 pips to 75 pips thus increasing your risk by 50%.
By using the percentage risk option in the BOT you can set the percentage of your account balance you would like to risk on each trade (for my trades I use 3-5%). The BOT then calculates how much this is as an amount of your account and then works out the lot size of whatever you are trading so that you are only risking the same percentage on each trade. This does mean that you will see differences in your trade sizes from day to day.
The other advantage is that as your balance increase so will the quantity that you trade at. This happens automatically so you don’t have to make the decision to increase your stake (quite a large psychological barrier for some people trading). It also means that if you have a trade go against you the BOT will automatically decrease the stake of the next trade in line with the percentage you have set. Again this is a common trading error, if people have several losing trades when they are trading manually they tend not to decrease their stake. The result is that each trade becomes a larger percentage of their remaining balance putting them at increased risk of margin calls and emptying their account !
I hope this explains why I think it is important to be aware of the amount you are actually risking on each trade and one of the methods you can use to control this risk.