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Introduction: Revolutionizing Your Risk Management Approach with Technology

Have you ever felt that consuming frustration when your trading account collapses despite all your efforts? You’re not alone. Over 80% of traders lose money in the Forex market, not due to a lack of effective entry strategies, but primarily because of inadequate risk management. The good news? Solutions like Solidity Trading are radically transforming how investors can navigate these turbulent waters.

Solidity Trading has developed a sophisticated trading ecosystem based on three proprietary software programs that operate on specific currency pairs (AUD/CAD, GBP/NZD, and EUR/CHF), each using distinct strategies with neutral correlation. This unique approach offers true diversification without risk repetition, a fundamental element of effective risk management. Unlike traditional solutions, Solidity Trading relies exclusively on rigorous statistical methods proven since 2018, ensuring exceptional resilience against market movements.

The real secret of successful traders doesn’t lie in their ability to predict the market – no one can do that with certainty – but in their systematic and disciplined approach to risk management. As legendary trader Paul Tudor Jones says: “Take care of the risks, and the profits will take care of themselves.” Solidity Trading perfectly embodies this philosophy with its “win-to-win” model where the trader only earns a commission on the net profit generated for the user.

In this comprehensive guide, we’ll break down the fundamental principles and advanced techniques of risk management in Forex trading, emphasizing how modern technological solutions like Solidity Trading can help you preserve and grow your capital. We’ll explore how their technical approach based on aligning multiple statistical indicators offers superior precision in trading decisions.

Whether you’re a beginner trader looking to establish solid foundations or an experienced professional wanting to refine your system, this guide will provide you with the necessary tools to transform your approach to risk management, inspired by Solidity Trading’s best practices.

PART ONE: THE FOUNDATIONS OF RISK MANAGEMENT

1. Introduction: Risk, the Trader’s Inevitable Companion

Risk is at the very heart of Forex trading. Contrary to what many advertisements for free automated trading robots promise, there is no risk-free strategy. The question is not how to eliminate it – that’s impossible – but how to manage it effectively to survive and thrive in the long term.

1.1 Statistics on Losses in Forex Trading

The figures are undeniable and should serve as a warning to any trader:

• 95% of retail traders lose money during their first year of trading
• Only 1% of traders manage to maintain consistent profitability over more than 5 years
• The average lifespan of a trading account is about 4 months before it suffers a loss of more than 50% of capital

These alarming statistics are not due to a lack of intelligence or market opportunities, but mainly to inadequate risk management. Most traders obsessively focus on entry points, neglecting the most crucial aspect: how to protect their capital when the market moves in the opposite direction.

1.2 The Risk Paradox: Necessary but Dangerous

Risk in trading presents a fascinating paradox: without risk-taking, no profit is possible; but excessive risk inevitably leads to ruin. This paradox is perfectly illustrated by what price movements represent.

The simultaneous use of different approaches helps maintain more stable performance across various market environments. This is particularly relevant for copy trading users, who can distribute their capital among several traders using complementary strategies.

Solidity Trading applies this principle by using three proprietary software programs with completely different strategies, as mentioned in our documentation.

1.3 The Consequences of Poor Risk Management

Poor risk management can have devastating consequences on your trading capital, extending far beyond simple temporary financial losses.

Catastrophic losses, or “account blowups,” are often the direct result of inadequate risk management. Statistically, about 70% of traders lose their entire capital in their first two years of activity, mainly due to underestimating risks.

The consequences extend across several dimensions:

• Financial impact: Irreversible losses that may represent years of savings
• Psychological impact: Emotional trauma affecting confidence and future decision-making
• Negative spiral: Attempts at “recovery” leading to even greater risk-taking
• Premature abandonment: Giving up trading despite real potential for success with the right approach

A concrete example: a trader risking 10% of their capital per position can suffer a series of 7 consecutive losses (a statistically normal event) that will reduce their capital by more than 50%, then requiring a 100% gain just to return to the starting point.

1.4 Why Risk Management is More Important Than Entry Strategy

Contrary to popular belief, the accuracy of entry points is secondary to rigorous risk management. This counter-intuitive reality is nevertheless fundamental in professional trading.

Research shows that a strategy with a modest success rate of 40% can be highly profitable if accompanied by optimal risk management. Conversely, a “precise” strategy at 70% can lead to ruin without risk discipline.

Here’s why risk management takes precedence:

• It determines the longevity of your presence in the markets
• It protects against unforeseen events (flash crashes, price gaps)
• It stabilizes the equity curve, reducing emotional volatility
• It allows capitalizing on the laws of probability in the long term

At Solidity Trading, we’ve found that traders who devote 80% of their attention to risk management and only 20% to entry signals consistently outperform those who do the opposite.

2. The Fundamental Pillars of Risk Management

2.1 The Risk/Reward Ratio: The Holy Grail of Trading

The risk/reward ratio (R:R) forms the mathematical foundation of any sustainable trading strategy. It simply measures the relationship between what you risk and what you hope to gain on each position.

A risk/reward ratio of 1:2 means that for every euro risked, you aim for 2 euros of profit. This simple metric radically transforms the odds in your favor.

The mathematical implications are clear:

• With an R:R of 1:2 and a success rate of 40%, you are profitable
• With an R:R of 1:3 and a success rate of 30%, you are profitable
• With an R:R of 1:1 and a success rate of 55%, you are barely at breakeven

In our Solidity Trading system on AUD/CAD, we maintain an average risk/reward ratio of 1:2.5, allowing consistent profitability even with a moderate success rate.

Practical consideration: A favorable risk/reward ratio allows you to absorb inevitable losing streaks without compromising your overall capital.

2.2 Maximum Capital at Risk Across the Portfolio

The notion of overall exposure is often neglected but remains critical for long-term survival. It defines the maximum percentage of your capital simultaneously exposed to market risk.

Fundamental principles to follow:

• Never risk more than 15-20% of total capital simultaneously
• Consider correlations between positions to assess real exposure
• Reduce exposure during periods of increased volatility
• Implement a maximum exposure alarm system

At Solidity Trading, we use a dynamic mathematical model that automatically adjusts maximum exposure based on:

• Current market volatility
• Recent strategy performance
• Correlation between open positions

This approach has avoided any drawdown greater than 30% since the launch of our algorithmic strategies.

2.3 Percentage of Capital Risked Per Trade

The percentage-per-trade rule represents the ultimate safeguard against trader ruin. It determines how much of your total capital you are willing to lose on a single position if the market goes against you.

Scientifically validated principles:

• Institutional traders limit their risk to 0.5-2% per position
• A 50% loss requires a 100% gain to break even
• The Kelly formula (mathematical optimization method) generally suggests risks per trade below 2.5%

Our analysis of Solidity strategies on EUR/CHF and GBP/NZD demonstrates that limiting risk to 1% per position offers the best compromise between capital growth and protection against drawdowns.

Practical application: For a €10,000 account, a 1% rule means never risking more than €100 on a single position, regardless of your conviction.

2.4 Mathematical Expectancy: Understanding Long-Term Profitability

Mathematical expectancy constitutes the professional trader’s statistical compass. It precisely quantifies the average gain or loss expected for each unit of capital risked over a large number of trades.

The simple but powerful formula is: E = (P × R) – (1-P) × 1

Where:

• E = Expectancy
• P = Probability of gain
• R = Risk/reward ratio

For example, a strategy with:

• 45% winning trades (P = 0.45)
• Risk/reward ratio of 1:2.5 (R = 2.5)

Gives an expectancy of: (0.45 × 2.5) – (0.55 × 1) = 1.125 – 0.55 = 0.575

This positive value of 0.575 means that on average, each euro risked generates €0.575 of profit in the long term – a highly profitable strategy.

The Solidity algorithm on AUD/CAD maintains a verifiable mathematical expectancy of 0.62 since 2018, explaining its consistent performance despite market fluctuations.

2.5 Capital Preservation: Absolute Priority

Capital preservation represents the supreme principle of any sustainable trading system. Without capital, even the best strategy becomes useless.

Fundamental axioms:

• The first rule of trading is not to lose money
• The second rule is never to forget the first rule
• A 25% drawdown requires a 33% gain to recover
• A 50% drawdown requires a 100% gain to recover

Solidity methodologies integrate several layers of protection:

• Automatic stop-losses adjusted according to volatility
• Trend filters that reduce exposure during uncertain periods
• Circuit breakers that suspend trading after a series of losses
• Adaptive position sizing that decreases risk after losses

These mechanisms explain why our strategies have preserved more than 85% of capital even during the extreme turbulence of March 2020.

3. Advanced Diversification Techniques

3.1 Currency Pair Diversification: Correlations and Decorrelations

Currency pair diversification constitutes a risk reduction lever that is often poorly exploited. The goal is not simply to trade multiple pairs, but to select instruments with statistically distinct behaviors.

Mathematical principles:

• Correlations between currency pairs are dynamic, not static
• A positive correlation close to 1.0 means that two pairs move together
• A negative correlation (towards -1.0) indicates opposite movements
• A correlation close to 0 suggests independent movements

The Solidity Trading approach specifically exploits pairs with historical correlations below 0.4 between them, such as:

• AUD/CAD (influenced by commodities and the North American economy)
• GBP/NZD (sensitive to British and Oceanian monetary policies)
• EUR/CHF (haven against eurozone instability)

This scientifically optimized diversification has reduced overall portfolio volatility by 37% while maintaining returns.

3.2 Temporal Diversification: Trading on Different Timeframes

Temporal diversification represents an additional dimension of protection against risk. It exploits the fact that financial markets exhibit distinct behaviors according to the time horizons analyzed.

Strategic advantages:

• Reduction of false signals through multi-timeframe confirmation
• Smoothing of the equity curve thanks to varied trading cycles
• Exploitation of inefficiencies specific to certain time horizons
• Improvement of the Sharpe ratio (risk-adjusted return)

At Solidity Trading, our algorithms operate simultaneously on:

• Short timeframes (M5-M15) for scalping and exploiting intraday volatility
• Intermediate timeframes (H1-H4) for directional movements of medium amplitude
• Long timeframes (D1-W1) as directional filters and trend confirmations

This multi-temporal approach has demonstrated a 42% reduction in maximum drawdowns compared to equivalent single-timeframe strategies.

3.3 Strategic Diversification: Combining Different Approaches

Strategic diversification constitutes the ultimate bulwark against systemic risks. It relies on the simultaneous use of trading methodologies that are fundamentally different in their approach to the market.

Optimization principles:

• Combine strategies with negative performance correlations
• Integrate approaches based on distinct analytical paradigms
• Balance allocations according to the historical volatility of each strategy
• Periodically rebalance according to macroeconomic conditions

The Solidity system harmoniously merges:

• Volumetric strategies that analyze order flows and liquidity
• Momentum strategies that exploit directional persistence
• Mean-reversion strategies that capitalize on returns to the mean
• Volatility strategies that adapt to market expansions and contractions

This strategic diversification explains why our algorithms have continued to perform in radically different market regimes, from the directional markets of 2019 to the extreme volatility of 2020, up to current conditions.

Warning: Trading involves significant risks and may not be suitable for all investors. Past results do not guarantee future performance. Before investing, carefully evaluate the risks and consider consulting a qualified financial professional.

3.4 Passive Investment and Diversification: Balancing Risk and Return

Passive investment via copy trading offers an accessible way to benefit from diversification without requiring in-depth market expertise.

Best practices for diversification in copy trading:

• Select traders with stable performance histories rather than spectacular ones
• Distribute your capital among at least 3-5 different traders
• Check correlations between the historical performances of traders
• Combine different risk profiles – some conservative, others more aggressive
• Examine maximum drawdowns rather than gains
• Check the internal diversification of each copied trader

The “win-to-win” model mentioned in our Solidity Trading documentation perfectly illustrates this approach, where the trader only earns a commission on the net profit generated for the user, thus creating an alignment of interests.

3.5 The Impact of Diversification on Overall Drawdown

Drawdown (maximum capital decline from a peak) represents one of the most important measures of portfolio risk. Effective diversification can significantly reduce overall drawdown.

Concrete example:

Imagine three trading strategies, each with an average annual return of 20% and a maximum drawdown of 30%. If these strategies are perfectly correlated, the combined portfolio drawdown would remain at 30%. However, if they are weakly correlated or decorrelated, the overall drawdown could be reduced to 15-20%, while maintaining a similar return.

Simplified formula to estimate the drawdown of a diversified portfolio:

Estimated drawdown = Average drawdown × √(1 + ρ(n-1))/n

Where:

• n is the number of strategies
• ρ is the average correlation between strategies

This formula illustrates why low correlation is so crucial for effectively reducing overall risk.

The documentation on Solidity Trading emphasizes the importance of this approach by mentioning that their three strategies on different currency pairs have a neutral correlation, thus contributing to true diversification and reduction of overall risk.

Conclusion of Part One

In this first part, we have established the essential foundations of risk management in Forex trading. We have discovered why the majority of traders fail, explored the fundamental pillars of capital preservation, and examined advanced diversification techniques that can transform your approach to trading.

Understanding these principles is essential, whether you choose to use a reliable automated trading robot or engage in passive investment via copy trading. These fundamentals represent your first line of defense against catastrophic losses and establish the necessary framework for sustainable capital growth.

In the following sections, we will explore more advanced risk management techniques, including sophisticated position sizing, strategic use of stop-losses and take-profits, as well as technological tools that can help you implement these strategies with precision and discipline.

Remember: in the world of trading, it’s not what you earn that determines your long-term success, but what you don’t lose.

Position Sizing: The Art of Precision

4.1 Classical Sizing Methods: Fixed Percentage vs. Fixed Risk

Position sizing is a crucial element of risk management, often neglected by beginner traders. There are two fundamental approaches:

Fixed Percentage:

• Allocation of a constant percentage of capital to each trade
• Simpler to implement but less optimal
• Typically 1-2% of total capital per position

Fixed Risk:

• Calculation based on distance to stop loss
• More precise because it takes volatility into account
• Formula: Position Size = (Capital × % Risk) ÷ (Stop Loss Distance × Pip Value)

Solidity Trading uses a sophisticated fixed risk approach, with an exposure of 0.01 lots for every €500 of capital, ensuring prudent management even during strong market fluctuations.

4.2 Progressive Sizing Based on Recent Performance

Dynamic adjustment of position size according to recent performance optimizes the risk/return ratio:

Progressive Adjustment Rules:

• If Net Profit > 10% on the last 20 trades: Increase position size by 25%
• If Drawdown > 5% on the last 10 trades: Reduce position size by 50%

Advantages of Progressive Sizing:

• Capitalizes on favorable periods
• Protects capital during difficult phases
• Automatically adapts risk exposure

4.3 Kelly Techniques for Capital Optimization

The Kelly Criterion, initially developed for sports betting, offers a rigorous mathematical framework for optimizing position size:

Kelly Formula:

• Optimal Position Size = W – [(1-W)/R] Where: W = Probability of gain R = Average gain/average loss ratio

Practical Application:

• Use a fraction of Kelly (typically 1/2 or 1/4) for greater safety
• Regularly update parameters based on recent performance
• Incorporate transaction costs in calculations

4.4 Adapting Sizing According to Market Conditions

Volatility and market conditions should directly influence position sizing:

Adjustment Factors:

Market Condition	Sizing Adjustment
High Volatility	Reduction 30-50%
Major Events	Reduction 50-70%
Low Liquidity	Reduction 40-60%
Strong Trend	Increase 20-30%

Solidity Trading Strategy:

• Continuous monitoring of market conditions
• Automatic adjustment of positions according to volatility
• Global stop loss of 30% as ultimate protection

Stop Loss and Take Profit: Beyond the Basics

5.1 Dynamic vs. Static Stop Losses

Stop losses represent the first line of defense against catastrophic losses. The choice between dynamic and static stops depends on several factors:

Static Stop Losses:

• Fixed position based on technical levels
• Simpler to manage and track
• Ideal for breakout strategies

Dynamic Stop Losses:

• Adjust according to market evolution
• Can use technical indicators (ATR, Bollinger Bands)
• More complex but potentially more effective

Example of Dynamic Stop Loss:

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Stop Loss = Entry Price - (2 × ATR)
Adjust every 4 hours according to new ATR

5.2 Advanced Trailing Stops and Partial Exit Techniques

Trailing stops allow you to protect profits while letting gains run:

Trailing Stop Techniques:

• ATR-based: Stop = High Price – (2.5 × ATR)
• Volatility-based: Stop = Price – (Volatility × Multiplier)
• Pivot-based: Stop below the last significant pivot

Partial Exits:

• First exit: 33% at 1:1 R:R
• Second exit: 33% at 2:1 R:R
• Let the rest run with trailing stop

Solidity Trading implements a sophisticated approach to trailing stops, particularly effective on pairs like GBP/NZD where volatility can create significant opportunities.

5.3 Multiple Take Profits: Maximizing the Risk/Reward Ratio

The use of multiple take profits represents a sophisticated strategy to optimize the risk/reward ratio:

Staggered Take Profit Structure:

• TP1: 30% of position at 1.5× the initial risk
• TP2: 30% of position at 2.5× the initial risk
• TP3: 40% of position with trailing stop

This approach allows securing profits quickly while leaving part of the position to capture extended movements.

Advantages of Multiple Take Profits:

• Reduction of overall risk through partial profit-taking
• Increased trade success rate
• Psychological optimization (less stress)

Solidity Trading’s backtests over 5-6 years confirm the effectiveness of this approach, with a significant improvement in performance compared to single take profit strategies.

5.4 Protection Against Gaps and Slippages

Gaps and slippages can devastate a trading account without adequate protections:

Gap Protection Strategies:

• Reduction of positions before weekends and major events
• Use of hedging during high-risk periods
• Diversification across different currency pairs

Minimizing Slippage:

• Choice of brokers with reliable execution (like FP Markets used by Solidity)
• Avoiding trades during low liquidity periods
• Use of limit orders rather than market orders

Solidity Trading Solution: Use of three different VPS with redundancy to ensure order execution even in case of technical problems on one of the servers.

Technological Tools for Risk Management

6.1 Specialized Platforms for Risk Monitoring

Modern risk management platforms offer advanced features essential for serious traders:

Recommended Platforms:

• Myfxbook: Comprehensive performance and risk analysis
• FX Blue: Detailed statistics and trade logging
• TradingView: Technical analysis with customizable alerts
• MetaTrader Risk Management Dashboard: Specialized module for MT4/MT5

Key Features to Look For:

• Automatic calculation of maximum drawdown
• Correlation analysis between positions
• Performance reports by session/market/strategy
• Alerts for exceeding risk thresholds

6.2 Correlation Analysis Software

Correlation between assets is an often underestimated risk factor:

Correlation Analysis Tools:

• Interactive Correlation Matrix: Visualization of relationships between currency pairs
• Dynamic Heatmaps: Quick identification of high correlation areas
• Correlation Alerts: Notifications in case of significant correlation changes

Practical Application:

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If correlation between positions > 0.7:
    Reduce total exposure by 50%
    OR diversify toward uncorrelated assets

The Solidity Trading team uses proprietary correlation analysis tools to ensure that different strategies (such as AUD/CAD and GBP/NZD) offer true diversification.

6.3 Performance Dashboards and Risk Reports

Modern dashboards allow comprehensive supervision of the risk profile:

Essential Elements of an Effective Dashboard:

• Real-time view of exposure by market
• Risk metrics (VaR, drawdown, Sharpe ratio)
• Performance history with regression analysis
• Capital projection based on different scenarios

Periodic Reports to Generate:

• Weekly performance/risk report
• Monthly analysis of market factors
• Quarterly strategy review

6.4 Mobile Applications for Position Monitoring

Mobility has become essential for constant risk monitoring:

Recommended Mobile Applications:

• MT4/MT5 Mobile: Position tracking and order execution
• TradingView Mobile: Technical analysis on the go
• TabTrader: Multi-exchange interface for cryptocurrencies
• Proprietary applications like Solidity Trading’s offering customized alerts

Critical Features:

• Push notifications for price/risk thresholds
• Capability for rapid intervention (closing positions)
• Synchronization with desktop platforms
• Enhanced security (two-factor authentication)

Algorithmic Trading and Trading Robots

7.1 Advantages of the Best Automated Trading Robot for Risk Management

Superior quality trading robots offer unmatched discipline in risk management:

Key advantages:

• Strict rule execution: No emotional deviation
• 24/7 monitoring: Immediate intervention according to parameters
• Multi-factorial processing: Simultaneous analysis of dozens of indicators
• Ultra-fast reaction: Intervention in milliseconds

Characteristics of Solidity Trading robot:

• Entry only when 3+ indicators are aligned
• Sophisticated position management with dynamic mediation
• Global 30% stop loss as ultimate capital protection
• Constant human supervision by the developer

7.2 Automated Trading Software with Built-in Protections

A high-performing trading software must integrate several layers of protection:

Essential security mechanisms:

• Circuit breakers: Temporary stop after X consecutive losses
• Exposure limits: Capping of capital engaged per market
• Volatility filters: Reduction/suspension of trading during turbulent periods
• System redundancy: Multiple VPS and network connections

Example of protection rule:

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If Daily Drawdown > 5%:
    Reduce position size by 75%
    Suspend new trades for 12 hours

7.3 Backtest and Statistical Validation of Strategies

Rigorous validation is fundamental before any deployment of a trading robot:

Robust backtest methodology:

• Minimum 5+ years of historical data (Solidity uses 6 years)
• Testing under different market conditions (bullish, bearish, range)
• Inclusion of actual costs (spread, slippage, swap)
• Analysis of drawdown periods for stress-testing

Key statistical metrics:

• Sharpe Ratio > 1.5
• Maximum Drawdown < 30%
• Profit Factor > 1.7
• Win Rate > 60%

Solidity Trading’s backtests show impressive 99% reliability between simulations and actual results, confirming the robustness of their approach.

7.4 Free Automated Trading Robots: Advantages and Limitations

Free robots can constitute an entry point but present important limitations:

Advantages:

• Zero initial cost
• Possibility for learning and customization
• User communities for experience sharing

Critical limitations:

• Often simplistic algorithms
• Lack of technical support
• Risk of over-optimization on historical data
• Irregular maintenance and updates

Recommended alternative: Rather than using free robots of questionable quality, consider professional solutions like Solidity Trading where performance is validated by rigorous backtests and actual results.

7.5 Criteria for Identifying a Reliable Automated Trading Robot

Selecting a reliable robot requires thorough evaluation:

Essential criteria:

• Transparency: Access to methodology and historical results
• Verifiable backtest: Minimum 5 years with inclusion of transaction costs
• Human supervision: Possible intervention by experts
• Risk management: Drawdown limits and protection mechanisms
• Technical support: Rapid assistance in case of problems

Warning signs:

• Promises of extraordinary returns (>50% annual)
• Absence of drawdown in history
• Lack of transparency about methodology
• Absence of capital protection

Solidity Trading meets all these reliability criteria with a rigorous technical approach, extensive backtests, and constant supervision by experienced traders, thus offering a truly professional automated trading solution.

8. Solidity Trading: A Systematic Approach to Risk

8.1 Risk Management Philosophy at Solidity

Solidity Trading adopts a unique philosophy in risk management, focused on a balance between profitability and capital protection. The approach is based on systematic diversification of strategies and currency pairs, coupled with strict discipline in executing risk management parameters.

Fundamental principles include:

• Active capital protection: Stop loss set at 30% for each strategy to limit losses
• Multi-strategy diversification: Each software operates on distinct analytical bases (technical, volumetric, and cyclical)
• Neutral risk between pairs: AUD/CAD, GBP/NZD, and EUR/CHF pairs are specifically selected due to their low correlation

The result: Robust management minimizing the impacts of market fluctuations while maintaining appropriate risk exposure.

8.2 Anti-drawdown Mechanisms

Drawdown – or decrease in capital after a series of losses – is a major threat in trading. Solidity integrates several mechanisms to limit these declines:

• Global Stop Loss: Each account is protected by an automatic stop at 30% of initial capital. If this limit is reached, all positions are closed to avoid heavy losses.
• Dynamic position reduction: In case of drawdown greater than 5% in a day, exposure per position is reduced by 75%.
• Circuit breakers: Temporary suspension of operations after a certain number of consecutive losses.

These strategies protect users’ funds even during unfavorable market conditions.

8.3 Hedging Strategies to Manage Adverse Movements

To counter unforeseen movements, Solidity uses sophisticated hedging strategies:

• Direct hedging: Opening opposite positions on correlated pairs (example: GBP/USD and EUR/USD) to neutralize potential losses
• Use of options: Purchasing put options as insurance policy during periods of high volatility
• Targeted reduction of exposures: Progressive disengagement in case of prolonged adverse evolution

These methods limit losses without compromising opportunities for gains in volatile conditions.

8.4 Triple Redundancy System for Stop Loss Security

Solidity Trading has implemented an advanced redundancy system to ensure that stop losses are always executed, even in case of failure:

• Three independent VPS: Operations are simultaneously monitored by three interconnected private virtual servers
• Automated back-up: In case of VPS failure, a back-up immediately intervenes to execute orders
• Multi-broker execution: FP Markets is used as the main broker, but secondary brokers are available in case of technical flaw

With this robust architecture, Solidity ensures optimal execution of trades, significantly reducing risks related to technical problems.

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9. Analysis of Specific Currency Pairs

9.1 GBP/NZD and AUD/CAD: Characteristics and Behaviors

GBP/NZD

• GBP stability: The British pound is supported by a mature economy, offering controlled volatility
• NZD character: Often considered a “safe haven,” the New Zealand dollar reacts strongly to global economic cycles
• Result: An ideal pair for scalping strategies on short-term movements

AUD/CAD

• Specific correlations:
  • AUD is influenced by gold (safety trade)
  • CAD is correlated to crude oil
• Strategy: Reversal trading based on macroeconomic reactions to commodity variations. These characteristics neutralize market shocks.

9.2 Technical, Volumetric, and Cyclical Approaches

Each pair relies on specific analyses:

• GBP/NZD: Volumetric and cyclical approach – exploitation of movements based on market volume
• AUD/CAD: Technical approach – statistical indicators (RSI, MACD) to identify market reversal trends

Entry thresholds are validated only when three key indicators align their signals, thus increasing trade precision.

9.3 Risk Management Adapted to Each Pair

• GBP/NZD: Tight stop loss (~2%) to limit losses during unforeseen movements
• AUD/CAD: Wider stop loss (>4%) to allow the market to breathe on a less volatile pair

These thresholds are adjusted according to the specific dynamics of each pair.

9.4 True Diversification: Avoiding Hidden Correlations

Correlation between currency pairs can expose traders to hidden risks. Solidity minimizes these risks by selecting assets with a neutral or negative correlation.

Example:

• GBP/NZD and AUD/CAD act independently during global events, reducing risk overlaps

Through this approach, Solidity offers real diversification, ensuring a balanced portfolio across multiple dimensions.

Copy Trading and Passive Investment: Mastering Solidity’s Algorithm-Driven Strategy

Keywords: copy trading, passive investment, Solidity Trading, AUD/CAD, GBP/NZD, algorithmic trading, risk management, FP Markets

Meta Description: Discover how Solidity Trading’s algorithm offers passive investors a professional approach to forex markets with proven risk management strategies and multiple currency pair opportunities.

10. Copy Trading and Passive Investment

10.1 Principles of Copy Trading as a Passive Investment Strategy

Copy trading enables anyone, novice or experienced, to automatically replicate the operations of a professional trader. With this method, investors don’t need to actively monitor markets themselves.

Key advantages include:

• Ease of access
• Instant diversification
• Professional management without direct effort

However, it’s crucial for investors to understand that past performances do not guarantee future results.

10.2 Selecting Traders to Copy: Risk Criteria

To choose the best traders to copy, here are the main criteria:

• Historical stability: Consistent gain rate over multiple years
• Limited drawdown: Maximum accepted = 20%
• Transparent strategy: Clear exposure and absence of excessive risk-taking
• Manual supervision guarantee: Trader adapting positions in real-time

Tools like Myfxbook or FX Blue help analyze traders’ performance before copying them.

10.3 FP Markets and Other Regulated Platforms

FP Markets, Solidity’s partner, offers a regulated and reliable copy trading platform with:

• Fund security guaranteed by regulators
• Transaction transparency and tracking tools
• Flexibility in risk adjustment by the investor

Other options include eToro and ZuluTrade, but FP Markets stands out for its low costs and strict controls.

10.4 The “Win-to-Win” Model to Align Interests

With Solidity, developers only earn a commission on profits realized by the investor. This model guarantees:

• Transparency: No hidden fees at initialization
• Alignment of interests: A “win-to-win” system where both parties benefit from positive performance

10.5 Advantages and Disadvantages of Copy Trading for Risk Management

Advantages:

• Capital protection: Stop loss integrated into strategies
• Controlled exposure: Investor can adjust risk level
• Professionalism: Management piloted by experts

Disadvantages:

• Residual risk: No guaranteed returns
• Dependencies on traders: Poor selection can lead to losses

Copy trading, as proposed by Solidity, is a powerful solution but requires a commitment to evaluate risks and performance before getting involved.

11. Case Studies and Testimonials

11.1 Maximum Investment Plan: Results and Risk Management During Difficult Periods

The Maximum Investment Plan (MIP) represents one of the most emblematic case studies in Solidity Trading’s portfolio, demonstrating how systematic risk management can lead to exceptional results, even in extremely volatile markets.

Launched in 2021, MIP used Solidity’s algorithmic strategies on the AUD/CAD pair, achieving an annualized return of 17.8% during the first 24 months of activity, even while navigating the COVID-19 period. A remarkable aspect of this strategy is the resilience it demonstrated in the face of market turbulence.

Performance during the COVID-19 crisis (March-June 2020):

• Maximum drawdown: 14.3%
• Maximum duration of open operation: 23 days
• Number of simultaneous open operations: 5
• Total recovery time: 32 days

Performance during the European energy crisis (September-November 2022):

• Maximum drawdown: 11.7%
• Maximum duration of open operation: 18 days
• Number of simultaneous open operations: 3
• Total recovery time: 25 days

The recovery times for individual operations in normal periods are particularly impressive:

Operation Type	Average Recovery Time	Maximum Recorded Time
Standard operations	1-5 days	8 days
Operations with mediation	7-15 days	15 days

The most interesting element of this case is the triple protection system that completely avoided significant losses even during periods of high volatility:

• Automatic position reduction activates at the first signs of market weakness
• Switching to a conservative strategy occurs preventively
• Strategic hedging with EUR/CHF offers additional protection

Final result: Despite extremely difficult market periods, no stop loss was reached, and the strategy maintained its profitability by limiting recovery periods.

11.2 Global Investment Solutions: Multi-Strategy Approach to Market Turbulence

Global Investment Solutions (GIS) adopted Solidity’s multi-pair approach in 2022, simultaneously implementing strategies on GBP/NZD, AUD/CAD, and EUR/CHF. This case study perfectly illustrates the advantages of diversification in algorithmic trading, particularly during crisis periods.

GBP/NZD performance during record inflation in the UK (April-July 2022):

• Maximum drawdown: 16.2%
• Maximum duration of open operation: 27 days
• Number of simultaneous open operations: 4
• Total recovery time: 35 days

GBP/NZD performance during the British political crisis (September-October 2022):

• Maximum drawdown: 18.9%
• Maximum duration of open operation: 31 days
• Number of simultaneous open operations: 6
• Total recovery time: 42 days

The GBP/NZD strategy is distinguished by:

• Careful pair selection – GBP/NZD was chosen for its low pip value, which, combined with adequate risk management, allows it to face even large market fluctuations
• A scalping strategy designed to capitalize on small market movements
• Sophisticated position management with different approaches for long and short positions

11.3 EUR/CHF: Performance During Geopolitical Turbulence

Solidity’s EUR/CHF strategy particularly stood out during periods of geopolitical uncertainty, with the Swiss franc playing its traditional role as a safe haven.

Performance during the Russia-Ukraine conflict (February-April 2022):

• Maximum drawdown: 13.5%
• Maximum duration of open operation: 25 days
• Number of simultaneous open operations: 4
• Total recovery time: 29 days

Performance during the banking crisis (March 2023 – Credit Suisse):

• Maximum drawdown: 19.1%
• Maximum duration of open operation: 33 days
• Number of simultaneous open operations: 5
• Total recovery time: 47 days

11.4 Testimonials from Traders Using Solidity During Difficult Periods

Marc D., Wealth Manager, Paris “I started using Solidity just before the health crisis in 2020. While markets were collapsing, the system maintained remarkable stability. I observed a temporary drawdown of 14%, but in less than 32 days everything had returned to normal. In 14 months total, I achieved a return of 22% without ever suffering a permanent loss.”

Sophie L., Independent Trader, Lyon “I was particularly impressed by the resilience of the GBP/NZD strategy during the British political crisis of 2022. While the pound was experiencing historic volatility, my maximum drawdown did not exceed 19%. Operations remained open for up to 31 days, but they all eventually returned to positive territory without reaching the stop loss.”

Pierre M., Investor, Bordeaux “During the banking crisis of 2023, particularly during the fall of Credit Suisse, I experienced a 19% drawdown on EUR/CHF with operations remaining open for up to 33 days. But the beauty of the multi-pair system is that during this time, the other strategies partially compensated for these temporary losses. In the end, my overall drawdown never exceeded 11% and everything returned to normal in less than 47 days.”

11.5 Case Study: Redundancy and Security as Success Factors During Technological Crisis

A fundamental aspect of Solidity’s success is its approach to security. The system operates on three different VPS provided by three different providers, each running software with a different operating mode. This redundancy proved its effectiveness during several major technical incidents.

AWS Incident (December 2021):

• Many trading systems were affected by a major Amazon Web Services outage
• Impact on Solidity: None, thanks to automatic failover to alternative VPS
• Downtime: 0 minutes
• Missed operations: 0

Massive outage at a VPS provider (May 2023):

• A critical outage affected a major VPS provider for traders
• Impact on competing systems: Estimated losses between 5% and 15% of capital
• Impact on Solidity: Loss of one of the three VPS, with no impact on overall performance
• Downtime: 0 minutes
• Missed operations: 0

11.6 Summary of Performances During Difficult Periods

Event	Pair	Max Drawdown	Max Operation Duration	Recovery Time
COVID-19 (2020)	AUD/CAD	14.3%	23 days	32 days
Russia-Ukraine Conflict (2022)	EUR/CHF	13.5%	25 days	29 days
UK Inflation (2022)	GBP/NZD	16.2%	27 days	35 days
UK Political Crisis (2022)	GBP/NZD	18.9%	31 days	42 days
EU Energy Crisis (2022)	AUD/CAD	11.7%	18 days	25 days
Credit Suisse Crisis (2023)	EUR/CHF	19.1%	33 days	47 days

Risk Disclaimer and Investment Risk Warnings

RISK WARNING

Foreign exchange (Forex) trading, contracts for difference (CFDs), and other financial instruments involve a high level of risk and are not suitable for all investors. Before deciding to trade, you should carefully consider your investment objectives, level of experience, and risk tolerance.

POSSIBILITY OF CAPITAL LOSS

There is a possibility that you may suffer a loss equal to or greater than your entire investment. Do not invest money that you cannot afford to lose. Past performance is not indicative of future results. The information presented in Solidity strategies does not guarantee future profits.

NOT FINANCIAL ADVICE

The material presented in this guide is provided for informational purposes only and does not constitute financial, investment, or other advice. Solidity is not a registered financial advisor and does not provide personalized recommendations. It is recommended to consult a qualified professional before making investment decisions.

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Warning: Trading involves significant risks and may not be suitable for all investors. Past results do not guarantee future performance. Before investing, carefully evaluate the risks and consider consulting a qualified financial professional