Why Every NinjaTrader User Needs an Account Risk Manager

Active trading holds the promise of higher returns when done well, but there’s also increased risk when compared to other investment strategies. That’s the biggest reason why active traders, on NinjaTrader and other trading platforms, should be using an account risk manager.

Successful traders understand that risk management is essential to long-term performance, reducing potential losses when trades go bad. When you’re buying/selling multiple tickers and have even more on your watchlist, an account risk manager helps automate the risk management aspect of your trading.

The Critical Role of Risk Management

Risk management protects capital by minimizing exposure to negative trades. Through strategies like position sizing and stop losses, you can reduce the amount of capital exposed and exit losing positions quickly. You’ll have more potential capital for the next trade.

This is something that every investor and trader needs to understand. It’s especially important for active traders, however. You’re often exposed to more risk than long-term investors, and you also are entering many more positions that could go wrong.

In addition to financial protections, risk management may also afford some psychological protections. Limiting losses on one trade might help you manage emotions for the next one. You’ll be less likely to enter a new questionable trade because of strong feelings.

Challenges Traders Face Without a Risk Manager

In theory, you don’t need account risk management software to manage risk. All of the principles used in risk management can be manually applied. In fact, many long-term investors do all of this themselves without any program or app.

In practicality, you’re going to want risk management software when making frequent trades. Taking a manual approach is time-consuming, intellectually taxing, and prone to mistakes if entering and exiting quickly.

Less Time for Evaluating Trades

Not using a risk manager leaves less time for evaluating trades — which is primarily what you should be doing. No one step in risk management takes too much time. You can adjust position sizing in a minute, setting stop losses takes just a few clicks in NinjaTrader, and managing margin just requires being aware. Doing each for every trade adds up to a not-insignificant amount of lost time, though.

Lag When Making Trades

For the most active traders, the lost time has a second consequence of delaying trades. Your trades likely already have some lag due to front-running. Any moments spent entering numbers for position sizes and stop losses is further delay between when you place and execute an order.

A small half-minute lag probably isn’t a huge problem if you’re a swing trader who holds for several days or weeks. If you’re a day trader who holds for anywhere from 1 to 15 minutes, those precious seconds can have a big impact on profits and losses.

Trading Based on Emotions

No matter how level-headed you normally are, every trader is apt to make emotionally charged trades when sustaining multiple losses. Poker players call this “tilt,” and the same can happen to active equities and futures traders.

Risk management strategies provide some safeguards against tilt-trading, especially if you use strategies like having a maximum daily loss. You can more easily override such safeguards if you’re manually following them, but having software force you to follow safeguards makes you much more likely to obey these rules on your worst days.

Excessive Losses

Ultimately, having risk management software can help you avoid excessive — and devastating — losses. Whether avoiding huge losses from one trade or one session, the software could more than pay for itself if you avoid losing a devastating amount of capital.

Benefits of Using an Account Risk Manager with NinjaTrader

The benefits of using an account risk manager are avoiding all of the aforementioned pitfalls. This is true whether you trade on NinjaTrader, ThinkorSwim, or even a legacy broker (not recommended).

The Affordable Indicators Account Risk Manager provides additional operational benefits for NinjaTrader users, though.

Automation for Faster Execution

Our Account Risk Manager fully integrates with NinjaTrader for automated risk management. Not only will you have automatic protections in place, but you also won’t be losing precious seconds when making trades.

Immediate Protection Against Significant Losses

The Account Risk Manager proactively safeguards your trading capital by automatically exiting trades once predefined loss thresholds are reached. This built-in safety mechanism ensures that unexpected market volatility or a series of unfavorable trades do not cause excessive damage to your trading account.

Real-Time Monitoring and Alerts

With real-time performance metrics and instant alerts, the Account Risk Manager enables you to monitor your trading risk effectively.

Integrate Account Risk Manager

If you’re a NinjaTrader user, integrating a dedicated Account Risk Manager into your trading platform isn’t just beneficial—it’s essential. Set up our Affordable Indicators Account Risk Manager, to seamlessly ensure you follow your own risk management strategies.