Algo trading Fx

Week#8

Daily circuit breaker hit the first day of its implementation. It may be a long journey of recovery here as I’m very near to my weekly threshold. Will see…

Algo changes:

  1. Partial close position when profit/loss reaches 30 pips.
  2. If account balance is negative, reduce lot size. “Let Algo recover at its own pace”
  3. Trailing Stop once pips are more than 60

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Week#9

Third consecutive down week! Nothing recovered this week. However, I lost almost nothing. So that’s an improvement!

Based on some real time analysis provided by Oanda I have modified Algo…

  1. Timing edges analysis showed me that my strategy is making money when trade is taken between 1 and 5 am EST. Now Algo will only take trade between these timing.
  2. If profit hit 30 pips, close partial trade and move stop loss to breakeven.

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Week#10

Still down! However the good thing is my Algo is handling risk management pretty nicely. As I’m nearly 20% down from my initial investment, Algo is adjusting position size accordingly.

Here is what I have implemented as Risk Management…

  1. If the account is negative between 1 & 10%, reduce position size by 10%.
  2. If the account is negative between 10 & 15%, reduce position size by 50%.
  3. If the account is negative between 15 & 20%, reduce position size by 75%
  4. And if down more than 20%, then reduce position size by 80%
  5. Similarly when the account is positive and drawdown is between 10 and 20%, reduce position size by 25%.
  6. When drawdown is between 20 and 30%, reduce position size by 50%.
  7. When drawdown is more than 30%, reduce position size by 75%. Don’t lose the hard earned money!
  8. Of course other than above risk management techniques, I have daily and weekly circuit breakers in place.

At one point my account was up by 40% however without these risk management techniques I lost all my profit and now 20% down. Well lesson learned and now in recovery mode.

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Week#11

Seems I’m recovering! After putting all the position sizing risk management, I’m expecting slow recovery based on the back test. Will see…

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Week#12

Algo didn’t identify any setup today. It’s done for this week. So posting my journal in the morning. Monday is a bank holiday in the US so there won’t be any trade.

3 months of live trading now. Recovery seems to be flat at present. I’m hanging in there.

I got some extra money through my credit card rewards program. The first thing that came to my mind was to add funds and one more pair AUDNZD that I have been back testing.Will see how it goes with all these risk management in place. Will keep posted here.

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Week#13

Added some funds and an instrument. My total investment now is $435.

However, it seems EURUSD didn’t like AUDNZD and rebelled against me this week. Hope in the future they will adjust and rain green leaves on me. :slight_smile:

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Week#14

Someone asked me before automating a strategy do I try that strategy by executing manually. I said no. Then I thought I should try to trade manually. I failed miserably.I’m so bad at it that I reached my max threshold.

I’ll stick to what I’m good at. Here is the progress so far…

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Week#15

This week I gained some and lost some. Nothing much as a progress but I didn’t do anything unusual (like last time I did manual trading).

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Algo trading is a tricky strategy. First off it’s too difficult to program big picture chart analysis that is best done with your own eyes that overall will increase your performance. Most algo’s are like most trading methods. They are all focused more on trading the pattern and setups rather than the market itself. So it’s only a matter of time before the market “breaks” your system and you have to either have kill-switches for risk protection or you constantly adjust them which also becomes a struggle to find consistency with all your data that you accumulate.

The real solution is to do what most pro’s do and that go semi-automated. Have your bots run but then you oversee them and confirm them manually. Sort of a best of both worlds.

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@eclipz3, thank you for your input! I do agree with your comment about semi-automated however, I’m not a full time trader and I can’t oversee trades. That is the reason I built this Algo from scratch. I don’t use MT4 or MT5 EA’s. I’m a computer programmer who knows how to code against an API. As you can see in my progress, initially I haven’t put proper risk management techniques but I’m learning. Appreciate the feedback/guidance you have provided here.

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Even when you trade by semi-automated method, strategies will lost profitability in duration by time, no matter which method are used ( discretionary, semi-automated, automated). When you trade by semi-automated method, did you know which transaction will be profitable? Regards Greg

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Great thread. What pairs and time of day are you limiting yourself to? Or is it 24/7, as long as your trades are identified by your algo?

Hey @dudebro, thank you for showing your interest in this thread! I trade EUR/USD and AUD/NZD on H4 time frame between 9pm EST and 9am EST. Initially it was 24/7 with one pair EUR/USD, however after reviewing 100 trades, realized that strategy works good between the time I have mentioned earlier. Demo and back test results showed that strategy works better on AUD/NZD than EUR/USD, hence added that recently. Trade time and pairs may change in future based on next 100 trades analysis.

Cool. Did you say what exactly your strategy is, or is that a secret?

Week#16

Wow! 4 months passed just like that. There was a glitch on the cloud server as a result my partial stop didn’t hit and I ended up losing more. It is now almost a month trading AUD/NZD. It seems to be performing well.

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Win rate of AUD/NZD vs EUR/USD in one month:

From what I can gather, you’re using a continuation pattern on a single timeframe. I suspect that you might not see much improvement over what you’ve already observed.

Have you considered factoring in multiple timeframes? At least one higher timeframe to ascertain trade direction might help.

@Quadpip

It’s kind of a continuation or I should say it works well in continuation. My strategy is to analyze 5 H4 candles. Let’s say the price is moving up, in this case my Algo looks for the last 2,3 or 4 candles to check the body size and direction. If bodies are positive with small wicks, then it takes a short position assuming the next candle will go down. The assumption is based on the fact that prices don’t move in up/down direction for long and take breaks before proceeding further.

I’m back testing my Algo to determine trends based on lower timeframe. However, it has not yet successfully identified directions. It is still work in progress. Actually, now your question has made me work on it more diligently and also explore a higher timeframe. BTW, I have always considered H4 as a higher timeframe and not thought about daily or weekly.

@dudebro , nothing is secret here, I have kind of explained my strategy in this post. There are other candle patterns that I consider however they all have the same base rule that prices don’t just go up up or down down. It has to take a break.

In addition, I really like that people are taking interest in this thread. I appreciate your questions & feedback.

Looking forward to more questions and feedback.

Week#17

Weekly circuit breaker hit on Monday and no trade was taken for this week. In retrospect, I realized that when I started Forex trading, I took the approach of a 5 year kid who wants to experience all that market has to offer. However, in between I got deviated and started to put lots of restrictions and forgot about my exploration. I guess now I’m back to the kid mentality. I know the market will not treat me as a kid. But we will see.So, the changes are…

  1. Now my trades will be on 30 min candles.
  2. Trend will be considered after setup is identified. Trend identification logic may need some refinement.
  3. No fixed stop. Yes, this one is hard. However, close trade the moment setup in which trade was taken no longer exists.
  4. Time based close. A trade can’t go more than 5 days.
  5. Without fixed stops my strategy has the potential of big losses. Hence only trade small lots. Lot size will reduce significantly if drawdown is more than 10%.
  6. Of course daily and weekly circuit breakers are there to protect my capital unless I manually intervene.

Algo took one trade based on the above changes today and that was the only winner this week.

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Week#18

This week Algo only took one trade that too ended in a loss. Oanda has updated their Trading Performance tool and it is not showing this week’s trade. So not posting weekly update as it is same as week#17.

One physiological update though, at one point I was around 200 pips down in the trade, however I controlled my emotions and did not close trade manually. To me, that’s a big win. I let Algo do the job which I have coded for.

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congrats @s_kushwah :grinning: :+1: :clap:

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