Disclaimer: I am a complete newbie in forex trading and EAs.
I started playing over the weekend with a Demo Metatrader account and after getting some ideas from the internet and some pdf books, I created my own simple (less than 20 lines) Expert Advisor.
Now my problem is that when I use the the backtester on M30 for a six month period (the maximum provided in my demo account) I see my EA managing to go from $10,000 to $70,000…
So I am wondering, what’s the catch here? Will my EA do the same if run it live? I mean, **** if it does, I am rich!!
Anybody can enlighten me what might be the difference between real life and the back tester??
(No flaming please, as said I am new to fx and EAs).
Im not sure that the metatrader strat tester is all that reliable, you might want to get some basica stats by running through your system manually, and running it on a demo account and then comparing those results.
It might be worth checking that your EA isnt basing trading decisions based on future data, its an easy mistake to make. For example, looking at the close of a bar before its actually closed !
Its a mistake I made time after time when I fisrt started
Another common scenario that leads to those kinds of results are systems without a stop loss that simply hold onto losing trades until they become profitable. 6 months probably wouldnt be a long enough period to expose the long term danger of that particular strategy.
Maybe your using very agresive position sizing to achieve those kinds of gains, which in practice may not be sustainable. Does the EA use any sort of staking plan, such as martingale ? if so it wont work long term.
Did you employ any sort of optimisation allowing the EA to identify optimum parameters ? If so, it wont work in practice !
If you post a statement, someone might be kind enough to comment further
As others have said the MT backtester isnt particularly reliable and you need to check results extremely carefully.
Dont underestimate the likelihood of getting great results just by random chance over such as short period. Extend the test to 20 years and see if it still holds up.
Or maybe you are actually going to be rich, systems dont have to be particularly complex to work.
