Robot Success

Trading Systems Expert Advisors and Automated Trading
121

Sorry, can someone explain me what I’m missing? The current equity (34,3k USD) is lower as the deposit (39,5k USD). You cannot just look at the realized PnL, you have to also look at the unrealized PnL, especially when you only close the winners (single or combo) and leave the (combo) losers run without a SL. Yes those losers can come back, but they can just as well go the wrong way even futher:

Looking at your Fx Book:
Realized PnL: 12,1k USD
Unrealized PnL: -15,9k USD
Interest: -882,9 USD
Commisions: ?
Total PnL: - 4,7k USD

As how the system works is very well explained, I coded it in MT4 and did a few backtests. Yes you get a lot of small wins, until you get that one trade where you take a (combo) position and the market goes the wrong way and it doesn’t come back (sometimes for many years) and it whipes out all the profits you made or even the account. For allmost every currency pair you end up with a (big) loss on the long run.

To me this looks as a losing strategy, but it seems that the rest is here impressed. As I’m not doing this for a long time, it could also very well be that I’m missing something. If I am, please enlighten me! Im here to learn.

1 Like
122

Thanks for your response Knotthead

First of all, I’m not sure I made it clear to you when and why I was taking the losses. When you backtest using MT4, it will close out any remaining positions held at the end of the date range. These are losses on both the smaller and larger positions, but in backtesting over a year and experimenting with many settings, these losses that get closed out can be quite large… commonly over $200 for the Martingale position. The big question is, will these large losses ever turn around (are they like inventory) or would I be better off to set a large stop loss (perhaps $100 or more), yet, as I recall you stated your large losses do eventually turn around. Correct?

On this EA system, the Margingale position is not taken until the original transaction reaches a loss setting that can be customized, but comes preset at 7 pips. They do normally close out together, but for inconsistent profits (not always the set TP).

I did find that the system does use both an RSI plus a momentum indicator referred to as Knoxville
indicator. The number of days can be set on either indicator, and by setting the Knoxville indicator to 0, I can test the RSI only without a momentum indicator and visa versa. Testing by setting the Knoxville to 0 returns better results sometimes than using both indicators, but not by much, and depending on other settings, sometime not at all.

This is complicated. My big question is without the stop, you must have open positions that grow to over $100 or even $200 and will they eventually turn around.

RCloud

123

You’re not missing anything bro. The rest of us choose not to flog a dead horse and bump this thread.

124

ADItheMan.

Thanks for your post. You’re not missing much…just one small piece. Yes, the equity is less than my investment at this point. Yes, that would seem like a loss for most. However, as I stated in one of my previous threads, I keep moving my TPs and lot sizes up as the account grows. The account turns black right around the time I up my lot sizes. The key is not the current equity total but what the EA is generating minus the open positions…because eventually I won’t raise the lot sizes and TP targets, I’ll let it keep rolling as is and eventually the profit will exceed the open positions. Thus far I haven’t done that but that time is coming. Check back in a month or two and lets see how it is doing.

Good question! If this system of build up the account and then get rich slowly doesn’t appeal to you…its all good. If you have a system that works well for you you should A) share it and B) keep rolling with it! :slight_smile:

Good luck!

~knotthead

125

oh Bob…at it again I see. :slight_smile: What are you doing back in here? Something must intrigue you or you wouldn’t waste time coming back :slight_smile:
Good luck bro!

~knotthead

126

If anyone is interested in testing knotthead’s success, I have started this strategy on a small ($850) live account for you to watch and see how it works out.

https://www.myfxbook.com/members/neuroclast/finch/2199694

Please start the analysis on 8/2, as anything before that was me playing around and losing money manually.

127

That is where I think you are incorrectly assuming that once you up the lotsizes (and TP in $) you will have a profitable system that will make up for the (unrealized) losses you made until now and will suddenly be a profitable system while until now you lost money. You are only incorporating the upside: that the TP in $ will be bigger, but leaving out that the unrealized PnL on the new losers that will happen will result in losing money. And yes they will occur, see your results until now, and backtesting results.

If you keep TP in $ and lotsize in proportion to eachother the lotsize does not matter to determine if the system is a winning or a losing system, if the system is losing money over the long run, and you up the lotsize you will even quicker lose money?

Actually, that’s exactly what I’m looking for :grin: (who isn’t?) , but so far no success for me. This topic contained a good oppurtunity to study a system, it also made clear (for me atleast) what the pitfalls are for some EA systems, and it made again very clear that proper risk management is very important. Thank you!

1 Like
128

Hey Aditheman.

Answers to your questions…

“That is where I think you are incorrectly assuming that once you up the lotsizes (and TP in $) you will have a profitable system that will make up for the (unrealized) losses you made until now and will suddenly be a profitable system while until now you lost money. You are only incorporating the upside: that the TP in $ will be bigger, but leaving out that the unrealized PnL on the new losers that will happen will result in losing money. And yes they will occur, see your results until now, and backtesting results.”

– Actually, no, I’m not counting strictly on the new TPs to wash out the older/smaller positions. Here is the real focus: I wasn’t losing money at times. In those times, I just so happen to be at the point where my schedule said to raise TPs and lot sizes…meaning, if I didn’t up my lot sizes and TPs, the open positions would be less than the profit. I just up’d my lot sizes and TP targets at those times. So I then went back in the red again since the lots were bigger. The point is, I was in the black and if I didn’t up my lot sizes I would continue to be in the black. The open positions, though they would fluctuate, eventually get surpassed by the profit. I just keep moving lot sizes to improve my profitability down the road. Perhaps I should have waited and let the system get in the black before starting this thread. The main point of this thread wasn’t to discuss the EAs I’m using or anything. It was focused more on lot sizes and TPs based strictly off of the account size - risk management. That way you are risking the same amount no matter how large the account is. I’m glad it has morphed into this new discussion though :slight_smile:

“Actually, that’s exactly what I’m looking for :grin: (who isn’t?) , but so far no success for me. This topic contained a good oppurtunity to study a system, it also made clear (for me at least) what the pitfalls are for some EA systems, and it made again very clear that proper risk management is very important. Thank you!”

– Welcome! :slight_smile: The issue with this or any other automated system that gets in and out quickly really lies in the fact that you never have a positive balance unless you sit on a TP and lot size setting for quite some time. The draw down is the real pitfall here. The reason for this is because you never have winners that run. The winners take profit quickly and get out…thus leaving the ones that are still open. In this situation, your account continues to grow, but at the same time the open positions keep you down. It is only when you let that setting sit for a while do you see the open positions level off (to some degree) while the others continue to close and churn. Like I said, I was in the black several times…but it was after I let the current setting sit for a while…and then I moved my lots and TPs again. Example: My original schedule said that I start with $2K and have my lot sizes set at .01 for the first position and .03 for the second (Martingale). My take profit was set at $1.25. That was on the 5M chart on 12 pairs. In keeping with the same risk ratio, I planned on moving my lots to .02 and .06 with a TP of $2.50 once the account doubled to $4k. As I started, some winning positions would close and some other positions stayed open. I was in the red…my profit did not exceed my open positions draw down. As I drew closer to that $4k mark, my profit got to and exceeded my open positions. Now, had I let that continue, the open positions would have stayed around the same amount they were (give or take around -$2K), however my profit would have continued to grow. The longer I kept it at that setting, the more it would have grown. Knowing I could stomach the draw down in order to make more down the road, I opted to move my lots to .02 and .06 with a TP of $2.50. Immediately I went back in the red because now open positions were taking that much more of my margin. Nearing the $8k mark I again saw that my account was just about black again. At $8k, instead of opting to continue to take $2.50 per trade…I opted again to move lots to .04 and .18 with a TP of $5.00. Each time the account doubled, I doubled my positions and TPs. Again, I wet back in the red.

Note. Moving lots and TPs so often I found to be a bit too aggressive. I noted this after the market shift in May. I white-knuckled it a bit because my timing was really poor. I up’d my lots and TPs and about 3 days later the market took a major turn. I was playing too aggressively. So I backed my lots and TPs down (see schedule a few weeks ago posted here). Now it is taking longer to get back to black…but I will get there and I will probably not move lots and TPs until I am quite far into the black.

I guess the focus I am trying to give you here is that it isn’t the bottom line (yet) that determines whether this is successful or not. Look long-term and look at it from a set system (meaning when lots and TPs do not change down the road). I keep changing the settings as I get to the next “level”. So, going forward, I don’t plan on changing my lots or TPs for quite some time. I have more than enough margin to cover all positions even if they are all locked up and a major market shift happens now and I can patiently watch my account crawl slowly towards the black again.

Does that make sense? Questions…toss them out here. I’ll do my best to answer them as best I can and with no filters. I’m not selling anything here. :slight_smile:

~knotthead

129

Hey neuroclast!

Good luck with your “test” account! I was looking at your myfxbook…how did your growth go down? That is the only line that never goes down unless you manually take a loss or withdraw? Are you running the same EA?

~knotthead

130

Hey rcloud.

I keep my positions open. I have only closed two positions and that was to free up margin in May (see several posts on playing too aggressively :)). I have some positions that are down much more than $200. I just have to make sure I have enough margin in the account to cover all positions should they go south. Hence the lot size and TP sizes based on account size. By running 12-14 pairs the lot sizes and TPs should have no problems being covered. I have had some stay open for 6-7 months but they came back. So, so far so good.

~knotthead

131

I might not agree wit you but I certainly wish you happy trading with loads of profit . Thanks for taking the time to answer.

1 Like
132

I screwed up and tried to manually close an open pair, thinking I could guess the market. Did not go as planned! I would suggest if you’re going to try this method, let the EA do its thing and don’t try to help it lol.

I don’t see any links to a babypips chat, but if you link me I’ll join.

133

Thanks AditheMan. I wish you all the success…as long as you share your findings :slight_smile: Even if you don’t, make some money out there!

~knotthead

135

hi knotthead, you are sharing a amazing strategy.
I have a question, how do you think, action,to non-farmer employee data report per month, such as today. do you take some action to your ea?

137

Hey Sheldon!

I don’t do anything regarding news. I let the bots run their course. If I turned them on or off then I would be interfering and using emotion to muck with the system. :slight_smile:
~knotthead

140

Hi Knotthead, let’s say someone was to open up an account of 40k with this EA and wasn’t planning on increasing lot sizes or TP’s, just kept the account at the appropriate settings for the amount implied. Would this avoid the implications of high drawdown and low equity? And how would this affect the negative open trades?

Also, when are you planning to stop increasing lot sizes, do you have a set goal in mind?

141

Hey Swanster. Thanks for your post.

You will always have draw down with an automated system like this. Winners don’t run, they take profit and get out…leaving only open positions that have not made/taken profit yet to stay open. I put almost that same amount into my account. The profit has taken me over the $50k mark. My current draw down is around $14k. Now, given that I kept moving lots and TP targets, if you started an account with $40k and ran 10-12 pairs , your draw down shouldn’t be nearly what mine is. Draw down, if played correctly with lot sizes and TPs based off of account size, should run between 10-30%. Anything more than that and your lot sizes are too big. If you did nothing to the account and just let it grow organically, eventually your profits should more than surpass your draw down. Since new positions will not be larger (because you are not increasing your lot sizes), the open position draw down should level off - though it will fluctuate due to varying market conditions - while positions will continue to open and close, growing your account.

I originally wanted to wait until I was generating more than my current salary in TPs before I stopped raising my lots. I’m not 100% sure what my cut off will be.

~knotthead

142

Thanks for the reply Knotthead, I will open a 40k demo account with this EA and let it operate for a few months to see if our assumptions are correct. Could you verify my numbers, for 40k I came up with these settings:

Initial lot size: .07
Martingale lot size: .15
Take profit: $3.50

I would also need to buy the EA to test it in demo right?

Thank you for your help!

143

Hey Swanstar.

It depends on whether you are going to run this on a 1M or 5M time frame. Here is what I am running on my $50k account:

1M
.08 - first position
.24 - martingale
TP is set at $4.00 ($0.50 for every initial lot size)

On a 5M I would be running the same lots but the TP target would be $8.00

144

Hello all:
Please tolerate a few noob questions related to this thread:

1: Margin Call: How do you calculate margin call on such a system running 14 to 20 open positions exceeding cost of $1K each on an account of less than $5K? I get it that the unrealized losses (is this “drawdown”) create potential for margin call, but how is it that you do or don’t avoid margin calls in this scenario? What I do not understand is how the role that leverage plays in the margin call calculation. I have looked for margin call calculations online to answer this question, but examples are too simple with only a single security used to illustrate how it works. Just the formulas would help.

2: Stop Losses: There is obviously some point at which you would close down a loosing transaction, as knotthead has admitted. Sure most positions turn around, but some (as pointed out in this thread) could be lost for years before turning around. Is there some large dollar amount or sustained time frame in which you would close out a looser (essentially a stop loss), as part of your trading plan?

3: Interest Expense: Under what conditions do brokers charge interest (rollover) on the amount you have outstanding, net of your account balance. This has not been raised in this discussion, so I assume that brokers do not charge interest on leveraged transactions.

Thanks,
rcloud