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
“Actually, that’s exactly what I’m looking for (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! 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.