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Petko: I have been learning about using EA Studio for generating strategies. Portfolio trading looks to be a great trading procedure. However you do not need to deal with the USA trading limitations of FIFO and no-hedging. I was testing some GBPUSD EA’s and very few could close when they should have because of FIFO requirements. I was wondering if you or some of the students can give me some ideas about how to overcome these limitations in setting up workable strategies.
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Hello Donald,
there was written a lot on this forum about the EA hedging trading with the FIFO rule, but I couldn’t find it. There was a thing to be done in order to go around it legally, staying within the rules.
I believe Jacpin was from The States, and she shared there her experience. If she could give you summarised answer here will be nice of her.
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@Donald-Hi there! I’m a US trader. In order for me to get around the FIFO rule, I had to change my lot size and the number of EAs that I am trading on an asset pair. For instance, I only trade 4 EAs for each asset pair. My EAs are (2) H1 and (2) M15. The lot size ranges from 0.01-0.04, meaning that I am always trading 0.1 lots on an asset pair. I have my best performing EA with the highest lot size of 0.04. This avoids having to wait for the first trade to close before the next on can be done as it is a different lot size. I’ve had no issues doing it this way.
Also, this didn’t change the way I generated strategies..just how to manage the risk when trading.
Hope this helps.
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Hey Japcin, great to see you share your experience as well.
Donald, as Japcin said, you need to have the EAs trading with different lots.
Also, you can look for bigger diversification with more currency pairs. You can trade as many different assets as you wish. The ea trading with FIFO restriction is about one and the same asset.
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Jacpin: Thanks for the information I had not thought of using the strategies this way. I will give it a try.
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Jacpin,
I think your system could be used from non US traders like us.
I would like to test trading with bigger lots the EAs that perform better.
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@Petko-I’m thankful that this conversation came up before and I was able to learn how to get around this rule.
@Donald-You’re very welcome!
@Desita-That would be great! I found that the EAs that perform better are not the ones that generate the most profit when trading at 0.01 lots. So these are the ones that I set at 0.04 lots. :) Of course this is all just based on a starting account balance of 1k USD. It’ll change once my live account hits 10k USD.
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Jacpin, I did not understand what exactly you mean? How do you choose which EAs to set with 0.04?
Regards,
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@Andi-I first look at win/loss % for the last 10 trades, then I look to see how many pips did each trade move, and how much profit/loss occurred for each trade. Highest win%, highest pips, and highest profit/lowest loss =0.04 and then I take the next best and give it 0.03 and so forth. Of course, this all occurs for each asset pair. So as I am trading 12 different assets right now, there are only 12 EAs that have the 0.04 lot size (1 for each asset pair). Hope this helps explain my thought process better.
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Hey Jacpin,
thank you so much for making it clearer. And this is based on the statistic in the live account, right?
So if one strategy gets better than another, you will switch the trading lot? For example, if the second best strategy take first place with best win/loss you will make it with 0.04, and the other one that was with 0.04 so far, you would make it 0.03. I hope I got it now :)
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@Andi-Yes, that’s absolutely right.
I know that I have been chatting with some people and they think that I am creating more work for myself by doing all this analyzing and stuff, but I told them that just because we do automated trading doesn’t mean that there isn’t still work involved. I check on the performance of EAs at the end of each trading session, that way I can catch any that are not performing to my criteria. I actually like the FIFO rule as it forces me to keep up with the analyzing and stuff.
I also have a trading plan where at every 2k USD the lot size for my Forex EAs double in size. When my account balance is at 3k USD, the lot sizes will change to 0.02-0.08 and I will probably continue with this money management rule until I hit 10k. Of course, I do all this is demo before I apply any trading plan/money management risk in live account. And I am only doing this on Forex because the risk/pip in Forex is a lower value when compared to my trading of the commodities.I probably won’t change the lot size of the commodities until maybe every 5k USD, but we’ll see.
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Hello Jacpin,
I really like that you have a clear plan and it sounds like you know what you are doing.
My problem is that I can not put the work together. I succeed to create some great EAs with EA Studio and FSB Pro for quite a long time now, but I can not build properly the portfolio. Also, I feel that I am taking a too big risk, and sometimes I get huge drawdowns.
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@SharapovaSisi-Hi there! I only have a license for EA Studio and have been working with it since September 2018. I honestly would not be trading anymore if it wasn’t for this software. I spent about a month generating EAs and just learning how to analyze the data.
Depending on the assets that are available from your broker, I say that it is always a good thing to diversify your trading portfolio. My broker offers forex, cryptocurrency, global indices, and commodity asset pairs to trade. So it gives me a good amount of assets to create a diversified portfolio. But even if you only have forex to work with, it can still be a great diversified portfolio. Honestly, I looked at each category of assets, did trading research about it online (like how it moves, any news regarding it, etc. just to learn more about it) and then whatever caught my interest, I just started creating EAs for it. My favorites are GBP/USD, AUD/JPY, EUR/GBP, Silver, Brent Oil, Natural Gas, DAX30, FTSE100, and USTech 100.
In regards to risk and drawdowns, you have to be disciplined to not indulge over your trading risk management plan. When I am creating strategies, I have specific criteria that I use for every single one. I then demo for a certain amount of time, and then go live. Once live, the EA cannot go below my performance threshold. So for instance, I cannot tolerate no more than a 20% max drawdown in my live account. I could if I wanted to, but this is not my trading risk/money management plan. When creating strategies, I use 0.1 lot size with a 1k USD account as a starting balance and 20% max drawdown. Once I have those strategies created, and they pass demo, I turn them on live using 0.01-0.04 as the trading lot size. This way, my EA is set to trade at 0.01 and I created it with a 0.1 trading lot size with max 20% drawdown, then my live drawdown max is 2% off a 1k USD account. And this actually gets even less with a higher balance account, minimizing the amount of overall loss. :)
I’m a very conservative trader because I use my trading profit to supplement my household finance. I don’t like losing money, so I have put things in place to avoid this or to have a loss that is deemed acceptable.
Hope this helps with my thought process on things. Feel free to ask me anything. I don’t mind sharing. *I actually redid my trading portfolio in January, so I kind of started all over, but I had already made back my initial investment, so I’m happy.
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Hey Jacpin,
I am very happy to see your replay. Thank you so so much! You are a very open-minded person, and already you are very skillful.
I am going to use the written as a basic guide because I really really need to organize myself. I have the Optimal Pack from over 4-5 months now, and I know that things will not happen if I do not put some effort into it.
When you say that you do not tolerate more than 20% drawdown in your live account, are you talking about single EA performance or for the whole account?
No one likes losing money :) I already saw that profits are possible with what Petko teaches in the courses, and by having EA Studio and FSB Pro, just I need a strong plan to stick with.
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@SharapovaSisi-No problem at all. Thank you for contributing in the forum. It’s nice to get different perspectives on trading from everyone.
The 20% max drawdown is from the account as a whole. Right now, it got up to 56% and that was because I went outside of trading plan and started to get greedy. So, I had to rein myself in and get back to basics. It’s gonna take a while for it to get back down to 20% max drawdown for the total account, but I know it will get there and I am not going to deviate from the trading plan again. Even in automated trading, a trader can get greedy. If only just manipulating the trading lot size on an EA, which is exactly what I did. But thank goodness, I caught myself. :) -
@Jacpin – Greed is exactly what happened to me and why I posted my lessons chat. Account was too small for what I had been testing on demo, knowing the strategy was good I still didn’t listen to my feeling of lowering my leverage and poof 50% drawdown immediately.
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@Roman-Yup. Happens to the best of us. lol
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Guys, be very strict with risk management. Concentrate on the strategies you create, and push yourself to make them better. Leave the account to go with the flow with small lots. 50% drawdown is really huge!
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Hello traders,
We have launched a page with the brokers finally. One of them accepts US clients. This might be useful for everyone who wants to avoid the FIFO rule.
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I have a friend in the US, and he uses an Australian broker to avoid the FIFO rule. It was something like Blueberry or something close.
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