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@Desita-I did the same thing..not looking at strategies where the equity line is going down after generation. But since I am generating fewer strategies, I start to look at these and keep them in mind because it may be just going into its losing phase and will come back in winning later on. I agree, I am really mad at myself for not using OOS sooner.
@Haliffa-Thanks for the compliment! I would say that this is me being very conservative, but not overly cautious. If I became overly cautious as well, then none of my EAs would ever go live! LOL.
@Desita-Hey there! I honestly tried to get out testing on Demo and only using Petko’s system of the OOS, but I just couldn’t confidently let it go. I guess this may be considered overly cautious, but I really don’t like waste time or money. So I do a combination of both.
I generate the strategies using my broker’s live historical data and include the updated criteria that Petko showed using the R-squared and 30% OOS. I then take these strategies and run them through the MT strategy tester (since I am using MT5, it might be a bit different for those on MT4). I analyze the last 10 trades to see if the win/loss is still at 70% or above.
For example..strategy generated and ran through tester shows a total count of trades to be 125. I go back to trade 110 (not 115) to analyze and see if 70% win/loss performance is maintained. From there I check the win/loss performance of trades 120-125. Lets say it is 4-1 in winning trades at this time. I then put this EA in demo for the next 5 trades to complete another 10 trade analysis. If it maintains losing more than 2 trades out of the next 5 trades, then this has maintained the 70% winning performance and passed demo testing. Potentially this is an EA that I could start live trading. There are other factors I look at as well before immediately putting them on, like profit factor, # of pips moved, etc.
Let’s take this same scenario and have it start off as a losing strategy, for instance it is sitting at 2-3 in winning trades. This means that it cannot have any more losses out of the next 5 trades to pass my demo criteria. Sometimes they pass and sometimes they don’t. But I have found that being this strict has helped me to avoid some major catastrophes.
Hope this helps.
@Desita-Sorry, it took so long for me to reply. I was having issues logging in and for some reason, the forum wasn’t allowing me to respond. But now I can. I use the win/loss ratio as 0.70 (meaning 7 out of 10 trades are winners) I only will accept 3 losses out of 10 trades. This is just my conservative way of trading. But after watching Petko’s courses on the updates, I now use the win/loss ratio of 0.70 for the complete backtest as well as a minimum count of trades. I use the OOS just the way Petko shows us as well as the R-squared for optimization. After doing this, my strategies have become so much better.
@Petko-You’re absolutely right. I still do. It is a lot easier for me to analyze an EA results in FX Blue Live with just monitoring the win/loss vs, anything else.
Hope everyone else is doing well and happy trading! My commodities are on a roll lately and my forex pairs with GBP and JPY are doing fantastic this month!
@Thapelo-I’m using 0.70 as my minimum in the acceptance criteria and only under the complete test part.
@Desita-I believe Petko had mentioned to me that it is not connected to the EAs. I honestly did not see a difference when I changed the leverage setting in EA Studio. But I’ll let Petko confirm.
@Andi-I actually stopped using my broker’s VPS and switched over to Contabo. I have had no issues since the change.
@Van-That is awesome. I wish you continued success. I’m doing good. I did a revamp of my trading portfolio at the beginning of this year, so I am rebuilding my profit, but I am still on the positive. I’ll be posting my results around June to give time for EAs to show a longer trend of being profitable.
@George-Oh, things like the R-squared being used when I’m generating strategies. After going through all the update videos that Petko produced, it helped a lot with my generating better strategies (better win/loss percentage, better equity lines, better max stagnation and max drawdown, etc.) Oh, I started using the In sample and Out of Sample along with the complete backtest in the acceptance criteria like Petko taught in his videos, to also help with generating better strategies.
@George-Same here. But I also have been doing some touch-ups on the assets I’m trading and the EAs due to the software updates. So, March is going to kind of going to be like a restart for me as I am going to be using brand new EAs in trading. I’ll try and post some results at the end of March.
@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. 🙂@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.
@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.
@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.