Request for Automation--Automatic Loss Recovery

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Request for Automation--Automatic Loss Recovery

Postby Dewey McG » Sun Jun 29, 2014 3:53 pm

The thread discussing this is here: Automatic Loss Recovery System (ALR)

I am sure many of you have also been getting some e-mails from Dustin Pass' latest and greatest, the ALR (automatic loss recovery) program that supposedly means you will never lose a trade again. You can check it out here: http://forextradersdaily.com/alr/?p=1 BTW—it sells for $1997.

This looks very similar to something Joseph Nemeth is selling as part of his program. His lecture on recovery where he says this method will mean you never lose a trade again is explained in Lesson 4 here: http://www.4x-dat.com/nemeth.asp His program is around $3,000

The basic strategy is this: Let’s say you take a buy order for 1 lot and would normally place a 150 pip TP and a 50 pip stop loss. Instead of using a stop loss, if price moves against you by 50 pips you take a sell order for 1.4 lots. If price keeps going down another 150 pips you will make a small profit (150 * 1.4) – 200 *1) = a net profit of 10 pips). If it goes back up to where you first took your order (this area is called the recovery zone), you open another buy order for 1 lot. If it goes up another 150 lots, once again you get out with a small profit where you would have taken a loss otherwise. Each time price reverses instead to the other side of the recovery zone then you open another trade. Eventually price will go up or down enough to be able to close all the trades. This means when you are right, you will hit your TP as you planned. When you are wrong, your trades will close at a modest profit. Once in a blue moon you will hit SL but it won’t devastate your account. You can predefine what your total SL would be.
Scenario's 1 and 2.jpg

Scenario's 3 and 4.jpg


After lots of debate and input from several others, I think we are ready to move forward. I think the simplest way is for the user to input lot settings for each turn and the maximum number of turns. They can use the ALR calculator to determine what the settings should be based on their account size, risk tolerance etc.

Ideally we would need 3 versions. One would be the trade manager for everyone to use with their own strategies. Secondly, I would like to see this already coupled with a good strategy so people can see this in action (and do all sorts of back tests for data collection to compare how well it works on higher volatility pairs versus lower ones etc.). Eventually there should also be a “shell version” so people could append this to their own strategies.

As a suggestion here is a simple strategy that works well on higher volatility pairs:
I used EURNZD for my example on a H4 chart. Use a 240 LWMA for trend direction. Only trade with the trend--only buys if the price is above the LWMA 240 and sells if below. Even better if you know how to state a minimum angle for the LWMA MA. I have heard there are indicators that tell you the slope of an EA that can be used to filter out when the MA is pretty flat. . If you are in an uptrend wait for MACD to cross below the 0 line, and then open a buy when price crosses and closes above the 5 EMA shift 5. Use 150 TP. Close when price hits TP or when it closes below the 5 EMA shift 5 as long as the trade is in profit. Do not close if it isn't. If price moves 50 pips against you then start your ALR sequence--turn on 50 pip moves and take TP at 150. Every trade either hits profit or just above break-even. The most ALR turns I could see was 3.

If you use the template all the trade lines are drawn in so you can follow along.
MACD 5EMA 5 strategy with ALR.jpg


I think ALR would also do very well with Bob’s 10.7, BASA and others. Another one would be the old Nanningbob 5.0 system. I am sure you can think of several others.

To help picture why the ALR strategy works, have a look at this H4 chart from the GBPJPY. All we need to ensure a profit is for the trade to move at least 150-200 pips if our initial TP is 150. As long as the market moves we will not lose. If we do hit a SL, it will be small in size (as determined by YOU). Using this on a higher volatility pair and I think it is going to be very successful!
200 pip move.jpg


Please let me know if there are any questions. After spending hours on this some things might seem simple to me by now that are as clear as mud to a third party.
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Dewey McG
 
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Request for Automation--Automatic Loss Recovery

Postby Dewey McG » Sun Jun 29, 2014 4:12 pm

Klotsh had a good post about doing this if you wanted to add the formulas into the EA itself:

Automatic Loss Recovery System (ALR)

Either way, I would suggest for the trade manager that we use the ticket number to have the ALR trade manager take over the trade.
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Request for Automation--Automatic Loss Recovery

Postby Dewey McG » Tue Jul 01, 2014 9:18 pm

Any takers? If nothing else think of the pride you will feel saving people from doling out between 2-3k for something that is not as good.
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Request for Automation--Automatic Loss Recovery

Postby SpiderX » Wed Jul 02, 2014 1:41 am

Dewey McG » Wed Jul 02, 2014 5:18 am wrote:Any takers? If nothing else think of the pride you will feel saving people from doling out between 2-3k for something that is not as good.


Hi,

Sorry...i sortta promised something in the other discussion, but got caught up in my own stuff.
Let me try to see if it is possible to cook something up this weekend.
In the meantime, if someone else has faster fingers than me, please go ahead.

Cheers
"Love is patient, love is kind. It does not envy, it does not boast, it is not proud. It does not dishonor others, it is not self-seeking, it is not easily angered, it keeps no record of wrongs.Love does not delight in evil but rejoices with the truth. It always protects, always trusts, always hopes, always perseveres."
-Corinthians 13:4-8
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Request for Automation--Automatic Loss Recovery

Postby Dewey McG » Wed Jul 02, 2014 2:18 am

SpiderX » Tue Jul 01, 2014 9:41 pm wrote:
Hi,

Sorry...i sortta promised something in the other discussion, but got caught up in my own stuff.
Let me try to see if it is possible to cook something up this weekend.
In the meantime, if someone else has faster fingers than me, please go ahead.

Cheers


Thanks. It would be greatly appreciated
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Request for Automation--Automatic Loss Recovery

Postby SpiderX » Wed Jul 02, 2014 9:17 am

Some notes on implementation since there is some time.

To my understanding, there look like 4 levels...
A- Buy trigger price/ Top of ALR zone
B- Buy tp which is N pips above A (is this SL for all sell trades ?)
C- Sell trigger price/ Bottom of ALR zone
D- Sell tp which is N pips below C (is this SL for all buy trades ?)


1. Enter initial position with tp and sl. If it is buy, then tp: B , sl: D
2. Calculate next lot size, Enter a sellstop at C. (tp: D, sl:B)

Loop: While number of trades < Max recovery trades, Check number of open trades
If number of open trades increase, means sell stop/buy stop has triggered, then:
3. Calculate lot size based on previous trade
4. Create new buystop at A. (tp: B, sl:D) or Create new sellstop at C. (tp: D, sl:B)

In that manner, all trades will automatically close once tp or sl is hit.

if number of trades = Max recovery trades, CloseAllTrades

Is this conception correct ?

Cheers
"Love is patient, love is kind. It does not envy, it does not boast, it is not proud. It does not dishonor others, it is not self-seeking, it is not easily angered, it keeps no record of wrongs.Love does not delight in evil but rejoices with the truth. It always protects, always trusts, always hopes, always perseveres."
-Corinthians 13:4-8
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Request for Automation--Automatic Loss Recovery

Postby Dewey McG » Thu Jul 03, 2014 12:45 am

SpiderX » Wed Jul 02, 2014 5:17 am wrote:Some notes on implementation since there is some time.

To my understanding, there look like 4 levels...
A- Buy trigger price/ Top of ALR zone
B- Buy tp which is N pips above A (is this SL for all sell trades ?)
C- Sell trigger price/ Bottom of ALR zone
D- Sell tp which is N pips below C (is this SL for all buy trades ?)


SpiderX » Wed Jul 02, 2014 5:17 am wrote:1. Enter initial position with tp and sl. If it is buy, then tp: B , sl: D
2. Calculate next lot size, Enter a sellstop at C. (tp: D, sl:B)


I am not sure what you mean exactly. You do not enter a stop loss. You enter a TP and the point where ALR kicks in. The “sell stop” is the same point as the “SL”—the spot where ALR takes over.

SpiderX » Wed Jul 02, 2014 5:17 am wrote:
Loop: While number of trades < Max recovery trades, Check number of open trades
If number of open trades increase, means sell stop/buy stop has triggered, then:
3. Calculate lot size based on previous trade
4. Create new buystop at A. (tp: B, sl:D) or Create new sellstop at C. (tp: D, sl:B)

In that manner, all trades will automatically close once tp or sl is hit.

I just want to make sure we are talking about the same thing. You open new buys when price returns to the original position (assuming the initial trade was a buy) and open new sells awhen price returns to the bottom of the ALRE zone, where you took the first sell.

SpiderX » Wed Jul 02, 2014 5:17 am wrote:

if number of trades = Max recovery trades, CloseAllTrades

Is this conception correct ?

Cheers



No, we don’t close all the trades when the max number of trades is hit. We simply stop opening any new trades. We will either hit TP or SL.
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Request for Automation--Automatic Loss Recovery

Postby SpiderX » Thu Jul 03, 2014 1:07 am

Hi Dewey,

Shouldnt there be a stoploss ?
Stop loss for buy trade is where sell trade take profit exit -D
Stop loss for sell trade is where buy trade take profit exit -B
In that way, the whole basket automatically closes itself.

You open new buys when price returns to the original position (assuming the initial trade was a buy) and open new sells awhen price returns to the bottom of the ALRE zone, where you took the first sell.


See my definition for A,B,C,D
To my understanding these are the four important levels in ALR.
Buy stop at A, Sell stop at C.

Noted on the last point of not taking new trades.

Cheers
"Love is patient, love is kind. It does not envy, it does not boast, it is not proud. It does not dishonor others, it is not self-seeking, it is not easily angered, it keeps no record of wrongs.Love does not delight in evil but rejoices with the truth. It always protects, always trusts, always hopes, always perseveres."
-Corinthians 13:4-8
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Request for Automation--Automatic Loss Recovery

Postby Dewey McG » Thu Jul 03, 2014 2:06 am

SpiderX » Wed Jul 02, 2014 9:07 pm wrote:Hi Dewey,

Shouldnt there be a stoploss ?
Stop loss for buy trade is where sell trade take profit exit -D
Stop loss for sell trade is where buy trade take profit exit -B
In that way, the whole basket automatically closes itself.

See my definition for A,B,C,D
To my understanding these are the four important levels in ALR.
Buy stop at A, Sell stop at C.

Noted on the last point of not taking new trades.

Cheers


Sorry--you were right. I shouldn't be trying to think when I am exhausted.
Dewey McG
 
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Request for Automation--Automatic Loss Recovery

Postby SpiderX » Thu Jul 03, 2014 4:47 am

More refinement on concept:

Input:
ALRZonePips: Y
TargetPricePips: Z
InitialEntryPrice: A

(Assume Buy initial position)
Buy Entry Level : A
Buy TP/Sell SL : B = A+Z
Sell Entry Level : C = A-Y
Sell TP/Buy SL : D = C-Z


1. Enter initial position at level A with tp:B, SL: D
2. Calculate_Lot_Size
3. Enter a sellstop at level C. (tp: D, sl:B)

Loop: While number of trades < Max recovery trades, Check number of SellStop/BuyStop
If there are 0 SellStop/BuyStop, Previous sellstop/buystop has triggered:
4. Get lot size of last trade, and Calculate_Lot_Size
5. Create new buystop at A. (tp: B, sl:D) or Create new sellstop at C. (tp: D, sl:B)

All trades will automatically close once tp or sl is hit.

if number of trades = Max recovery trades, no more trades are taken.


Calculate_Lot_Size function

Mulling on implementation of this.

Simple implementation:
extern string LotMultiplier = "1.2,1.4,1.6,1.7,1.9,2.1,2.3,2.5";
double LotMultiplierArray[20];

-Lot multiplier entered as a string and initialization function breaks it into a double array.
-Initialization function automatically set number of levels based on size of this input.
-During calculation of lot size, function looks for lot size of initial trade.
-Based on number of trades N, function will determine lot multiplier
-i.e : Next Lot Size = LotMultiplierArray[N] x InitialLotSize

Is this the ideal way to implement this ?
Someone got to enlighten me on this.

Cheers
"Love is patient, love is kind. It does not envy, it does not boast, it is not proud. It does not dishonor others, it is not self-seeking, it is not easily angered, it keeps no record of wrongs.Love does not delight in evil but rejoices with the truth. It always protects, always trusts, always hopes, always perseveres."
-Corinthians 13:4-8
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