José Luis Live Account Experiment

nonlinear · Post by **nonlinear** » Thu Feb 19, 2015 8:07 pm

Excellent work, Jose! Very impressive and well deserved.

Post by **rocketman99** » Fri Feb 20, 2015 12:46 am

jlcgarcia » Thu Feb 19, 2015 8:24 pm wrote:Hi,

I am posting here the evolution of my live account with the same EA during this year. I think it is interesting to take a look for several reasons:

1. Although I began working with this EA from last August (and use it in a tiny account), I did not let it manage a seriously funded account till January this year.

2. The beginnings (as you can see in the graph) were disastrous, and I had to reprogram the code and modify the parameters.

3. As you can see in the graph of growth, several more adjustments were conducted and now it seems running smoothly.

4. The message I want to translate you is clear: first, you must have a great confidence in your EA to let it manage your money. Second, you must be psicologically prepared for the bad movements of the market against your EA. Third, it is possible to earn money in the forex market with an EA, but it is not easy. Fourth, the perfect EA does not exist and you must be prepared to modify the code or the parameters periodically.

Regards

José Luis

Nice looking results but I cannot really asses or judge the results without:

Drawdown (my equity graph also looked like that but DD kept increasing)
Account at risk/Leverage (will your account blow up with a black swan event?)

Due to drawdown I modified my strategy which is working better now. I survived the CHF debacle but my account took a 10% hit that will take a year or two to win back. I trade low leverage.

jlcgarcia · Post by **jlcgarcia** » Fri Feb 20, 2015 7:04 am

rocketman99 » Fri Feb 20, 2015 2:46 am wrote:
Nice looking results but I cannot really asses or judge the results without:

Drawdown (my equity graph also looked like that but DD kept increasing)
Account at risk/Leverage (will your account blow up with a black swan event?)

Due to drawdown I modified my strategy which is working better now. I survived the CHF debacle but my account took a 10% hit that will take a year or two to win back. I trade low leverage.

Hi,

here it is the Drawdown parameters for the this year (beginning January 1st). First column are referred to longs, second to shorts, and the third is the total.

The CHF debacle took me with a short EURUSD position and for that my account did not suffer.

I am posting here the statistics about DD and my leverage is 1:100. I have learned a lot about using high leverages.

Regards

José Luis

Sin título.gif

jlcgarcia · Post by **jlcgarcia** » Sat Feb 28, 2015 8:41 pm

Hi,

I want to be honest and tell you that this month of February I have not gained anything with my live EA. Till the third week of February my EA was earning 8% weekly. Then what has failed? The person has failed (me), nor the EA. I was trading live my EA with two non-correlated pairs and earning near 20 % monthly. But then I had the poor idea of trading more pairs: if I am earning 20 % monthly with two pairs I can earn 50 % with 5 pairs. This way I modified the EA to adapt to the new situation and did the worst error you can do: curve-fitting an EA. Let me explain it in two words. The two more important risks with an EA are Over-Optimisation and Curve-Fitting (the third is overtrading). I am posting here an article I read in the web about these risks and a pdf I think it will help you undestand what I am talking about.

Resuming, when my live EA reached a DD of 15%, I closed nearly all the losing positions. You can tell me that 15 % is not a very important DD. Perhaps in a demo is not important, but on a live account is disastrous; and more if you see that your modifications to the live EA have transformed a very profitable program in a garbage.

I assure you that I have learned the lesson: 20 % profit monthly with a conservative EA and a DD less than 10 % it is best for me that earning 100 % monthly with a DD over 15 %.

Perhaps, you can ask: is it possible to evaporate 24 % profit (three weeks at 8 % profit) in an week ? Be careful because it is possible to loss your full capital by overtrading, over-optimising and curve-fitting.

And now here it is the article. I think it is interesting and be aware that I do not have any relation nor publicizing anything:

Analysing past data for patterns to find the probability of them repeating

It is actually quite easy to make any strategy look good by over-optimising it. All you need to do is run enough optimisation tests in Empty4 and then only show the profitable results - unfortunately this is when people first discover that "past performance should not be relied upon for future results"!

There are many more ways to lose than to win

Nowadays, it seems that the Internet, as well as liberating almost limitless information, has become a minefield for miss-guidance and system vendors - making more money from selling systems, strategies and EAs than from trading them.

There are some gems out there but often they will be "educated" and lose their edge over time as they get over traded and the stop levels become targets for bigger traders - hence the need to create strategies that evolve with the markets, and not to follow the herd when thousands of traders are trading the same EA.

Over optimisation and curve-fitting

It is almost too easy to over-optimise an EA, and the biggest deceiver in looking for the magic settings can often be ourselves.

There's an excellent ebook called How to Lose All Your Money Trading. It explains how unscrupulous system vendors can easily create EAs supplied with pretty back-testing results, showing you how brilliant they are. Plus, how a simplistic view of how to use backtesting optimisation can make people think they have discovered the holy-grail of trading and deceive themselves to ignore all the many permutations that lose money.

Target optimisation results

One important tip is to set your EA to trade 0.1 lots on a micro-account for every trade without any compounding (that is, increasing the lot size with the account size) and use a £/$1,000 starting balance (the same currency your account is in). This will give you results where the £/$ amount balance, minus the original 1,000, will be exactly in pips.

As a rule an EA that can average a minimum of 1,000 pips per year - or 80 pips per month, will give you an account growth rate of 100% year on year. So, 500 pips per year - 50%, 2,000 pips, 200% and so on. It doesn't sound that difficult but in practice there are of course other factors to consider that will be linked to your personal tolerance for risk to gain those elusive rewards.

This all need needs to be achieved within reasonable drawdown limits, a highly successful strategy will still have drawdowns of about 10% over any year but anything more than 30% and your strategy is in serious danger from changing market conditions eliminating your edge before you realise.

Remember, the bigger you risk per trade, the bigger the drawdowns will be in proportion to your account - this is why it is so often repeated that conservative is is about 1% per trade, most professional systems traders will trade 2-3% risk per trade and 5% risk is considered quite high - not many people have the discipline to trade the kind of drawdowns that high risk will inevitably yield without prematurely losing faith or adjusting (curve fitting) their strategy.

Another metric to look at is the profit ratio, you are aiming to achieve 2 as a minimum and a target of 3 would be fantastic. There are others, which you can read more about at MyFXBook.com.

For those interested in reading the ebook mentioned in the article here it is:

c2_ebook.rar

Regards

José Luis

MrLong · Post by **MrLong** » Sat Feb 28, 2015 10:22 pm

Hi Jose,

Sorry to hear you had a slip up with your system.

Most professional systems traders will trade 2-3% risk per trade and 5% risk is considered quite high <== In my opinion this is a fallacy, just because an account has 10k in it doesn't mean that is all that's available, for example a trader may have a cash balance in his bank of 100k, but isn't prepared to deposit the money with the criminals, and rightly so with the bullshit I'm having to contend with getting my money back from the administrators of Alpari(UK), so why set in stone a rule that you are governed by not the trade but how much you dare risk with the thieving criminals.

Andy

DNTme · Post by **DNTme** » Sat Feb 28, 2015 10:44 pm

MrLong » Sat Feb 28, 2015 2:22 pm wrote:Hi Jose,

Sorry to hear you had a slip up with your system.

Most professional systems traders will trade 2-3% risk per trade and 5% risk is considered quite high <== In my opinion this is a fallacy, just because an account has 10k in it doesn't mean that is all that's available, for example a trader may have a cash balance in his bank of 100k, but isn't prepared to deposit the money with the criminals, and rightly so with the bullshit I'm having to contend with getting my money back from the administrators of Alpari(UK), so why set in stone a rule that you are governed by not the trade but how much you dare risk with the thieving criminals.

Andy

Hi Andy,

If i may ask what EA you run on your myfxbook signature? looks awesome

MrLong · Post by **MrLong** » Sun Mar 01, 2015 5:54 pm

DNTme » Sat Feb 28, 2015 10:44 pm wrote:
MrLong » Sat Feb 28, 2015 2:22 pm wrote:Hi Jose,

Sorry to hear you had a slip up with your system.

Most professional systems traders will trade 2-3% risk per trade and 5% risk is considered quite high <== In my opinion this is a fallacy, just because an account has 10k in it doesn't mean that is all that's available, for example a trader may have a cash balance in his bank of 100k, but isn't prepared to deposit the money with the criminals, and rightly so with the bullshit I'm having to contend with getting my money back from the administrators of Alpari(UK), so why set in stone a rule that you are governed by not the trade but how much you dare risk with the thieving criminals.

Andy
Hi Andy,

If i may ask what EA you run on your myfxbook signature? looks awesome

Hello DNTme,

It's a commercial EA I've been developing.

Andy

MrLong · Post by **MrLong** » Sun Mar 01, 2015 5:55 pm

Hi Jose,

Thanks for the book, I guess that just about rounds this industry off.

Andy

jlcgarcia · Post by **jlcgarcia** » Wed Mar 18, 2015 7:19 pm

Hi,

Finished TheCrusader v6 last Sunday (better than v5) and trading it in my live account with very conservative parameters. Here are the results for this week till now (1.206 pips). I have not intervened manually at all. I am now convinced that it is possible to earn money with grid trading if you have a good method for the entries and a good solution for recovering the lossing trades.

Regards

José Luis

Sin título.gif

AGT · Post by **AGT** » Thu Mar 19, 2015 9:22 am

jlcgarcia » Wed Mar 18, 2015 8:19 pm wrote:.......... I am now convinced that it is possible to earn money with grid trading - constantly if you have a good method for the entries and a good solution for recovering the lossing trades.

Regards

José Luis

Yeh - If you could resolve this major problem - that would be a great/hugh step forward!