Automatic Loss Recovery System (ALR) - read this first

[Eamonn]

Hi Guys,

Doesn't it just boil down to two scenarios.


1. You trade your strategy, outcome you win 60 pips you lose 20 pips.


2. With ALR you trade your strategy, outcome you win 60 pips or you have x number of turns to break even

or small profit and then if hit after x turns lose equivalent of 20 pips.


Thats it isn't it !!!

Eamonn.

[JellyBaby]

Hi Guys,

Doesn't it just boil down to two scenarios.


1. You trade your strategy, outcome you win 60 pips you lose 20 pips.


2. With ALR you trade your strategy, outcome you win 60 pips or you have x number of turns to break even

or small profit and then if hit after x turns lose equivalent of 20 pips.


Thats it isn't it !!!

Eamonn.

In which case you have nothing to lose by trading the strategy. You could run ALR for 10 turns and then just take the 20 pip loss if it didn't break even. If you can halve the number of losing trades by bringing them to break even I cannot why you wouldn't do it.

[Eamonn]

In which case you have nothing to lose by trading the strategy. You could run ALR for 10 turns and then just take the 20 pip loss if it didn't break even. If you can halve the number of losing trades by bringing them to break even I cannot why you wouldn't do it.

I Agree that's why I cant understand all this " Its a martingale system" hysteria when its not, its just a sophisticated money management system that gives you x turns to break even or slightly better and not trade till infinitum till it blows up !! It stops after x turns or whatever your comfortable with.

Eamonn.

[alfonsomg]

There is no way it should blow an account if used properly. You can and should limit the total risk and total number of turns. Whether or not this proves to be a valid strategy, if you blow an account you are not using it prudently.

I think you guys haven't really understand the point Dewey is making..

The whole idea is converting your loosing trades into Breakevens or in super worst case scenario (i.e 10th cycle X% of your account)

I'll try to tweak more my EA or find a variation. At the moment I'm not limiting the number of turns and the EA is making profits slowly until the worst happens.

But the thing is, and you know guys, high win rates go with small profits and high profits go with small win rates. If you give the trade enough room to breath (at least 1 ATR) then the TP level will be far, far away.

As a money management system, the key would be to keep the loss at Max Turn smaller than what you would have if you hit an standard (no ALR) SL.

[madpipa]

Hi Eamonn,

If you lose after a number of turns you would end up losing 20 pips (or close enough - disregard spread etc for now).
The problem arises in that each new trade in the opposite direction is increased in lot size. Lets say you are using TP = 60 & ALR = 20, starting with 0.10 lot size for the first trade.

Assume the trade doesn't reach TP & hits the ALR level. Say it does this 10 times before eventually being stopped out of the trade. The lot sizes would be:
1 = 0.10
2 = 0.14
3 = 0.09
4 = 0.12
5 = 0.16
6 = 0.21
7 = 0.28
8 = 0.37
9 = 0.49
10 = 0.66

So your net exposure is 0.38 lots. So while you may have still only lost 20 pips you stand to lose close to 4 times your initial risk. That is where the martingale aspect comes in.

Hope that helps explain it.

[kotsh]

Hi Guys,

I found this link to the ALR EA manual. Shows what exactly are the EA inputs and the trade sizes (which were not very clear to me in the videos)

http://www.forextradersdaily.com/alr/wp ... tGuide.pdf

Starting position is 0.1 std lot.

[AnotherBrian]

Maybe I'm missing the answer to this... The chart below is an H4. How does the system handle the chart below where price travels straight line for more than 1000 pips? If I understand ALR correctly, we need some oscillation. I guess the turns need to be defined in terms of distance from entry, but generally speaking, does this expose any potential weakness?

I hope I'm missing something simple here.

...and - your system shouldn't take that trade!" isn't an answer.

eurchfh4.png

[alfonsomg]

How does the system handle the chart below where price travels straight line for more than 1000 pips? If I understand ALR correctly, we need some oscillation.

We don't want oscilation. ALR applies its logic when there is oscilation. If that happens it is because we didn't succeed on first stage with the initial trade direction. ALR tries to reduce the size of a loss when our trade is not a winner.

In the case of the attachment, if you placed a trade in the direction of the 1000pip movement then you hit TP and pocket a winning trade. If you traded in the opposite direction then ALR will have a turn, and will open another trade in the opposite direction (that means in the direction of the big movement) with a bigger lot size so the basket is closed with an small loss or an small profit, depending on how you have configured the logic.

[kotsh]

hope I'm missing something simple here.

yes you are

we actually WANT this to happen when ALR is in action, because all the positions will close in BE (or small profit) once the TP level on either sides of the trade is hit.

ALR works in both direction from your entry level.

Hope this clears it up. if not you could watch the ALR video on how it works exactly (search google for it)

[Eamonn]

Hi Eamonn,

If you lose after a number of turns you would end up losing 20 pips (or close enough - disregard spread etc for now).
The problem arises in that each new trade in the opposite direction is increased in lot size. Lets say you are using TP = 60 & ALR = 20, starting with 0.10 lot size for the first trade.

Assume the trade doesn't reach TP & hits the ALR level. Say it does this 10 times before eventually being stopped out of the trade. The lot sizes would be:
1 = 0.10
2 = 0.14
3 = 0.09
4 = 0.12
5 = 0.16
6 = 0.21
7 = 0.28
8 = 0.37
9 = 0.49
10 = 0.66

So your net exposure is 0.38 lots. So while you may have still only lost 20 pips you stand to lose close to 4 times your initial risk. That is where the martingale aspect comes in.

Hope that helps explain it.

Hi Madpipa

I understand martingale and don't need it explaining, but what I don't understand is that "I stand to lose close to 4 times my risk" I'm not, I'm going to lose 20 pips and that's it nothing more.

I know I will be using more lots(exposure) to do this but that's my risk and if it is 4 times what I'm comfortable with then maybe I will use a quarter of the lots to start with.


Don't want too sound antagonistic, just want us all to make pips,


Eamonn.