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| Automatic Loss Recovery System (ALR) - read this first https://www.stevehopwoodforex.com/phpBB3/viewtopic.php?t=3682 |
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| Author: | SpiderX [ Fri Jul 11, 2014 2:46 pm ] |
| Post subject: | Automatic Loss Recovery System (ALR) |
Maybe in future, we should have some crowd-sourcing feature here. Someone posts a trading idea to be coded, and everyone interested contributes to the pool for a programmer to code. Programmer takes the job and is paid in stages as the job progresses until it is mature and bug-free. Everyone is happy.  Cheers |
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| Author: | kotsh [ Fri Jul 11, 2014 6:16 pm ] |
| Post subject: | Automatic Loss Recovery System (ALR) |
the lot thing is because you are using oil, not FX pair... |
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| Author: | Fibotrend [ Sat Jul 12, 2014 12:16 am ] |
| Post subject: | Automatic Loss Recovery System (ALR) |
Hi All, this is my first post here and I would like to thank everybody for the amazing work done so far. As the majority of ppl on this thread I've been always interested in developing a trading system that does not require a stop loss and I think that the ALR is a very effective mathematical model. However I am not really happy about the way it manages the multiple lots, especially the timing. I'll try to explain it going back to the scenario 3 and 4 showed in the first post. As the price travels down to the -50 pips level we are ready to open the .14lot; then we wait and see if the price reaches the 150 low TP with 10pips profit; if the price turns we keep the hedge and eventually we open the .09lot, hoping it will reach TP with a 5pips profit. This is the part of the system has been puzzling me. We are actually taking more pips if the price goes against the original position  I think that keeping the hedge travelling back through the recovery zone defeats the purpose of having it; the hedge should balance the loss of the original position, in this case we are decreasing the profit as the .14lot is eating the original trade.Possible solution: Once the 0.14lot is open, if the price turns again we close the lot all together and we are back to "recovery zone mode" meaning we are -49 pips down, then: 1) if the price keeps going up and hits TP we get our full reward of 15 pips; if it crosses over the original buy level and turns down we can close the position at BE; 2) if the price drops we open the 0.14lot again and see if it hits low TP with 10pips profit. We keep doing this for lets say the first five turns, then the 3rd time the 0.14lot crosses the -50pips level the ALR kicks in and kills the trade. By doing this we also limit our overall exposure in the trade. In simple terms we are giving the original trade a chance to run and hit full profit, if it goes against us we use the "recovery zone mode" and open the 0.14lot; if the trade keeps going nowhere we then use the ALR to close the trade with no losses and move on. I was wondering if the number of times we open/close the 0.14lot before going into "ALR mode" can be implemented in the EA, so it can be optimized for each pair. Please let me know your thoughts. Cheers |
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| Author: | kotsh [ Sat Jul 12, 2014 8:42 am ] |
| Post subject: | Automatic Loss Recovery System (ALR) |
Hi Fibotrend, this idea also crossed my mind, but if you try to implement it with an EA it is not practical. Lets say your first hedge trade is 50 pips away from entry. It opens and price goes 10 pips into it then reverses back in original direction, so you close the hedge when (the hedge) is at BE. Now lets say on the way back in your original position favour, it oscillates at the -50 pips level dome time, It goes for example from -48 to -52 pips 10 times, this means you would every time open and close the hedge trade, paying spread and commissions, plus it is very painful to watch  You idea would much better be implemented manually, for example if the hedge goes to BE, you can put a pending order 10-15 pips BELOW the first hedge and increase hedge position size, so in case it reverses again you still catch it with the hedge, but you are at the same time giving it room to move in the ALR zone. With ALR, you have peace of mind, because you know mathematically it will recover the loss and you can just let it play out. If you are worried about exposure and margin if too many positions are opened with ALR I suggest: - Find a broker who offers high leverage so you don't have to worry about margins, drawdown is not that much of an issue because the net position even after many turns is not huge. - Place your ALR SL/TP levels to be at a support or resistance zone: price will most likely hit it within 1 or 2 turns - Revise your strategy: if it takes you more than 2-4 turns to hit ALR TP level then you placed it at at a wrong level in the first place - Calculate the maximum margin you will need to endure the ALR process till it plays out, and how much DD you are comfortable with, then adjust your initial position size accordingly or deposit more fuinds in the account to cater for it. |
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| Author: | moncsicsi78 [ Sat Jul 12, 2014 2:31 pm ] |
| Post subject: | Automatic Loss Recovery System (ALR) |
I think this ALR strategy is the same as the well-known "range-break-out" systems, as you know there are a lot of EA on the internet - every of them is based the "Sure FireHedging Strategy". So everybody know that these type of strategies can work well only in trend. But if there is a long time range period, it can kill any account. In another forumI've already attached a picture in which I try to explain my idea how can we make this strategy much safer and profitable. Instead of long explanations see my picture below, and waiting for your comments. |
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| Author: | abbey [ Sun Jul 13, 2014 1:57 pm ] |
| Post subject: | Automatic Loss Recovery System (ALR) |
I'm impressed with all the work everyone is doing on ALR. I'm helping a friend who bought ALR learn the ins and out of FX trading. Does ALR work? Assuming of course the trader is making fairly good decisions about trading. To me 3 to 1 target/stop is difficult without getting a few good runners overtime. Thanks, Abbey |
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| Author: | Dewey McG [ Sun Jul 13, 2014 2:01 pm ] |
| Post subject: | Automatic Loss Recovery System (ALR) |
I think it is still too early to say how well it works. We are now in the testing phase since we have a couple of EA's to work with. We Can say that the marketing used to sell ALR by commercial vendors was hyped up a bit and that more caution should be used. |
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| Author: | abbey [ Sun Jul 13, 2014 3:22 pm ] |
| Post subject: | Automatic Loss Recovery System (ALR) |
Yea, after all the hype all is quiet. I received many emails then it all stopped. You site is the only discussion I could find. Thanks again, Abbey |
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| Author: | Dewey McG [ Sun Jul 13, 2014 9:44 pm ] |
| Post subject: | Automatic Loss Recovery System (ALR) |
I ran some tests using Madpipa's EA version. It worked fine with Take Small Profits" turned on, but whens et to false it didn't close any trades until the backtest stopped. Results with it on were good using either 40/120 or 50/150 |
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| Author: | Dewey McG [ Sun Jul 13, 2014 10:11 pm ] |
| Post subject: | Automatic Loss Recovery System (ALR) |
Here is a 5 year back test of the EURCHF. I like using this pair as a control because it might be the worst pair to use this strategy with since it has the lowest volatility. |
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