Question about the beast

Your basic questions about running EA's
mattfordcoys
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Joined: Sat Feb 23, 2013 6:16 pm

Question about the beast

Post by mattfordcoys »

Hello all, hope you are well.

Earlier this evening I stumbled across The Beast (via http://www.professionalwreckhead.com/?page_id=224), and being vaguely au fait with forex found it rather exciting.

So I've opened up a demo account on metatrader4 and installed TB. I've read the user guide and I'm ready to watch and try and learn how it does it's thing.

Now, how wrong am I to think that because I have read the PDF, understand the definitions of setup and trigger and am now brimming with confidence, that I will be able to make (demo) forex $$$? Also (and I'm asking this as all the markets are closed), how automated is it? Do I open Empty4, and boom, it just starts trading? Is it necessary to know how the recovery system works or is it just there for reference (in the PDF, that is).

And finally, what are all the references to criminals in the PDF about?

Thanks for any help and advice!

Matt
garyfritz

Re: Question about the beast

Post by garyfritz »

The Beast is a type of EA known as a Martingale trader. (Or grid trader, not sure exactly, but the end results are similar.)

These systems have a common behavior: they make money steadily, ching ching ching. Everything is wonderful, you're happy, you throw more money at it. Ching, ching, ching, ***BOOM***. After lots of nice small wins, you have a gigantic loss that eats all your profits and more. Sooner or later, it WILL happen.

IF you made a bunch of profits before it blew up, you might still be OK. As long as the blow-ups happen seldom enough, and don't eat too much of your profits, you can still come out ahead. But if you have luck like mine, it will blow up about 3 days after you start trading it, when you have no profits to give back. There goes your account.

So you have to be VERY careful to trade a system like this. Assume it WILL blow up. If you're going to trade it, trade it very small and conservatively. Pull out profits frequently. Don't give it too much rope or it WILL hang you.

Or do like I do. Stay far away from Martingale systems. They're too dangerous for my tastes.
mattfordcoys
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Joined: Sat Feb 23, 2013 6:16 pm

Re: Question about the beast

Post by mattfordcoys »

garyfritz wrote:The Beast is a type of EA known as a Martingale trader. (Or grid trader, not sure exactly, but the end results are similar.)

These systems have a common behavior: they make money steadily, ching ching ching. Everything is wonderful, you're happy, you throw more money at it. Ching, ching, ching, ***BOOM***. After lots of nice small wins, you have a gigantic loss that eats all your profits and more. Sooner or later, it WILL happen.

IF you made a bunch of profits before it blew up, you might still be OK. As long as the blow-ups happen seldom enough, and don't eat too much of your profits, you can still come out ahead. But if you have luck like mine, it will blow up about 3 days after you start trading it, when you have no profits to give back. There goes your account.

So you have to be VERY careful to trade a system like this. Assume it WILL blow up. If you're going to trade it, trade it very small and conservatively. Pull out profits frequently. Don't give it too much rope or it WILL hang you.

Or do like I do. Stay far away from Martingale systems. They're too dangerous for my tastes.
OK, plenty to consider then! How does professionalwreckhead seem to succeed? Is the Martingale element of this the recovery system?
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mjws00
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Re: Question about the beast

Post by mjws00 »

There are quite a number that have run this, forward testing for significant periods. It does very well and then DRAWS DOWN HARD. It is one thing to explode those dollars on demo. In real life it will keep you up at night. Yes the recovery system will be some type of martingale, whether it is stepped, linear... I'd have to read the docs.

cuzgeorge has some testing on it. http://www.stevehopwoodforex.com/phpBB3 ... f=36&t=848

I'm sure there are many others as well. Most shut it down a while ago as it isn't the latest favorite toy. I think some of the very active EA's may be derivatives? Crossfader comes to mind...

Testing it. Watching. And trying a bunch of them is where you start. Just don't throw real money at it until you have seen it survive many different kinds of markets. Part of the magic of bots is knowing when to turn them off. Most do very well in certain conditions and then give it all back and then some if left to their own devices when the markets shift or adapt.

Good luck. Welcome.
Reading the dark heart.
garyfritz

Re: Question about the beast

Post by garyfritz »

mattfordcoys wrote:OK, plenty to consider then! How does professionalwreckhead seem to succeed?
Don't assume he is. Look at his account in myfxbook: http://www.myfxbook.com/members/prowrec ... ast/388980

The red equity curve looks beautiful -- a nice straight line. But that is the profit on CLOSED trades. Look at the gold line. That's the actual total equity value of the account, including closed AND open trades. He has $10k in open losses. The total net is actually a -21% loss since he started.

Those open losses are typical of Martingales. When they work out, you close them with small profits. That's where the nice red line comes from. But when the market goes against your position, the open losses grow dramatically. That's how they blow up your account. (Wreckhead's account actually is losing pretty gradually. Take a look at http://www.myfxbook.com/members/TGT_FX/ ... s-1/417783 for a more dramatic example.)
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mjws00
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Re: Question about the beast

Post by mjws00 »

Heh. This was timely. Study MurphyMan's experience carefully. It clearly demonstrates Gary's points. I couldn't agree more with what he said.

Sam's experience: http://www.stevehopwoodforex.com/phpBB3 ... p?f=6&t=78
Reading the dark heart.
mattfordcoys
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Re: Question about the beast

Post by mattfordcoys »

Holy crap, -1400 pips! I take your point! So do EAs have a purpose? I fail to see the advantage of them over just using the underlying method manually. But that begs the question: is the underlying method sound? What are your methodologies?
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mjws00
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Re: Question about the beast

Post by mjws00 »

The EA is the ultimate free-money dream. The advantages are no time commitment. No skill necessary. No discipline necessary. The intent is Black-Box money printing.

One advantage is freeing the trader from psychological errors when the underlying system is strong. And for some that is a big part of the problem. Another is allowing mechanical execution when a trader is unable to monitor the market 24/7. We sleep... they do not. So imho a "helper" EA can be very beneficial for some.

I've never seen one, without intervention, survive for a significant period. There have been some systems that do very well in certain market conditions. You can curve fit these suckers like crazy. However, the question becomes when do you turn them off, and fire up the next one and that is discretionary. If you can read the market well enough to pick the profitable bot... and ignore/take signals ... there is a good chance the bot is adding little value beyond mechanical execution.

But I'm a skeptic. I believe trading is like any other professional endeavor it requires time and effort to achieve excellence. Automation is a powerful tool, but the holy-grail bot is a pipe dream. Quants may rule the world, but they ain't running a 99 dollar bot on a laggy unstable platform.

There is a lot to be learned from coding and testing them, kind of like the upside to teaching someone any skill. The teacher often benefits as much as the student.

Just two bits. There are a lot of clever coders and guys here playing with these. But how many would risk a large account to one? A portfolio of them running, is interesting, but to find a large account that is successful with them (100K+) is pretty rare. I've certainly never seen it. Lots of folks selling something are of course VERY SUCCESSFUL. ;)

Have fun.
Reading the dark heart.
garyfritz

Re: Question about the beast

Post by garyfritz »

mattfordcoys wrote:Holy crap, -1400 pips! I take your point! So do EAs have a purpose?
Don't confuse "Martingales blow up your account" with "EAs blow up your account." EAs can be very viable. Martingales cannot, IMHO.

Find a suite of good EAs, and split your account among them. When one of them fails (and most eventually will), you take it out of the rotation and find another. Since each of them only trades part of your account, the losses incurred when it fails shouldn't be too painful.
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MurphyMan
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Re: Question about the beast

Post by MurphyMan »

And now, the rest of the story.

I am no longer trading the beast. Steve has been kind enough to include a link to my story for over a year. Take a look at my final post there http://www.stevehopwoodforex.com/phpBB3 ... 112#p42112

Cheers :roll:

Sam
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