[DARWIN] EOD by hefoba - hekenberg

[CavaliereVerde]

This darwin is provided by @hefoba .
It has been migrated recently but he has friends an followers so it quickly reached a notable AUM of 300k

Hi @hefoba !
You can explain your strategy and your risk management, for the benefit of colleagues and investors.

 

[hefoba]

The HeFoBa concept aims to make complicated trading simple and making
forex trading accessible to everyone, whether it be private individuals,
small businesses or large institutions. The HeFoBa methods are
continually developed from over 2 decades of experience in fundamental
and technical analysis. The current automated system is based on
advanced automatic trading developed and tested since 2005.

The Hefoba system is based on 15 years development of one fully automated Expert Advisor, and from January 2020 a machine learning filter was employed for further optimisation. Trades are taken continuously during all hours and days of the year. Manual control is maintained such that for anticipated, as well as in response to unforeseen, turbulent events the Expert Advisor stops trades or invokes a reduction in risk level

The EA trade different pairs:





To be clear I have skin in the game

Feel free to ask questions and I will try to explain what you need to know.

Darwin - EOD -

 

[hefoba]

The system we run is one multi pair system. Here is which pairs we traded last 3 month

CHF pairs are stopped for trading as SNB is “playing” with the pairs ( Rumors or true is not important we avoid risks )

Here you see the trading timezones we are most active at.

We run on different brokers and analyse the returns per brokers.
We use one Master / Slave setup so we can tune trades we open.

After collect 2 years of live trades did we analyse which trades open on the slaves.

Before the machine learning was applied we had this equity curve increase







Then after the analyse we got







The funny and interesting part is that we got higher returns with less trades

 

[hefoba]

From now, will I answer questions here but will not write about my Darwin.
Information about my Darwin can be found on hefoba.com

 

[itstradingtime]

Hi Hefoba,
we can continue the conversation here

Please, before I start with my question(s), I invite you to see me as a genuine person interested in other traders' strategies, not as a competitor who is trying to diminish other colleagues' work.
I do not hide that, at a first glance, I find your Darwin very risky. I have the same view I had with HFD or CIS and it is no secret that I always suggested not to invest in those 2 Darwins because of a very high hidden risk.
I hope this can be a chance for me to understand better your strategy and for you to clarify doubts that even other investors may have.

Analyzing your trades, you have only 3 trades that reached a max profit above 1%, while you have 8 trades going below -4% and 13 going below 1%. All of them were held and closed in profit or at a very low loss at the end. Your VaR also increases in the same periods you have this sudden huge temporary losses, suggesting that lot size is increased during this averse trades.
This is exactly the same behavior that other Darwins mentioned above used to have.

The concern is that the reward to risk ratio is very small and the account can go on for long time getting small rewards, building a nice graph with +20% in a year, +50% in a few years, until the bad day in which that -10% cannot be recovered will happen.
I believe this is exactly what happened to HFD and CIS. May I ask you why do you think that this doesn't apply to your strategy? What is your plan in case that -10% that you had a few times and it was always recovered, for one bad day cannot be recovered and it continues to go down instead? What do you think about making +17% in a year but risking or having a loss of 10% in a few hours?
I'm sure you have back-tested your strategy, but I don't think that the managers behind HFD and CIS are beginners and they didn't backtest their systems, but it still happened to them.

Thanks

 

[hefoba]

Hi,


Let's first adjust some numbers you have and use. You say 17% return for 10% quick losses.

Numbers from one other broker gives this ( https://www.forextime.com/eu/strategy/hefoba03 )

I have been trading since year 2000 ( stocks then Forex ) I know that one system can stop to work and perform so this risk exists for this system. ( Exist for all systems )

I have a hard Stop loss on the main account of 20%. So latent risk is 20%.

As I trade multi pairs then I need to analyse and trade each pair separately.
What you see a DD when I have more than 1 pair open.
So if I trade 5 pairs and I accept each pair to have a 4% DD ( Low for one system running 1 pair only ) then I may have a 5x4% DD => 20% ( And I hit on SL for the Account )

I do not trade my account as a basket. Each pairs are trade on its own. ( Hope you follow)

During Corona Flash Crash. We got more than one pairs going bananas and you can see some spikes on the history. The system handles it and exit all trades as planned.

Since we activated the machine learning module do we have less trades and bigger profit per trade. With the time will the numbers show that. Drop in VAR also the one consequence.

Like you @itstradingtime do I trade my account for me. Friends asked me to open accounts so they can follow me.
If you like my Darwin invest in it. If you do not like it avoid it.

I hope I gave you some input. Feel free to ask more questions and ask for clarifications.
I will not talk about my view of other Darwins.

I will be here during sunny days and storms. The day I do not answer to your questions then hit the Sell button because this is not a normal behaviour from me.

I believe in communication to everybody. To often will traders stop to answer when storms hit.

Join our Discord Server to see how I communicate.

Hi Hefoba,

we can continue the conversation here

Please, before I start with my question(s), I invite you to see me as a genuine person interested in other traders' strategies, not as a competitor who is trying to diminish other colleagues' work.

I do not hide that, at a first glance, I find your Darwin very risky. I have the same view I had with HFD or CIS and it is no secret that I always suggested not to invest in those 2 Darwins because of a very high hidden risk.

I hope this can be a chance for me to understand better your strategy and for you to clarify doubts that even other investors may have.

Analyzing your trades, you have only 3 trades that reached a max profit above 1%, while you have 8 trades going below -4% and 13 going below 1%. All of them were held and closed in profit or at a very low loss at the end. Your VaR also increases in the same periods you have this sudden huge temporary losses, suggesting that lot size is increased during this averse trades.

This is exactly the same behavior that other Darwins mentioned above used to have.



The concern is that the reward to risk ratio is very small and the account can go on for long time getting small rewards, building a nice graph with +20% in a year, +50% in a few years, until the bad day in which that -10% cannot be recovered will happen.

I believe this is exactly what happened to HFD and CIS. May I ask you why do you think that this doesn't apply to your strategy? What is your plan in case that -10% that you had a few times and it was always recovered, for one bad day cannot be recovered and it continues to go down instead? What do you think about making +17% in a year but risking or having a loss of 10% in a few hours?

I'm sure you have back-tested your strategy, but I don't think that the managers behind HFD and CIS are beginners and they didn't backtest their systems, but it still happened to them.



Thanks

 

[itstradingtime]

Thanks for the very detailed asnwer, I appreciate it.

I have a hard Stop loss on the main account of 20%. So latent risk is 20%.

One problem you may need to face with this is that your VaR is at 2.42%, so I believe that, in the best case, you have a multiplier of 1.34, no lower than that.
A hard stop loss of 20% is a loss of 26.8% for investors.
Again, my understanding is that the return, so far, is 18.5% in more than one year but the strategy risks to lose more than that in a few days. Not disputing if it is a good strategy or not, everyone has his risk tolerance and investment goals, so your strategy might be perfect for many people but not for me, since 26.8% is not something I am able to tolerate.
Sorry if I talk about Darwinex results and parameters, but this is a catategory about Darwins, so I think it's fair to analyze results of the Darwin and not the underlying strategy or the strategy on different brokers.
I think that there are many people unhappy about the VaR and the way Darwinex alters the return/risk, but it is something we have to live with

Anyway, you are an experienced traders, you are open to talk about your strategy, I wish you good luck and I thank you for spending time to explain better your strategy to me.

 

[hefoba]

Sorry if I talk about Darwinex results and parameters, but this is a catategory about Darwins, so I think it's fair to analyze results of the Darwin and not the underlying strategy or the strategy on different brokers.

I agree that we need to talk about Darwin results and I can say that those results ( 17% ) are wrong. I can not see how they decide that return.

As you see my Fxtm account have made +20.98 % during 6 months. If you read https://hefoba.com/2020/09/19/darwin-eod-and-fxtm-hefoba03-comparison-18-sep-2020/ then you will see that leverage 1 of DarwinEx will beat Fxtm. ( post is with leverage 2 but divide the numbers )

So I think best I post on weekly basis comparison so can investor understand more how DarwinEx is comparing with other brokers I trade.

I think that there are many people unhappy about the VaR and the way Darwinex alters the return/risk, but it is something we have to live with

Yes we need. Have you ( @itstradingtime ) analyse how trading 2 or 3 pairs will act on your VAR?

 

[itstradingtime]

Have you ( @itstradingtime ) analyse how trading 2 or 3 pairs will act on your VAR?

VaR works mainly on the lot size and duration of trades you have on a daily basis.
I published only that strategy because I only trade GBPUSD with it and lot size tend not to vary that much, so VaR can be under control.
I have other accounts that I have not published. Results are good but VaR is a joke with them.
You cannot pretend that traders wake up and say "ok, today let me open 3 lots on GBPUSD, EURJPY and USDJPY, just like yesterday, because I have to keep my VaR constant". Somehow, Darwinex pretends that this is a normal behavior in trading

 

[CavaliereVerde]

@hefoba
Congrats! You are raising an impressive AUM, 800k ... 😲

 

[CavaliereVerde]

@hefoba
Congrats again for breaking 1.5 Millions.
🎖️ 🎖️

 

[hefoba]

@hefoba
Congrats again for breaking 1.5 Millions.
🎖️ 🎖️

Hi,

Thank you @CavaliereVerde

Best Regards
H.

 

[TLN]

Some friend already warned me about the day EOD explode. It seems to happen very soon.
Now just curious how 1.5M$ AuM will react?

 

[Muiris]

Some friend already warned me about the day EOD explode. It seems to happen very soon.
Now just curious how 1.5M$ AuM will react?

like deer in the headlights they will hold lol

time to break out the hopium crackpipe

 

[CavaliereVerde]

Quite a sharp black swan but the loss is 13% that is the average for every darwin.
Also on underlying strategy we have a -14%.
Every trade is closed now.
We are very far from "blowing".

 

[Muiris]

Quite a sharp black swan but the loss is 13% that is the average for every darwin.
Also on underlying strategy we have a -14%.
Every trade is closed now.
We are very far from "blowing".

9 months to grow it , 2 wks to blow it. nice cope

 

[Captain Currency]

9 months to grow it, 2 weeks to blow it.

Great saying and very fitting!

 

[CavaliereVerde]

9 months to grow it , 2 wks to blow it. nice cope

This is true, it is a common behaviour of very loss averse strategies but what matters is that there is a risk limiter that acts as a fuse.
On the underlying strategy the engines were halted reaching 17% of loss as stated by @hefoba .

 

[CavaliereVerde]

I have a hard Stop loss on the main account of 20%. So latent risk is 20%.

 

[Muiris]

This is true, it is a common behaviour of very loss averse strategies but what matters is that there is a risk limiter that acts as a fuse.
On the underlying strategy the engines were halted reaching 17% of loss as stated by @hefoba .

that may be true, but if we look to the history of darwins

then this darwin is done as far as investment. first sharp fall is usually game over.