From Zero to Hero - in a year's time

[babyjake1961]

Greetings, everyone.

For some time, I've been studying the concept of price inertia (just do a quick Google search for the academic papers on the subject) and developed a EURUSD M15 trading strategy based on it. With a little help from my friends (c), I got it coded into a fully automated EA which I am now keen to test live in the form of a public diary on these boards.

Below is a graph of the bot's backtest with a rather excessive lot of 0.2 on a 1K initial deposit for the period of 2010 until now. It's not over-optimized and was done with the base settings that stem from the very concept. I sure could get a much nicer profits curve by means of optimization but don't really see any point in it, as the market never repeats that much anyway.

I do not intend to convince anyone of the strategy's long-term profitability, as that is one thing I am not quite sure about myself.

My plan is to set up a 1K live ECN account on the first day of every month over the course of a whole year. Considering the excessive 0.2 starting lot size I will be going with, that should spare me from a need to wait out some months for an account's recovery from a large drawdown, like would be the case with a single trading account. Also, even if I happen to blow an account, I will still be able to keep going and end up net profitable (hopefully, highly net profitable) in a year's time.

Needless to say, I will post a fully verified MyFXBook link every time a new 1K live account is set up (that is, on the first day of every month over the course of a year). I picked Tickmill as my broker for this experiment - this offshore shop offers tight spreads and makes it possible to instantly open additional accounts in their website's client area.

Running up to 12 live accounts will eventually put some decent load on my VPS but I don't mind upgrading it at some point to a costlier package for the sake of completing the experiment.

By the year's end, I will be proven either right or wrong about the profitability of my strategy. If the former is the case, I will end up having a publicly documented online track record, lots of fun, and lots of friends from here. As a token of my appreciation for staying with me over a year, I will then share my EA at no cost in this thread (which I wouldn't do just yet, as I don't want anyone to blow their accounts in an event I'm wrong with my trading strategy).

I will post the first live account's verified MyFXBook link here exactly on April 1, 2016. Until then, feel free to ask me whatever you would like to know or just share whatever thoughts you might have.

 

[sun11]

Fully automatic system...I thought trading successfully with EA was never possible...
Good to see a thread like this...interested to see your end results...

GL
Regards

 

[babyjake1961]

Fully automatic system...I thought trading successfully with EA was never possible...
Good to see a thread like this...interested to see your end results...

GL
Regards

Success with this strategy is something we are hopefully yet to see. Yes, the absolute majority of automated trading strategies are not market-beating. The few remaining can be regarded as profitble in the long run but are often mistaken for losing ones for a variety of reasons: a trader mistook an acceptable drawdown for a strategy's failure, failed to sit tight and follow the strategy, went on to gamble in a chase for quick superprofits, or just quit prematurely because he/she was desperate and trading with their bread money instead of their risk capital.

The funds I'm willing to allocate to this experiment make absolutely no difference to my personal financial well-being, so there won't be a reason for me to pull the plug early. Likewise, I won't be upping the lot size by more than in the bot's money management if the market moves in my favor, as I am not desperate for cash within a limited time span.

The reason I decided to put up this experiment is a potentially fantastic risk-reward ratio stemming from my backtests with unoptimized parameters. I am perfectly aware that historical data tests and live forward tests over the same period of time will not post identical results but shouldn't differ that much either, provided the algorithm is not extremely spread/slippage-dependent (which it is not in this case).

After every series of trades, I will be posting my follow-up analysis with screenshots from my MT4 explaining the general logic behind the trades, what the expectations were, and what went wrong if the trades end up losing. This will be as much of a diary for myself as for the rest of you here.

I do not intend to keep my strategy forever concealed but it's imperative for me to make sure it works well live over the course of a year before I share the EA. In an unsuccessful outcome, it would be just another piece of junk you wouldn't need anyway. If I am, however, successful, the rest of you will be able to replicate my success, unlike with manual trading where you would need to possess the same vast set of skills and knowledge as the journal's author.

So all in all, I strive for becoming the forum's icon and hero - YOUR hero whose success you will be able to easily and fully replicate. :smart:

If fortunes are made here, I shall demand being addressed no less than "Sire". :cheesy::clap: If I fail, it will still be an exciting journey you won't regret following - much like you wouldn't regret watching your team playing and losing a truly exciting and spectacular football match.

I've been active on Forex for over ten years. If this strategy disappoints, I will probably just quit for good because this is the very best I have to offer and the only thing that might prove to be THE thing while also capable of being run in a fully automated mode.

So stay tuned for April 1 - I've already got my cash transferred to Tickmill in the full amount required for the experiment and rented out a good VPS from which the bot will be run. It's only sad that so far I got as little as one response in this thread but it's a "put up or shut up" matter: once the results are positive and steady, people won't remain indiferent.

That being said, I strongly encourage all forms of skepticism, disbelief, criticism, and whatever else that can be called "sound rationale". The bar is high here and burden of proof is heavy and it's entirely on me. After all, it would be kind of odd if reasonable adults demonstrated belief in a holy grail from the start, no questions asked. I like compliments but I would just as much have staunch critics here. Everyone is cordially welcome to throw whatever you have in mind at me. That way, together we'll make it or break it.

 

[sun11]

1st April = April fool day.. But I am considering it as special day for your Journey.....

Thanks for a sharing your honest thought here. I have one EA so far which shows a positive curve in long run..I never used it on any VPS. So your thread might inspire me to do so...
Wishing you all the best..

Regards

 

[NVP]

good luck gang ......I have worked with a few trader/programmers on EA 's over the years (serious Quants) and found that I am still mainly old school.........

I am happy for the robots to save me processing time and produce some decent bells and whistles for me on charts

but nothing comes close to what real traders can do ...........well certainly not with the capital most of us have to invest in robots and systems ..........

give me a few million to invest in programmers / hardware and I might start thinking about playing with advanced EA's again !!

N

 

[babyjake1961]

Thanks for the wishes.

I was also playing with complex EAs a few years ago, foolishly trying to account for every possible market scenario until I realized it's impossible whereas there's simply an infinite number of such scenarios.

Actually, the main reason I believe this bot stands a decent chance of lasting is its strategy's relative simplicity. It is profitable only roughly 50% of the time but due to the TPs being higher than SLs there's reason to believe it might retain an edge over the market. That's also the very reason I won't mind losses at all, however odd that sounds.

The two worst types of EAs are scalpers with huge SLs that wipe out half a year of profits with one losing trade and over-optimized indicator-based codes that illogically expect the past scenarios to repeat often enough on the forever changing market.

 

[babyjake1961]

As promised, here's the first 1K account's fully verified MyFXBook link: http://www.myfxbook.com/members/babyjake1961/01042016/1573036

The bot will be placing anwhere between two to six simultaneously opened trades, each with a starting lot of 0.1 (making the total starting lot 0.2).

The first trades can be placed as soon as today (for some of you, tomorrow), since it's the US NFP Friday and substantial price movements might occur, should the NFP data surprise to either the upside or the downside.

 

[NickBk]

Good luck.

 

[babyjake1961]

A brief analysis of yesterday's trades. As the price gained sufficient acceleration in the NFP/ISM aftermath, a total of four trades opened with a 15-minute interval yet only the first two managed to reach the profit zone before the momentum ran out of steam and the price reversed. So we netted a small loss of 1.18% (almost a break-even, considering the risk level). What pleases me the most is yesterday's live trades fully matching those on a backtest for yesterday, which means the algorithm is functioning properly. As all the time in the world is ours, we shall continue when the next market opportunity presents.

As a side note, never trade in a time of your worst financial desperation! Remember that markets are heavily manipulated and technical analysis no longer works. That's why the "gurus" have switched to bucket-shopping and b-booking while never trading themselves, not even during the "live sessions" when they are doing the "guru stuff" in a webinar mode to get a hold of your cash. So if you are cash-strapped and must push at high leverage under stress and time limit, it will always go against you to take you out for good.

 

[jeffre4]

good luck

 

[babyjake1961]

Those of you who want a copy of the bot can get it here: http://www.trade2win.com/boards/tra...500-one-year-autopilot-call-beta-testers.html

 

[NVP]

A brief analysis of yesterday's trades. As the price gained sufficient acceleration in the NFP/ISM aftermath, a total of four trades opened with a 15-minute interval yet only the first two managed to reach the profit zone before the momentum ran out of steam and the price reversed. So we netted a small loss of 1.18% (almost a break-even, considering the risk level). What pleases me the most is yesterday's live trades fully matching those on a backtest for yesterday, which means the algorithm is functioning properly. As all the time in the world is ours, we shall continue when the next market opportunity presents.

As a side note, never trade in a time of your worst financial desperation! Remember that markets are heavily manipulated and technical analysis no longer works. That's why the "gurus" have switched to bucket-shopping and b-booking while never trading themselves, not even during the "live sessions" when they are doing the "guru stuff" in a webinar mode to get a hold of your cash. So if you are cash-strapped and must push at high leverage under stress and time limit, it will always go against you to take you out for good.

Please,expand on the second paragraph......traders trade and gurus are failed traders generally trying to,sell,stuff .......is that what you are saying as well

Are you implying that all good traders must use eas because they can't cut in manually .......seriously ?

N

 

[NVP]

I only scalp in high probability periods in the forex market ......when momentum on the g 8 is above key volatility levels ......and other factors are in play regarding correlation patterns and time window signals.......is that what you are doing ?

N

 

[NVP]

Can I ask why eu"...........when I scalp 2 hours a morning that' pair is way back in my lead pair list......it's petty low,volatility and any momentum play will generally fade leaving you dead in the water.......only advantage is lowest spread,,,,,,.,.have you tried other pairs and why did you reject them ?

N

 

[babyjake1961]

My strategy is quite different from yours, only the general concept is somewhat similar. As I briefly mentioned, the strategy is based on the concept of price inertia. Basically, it implies that once the price has reached a certain degree of acceleration (increased growth/fall over a fixed unit of time), it is reasonably expected to move for some more time in the acceleration direction before the momentum exhausts.

EURUSD is the best pair to trade this way, followed by other dollar pairs on smaller timeframes.

You don't need to trade with an EA to be successful, you can also trade well manually - if you can. Yes, by "gurus" I meant people selling useless trading stuff online that doesn't work and who don't even trade themselves.

 

[babyjake1961]

What's really bad for my system is complete big price round-trips like the one on EURUSD today. It's not like they didn't happen before (quite a few did, as my backtest shows) - yet my bot has no effective remedy against them. These round-trips first trigger a lot of trades, then lead them to a slaughter.

What do I do about it? Nothing. Do I care? Not for a tiny bit. Will my year-long experiment go on? Of course.

 

[tomorton]

What's really bad for my system is complete big price round-trips like the one on EURUSD today. It's not like they didn't happen before (quite a few did, as my backtest shows) - yet my bot has no effective remedy against them. These round-trips first trigger a lot of trades, then lead them to a slaughter.

What do I do about it? Nothing. Do I care? Not for a tiny bit. Will my year-long experiment go on? Of course.

Well you can anticipate the events that cause these in some cases. Was this round-trip around the ECB Rate Decision announcement at 1245?

 

[babyjake1961]

Well you can anticipate the events that cause these in some cases. Was this round-trip around the ECB Rate Decision announcement at 1245?

Yes, but these are also the times the robot takes most of its profitable trades historically. The reason it survives and profits in the long run is most of the high-impact events either not resulting in round trips or the round trips not being so short-lived. Big short-lived round trips also happen but they are not dominant on the market.

Overall, the market is always right (or always wrong). Seek no logic in it. Don't fight the tape, cut your losses, sit tight, and follow the strategy. These simple rules have proven correct over and over a countless number of times.

 

[babyjake1961]

Another live account was set up today (01.05.2016) as scheduled: https://www.myfxbook.com/members/babyjake1961/01052016/1611171

 

[babyjake1961]

My bot went in nicely in the breakout direction following yesterday's FOMC minutes. Are you now expecting the price to keep moving for some more in the breakout direction (thus agreeing with the bot) or to correct back to the pre-FOMC level?

It doesn't matter, actually, because large breakouts statistically result in new trends about 50% of the time. So if your risk is contained and your TP is greater than your SL, you have an edge over the market, provided you also have enough patience.