Welcome back Meta-Traders.Well after almost a year of live trading, Megadroid Live gave back all of its year-to-date profits (about 24%) in one short evening. Its depressing to see an entire year's worth of earnings evaporate so quickly But I knew it could happen and giving back profits is part of the process. Meanwhile the demo account continues to chug along and got out of this particular trade with a 1-pip profit!
One point worth making is that much of the action in Forex is just stop-running. I watched a video last week about how the market makers go through a daily cycle of letting stops accumulate above and below the market. Then they swing the prices around to take out the stops. And once a set of orders accumulate at a certain level (away from the market) its exponentially more likely that the market will go there. Take a look at this chart of my Megadroid trade. The market kept on going up and up until my stop was taken out and magically, that was the top of the move!Enough whining about this setback, how did our other robot's make out?
It was a pretty good week for the portfolio systems at Asirikuy. Atinalla #3 had a week picking up about 4% and is now up about 6.5% since starting the demo back in mid-November
Atinalla #1 live finally came into profit after being down as much 3% since starting live trading on November 12th. The star trade for the week came from Teyancanani which picked up nearly $100 on a single trade. Watukyshay FE chimed in with a few winners as well, but gave those profits back with a larger loss later in the week. The system went out out short on EUR/USD on 2 of the 3 systems, which did not trigger in my live account due a platform crash. I'm not too concerned since trend trades taken on Friday's can easily get thrown back early next week.
God's Gift Duo continues to cycle lower in lackluster trading and is now down -1.67% since starting trading live back on October 19, 2010.
So here's what I learned from this week's experience:
- A high winning percentage doesn't mean anything of the risk/reward ratio is skewed
- Martingales result in nice smooth equity curves, but when they crash, they crash hard!
- Diversification is key!
I'm going to make a few adjustments to my robot's portfolio as a result of this experience and report back on that. Also, i'm done with my regular job for the remainder of 2010 so look for more frequent posts in the next 2 weeks.
Enjoy your Saturday.
Hey Chris,
ReplyDeleteBig bummer on Megadroid. What happended to you is the worst thing that could happen with currency trading. You get that feeling of confidence that you are ending positive and then all your profits get wipped out, and it took you a whole year to realize it, which really sucks. It has happened to me sevearal times but on shorter time frames I suppose. Still does not make you feel very good... I remembering considering doing Megadroid after seeing some of your results. I have to say that I will not purchace Megadroid (I decided that several months ago I suppose). My past few weeks I have been studing a little on the types of systems that take a lot of small gains and also take huge losses (higher accuracy systems with poor reward to risk). Zulutrade is rampant with these types of systems and I have been trying to open the eyes of some of my readers to exactly what is going to happen if they trade these systems. It is very diffuclt to convey my song and dance when these types of signal providers which go 6 or more months without a failure. People, newbies, start to think I don't have any idea what I am talking about. I suppose they just have to learn the hard way. I do plan to do a more indepth post in regards to these types of systems soon.
Your stop hunting comments do worry me. I have always felt that where there is money to be made, only the crooks are making it. Currency trading may be several trillion dollar a day event which seems like it would be hard to manipulate that, but being an Engineer I know better, anything is possible is always my thought, and never underestimate what people are doing. I have been trading my Mover3 and Tiger Tail v2 now for a while and have been running into some interesting trades where I just barely stop out. I'm not going to call foul play yet as my impact to the market should be tiny, but it does keep me wondering. For me right now it looks like Tiger Tail will end up 8% to 10% on EUR/USD for the year. Tiger Tail on GBP/USD crashed on me (I should have collected more data and I was risking too much). Mover3 is curretly down a few percent and I don't expect to close out the year positive with it. I made some mistakes in my coding that cost me a couple of trades when I first started trading live so my data is somewhat skewed. Technically I should be very close to break even right now. So I do see some hope there. I have been putting some additial focus on Mover3.1 which is my next version. I increased my profits with some tweaks(you may have read my post on it). I plan to focus on what I have now and I think I am going to use Teyacanani (I want to see it trade a few times first)
Anyway, I think you and I are likely on the right track here and I hope we will start making some long term profits.
JT
JT-
ReplyDeleteThanks for the comments.
The stop hunting thing is definitely for real and its explains a lot of the short-term movement in the markets. The problem is that we don't get to see the order book so we don't know which way the market is going. Also, the fact the market is so fragmented with so many brokers, each with their own price feed, makes it pretty hopeless for us to compete on that basis.
I suppose the only real defense are a systems with sufficiently large TP's and SL's. Daniel F for example advocates SL's and TP's many times larger than the spread, but I forget what multiples he recommends.
As for giving back the profits, its bad but not quite as bad as losing right out of the gate. But it doesn't inspire confidence that I can throw increasing amounts of money at a system like this.
Speaking of Teyacanani, i'm working on a review of that system right now, and hopefully it will be ready in a day or two.
Thanks and take care,
Chris
I think I remember something like 10X the spread, but I thought there was some sort of correlation with intended time frame the system trades on. Daniel has some better exit tactics than anything I have done yet. My exit is pretty much set (like 2x the 14 period ATR on 1H chart), while I think he likes to use the, better, dynamic exit on his trades. He sets some pretty large TP and SL values then I think if some conditions are met during the trade he gets out. Someday I will apply this strategy (doing a little work on Mover3 with dynamic exiting). I watched Teyacanani make the most perfect trade a week or so ago. I could not believe it executed so smoothly. The second trade I am in right now is not so perfect, but I am non-the-less looking for some confidence in the system, and I am sure it will do great. Hard to want to pass up a system that back tests so well. Looking to go live with it soon.
ReplyDeleteOn another note, FXDD just sent me a note that it will now be a 5 digit broker on live accounts. Good thing I updated my EA's to be 4 and 5 digit broker compatible.
JT
JT-
ReplyDeleteThanks for the update. I wasn't aware of that change with FXDD. Take care bud,
Chris