Customers often ask me a question: How fast can I pass the challenge with an Expert Advisor? Assume I answer: it can be done in 5 days. Would you believe me? I think not. What if I said 50 days? You would probably say that's a very long time.
I think that everyone should be able to assess the terms and risks, while I will try to explain to you how to do it. As an example, we will consider the Prop Master Expert Advisor.
Prop Master Expert Advisor is designed specifically to work on funded accounts of Prop Firms:
Read the article How to test the Prop Master Expert Advisor correctly
Backtests of history and signals of real accounts, on which the EA works, are the only thing you can rely on.
In this picture I have provided an example of a backtest of the Prop Master Expert Advisor for the time period from January 2023 to May 2024. You should pay attention to the following:
1. Profitability for the test period
Download and test the EA in your trading terminal for a period of several months. It is better not to take one last month or 10 years of history. Do a test for the last year or a year and a half (10-20 months). And then divide the income that you got as a result of testing by the number of months of testing. That way you will get an average of your monthly income.
It is important to remember - you get an average value based on the results of testing. The market has different activity, the market phase may not fit the trading strategy of the Expert Advisor, and the results of testing in most cases are always better than the real trading. Therefore, in some months you can get a value worse than the one obtained during testing, and in some months it is better.
Example:
According to the results of testing for 16 months, Prop Master Expert Advisor earns a profit of $13394 (see point 1 in the picture). The initial deposit is $10000.
Profit for the whole period: 13394/10000*100 = 133,94%
Average profit per month on EURUSD: 133.94 / 16 = +8.37%
Take into account the profit on all currency pairs on which the Expert Advisor trades.
As a rule, Expert Advisors are designed to trade not just one currency pair, but several. The list of currency pairs is usually specified in the description of the Expert Advisor, and the settings files for currency pairs can be downloaded in the comments.
Prop Master Expert Advisor can trade EURUSD and GBPUSD (USDJPY is still being tested). Therefore, it is worth to test the GBPUSD currency pair to get the total profit on all currency pairs. After calculating the average profit for the month for all pairs, it should be summarized.
Example:
Average profit for the month:
- EURUSD = 8.37%
- GBPUSD = 5.48%
Total profit for the month: 8,37+5,48% = 13,85%
Download detailed reports on EURUSD and GBPUSD here
2. Is the risk management suitable to pass the challenge?
Lot size, risks and money management parameters are the parameters that affect profitability and with which you can increase profits or reduce risks.
It is always up to the trader to customize the risk and money management parameters. One trader will feel comfortable with a risk per trade of 10% of the deposit, and for someone the risk per trade of 0.5% of the deposit will be normal.
You should define the risk acceptable for you and set up the Expert Advisor yourself. This is your task as a trader!
If you are not satisfied with the profit of the Expert Advisor, check if there is a possibility to increase the risks without violating the critical drawdown values. To do this, pay attention to the maximum drawdown in backtests (see point 2 on the picture). By adjusting the value of Risk per transaction in the parameters of the Expert Advisor, you can increase profitability. In the same way, you can decrease the value of Risk per transaction to reduce the maximum drawdown. Adjust the value of the risk in such a way that it does not exceed the critical drawdown values set by your Prop Firm.
IMPORTANT!!! The Risk per transaction parameter should not exceed the value of maximum drawdown per day.
3. Stable results are the key to success
Criteria for successful passing the challenge of many Prop Firms are quite strict. Not many Expert Advisors can show such results for several months in a row. That's why I recommend you to pay attention not to the profitability of the Expert Advisor, but to the stability of its results when you choose an Expert Advisor.
Let's say you have found an EA that consistently earns 4% per month, withstanding critical drawdowns. This is very good! Now imagine that you will have 3 such Expert Advisors. The advantages are obvious:
- You will steadily earn 12% per month (4% * 3 Expert Advisors)
- Diversification of trading strategies gives you the opportunity to gain profit at different phases of the market
- Prop Firm will not accuse you of copytrading (see the article How not to blow up the account and complete the Сhallenge)
Add me as a friend here so that you don't miss new interesting topics:
- 5 criteria for choosing an Expert Advisor to pass the Prop Firms Challenge
- Prop Controller - a mandatory module for Prop Expert Advisors
