We are using a proprietary algorithmic trading robot that uses two mathematical models:
a) Bayesian Probability Model
b) Machine Learning Algorithm
It is a complex system that take into account more than 100 variables simultaneously and that has the capacity for self-learning, minimizing the risks the longer it is used.
– On a daily basis:
a) The system runs continuously and using a simple graphical interface it tells us what is the entry price for a specific instrument (currency pair) which direction (buy or sell) and how many pips are expected to be won on that trade.
b) Separately, the system tells us what is the risk of the operation in a rank of 0 to 10. We use this rank to enter into the market with a specific volume. However, since this information is not static, it changes with ticks, sometimes we re-enter a new trade with same instrument and different or same volume, as you can see. Imagine that we BUY 0.5 lots of EUR/USD with our risk rank at 8. Then, 2 hours later the risk rank goes to 9, in that case we would had probably 0.2 or 0.3 more lots (the higher the figure, the lower the risk and more probability for the price to move in our favor).
This is how we work. We read the alarms from our algo-trading system but we introduce orders manually, to avoid any algorithmic related issue or even any kind of broker-related issue (unfortunately not so uncommon).
– Risk Management:
With regard to your capital preservation, please be aware that we have a mid-low tolerance to risk and that we have limited our system to a maximal consolidated drawdown of 20%. So far, in 7 months, which includes BREXIT and US ELECTIONS, we only had a maximal drawdown of 14.45%. Please see our MT4 terminal report. Also, the profit trade ratio is always kept at 80% or aboveall the time, as you can see. We are approaching 90% in the last couple of months.
For the floating drawdown, and only under very exceptional circumstances like BREXIT or US ELECTIONS, we allow the drawdown to go a big further, if and only if our system tells us that we are in a good scenario.