How to get 100% per trade. The Balance Growth illussion

11 September 2017, 18:40
Michalis Phylactou
2
92

In this post I will show how easy is for one to be fooled by the Growth statistic shown in the signals.

As the MT4 signals measure growth based on balance and not based on equity here we go.

You can see a demo signal I created for this here ( https://www.mql5.com/en/signals/342751 )


1) I opened a demo account with 5k USD and leverage 200.

2) I open at the same time 8 Lots Buy USDJPY and 8 Lots Sell USD JPY 

-By doing this my account is completely hedged hence my profit will always be the negative spread and the swap

3) Once one of the two trades reaches a profit of almost 5k ,I close that profitable trade and open a new trade in that direction. In this way I am fully hedged again.



Result

1) Every time a trade closes the account growth should increase by 100% as the growth is based on the account balance.

2) The account equity will always remain the same (minus the spreads and swaps) as every time the profit trade closes it re-opens.

3) My active loosing trade losses will be more than half than the account balance and more than the profit made by the last trade.


After 1 trade only the account is up almost 100% while the equity is loosing

sc

Equity

Conclusion

Even thought the account equity never increases the account growth will be showing massive increase.

In fact the equity will be decreasing each time due to spreads and swaps.

That is because the growth is calculated by measuring how much profit the last trade made relative to the last balance and ignores existing open losses


Don't be fooled by signals that show just high growth and look at the equity growth instead. That is the real growth.


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