Trend Domination EA User Guide

Trend Domination EA User Guide

15 May 2018, 20:40
KEENBASE SOFTWARE SOLUTIONS
2
721

User Guide for Trend Domination EA.

Product Links:

EA monitoring on real account: https://www.mql5.com/en/signals/410664

How to backtest Trend Domination EA:

Trend Domination EA has provided promising results in a series of backtests performed on the 10 years of data starting from 12-05-2008 to 10-05-2018. You can use the following SET files for each pair to perform the similar backtest. 

-> Download the EA SET files to perform the backtest.

Trading Strategy:

This EA incorporates a trend-following strategy that is specifically tested and developed for GBPJPY, GBPUSD and EURJPY on M30 Time Frame. Buy/Sell opportunities are provided by our custom built channel indicator.

After receiving the signal from our custom indicator, EA opens medium-term positions that can last between few hours to several days. Hence, the use of a VPS is highly recommended.

This trading strategy performs best when optimized at regular intervals. For our own trading, we've chosen the optimization window of 8 Months.The trading strategy was last optimized on 01-05-2018 so next optimization will be done on 01-05-2019". 


How we developed this Trading Robot:

In the initial phase of development, the strategy was tested on multiple Symbols and time-frame including Currency pairs, CFDs and Metals. We have a specific model developed in Python which ranks data and reports according to Sharpe ratio(risk-adjusted returns). 

Tools used: Matlab, Python, Excel, MT4, and MT5. 

After going over the extensive data, reports, Excel sheets and graphs, our quant carefully shortlisted GBPJPY, GBPUSD and EURJPY for the live trading with this EA. 

Robustness:

In trading, robustness is the ability of a financial trading system to remain effective under different markets and different market conditions, or the ability of an economic model to remain valid under different assumptions, parameters and initial conditions.

Mainly, there are two type of tests that can show the robustness of a trading strategy. 

Monte-Carlo Simulation:

We combined the backtesting results of all three pairs and apply the Monte-Carlo test with 5000 simulations.  


As you can see in the above fig. Monte-Carlo simulation shows that there is a very low risk of Drawdown with this system. However, this is clearly not a full proof approach to test a trading model robustness because backtesting result can be manipulated by hindsight and biased data. 

So we exposed the system to unseen data(also called out-sample test). If the trading-system shows decent performance on unseen-data, we can say that the system is robust. 


Out-Sample Test:

The trading system shows promising result when tested on unseen-data. The equity is not as smooth as in backtesting for obvious reasons, still we can say that this is an astonishing performance because the system had never seen this data before still equity holds very good and reaches new high continuously.

We went one step further to perform Monte-Carlo simulation on the out-sample result:


Again, the drawdown is very low as similar to the Monte-Carlo simulation on backtesting result.

The series of above tests show that the system is robust that can hold well in changing market conditions. However, always remember that past result cannot guarantee the future result still we can go live with this trading robot with high confidence. 

How to use Trend Domination EA for Live Trading: 

1. Choose your risk category:

We divided the risk into three categories:

  • 2% = Conservative
  • 4% = Moderate 
  • 6% = Aggressive

Max. drawdown tolerance for each category is different. Return On Investment(ROI) received from the market is inseparable from the risk. 

  • Conservative  : Max. Drawdown of 15-20%
  • Moderate       : Max. Drawdown of 20-25%
  • Aggressive      : Max. Drawdown of 25-30%

2.  Once you select the risk category, there are two ways to proceed ahead:

Download this remote accessing software and send us a message, I or someone from my staff will setup everything within 5 minutes. 

Or,

Do it yourself:

  • Download the Live Trading EA SET files attached at the bottom of this post. 
  • Open four M30 chart dedicated to each symbol. As we are trading GBPJPY, GBPUSD and EURJPY so there will be total 12 charts. 


Understanding the Risk category and market exposure:

Distribute the risk into 3 equal parts(because we are trading 3 pairs) and further distribute the risk into 4 equal parts (because there are 4 charts dedicated to each pair). 

If your risk category is 6% Aggressive:

  • Dividing 6 by 3 gives 2
  • Dividing 2 by 4 gives 0.5

Risk per trade for the Aggressive category is 0.5%

If your risk category is 4% Moderate:

  • Dividing 4 by 3 gives 1.33
  • Dividing 1.33 by 4 gives 0.33

Risk per trade for the Moderate category is 0.33%

If your risk category is 2% Conservative:

  • Dividing 2 by 3 gives 0.66
  • Dividing 0.66 by 4 gives 0.16

Risk per trade for the Conservative category is 0.16%

We will load the EA on each chart with their respective SET File and change the Risk Percentage per trade according to the above categorization. Since we are trading 3 pairs with their respective 4 different iterations, it is possible that a long and short position may appear together on the same pair. By following the above steps, you deploy a hedging mechanism that generally tends to stabilize the returns and distribute the risk. 

Share it with friends: