Which timeframe?

New comment
 

Hey, guys!

Im facing the following decision: what should be the best timeframe for my EA? It is profitable in almost all  timeframes (except M1).

I prefer to work with greater timeframes (like H12 or D1). First because the spread charged by the broker practically makes no difference (it is very different when you trade in, for instance, M5). Also, there is much less randon noise, as a result the total profit is far better then the smaller timeframes, as well as the % of profitable trades.

The problem is: because I intend to open a account with only USD 500, I am experiencing huge drawdawns when I perform a simulation, even buying only 0.01 lots at time.

I would like to ask, what timeframe do you trade and why? Also, do you think I should choose a smaller timeframe (like H1 or M30) because my account has only USD 500?

Thanks a lot!  

 
It depends on your system which you coded your EA in
 
Icarus:

Hey, guys!

Im facing the following decision: what should be the best timeframe for my EA? It is profitable in almost all  timeframes (except M1).

I prefer to work with greater timeframes (like H12 or D1). First because the spread charged by the broker practically makes no difference (it is very different when you trade in, for instance, M5). Also, there is much less randon noise, as a result the total profit is far better then the smaller timeframes, as well as the % of profitable trades.

The problem is: because I intend to open a account with only USD 500, I am experiencing huge drawdawns when I perform a simulation, even buying only 0.01 lots at time.

I would like to ask, what timeframe do you trade and why? Also, do you think I should choose a smaller timeframe (like H1 or M30) because my account has only USD 500?

Thanks a lot!  

As newdigital said, it depends. If your are calculating your stoploss from your risk, it's better to choose a lower timeframe. Anyway, the best choice is to lower your risk, drawdown,etc...to preserve your capital.
 

Thank you guys!

I usually set my stops and tps as a multiple of the ATR of 14 bars. Tipically, my stops vary between the last price minus 1, 2 or 3 ATRs, and my tps are the last price plus 1, 2, 3, 4 or 5 ATRs (both for long orders, for short, it is the oposite). The stop loss is never bigger than the take profit.

Certainlly that is the origin of my problem because naturally a dailly bar has a much bigger range than a H1 bar (in absolute terms, i.e. in points). 

I never considered set the stop according to the capital I am willing to risk. 

I also try to simulate some effect of spread, for example, by adding 0.0009 to the price I pay in the buy orders, or subtracting the same amounth for the sell orders. So I am certain to be paying higher prices in buy orders and selling by lower prices in sell orders. I think it may make the results more realistic. That also explain why I dont have much profit trading in smaller timeframes, which is OK for me.

 
Icarus:

Thank you guys!

I usually set my stops and tps as a multiple of the ATR of 14 bars. Tipically, my stops vary between the last price minus 1, 2 or 3 ATRs, and my tps are the last price plus 1, 2, 3, 4 or 5 ATRs (both for long orders, for short, it is the oposite). The stop loss is never bigger than the take profit.

Certainlly that is the origin of my problem because naturally a dailly bar has a much bigger range than a H1 bar (in absolute terms, i.e. in points). 

I never considered set the stop according to the capital I am willing to risk. 

I also try to simulate some effect of spread, for example, by adding 0.0009 to the price I pay in the buy orders, or subtracting the same amounth for the sell orders. So I am certain to be paying higher prices in buy orders and selling by lower prices in sell orders. I think it may make the results more realistic. That also explain why I dont have much profit trading in smaller timeframes, which is OK for me.

Seems all good. With 500$ you have to trade with 0.01 at maximum. So see what timeframe gives you a good compromise between your profit and your risk. 0.01 lot is a risk of 1$ for 10 pips (for xxxUSD). If you want to risk no more than 2%, which gives you 10$. So choose a timeframe with an average stoploss of 100 pips. That will probably allow you to trade on H1 at least. Of course it's only an example, adapt it to your strategy and money management.
 

@Icarus:

Have you considered going with a Nano_Account? These types of accounts makes $500 appear as 50,000 Credits. Usually the spreads are about 2x that of regular accounts but giving the larger_timeframes you trade_on, it might not matter so much.

New comment
Reason: