Cost Averaging System - page 43
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Is there a way to determine wheather the market is rangin or trending?
ADX is a great indicator for that. However, once the market starts to trend, and the indicator fires off that fact, it is too late for the EA. It probably would have cost averaged a few times and is in the hole now.
I am surprised to see users worried about open trade losses using the CA system. It is the basic premise of the system... it will cost average its basis cost and try to close the trade for a profit. It works on the assumption that the market trends much less than it ranges, and there are retracements in every trend. The clue to surviving these drawdowns is through capitalization. Using indicators is a futile exercise, in my mind. It is just a psychological crutch and my experimentation with indicators, all the new flashy ones and the old faithfuls, have shown me that many many times over.
I don't know what the outcome will be but I am excited to see it. There hasn't been a good trend for a while so this gives me an opportunity to stress test the system, like forex blue had hoped for.
I want to emphasize this... trading is all about psychology and capital. If you can't handle either one of them, then you probably will be killed by the market. Don't get too excited when you see profits and don't get scared when you see losses, they are part of trading. Tell yourself this thousands of time over and then one more time... it is the only way to survive this jungle.
what about the simple lowly ATR? set some limits on the maximum allowed ATR level for the initial order? I'm not saying it's a perfect or a full solution.
I don't know what the outcome will be but I am excited to see it. There hasn't been a good trend for a while so this gives me an opportunity to stress test the system, like forex blue had hoped for.
what i would like so see for a stress test is the market going 300-500 points in a couple of days. the market from monday to today's high on the euro has gone up about 140 points.
the past 6 months have been ideal for martingale type systems.
what i would like so see for a stress test is the market going 300-500 points in a couple of days. the market from monday to today's high on the euro has gone up about 140 points. the past 6 months have been ideal for martingale type systems.
I would love to see that too. However, the question is how much retracements will be there during that move. If there are 80 pip retracese for every 100 pip move, then the system will come out laughing. However, if the retracements are shallow, then it will come out with its butt in its hand. Again, time to wait and see.
Here is the results for the aggressive version. Not bad, just $450(+/-) of open trade drawdowns.
The common rsi has open trade drawdowns of about $3500. That is expected, because it just really depends on RSI values to close its trades. This is a nice test for it.
Cost Averaging RSI with Trend v4 midweek update
Test from post #391.
Maji from all Martingale systems I am testing this one is performing best in difficult market conditions of a current week.
Maximum observed drowdown less than $400.
H1 timeframe.
Cost Averaging Common RSI v1 midweek update
Tests from #392.
Common RSI is showing more impact.
Observed drowdown over $500.
I am not testing Pyramid version at this moment. If somebody is testing it please post your results.
I hope you guys understand the underlying logic of the system. It will work great in ranging markets but will incur losses in trending markets. I have tried indicators of sort and have even tried trading with the trend. Those have proved that they do not work. The only way to trade these systems is to capitalize yourself adequately so that you can withstand the drawdowns. If you think you can trade 5 pairs of even nanolots with $1000, you are wrong.
The overnight trends will provide the stress test for the system. Remember, tomorrow is Thanksgiving in the US and the market volume will dry up significantly. This may lead to large spikes, but that is good for the system. I was hoping for a couple of days or more of sustained trend so that I can see what the systems can do and cannot.
Please try to note the maximum open trade drawdowns during these trending times and that should provide an idea for capital required to trade these cost averaging systems.Maji,
I am one of those wrong guys, tried to trade 10 pairs (including four majors) with only 500$. You know the results.
Thanks for your suggestions.
Scott