The Legend of The Gambler - page 50
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LOL. The backtest results were disasterous in the long term. It is a steady decline in the equity curve.
Man, what kind of voodoo magic is going to turn this equity curve into a success? Maybe I should just reverse my entries, but that never works either. Crazy.
For the life of me, I can't get the EA to place trades in the MBtrading demo server. I must be doing something wrong, but I can't put my finger on it yet. This is the problem with changing different broker demo servers and adding too many features at the same time.
I think I finally have the EA trading on the MBtrading demo server. Then the demo account was disabled. WTF, man.
Perhaps, I had too many hedging requests that were denied and hammering their server. I already made the correction to stop this problem since MBtrading does not allow hedging trades per NFA.
Well, my testing is going down with MBtrading demo server. I'll see what happens tomorrow if I can continue on their demo server or maybe I'm banned.
I'm hoping it is on their end, and that their demo server is down for maintenance. Now I understand why some people complain about their demo environment.
6 days into the new year, and I think I've made some good progress on the coding front.
Checked this morning, and my demo account is still disabled.
I opened another demo account with a different email, and it connected just fine. So demo testing is restarted back up with a variation of my original concept. However, this variation does not use SL, so it is just a random variation.
Most likely, I will start another demo account to continue the development of the original concept with SL and TP.
New demo account was disabled again. Man, MBtrading needs to work on their demo servers because this is not a pleasant experience, and it is definitely slowing down my project.
I will email MBtrading customer service, and get the demo account working next week. In the meantime, I will develop my project on IBFX and hope to port it over at a later time.
But I think I understand why the EA did not place any trades on MBtrading. I cannot send the sl and tp with the original order. I need to subsequently add the sl and tp after the trade is already opened. Well, I won't know for sure until I can get their demo account working.
Anyways, it's going to be a lot of work and brain power to try to even make this EA into breakeven.
Since there isn't much to do today, and my demo accounts not active, I want to share with you all some principles of simple statistics that are used in many industries. These principles were developed mostly for the manufacturing purpose, to reduce defects in the manufacturing process.
In a normal distribution, you have a simple bell shaped curve, and to capture the area under the curve, the amount of standard deviation from the center of the distribution.
A "Sigma" is basically 1 standard deviation. So six sigma means that you are +/- 3 standard deviations from the mean. What good is that? Well, if you have six sigma, you are capturing 99.99% of the area under the bell shaped curve. If you had 4 sigma (+/- 2 standard deviation), you are capturing 99.38% of the distribution. With 2 sigma, you only capture 69% of the curve.
Well, what good does that information do in forex? Obviously it is not perfect, it will not always be a normal distribution, however , there is the theory of reversion to the mean. Which signifies that there is some sort of distribution curve similar to the normal as it reverts to the mean that we see time and time again as we see price consolidate.
So to pull it all together, I recommend staying at the 4 or 6 sigma levels to capture most of the movements of price action. Think about it, and use that to your advantage, and maximize your profits. If prices go from A to B, and you know that A to B is about 99%+ of the movement most of the time, then you just need to stay in that area and capture that movement.
I've given you the theory and some simple statistics, you just have to use a little brain power to figure out how to use it in your trades. I think you'll like it.
Next topic is Reversion to the Mean. I've already touched on that previously. But this theory was really developed in the equities/futures arena decades ago. In 1982, Peter Steidlmayer introduced Market Profile with CBOT, I believe he had a white paper on it. Market Profile is the graphical representation of price and time formation. There are even MP indicators for MT4, so those are all based on the work of Mr. Steidlmayer and his Market Profile work.
This really proved to the work the theory of reversion to the mean, and today, there are many products in the trading work built around Market Profile. I am a firm believer of this concept, and when you look at the graphics, it is actually a nice bell shaped distribution curve (more or less). Now if you understand this much, I don't think there is much more to reveal.
Just as reversion to the mean, and statistics can be used to find an entry, it can be equally useful in finding an exit. One needs to be prepared for large stoplosses because one can also wait for the exit when prices revert.
So with that, it should be enough to open a new form of thinking when trading.
I was just informed by MBtrading that their demo server is down, and there is no ETA on when it is coming back up. Ummm...
I'm not sure how MBtrading expect investors to develop EA for their brokerage if they can't keep their demo server up consistently. If I can't develop and test my EAs on the demo environment, I'm not going to stick it on my live account to trade. It's as simple as that.
And the problem is that they don't disseminate this information where I can check to see this information.
Another weekend, so more down time to share some knowledge. In my years in the market, there are 2 kinds of price movements....fast and slow. Obviously, price will consolidate and expand, and that's how you get chop and trend. But I want to focus on the speed of the movement, which inexperienced traders usually don't put much thought into.
When the price moves very quickly, there needs to be a set of rules to counteract that. And when the prices moves slowly, there needs to be another set of rules to deal with that. So if you have those 2 bases covered, then the system is much more robust, and you just might be able to survive and make a few bucks in this market. A system needs to be more flexible and dynamic to handle the market because the market is one tricky beast. If you are not ready, it will steamroll you and back it up.