Manual trader seeks advice on EA robots
Ps
PS. Please ignore the first 6 trades on the statement as these were made with another EA by mistake (so the profit is really even more).
Thanks again in anticipation.
Regards
Cofton
Hello Cofton,
Certainly it is not uncommon to find people in the same situation as you and it is very clever from your part to ask for advice. Do not worry about the nature of your questions, there are no stupid questions and I am sure many people here will be glad to answer. I will do my best to answer what you ask :
(1) Certainly, by looking at a statement, the SL, TP, closing prices, opening prices, lot sizes, instruments, etc one is able to quickly elucidate the nature of the system and indeed say up to a certain point if the system has or does not have the merit to be a long term profitable system. You can easily discard very unsound trading tactics which are evident on statements.
(2) Extremely hard to say. What says that your system will not fail the year after you demo test it ? In the big scheme of things one needs to have a very strict criteria of profitability. A ten year long backtest which shows consistency with live testing results is the best way to go. Certainly you would need 10 years of demo trading to know if your system can survive a wide enough range of market conditions. If your system uses a rigid SL or TP then most likely it will become outdated quickly as conditions change and it will only be profitable in the short term. As a trader and EA reviewer I am always looking for Long term profitability. I am interested in systems that will work for me for the next 20 and 30 years, based on sound trading principles. Getting such systems requires adaptation against changing markets, extensive evaluation, etc.
(3) Depends on the EA. If you have a scalper then demo trading tells you nothing since scalpers are affected the most by spread widening and requotes which do not happen on demo accounts. I have seen many cases of scalpers being the BEST on demo and then failing in live tests because of this. Forward testing on demo accounts is only useful for experts that are unaffected by these phenomena, for that you would need an EA which closes orders at at least 5 times the spread away from the opening price of each order. Even then I would only say that you are away from significant spread and requote effects when you close orders at least 20 or 30 times the spread away from the opening price.
(4) You are lacking the history data for the instrument you are trying to backtest,you can follow this guide on my webpage which has a video teaching how to backtest properly with 90% modeling quality. Take into account that if your EA is a scalper and has a TP and SL of less than 20 pips then backtesting will be USELESS because of backtesting one minute interpolation errors caused by the "guessing" of intra one minute candle tick movements.
I hope my insights have been useful. I wish you the best in your search for an automated trading system that fits your trading style !
Daniel
PS. Sorry I couldn't see your statement because the attachment is still pending approval !
Thank you
Hi Daniel, thank you very much for your detailed reply, your advice is much appreciated.
I would like it if you would look at my statement when you can and let me know your initial thoughts as I feel the results are good to start with.
I've just done another 24 hours trading and it is still very promising so I have attached another statement in case it is of interest to you or other experienced traders.
I feel like I want to test the EA live but know I must wait a while and see if it continues.
I visited your blog/site and found it very interesting so thank you again.
Kind regards
Cofton
Loss Of Opportunity is Preferable To Loss Of Capital
The Market Will Always Provide You With Another Opportunity But It WILL NOT Provide You With More Capital
Hello,
I looked at your statements. I am sorry to say that your system has some really unsound trading characteristics. It is a true scalper, it takes profit below 3 times the spread and it also uses a martingale "money management" technique. With this system it is absolutely guaranteed that you will eventually wipe your account, specially on a live account where results WILL be very different because of re quotes, widening, etc. You will probably get some short term profitable results but you will, without a doubt, lose all your money if you trade this system, it is just based on very unsound money management. All martingale systems eventually wipe accounts. I wrote an article on why martingales cannot be traded profitably, you can read it here. I am glad you posted this, it would have been a big mistake to run it on real money. I hope you find some long term profitable system that fits your trading style !
Unsound money management
Hi Daniel
Yes I understand what you mean and I have always felt uneasy about this sort of money management (Martingale style). In my experience though, within 120 hours of trading an EA you do tend to observe high risk pretty quickly. There will be periods of either high loss (or close to it) and you soon identify that this type of money management is indeed high risk or it has already blown the account.
With this particular EA however, I have not yet come across any high risk whatsoever, there hasn't been one day or evening where I even considered it to be 'dangerous'. Now this suggests to me that maybe (just maybe) it may have some merit and could be worth pursuing.
I realise I do not have the experience that you have and I really do appreciate you looking at my statement and offering your advice. I just feel I have to test this more and see how it fairs on a longer term.
Is there a period of success that you would then consider this to be 'usable' in real trading ? I mean let's say I demo'd it over a 6 month period and it didn't wipe the account out and remained profitable, would you then consider this to have a chance ?
Just wondering how bad you think this EA is as I have tested many EA's and they all either blew the account or were just plain unprofitable or hardly traded at all. This one has shown results quickly and with little risk so for me it looks interesting.
Thanks again.
Cofton
Hello Cofton,
I do understand what you are thinking and the reasons why you want to pursue this EA, however Martingales always wipe your account, it is not a matter of "if", but a matter of "when". You may think that you are observing quick results with a low risk to your equity, I see an EA with a huge market exposure and some temporarily profitable results. There is no merit to any expert that uses Martingale trading, specially an ea that scalps the market. Think that your profits are also associated with this fact, even if you demo tested for six months, your loses will probably be much greater in live testing because of the demo/live testing difference inherent to scalpers. This difference IS BIG a reason why scalpers should ONLY be tested live.
I have talked to people in your exact situation a few times. They find a martingale EA that seems to "not wipe" their account and afford profits quickly and they push it and continue to test it for months. The results are always the same, Martingales always wipe your account. Some may even take 1 or 2 years, some may wipe your account the week you go live. Trading a Martingale is nothing short of gambling and that is not what we are in trading for.
Again, some people can learn from what I and other experienced traders tell them regarding these systems, others have to walk the road themselves and actually see their Martingale EA turn an account to dust. Don't get excited by short term profitable results, if your objective is to get your income from an EA and be profitable for decades in automated trading then gambling with martingales is not the way to go. Look for sound, realistic, automated trading strategies. Just my piece of advice, now that you have the information it is up to you to decide,
Thank you for valuing my opinion and experience 
Thanks again
Hi Daniel
Thanks again, I must take on board everything you say, I am new to automated trading and need all the advice I can get. I think I am struggling to recognise the difference between demo and real trading and how it can affect results.
As I know you understand it is so tempting to see positive results so quickly and then just dive in. I am glad you have taken the time to let me know how this could (or will) turn out and I hope other newbies read this post in case they are seeing things the way i do.
I have to say that I do get a kick out of watching results of automated trading on a demo account especially when it shows such success lol, it really does make it look easy - and we all know there is no such thing as a free lunch !
Thanks again Daniel, I will continue my search and may I wish you every success !
Kind regards
Cofton
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Hi all
Although I have read and learned much from TSD this is my first post so please treat me gentle
.
I have never really been interested in EA's/robots as I have never wanted to trust any automation with my cash, but recently due to business commitments I have started to consider the possibility. After searching and downloading and testing various so called robots and EA's I found out pretty quickly that they were either a load of crap or didn't feel right or didn't suit my kind of trading style (I like to scalp and simply haven't got the patience to wait for ever to see a result), I like to go to bed and know I've finished trading for that particular day, right or wrong that is the way that suits me.
Anyway, cutting a long story short I'd almost given up but I did put the word out to a few trading colleagues and eventually a friend of friend (yes it really was a friend of a friend lol) gave me an EA and simply said 'try this I think you will like it'.
So I've demo'd it for the last 3 days, just left it running in the background with $5000 and on a 5M chart EUR/USD. I left it running overnight and it's the first time I've been pleasantly surprised, in fact I am pretty much gobsmacked by its performance. I cannot open the EA as it's protected so I don't know the instructions of the code, plus to be honest I only know basic coding so I would probably be pretty useless anyway.
As I am not too familiar with EA's/robot trading I would like to ask a few questions from more experienced traders, I realise what I ask maybe basic stuff to many on here and I may seem a little naive so please bare with me.
(1) Is it possible for experienced traders to look at a trading statement and make a judgement on whether or not the EA has any merit ?
(2) How long should one judge an EA on demo trading to make a decision on whether or not to go live ?
(3) I realise that demo trading is not the same as real trading, but is it so much different ? I mean if an EA performs on demo and is rated profitable (say 9/10) is it possible that when traded live that it could end up a turkey ( say 1/10) ?
(4) I tried to backtest the EA in MT4 but after i set the dates and stuff and clicked Start all I got was a load 'squeak' - what does this mean ? Sorry if this is obvious but I've never backtested before so a bit wet behind the ears in this dept, it didn't show me any errors, just did nothing.
Well, I've done it, my first post here and I'm quite proud of myself !
Just hope my questions are not too silly for you experienced guys
so please don't start getting all mad at me lol
Any advice would be greatly appreciated.
Kindest regards
Cofton
Loss Of Opportunity is Preferable To Loss Of Capital
The Market Will Always Provide You With Another Opportunity But It WILL NOT Provide You With More Capital