Profitable system. Now what?
Give us an example and screen shots, let us help you make it better...
Um..the system is kind of profitable already. I'm actually asking for money management advice here.
Um..the system is kind of profitable already. I'm actually asking for money management advice here.
I think your money management will depend on the potential drawdown of your sistem.
That way, you can feel confortable trading with the money you need for that lot.
Example: If your sistem allow, you trade with 0.1 lot every $2.000 in your account, because you know (by tests) that if you lose a certain amount of that money (in a very bad days), you will recover without needing to lower your lot.
So, to increase your lots to 0.2, you will need to reach at least $ 4.000 in your account.
I don't know if that answer your qestion, maybe I didn't fully understand what you ask.
Mm
I have asked for money management hear before. It is hard to come buy. Most people are going to ask for your system. Then try to make it in to a EA. So make a statement saying you are not going to share. Or your thread will only go to people thanking you have the next HG. My advice is to keep it small for along time. A lot of system seem to be great. But only work in a trending market. If the market is in a long swing. Say two week up trend and this is the time you were testing. When the market turns. Your system won't work. You will loose all you have make plus your bank. Also don't trust back testing data. Almost all indicators repaint in one way or another. I know you know most of this. You have been around for some time. I put some of this on for the new folks. Good Luck
Thanks for the replies guys, lots to think about.
Yeah, I don't use back testing at all. After all this time I don't trust it. Thankfully my system does not rely on trend trading, so I don't have that issue. I gave up looking for the perfect way to trade trends long ago. Though it is possible with the proper risk/reward ratio and $ management. My system relies on inherent qualities of the market applied to a random medium. In other words, it treats the market as if it were random.
Yes, I should state that I'm not interested in sharing system details. I've shared a lot of other systems on here that could be made to be profitable with the proper $ management and some tweaking, look through my past posts.
If this pans out over the next few months I will write a thread offering general to semi-specific advice on how to make a profitable system. It's just that I am a firm believer that if I tell people how do something they won't value it at all. Forex is very, very hard work and unless you are a certified genius you will have to put years, blood and sweat into it to get something out.
I would recommend writing an EA just to save you from some hard emotions and decisions...
I've finally hit on something that is profitable. Took me a couple years (read: 4). So now what?
How do I manage my money? How soon do I move up in lots? Should I set up a VPS and write an expert adviser for it?
What do you guys suggest?That can depend on several things, how much money you are trading with as that can determine your lot size also as others have stated what your potential draw down is and whether you use a physical SL or a mental one. Also how much are you looking to take out of your account each month. My suggestion, maximum 65% of the real profit and let compounding aid in the growth.
https://www.mql5.com/en/forum/180007
Should I set up a VPS and write an expert adviser for it?
Well you will know better that most the difference between manual and EA trading and how different they can be due to emotions and discretion.
If you are trading a manual system at the moment and you are consistent, then why change. But if you are working fulltime or a student and have limited time in front of the screen. Then logically an EA would make sense but chances are from experience you will not receive the same results.
Just my 2 cents
may we suggest -- if you found the randomness that could be Predictable in advance
krusty Krab as in the famous sponge bob animation -- the red hot crab got a secret formula(e)
This comment makes me think of how often people ask whether the Forex market is random or not. Different people give different answers. The correct answer is that this is not a question that can be answered with a simple 'yes' or 'no'.
The market is a paradox. It is both random and guided at the same time. Which perspective you take up will depend on what you are trying to achieve.
Simply put, the market is random because no method of predicting the future price will consistently work. This becomes clear when you look at huge data samples of the most popular indicators. Technical indicators are simply derivatives of the price. their for they can only tell you what has happened.
This has no actual bearing on what the price may do next....unless it does.
Yet even this is an illusion. The price doesn't respect your indicator, your indicator is simply getting lucky.
The Forex market is incredibly intricate. It's players are many and varied. It is entirely possible for an indicator or a 'system' to move in sync with the market for a period of time and produce profits. Yet, if you were to somehow track that same indicator over many many years the result would be break even or worse.
Why?
Because the market is dynamic, but not in an intelligent way. It has no actual memory in and of itself and it sure as hell doesn't give a damn that your moving average cross is 'supposed' to win on average.
If you say, 'but my system has been working for years!' I will say:
"Then you are an extreme example. All things are a spectrum and you got lucky. Maybe the dynamic of the market will continue to support you, maybe it won't. If you were to somehow use your system for 100 years it would break even."
Every bank and retail broker knows this.
The price is random as far as we mere mortal retail traders are concerned.
Okay, okay, here's the exact reason why: (This is important)
We, as retail traders only have access to the chart. The 'price action' as it's called. We do not have access to order flow.
Order flow is everything. We can't see where the majority of stops are at any given time. We cant guess at who is buying at x time and what their motivation is. All we have is gross volume. I mean gross, as in ugly, because it is. It is utterly useless information.
Unless you know why the players are doing what they are doing the price is random, period, and there is no hope of predicting it on a consistent basis in the way that most people think of it.
A good example of this is the Heiken Ashi indicator. This massager of price data paints a nice, easy to read picture, and it is possible to get lucky with it. Yet, and here's the key, each time you open a trade based off it's signal you have a 50/50 chance of closing in the money or via a stop. That's right, 50/50 and anyone who says otherwise is lying to you.
The price doesn't care where it's been. PEOPLE DO.
The problem comes in when you look at price data, and price flow and say 'price has been going down, heiken ashi has confirmed it, price is about to sink!'.
You don't know who has been selling, you dont know who has been liquidating. Opening a trade based solely on the trigger of a technical indicator is foolish, but assuming that you know what the market movers are doing is even more foolish.
So then, what does matter?
CLUE:
The Herd.
If you are doing what 95% of the retail traders are doing at any given time I can promise you that you will lose your trading account. Forex is a zero sum game. Someone wins, someone loses, every time.
The retail traders that use either fundamental analysis or technical analysis think that they have an edge, but they are all using the same blunt instrument.
We can't SEE it on order books or in the order flow but it is a safe assumption to make.
Because they are all using some form of indicator (news and speculation is an indicator too) they are all actually trading off of pure price action whether they realize it or not and the price doesn't have any memory of what their charts are telling them to do.
The price isn't aware. Some traders act like it's some of slippery God that givith and taketh away. This is fallacy. The price is merely the purest economic indicator.
Supply and Demand. S&D. Get that concept into your head. That's all there is to it. The Herd does not often make correct assumptions of where price will go but the price (a function of supply and demand) has no choice but to be reactive to their franctic buying and selling. And what do they do when they buy and sell? They place stop loss orders. What happens to supply when masses of stops are hit at once?
Do you think the banks are unaware of this?
We, as retail traders can not 'read the books' or have a perfect perception of order flow but we can make certain educated guesses in certain situations.
I'll give you a clue:
Support and Resistance
Though this is not the end all and be all.
So, yes, I treat the market as if it were random.
If you and a friend flip a coin for ten years when you are done what you will see is that the results usually remain about level for each of you but ever so often a trend will develop either way and then come back into harmony.
An astute observer from another planet could surmise that our coins are somehow smart and have a will of their own. It would seem to them that Side A of the coin would want to show it's face more often than Side B and vice versa.
The alien would be wrong. the coin has no memory. What the two friends would observe is sheer statistical noise. Given a large enough sample any data will develope trends.
What does this mean for us? If the price might as well be random how can we make any money?
I will answer this briefly, then I will say no more:
You make money from the people who know less than you.
And to be clear, I do not use any indicators myself.
I think your money management will depend on the potential drawdown of your sistem.
That way, you can feel confortable trading with the money you need for that lot.
Example: If your sistem allow, you trade with 0.1 lot every $2.000 in your account, because you know (by tests) that if you lose a certain amount of that money (in a very bad days), you will recover without needing to lower your lot.
So, to increase your lots to 0.2, you will need to reach at least $ 4.000 in your account.
I don't know if that answer your qestion, maybe I didn't fully understand what you ask.Thanks a lot for the money management answers guys. It's a slippery subject because sometimes it's difficult to quantify risk reward ratios. For instance, on any given trade I am risking around 4-6%, around 10 to 15 pips on average yet any given trade can produce 100 pips, with an average of around 40. So far I am comfortable with this. So my account is too small in terms of margin but my risk/reward is favorable.
- Free trading apps
- Over 8,000 signals for copying
- Economic news for exploring financial markets
You agree to website policy and terms of use
I've finally hit on something that is profitable. Took me a couple years (read: 4). So now what?
How do I manage my money? How soon do I move up in lots? Should I set up a VPS and write an expert adviser for it?
What do you guys suggest?