Shifting the recovery target closer to the market would make you get out with a partial loss, since the lot size was calculated to close at breakeven at the end of that target. So, should I increase the lot size to compensate it or just take a partial loss?
I've been studying the Zone Recovery Algorithm for a couple days and when I was backtesting it in a ranging period, in the sixth consecutive trade I had to stop due to insufficient margin. I would greatly appreciate any advice on how to avoid this situation.
Thank you very much.
Regarding your first question: my algorithm is able to adapt (on-the-fly) to the new (shifted) recovery target. So even when the previously opened orders are targeting "old" recovery levels, the new calculated Lot size is compensating for this mismatch. Theoretically, in the end you should always end up with some small profit or a breakeven situation. Of course in the real life you can get some small losses due to spreads and differences in the execution time between the orders. At this moment in time I'm investigating the possibility of trading on a stable VPS server to minimize execution time and so minimize the risk of small losses.
Regarding the second question: this is depending on many factors, however when trading/backtesting with the standard settings (TP=200pips and recovery at 50pips) I have seen that 6 consecutive trades (1 trade + 5 recovery positions) is really not that uncommon. Moreover, I have simulated (using EURUSD pair data) that in order to be on the "safe side" you need to allow the system to open up to 10 trades! It happened in the past, so it really will happen in the future, the question is when...To overcome that problem I trade at on a $2000 (or higher) account with a 500:1 leverage and 0.1 LotSize. This configuration should allow you to open more than 10 recovery trades. When doing a backtest you should verify that the MT4 tester is using desired high leverage. If you do not know how to do it please contact me on my email.
Better tips. Really valuable.
Where can I get more information about recovery hedging system.
Nowhere. There is no such thing as no loss system
The strategy comes from Hungarian trader Nemeth. There is video on YouTube with him about the no loss strategy.
You can always visit my website and judge by yourself if this is working for you;) I do agree with morro there no such thing as no loss system, but this system is as close as you can get to full recovery of your losses. (of course only if you really know what you are doing! It is still very tricky system).
And for those who want to understand the relationship between the EA parameters and the resulting FreeMargin drop and DrawDown, I have created a simple tool to play with:
The tool can be downloaded from HERE (load it as an indicator on any MT4 chart)
One more grail
There are no grail systems
why of course there are
everywhere you look they are selling grail systems (and revealing secrets not known to anybody )