Analyzing the Signals before subscribing
Forum on trading, automated trading systems and testing trading strategies
How to Start with Metatrader 5
Sergey Golubev, 2018.07.30 18:53
Good article was published today -
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How to analyze the trades of the Signal selected in the chart
New signals, free-of-charge or fee-based, appear in the Signals service on a permanent basis. The MetaTrader team took care that the service could be used without logging out of the terminal. All that is left to do is choosing the very signal that would produce the highest profits at acceptable risks. This problem has been discussed since long ago. The method of automatically selecting signals by the specified criteria [1] has already been proposed. However, the conventional wisdom says that a picture is worth a thousand words. In this paper, I propose to study and analyze the history of trades on the signal selected in a symbol chart. Perhaps, this approach would let us better understand the strategy of trading and estimate risks.
Having compiled the indicator, we will only need upload to the terminal chart the statistics of the selected signal and attach our indicator to one of the charts. Now we can study and analyze trades.
- Introduction
- 1. Setting the goals for our future work
- 2. Collecting trades statistics
- 2.1. Class for keeping information on the order
- 2.2. Collecting information from the charts
- 2.3. Creating the timeseries of the balance and funds on each symbol
- 3. Adding a graphical shell
- 3.1. Creating a graphic panel
- 3.2. Chart creation function
- 3.3. Chart and statistical data updating method
- 3.4. "Animating" the panel
- 4. Creating an indicator to analyze the signal
- Conclusion
Conclusion :
4- Winning trades % : it should be aroud 65-75% , the ridiculous high percentage of 90s% is a clear indication of martingale / grid / hedging / etc.. that will blow off the account on the medium term if not the short term .
5- best trade vs worst trade : they should be almost equal or relatively of close value .
6- average PROFIT & LOSS : they should be almost equal or relatively of close value .
I agree with your conclusion except the points 4-6. All these points depend on kind of strategy.
I can imagine a successful strategy that has winning trades under 50% (maybe it won't be attractive for subscribers). Then RRR must be higher than 1:1 (e.g. 1:2, 1:3...). The ratio best trade vs worst trade (profit vs loss) is related with it.
I wish you more subscribers. Good luck.
I agree with your conclusion except the points 4-6. All these points depend on kind of strategy.
I can imagine a successful strategy that has winning trades under 50% (maybe it won't be attractive for subscribers). Then RRR must be higher than 1:1 (e.g. 1:2, 1:3...). The ratio best trade vs worst trade (profit vs loss) is related with it.
I wish you more subscribers. Good luck.
but if your strategy is based on 50% profitable trades , and the success is created through higher average winning than average losing , if things go bad and you miss that big winning trade and you go to a losing strike , you are more likely to curve down and lose control on DD , some others work on the factor of winning 90% of low average trades and losing 10% on a much bigger multi times average losing trades compared to winning trades ,,, this is dangerous as well , and I have seen accounts that blow off in august because of that .
in my prospective ... to play it safe ,,, the EA should produce logical high winning trades , winning average vs losing average , best winning strike vs losing strike .. if these are achieved .. any turns in the market that cause a decrease in this percentages , the system will be more able to deal with it , it will not have a strong negative impact on the account , but if you pick up only one of these factors and rely on it , sooner or later things might turn pretty bad if the market starts to go in the opposite direction .
I get what you are saying Ahmed. I have noticed the same thing myself. Subscribers continue to follow the riskiest SP's. I think it has to do with the get rich quick mentality. People like to gamble for a chance to make millions. To make bigger profits they are willing to subscribe to high risk Signal Providers.
this month the top 2 signal providers that had 2000 subscribers in total had their accounts blown off ... getting rich is a long term plan .. not a few month plan , I have seen some sad comments on these signals review that is obviously coming out of people that lost money which they cant afford to lose , their is 2 ways to get rich , study well and be patient and develop your trading and programming skills and make your own EA .. or study well for few month or weeks how to choose the right person to trade with your money and spend time monitoring and learning , no shortcut for both roads .
I focus more on the strategies that is successful on the long term with low DD , I understand that some other strategies might be working on the short or medium term , but on the long term if you are winning 6-7 trades out of 10 ... and on the other hand .. point 5 and 6 are of a satisfaction ( average profit vs average loss / best win and worst loss ) .. good results will be more consistent , cause at the worst case scenario if in a month your win % declines to 50% or 45% ... if your average profit vs average loss are relevant and close .. you will still be making money or losing slightly ..
but if your strategy is based on 50% profitable trades , and the success is created through higher average winning than average losing , if things go bad and you miss that big winning trade and you go to a losing strike , you are more likely to curve down and lose control on DD , some others work on the factor of winning 90% of low average trades and losing 10% on a much bigger multi times average losing trades compared to winning trades ,,, this is dangerous as well , and I have seen accounts that blow off in august because of that .
in my prospective ... to play it safe ,,, the EA should produce logical high winning trades , winning average vs losing average , best winning strike vs losing strike .. if these are achieved .. any turns in the market that cause a decrease in this percentages , the system will be more able to deal with it , it will not have a strong negative impact on the account , but if you pick up only one of these factors and rely on it , sooner or later things might turn pretty bad if the market starts to go in the opposite direction .
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I have noticed from my 1 year monitoring to the Signal providers/Subscribers behavior the following :
1- Subscribers
- they mostly look for the highest profitable signal , don't know what else to look for except the GP% & DD.
- they rush to ratings and giving opinions based on daily profit and loss , not monthly and quarter performance .
- they get emotionally attached sometimes to the signal in a way that further harms their account when they consistently continue with a bad signal hoping for a magical recovery and when they get lucky and it happens , they don't sit back and re-assess if they need to continue with that risky signal or not , instead they grow more confident to follow it regardless of the continues high DD which ends up in a blown account .
-they tend to be more confident subscribing to a signal that has a lot of subscribers thinking that it is safer , while there is some other realistic successful trading signals that perform better than the popular signals in terms of the ration between DD / GP .
-they don't use the Statics tab / risks / order history in the signal to try to understand anything , they use the basic account information to analyze the signal which is quite dangerous .
2-Signal providers
- some of them are totally aware that their trading strategy specially if it is a grid trading or martingale is gonna blow off their account one day , but they still tend to go on with it for a fast few month solid profit history to attract subscribers , they even sometimes create other accounts to switch to when their account is blown off in the same moment they launch their signal .
- I have seen a famous signal provider using 400% deposit load to recover a 50% DD which is a do or Die strategy , very reckless and unconcerned about the subscribers for the signal who might still want to keep the other half of their account and try again with another signal to recover .
-the history before establishing the signal sometimes is obviously manipulated somehow as it is a steady trend with 0 losses and almost 0 DD , and that suppose to be suspicious rather than attractive to subscribers but the sad thing is .. it is found to be attractive by subscribers , and when the signal launches here , the trading results is totally different from the history .
Conclusion : don't blame the signal provider for losing your money if you didn't do your homework first , I would blame the signal provider though but the biggest blame goes on the investor who didn't educate himself enough on how to choose the system that will control their money and destiny.
from my experience , I would look for the following in any signal to assess it :
1- DD ratio and history : if the monthly profit ranges around 20-30% .. the DD shouldn't exceed 15% in few occasions every few month , while the regular DD should be around 5-10% Max.
2- the Monthly GP% : it shouldn't exceed 30%-40% as an average , the ridiculous high profit of 100-200% is a red flag for me to point at a huge risk / short term success / martingale & grid trading / deposit load / risk trading strategy .
3- deposit load : it shouldn't go over 10% otherwise the trader is overtrading with high leverage which might be successful for a short period but destructive on the medium and long term .
4- Winning trades % : it should be aroud 65-75% , the ridiculous high percentage of 90s% is a clear indication of martingale / grid / hedging / etc.. that will blow off the account on the medium term if not the short term .
5- best trade vs worst trade : they should be almost equal or relatively of close value .
6- average PROFIT & LOSS : they should be almost equal or relatively of close value .
7- maximum consecutive profit and loss : shouldn't be ridiculously un-relative ( 100 cons.winning trades vs 5 cons loss trades ) as irrelevant as they get as much they signal for grid trading / hedging / martingale .
8- trades/ week : if all the above are considered and found satisfying , trades/ week shouldn't be of any concern , it is not the number of trades , it is the quality of the trades and the outcome analyzed above .
9- a trader that doesn't use a SL is a dangerous trader , a trader who takes the loss in and hunt for a better trade is a successful trader or system .