Diversification using multiple EAs and managing EA costs and risk

Mave02
142
Mave02  

I'm new to forex trading and trying to build a portfolio of different strategies in order to not worry about single EA results too much. I'm trying to immitate quantitave investing methods from stocks. My question is - how could I do this with reasonable costs and if someone has ideas on how to set it up.

I'm currently using three signals and MQL5 vps on three accounts. That is costing me close to 150 USD a month including subscription fees and VPS. I wouldn't buy new signals and open new accounts as it would be too much costs and would require too large account size. I'm just starting up.

One idea would be to have a VPS that can run multiple EAs (I would prefer 6-10 different strategies to have enough diversification and to manage risks). The EAs should be either low cost or free.

As this is just a thought - I'd really like your opinions. Feel free to comment and advise. Thanks in advance!

Marco vd Heijden
Moderator
13640
Marco vd Heijden  

It's not diversification with multiple EA's it actually add's up to the risk because there isn't any link that keeps things balanced.

When they are all happily making money the account will grow fast, but when they all are losing, the account will burn harder.

You are setting up for disaster.

And why does it have to be low cost or free EA's?

Why are you willing to pay for vps services and signals but not for EA's ? 

Try making $150 a Month with just one EA.

Mave02
142
Mave02  
Marco vd Heijden:

It's not diversification with multiple EA's it actually add's up to the risk because there isn't any link that keeps things balanced.

When they are all happily making money the account will grow fast, but when they all are losing, the account will burn harder.

You are setting up for disaster.

And why does it have to be low cost or free EA's?

Why are you willing to pay for vps services and signals but not for EA's ? 

Try making $150 a Month with just one EA.

Thank you for the reply! Maybe I described it wrong. The idea is to have 1 account for each signal or EA. Now I have three accounts subscribed to three signals (each account has 1/3 of the capital) so if one account is burned it does not burn the whole portfolio only 33 % of it. I still think three is too little and 10 signals would cost too much. With this clarification do you still think I'm setting up for disaster and if so why? I'm not contradicting I'm just discussing and as said I'm just only starting out...

It's true that I could pay for EA's. I just think that in the beginning signal might be less risky as there is someone trading / monitoring and adjusting an EA. It depends on the EA of course and there must be ones that do not require attention or less of it.

numejak
160
numejak  
Marco vd Heijden:

It's not diversification with multiple EA's it actually add's up to the risk because there isn't any link that keeps things balanced.

When they are all happily making money the account will grow fast, but when they all are losing, the account will burn harder.

You are setting up for disaster.

And why does it have to be low cost or free EA's?

Why are you willing to pay for vps services and signals but not for EA's ? 

Try making $150 a Month with just one EA.

FALSE. The more uncorrelated strategies one has, the more risk is diluted. When one signal draws down, the others are equally as likely to be flat or up since they are uncorrelated. Google "Ray Dalio holy grail" for the math. More signals is less risk. Diversification begins at 3 signals.

Renato Takahashi
783
Renato Takahashi  
Mave02:

I'm new to forex trading and trying to build a portfolio of different strategies in order to not worry about single EA results too much. I'm trying to immitate quantitave investing methods from stocks. My question is - how could I do this with reasonable costs and if someone has ideas on how to set it up.

I'm currently using three signals and MQL5 vps on three accounts. That is costing me close to 150 USD a month including subscription fees and VPS. I wouldn't buy new signals and open new accounts as it would be too much costs and would require too large account size. I'm just starting up.

One idea would be to have a VPS that can run multiple EAs (I would prefer 6-10 different strategies to have enough diversification and to manage risks). The EAs should be either low cost or free.

As this is just a thought - I'd really like your opinions. Feel free to comment and advise. Thanks in advance!

That's very interesting and I am doing with 1 account and 6 to 8 expert advisor configured in several pairs and timeframes. Besides EA diversification, with different strategies, pairs and timeframes, we know that a optimization is not alltime along and then it's interesting because one not good EA configuration can be compensated by a very good one. I'm calling MULTIBOT strategy. But it's an experience running almost 40 bots (different EA running different pairs on different timeframes). Maybe more 6 months I can have more conclusions.
Falade Kunle
12
Falade Kunle  
Please has ''diversifying risk'' in the name of running multiple EAs at a time ever worked? on the average