Balance VS equity in test
Dear experienced traders,
I'm testing 2 kinds of EA.
The test result shows EA 1's balance is always higher than equity. (Blue line is higher than green line).
EA 2's equity is always higher than balance. (Blue line is lower than green line).
1. What exactly mean for balance and equity?
2. EA 1 or EA2, which one is better?
3. For EA2, why balance could drop down suddenly and get back soon? What kind of strategies could make this?
Thank you in advance and best wishes,
Sky
The first EA is some kind of grid or an EA that doesn't use SL and keeps opening new trades while the previous ones haven't closed, resulting in very large open drawdown. That's very dangerous trading approach.
The second EA looks much better, but its problem is exactly that, that it looks too good! You are probably testing on MT4 and your results are not calculating spread and swaps correctly.
Try putting this EA on a demo account for some weeks and you will see much different results.
The bottom line is, never trust straight lines in backtests, they always end with account blow ups.
The first EA is some kind of grid or an EA that doesn't use SL and keeps opening new trades while the previous ones haven't closed, resulting in very large open drawdown. That's very dangerous trading approach.
The second EA looks much better, but its problem is exactly that, that it looks too good! You are probably testing on MT4 and your results are not calculating spread and swaps correctly.
Try putting this EA on a demo account for some weeks and you will see much different results.
Thank you for your continuing support, Eleni.
Could you teach me something balance and equity?
Does balance means deposit +/- profit, and equity means balance +/- floating profit?
Thank you for your continuing support, Eleni.
Could you teach me something balance and equity?
Does balance means deposit +/- profit, and equity means balance +/- floating profit?
Yes in both.
The first EA is some kind of grid or an EA that doesn't use SL and keeps opening new trades while the previous ones haven't closed, resulting in very large open drawdown. That's very dangerous trading approach.
The second EA looks much better, but its problem is exactly that, that it looks too good! You are probably testing on MT4 and your results are not calculating spread and swaps correctly.
Try putting this EA on a demo account for some weeks and you will see much different results.
The bottom line is, never trust straight lines in backtests, they always end with account blow ups.
The bottom line is, never trust straight lines in backtests, they always end with account blow ups.
Very good sentence, thank you.
Yes in both.
Thank you, Eleni.
For EA2, do you know some case why balance could drop down suddenly and get back soon? What kind of strategies could make this?
Thank you, Eleni.
For EA2, do you know some case why balance could drop down suddenly and get back soon? What kind of strategies could make this?
Martingale can do that, but other strategies too.
If you check the deposit load of the EA2 carefully, you will see that its increasing when these hick ups occur, so it opens larger trades in order to get back to profit, that's a clear sign of martingale.Martingale can do that, but other strategies too.
Thank you, Eleni.
Maybe martingale do better than I thought.
I thought it is very dangerous.
Thank you, Eleni.
Maybe martingale do better than I thought.
I thought it is very dangerous.
No, you thought well, martingale is a very dangerous trading approach.
It only works under a very disciplined plan, with specific limits that will always be obeyed.
No, you thought well, martingale is a very dangerous trading approach.
It only works under a very disciplined plan, with specific limits that will always be obeyed.
Thank you so much, Eleni.
Could you teach more about martingale, maybe I have to open a new ticket for that.
Thank you so much, Eleni.
Could you teach more about martingale, maybe I have to open a new ticket for that.
I don't use martingale in my trading, ask other members.
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Dear experienced traders,
I'm testing 2 kinds of EA.
The test result shows EA 1's balance is always higher than equity. (Blue line is higher than green line).
EA 2's equity is always higher than balance. (Blue line is lower than green line).
1. What exactly mean for balance and equity?
2. EA 1 or EA2, which one is better?
3. For EA2, why balance could drop down suddenly and get back soon? What kind of strategies could make this?
Thank you in advance and best wishes,
Sky