THE 2007 TRADING CHAMPIONSHIP! - page 7
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30% or 50% is a small difference.
So, how about a Risk limit instead of 5 lots and 3 trades?
And is it realistic to trace the Risk limit from the organizers?
When investing the same amount of money in trades by different EAs, only smart EAs will win. It will add flexibility in the distribution of trades and funds on one currency pair and in portfolio trading.
Equiti - there is real money in the account and depending on it we can risk a certain amount (% of Equiti).
Probably, the risk should be understood as the possibility of losing a certain amount of the current balance (not equity). This is where the difficulty of calculating this amount arises. The problem does not arise when the stop loss is set in advance. We cannot know the expected drawdown without the stop-loss. Whether the organizers will undertake to track the current drawdown is a question. Although, in principle, it is not difficult: current profit divided by balance (not equity) and multiplied by 100%. It seems to be simple for the server.
By the way, it would teach traders to control their account, which will come in handy in real trading.
You probably shouldn't associate risk with margin. Margin is designed as a safety cushion during large gaps for dealers to have time to close unprofitable orders, not for traders.
Let us define the requirements for participating EAs. If the purpose is narrowly specific, to check a particular idea, then we can impose a lot of different restrictions for specific goals and objectives.
If the goal is to check the MTS idea for viability and the right to exist, then, obviously, the Championship conditions have to be very close to the real life. In real life, a trading system cannot exist separately from the money management strategy, as well as from other factors, including the individual psychological characteristics of the trader. Therefore, I believe that any artificial restrictions on Expert Advisors participating in the competition distract the event from its initial purpose (if I imagine it correctly, of course).
Equality for all participants is only one thing - the same starting capital and the same trading conditions for the "average broker".
And preferably for a longer period of time.
And let life put everything in its place...
Perhaps that's the point: the organisers can't afford to run the competition for six months or a year. And the MM is not really needed on shorter terms. A more aggressive EA is written, and maybe we'll get lucky. Another thing is to teach or force capital management with the concept of Risk. CBA, you yourself say that "in life there can be no trading system separate from a money management strategy". If the organizers want to advertise the ability to make money with autotrading in real life, then transactions should be limited not by lots, but by risk.
Take banks, there is such a thing as risk when they issue money on credit. This risk is based on the authorized capital of the bank, and not on the maximum amount taken from the unknown (3*5 lots) for all banks (large and small). By the way, this risk is strictly regulated by the state, because banks borrow money from the population, i.e. from investors, and give loans.
Perhaps that's the point: the organisers can't afford to run the competition for six months or a year. And the MM is not really needed on shorter terms. A more aggressive EA is written, and maybe we'll get lucky. Another thing is to teach or force capital management with the concept of Risk. CBA, you yourself say that "in life there can be no trading system separate from a money management strategy". If the organizers want to advertise the ability to make money with autotrading in real life, then transactions should be limited not by lots, but by risk.
Take banks, there is such a thing as risk when they issue money on credit. This risk is based on the authorized capital of the bank, and not on the maximum amount taken from the unknown (3*5 lots) for all banks (large and small). By the way, this risk is strictly regulated by the state, because banks borrow money from the population, i.e. from investors, and give loans.
Of course, in real trading you must be guided by the concept of RISK, but in each case, each trader for himself to determine the acceptable level of risk. Some traders are guided by strict mathematically verified rules, some of them are guided by an inborn sense of caution, and others are guided by their own excitement or, in a simpler case, simple stupidity.
How many Forex beginners stay with the market for a long time? It's a natural selection!
If we are talking about trust managers, they sign a risk agreement and determine for themselves the proportions of risk and possible profit. You don't have to go to school to understand that they contradict each other.
But my point is that the championship should be the same natural selection, as in life, so that the Expert Advisor that shows successful results in the competition can achieve them in real life. I.e., any artificial restrictions may play a double role - on the one hand as insurance against risk, and on the other hand - as something like tying the wings.
As a small analogy, if all toddlers in the nursery were to be led by the hands and constantly supported and reassured by nursemaids, it would be difficult to determine who is disabled from birth and who is a future Olympian runner (I apologise for this digression from seriousness).
I wonder if we show the investor that the Expert Advisor places orders
with the profit/loss ratio of 1 to 2 - will this MM work in the real world?
I doubt it.
It could become a restriction in the contest.
We would not accept orders without TP and SL,
and the ratio of TP and SL should be at least 2 to 1, in an extreme case 1 to 1.
Naturally, you can only change the SL in the direction of the open position,
when you reach 'breakeven' you can remove the TP altogether.
Answer the question. What expert from previous competitions can you trust with your money? I am sure there is no one like that. But the purpose of the organizers was not only to win big prizes, and that it was talked about throughout the world.
The natural selection is not a very good example. In short term with "untied wings" it is impossible to determine if the expert is a steady winner or if he/she merges a month after the end of the competition .
With limited risk the expert who can be trusted with real money wins. Of course the maximum risk must be within reasonable limits.
The point is that this is not a crèche, but a competition. Based on the results of the competition, someone may want to buy an expert, someone may want to entrust capital to the winner. The organisers are running the competition for their publicity, investing a lot of money in it.
Answer the question. What expert from previous competitions can you trust with your money? I am sure there is no one like that. But the purpose of the organizers was not only to win big prizes, and that it was talked about throughout the world.
The natural selection is not a very good example. At short term with "untied wings" it is impossible to determine if the expert is a steady winner or if he/she will leak in a month after the end of the competition .
With limited risk the expert who can be trusted with real money wins. Of course the maximum risk must be within reasonable limits.
You are contradicting yourself: in the short term it is very difficult (read: impossible) to determine the degree of reliability of an EA, but the EA with "wings spread", first, has the possibility to demonstrate its ability to make profit, and second, with bad balance of risk/profitability it is more likely to show instability in a short term, i.e. in case of its initial non-viable nature it will quickly "fall apart".
If the main advantage of Expert Advisor of the second type is its relative risklessness to the detriment of profitability, then it simply has a chance to lose the deposit in a longer period of time (the risk is not absolutely zero and in case of a critical situation the income earned by it earlier cannot insure it against plummeting, but more "smooth").
Don't take my words the wrong way, I am not a supporter of either of these extremes, in real life I am for balance and balance in any decision.
But agree that in life, anything produced by artificial selection is always less resilient than the result of natural selection. So give everyone the right to participate in such selection, and may the strongest survive!
then the effectiveness of its use must be evaluated.
For example like this.
Sum up lots for the whole trading period, divide by their number.
We obtain the average lot for the whole trading period.
Divide profit at the end of trading by the average lot.
I.e. lots 1 + 1 + 2 + 3 = 8,
8/4=2
Profit in pips divided
500/2=250.
Or to complicate/modify the formula.
We get into an argument about what we want to know about the best marathon runner by fielding him in a 100-metre competition.
Let me give you an analogy with motor racing. Earlier, in the WRC world rally, there was no engine power limit. When this capacity reached 500-600hp, pilots and spectators standing along tracks started to die. In the 80's a hard bar was set for not more than 300hp. Rally didn`t cease to exist, but became more entertaining - it`s not power, it`s mastery of a pilot who can drive a car, go round corners, timely press gas and brake. Naturally, reckless pilots are not admitted to WRC, as there is good elimination before the Champa.
All are admitted to autotrading competition. The organisers have tried to limit the recklessness with deals and lots. And we saw who was in the beginning and in the middle of the Championship. And many already believed that it would be the end. But they were not lucky a little, I repeat a little, but there is a chance that they will be lucky and it's not a small chance.
All competitions have rules and restrictions. That's why I propose to make a limit not on the number of lots and the number of trades, but on the risk, as it's closer to real trading. In real trading, do you limit yourself to three trades or 5 lots? But I am sure you limit the risk.
Therefore, with the same small risk there is the possibility of showing decent Expert Advisor logic. The winner will actually be able to use their expert in real trading. And I believe in that. Under such conditions, the strongest will indeed survive and win.
If organizers limit their risks to a reasonable extent, it will remove the question of how much risk to take in order to be a winner and give more attention to the examiner's logic. There will be no guessing, lucky or unlucky. All the participants will be in equal conditions, but the one, who is more competent in making trades and passing more skilful turns of Forex, will be a winner.
Why should I invent different EAs, separately for the Championship, and different for real trading? Let's save our time! The geniuses will show themselves with limited risk.
I understand the organizers. They have made 35t in three months out of 10t! But this is recklessness, and nobody will believe such trading. And decent EAs have remained in the shadows.
ram25, in real trading, will you do the same or have you already applied the formulas you've presented?
We get into an argument about what we want to know about the best marathon runner by fielding him in a 100-metre competition.
Let me give you an analogy with motor racing. Earlier, in the WRC world rally, there was no engine power limit. When this capacity reached 500-600hp, pilots and spectators standing along tracks started to die. In the 80's a hard bar was set for not more than 300hp. Rally didn`t cease to exist, but became more entertaining - it`s not power, it`s mastery of a pilot who can drive a car, go round corners, timely press gas and brake. Naturally, reckless pilots are not admitted to WRC, as there is good elimination before the Champa.
All are admitted to autotrading competition. The organisers have tried to limit the recklessness with deals and lots. And we saw who was at the top at the beginning and in the middle of the Championship. And many already believed that it would be the end. But they were not lucky a little, I repeat a little, but there is a chance that they will be lucky and it's not a small chance.
All competitions have rules and restrictions. That's why I propose to make a limit not on the number of lots and the number of trades, but on the risk, as it's closer to real trading. In real trading, do you limit yourself to three trades or 5 lots? But I am sure you limit the risk.
Therefore, with the same small risk there is the possibility of showing decent Expert Advisor logic. The winner will actually be able to use their expert in real trading. And I believe in that. Under such conditions, the strongest will indeed survive and win.
If organizers limit their risks to a reasonable extent, it will remove the question of how much risk to take in order to be a winner and give more attention to the examiner's logic. There will be no guessing, lucky or unlucky. All the participants will be in equal conditions, but the one, who is more competent in making trades and passing more skilful turns of Forex, will be a winner.
Why should I invent different EAs, separately for the Championship, and different for real trading? Let's save our time! The geniuses will show themselves with limited risk.
I understand the organizers. They have made 35t in three months out of 10t! But this is recklessness, and nobody will believe such trading. And decent EAs have remained in the shadows.
ram25, in real trading, will you do the same or have you already applied the formulas you've presented?
There are experts who use MM too aggressively,
which doesn't mean they're profitable in the long term.
We need to bring it down to the same rules/methods of valuation.
That's my understanding, or am I wrong?