What Separates a Professional EA From a Gambling Bot?

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Hello Everyone,,

I’m researching what traders truly value in automated systems

Most EAs promise profits and very few survive real market conditions.

In your opinion, what type of automated strategy has the highest long term potential?

What features would make you trust an EA enough to run it continuously?

Also about using Martingale, what's your opinion on martingale actually making an EA Truly Sustainable instead of ruining it? (obviously with preset limits)

I personally found success with it and found it worth to use implemented right.



Best regards

 

I'm interested in EAs that actually catch a good entry beyond the "trap" zones, and I stay far away from EAs that are counter-trend.

Martingale can work when you start with 0.01 lot size and use some form of technical analysis. I don't mind the system when lot sizes are low, and if you can control the max lot size. But martingale isn't the kind of trading system that I'm in favor of. Not really a fan of grid, because I don't like messy staggered buy and sell orders placed. I like precision...I'm interested if the EA can get the right quotes and enter trades efficiently. 

A high win rate is promising, but can sometimes be deceiving because of the phenomenon of overfitting. If the EA has a 30% win rate, but manages to keep losses extremely small while allowing good trades to progress, that's appealing, and sometimes that can provide more alpha than a high win rate EA. Finally...I don't accept any EAs that don't control losses well. An EA should not make idiot losses (large losing trades that grow). Some losses are acceptable, but not others. Anything above 20% drawdown isn't acceptable

 
Eugen-alexandru Zibileanu:

Hello Everyone,,

I’m researching what traders truly value in automated systems

Most EAs promise profits and very few survive real market conditions.

In your opinion, what type of automated strategy has the highest long term potential?

What features would make you trust an EA enough to run it continuously?

Also about using Martingale, what's your opinion on martingale actually making an EA Truly Sustainable instead of ruining it? (obviously with preset limits)

I personally found success with it and found it worth to use implemented right.



Best regards

A professional EA is built around SURVIVAL FIRST… PROFIT SECOND.

A gambling bot is the exact opposite. It looks like a money printer until one ugly market condition shows up and sends the account straight to the cemetery. 

For me personally, the biggest difference is this:

• Controlled drawdown
• Consistent lot sizing logic
• Real stop losses
• Ability to survive different market conditions
• Verified long term live signal, not just impressive backtests

Any EA can look like a genius during trending markets. The real test starts during choppy, low volatility, high spread, manipulated conditions. That's where 90% of "holy grail" bots suddenly disappear from the marketplace.

Now since you mentioned it we see this behavior most common with martingale bots, right?… Well, here's the truth; people love to pretend it's automatically evil. It's not that simple.

Controlled martingale with strict limits, proper equity protection and intelligent entries can actually work very well. The problem is most developers become drunk on recovery power and remove the safety brakes completely.

That's when the EA stops trading… and starts gambling.

In my opinion the best long term EAs are the ones that respect risk, accept losses quickly, and don't rely on "one day the market will come back" logic.

Because eventually… one day it WON'T.
 
Martingale, as long as you have a large balance and open all trades with very small lots of 0.01, the EA can survive, because if you still lose, just open another trade and so on. If the balance is low, then use Martingale, plus every time you open a trade lot, increase it, for example from 0.01, then to 0.02, 0.04, 0.08 and so on, so be ready for MC. In my opinion, if you can still survive with Martingale, it's just luck because once you suffer a loss to return to BEP again it can take quite a long time, especially if the TP you set is not large. 
Sometimes it's not the EA that fails, it's just us who are impatient so when we see a loss we think the EA has failed. 
When the backtest is carried out, it can be seen that sometimes there is a profit so the balance goes up but there can also be a loss so the balance goes down. The only difference is that during the backtest we don't feel when the balance rises again after a loss, sometimes it doesn't take an instant. 
However, whatever the backtest results, I always remember "Past performance does not guarantee future results".
 

IMHO, the best strategies (including algo's) trade a single position/single order at a time. This is based on the KISS principle and Murphy's Law. Of course, you can implement a position sizing strategy for that one position (such as Kelly Criterion) but I don't even do that. If prefer to focus squarely on the entry logic/conditions and the exit logic/conditions─if any given prospective trade is less than statistically probable, I filter it out completely rather than monkeying with position sizing. I should note that this is among the most challenging type of strategy to develop. Although the system is KISS compliant, deducing the best logic for it is nothing short of a grind. This process is almost mandatory for any trader in a FIFO/Netting jurisdiction.

It would be helpful for the purpose of discussion to distinguish Martingale (Martingarbage) from scaling-in/averaging-in, stacking/pyramiding, and scaling-out. Martingale is based on nothing more than horizontal price grid lines. It is otherwise void of logic and it was created for playing a roulette wheel in a casino. In contrast thereto, each of the latter is a subsidiary position management strategy that exists within a greater trading strategy─wherein superior entry and/or exit logic has already been statistically defined. Those were developed for trading purposes.

 

...Hard work, continuous research, patience, avoiding greed, and not interfering emotionally with the EA’s trades. I believe discipline and risk control matter more than any ‘magic’ strategy.

 
Alex Holloway #:
The problem is most developers become drunk on recovery power and remove the safety brakes completely.

That's when the EA stops trading… and starts gambling.

that's very true!

They're often the people who are just programmers, not traders... or worse - a seller who asked someone else to code the bot for them.

 

I approach this with the intention that you build your EA with a long-term mindset.

When the focus is only on quick wins, long-term sustainability is usually not taken into consideration, so the EA may seem to “work” at first but then break shortly after.

On the other hand, a developer who thinks long term tends to build with greater stability, adaptability, and durability in mind.

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