What can be done to make a very highly unprofitable EA Profitable? - page 3

Robert Mihali
2269
Robert Mihali  
it doesn't help to revers the orders, if the stoploss and the takeprofit are not equal. If both are the same, then it could work. But I don't think that you should risk real money with such an EA
Valerii Mazurenko
2600
Valerii Mazurenko  
angevoyageur:
It's not an opinion, it's an illusion.

You're wrong.

Imagine simple unprofitable EA with single trade, for instance, buy GBP/JPY 151.50 (ask) -> out 151.00 (bid) (loss = 50 points) 

For simplicity, assume, that spread is const and equal 10 points.

So, if we reverse this simple EA, we get next trade - sell GBP/JPY 151.40 (bid) -> out 151.10 (ask) (profit equal 30 points -> loss - 2 * spread).

Wow, unprofitable EA transformed in the profitable. 

Valerii Mazurenko
2600
Valerii Mazurenko  

Complicate example.

Now, we have two trades:

buy GBP/JPY (ask) 151.50 -> out 151.00 (bid) (loss = 50 points)

sell GBP/JPY (bid) 150.80 -> out 150.40 (ask) (profit = 40 points).

This EA is unpofitable two - our loss is 10 points.

Average Profit (or Expected Payoff) is (40 - 50) / 2= -5

 So, reverse it!

sell GBP/JPY (bid) 151.40 -> out 151.10 (ask) (profit = 30);

buy GBP/JPY (ask) 150.90 -> out 150.30 (bid) (loss = 60 points)

Average Profit is (30 - 60)/ 2 = -15 - EA still Unprofitable (!) 

Valerii Mazurenko
2600
Valerii Mazurenko  

You can independently check situation, when Average Profit is -(2 * spread) (Profit and loss reverse EA will be 0). 

Similarly, you can make sure if  Average Profit is less -(2 * spread), so reverse EA will be profitable. 

we can extend the result to any number of transactions with help of  mathematical induction.

Q.E.D. 

Simon Gniadkowski
17348
Simon Gniadkowski  
notused:

You're wrong.

Imagine simple unprofitable EA with single trade, for instance, buy GBP/JPY 151.50 (ask) -> out 151.00 (bid) (loss = 50 points) 

For simplicity, assume, that spread is const and equal 10 points.

So, if we reverse this simple EA, we get next trade - sell GBP/JPY 151.40 (bid) -> out 151.10 (ask) (profit equal 30 points -> loss - 2 * spread).

Wow, unprofitable EA transformed in the profitable. 

A "highly unprofitable" EA will be so due to the spread and the spread still has to be paid even if the strategy is reversed.
Sergey Golubev
Moderator
120290
Sergey Golubev  

Yes, because of spread.

The other reason about why the reversal of "highly unprofitable" EA will not help to make it profitable one in most of the cases -  is the following:

  • market is not moved in 2 directions only (uptrend and downtrend). I mean - we are placing stop loss and take profit value on horizontal way/lines hoping that price will be moved to uptrend only or to downtrend only? But price is not moved on such a way ...

I remember one example/experiment which I did with one broker (it was long time ago): I opened buy trade and sell trade on almost same market price with same values of sl/tp, waiting ... and 2 trades were closed in almost simultaniously with opposite direction - buy trade was closed in profit and sell trade was closed in profit :)

Valerii Mazurenko
2600
Valerii Mazurenko  
RaptorUK:
A "highly unprofitable" EA will be so due to the spread and the spread still has to be paid even if the strategy is reversed.
You're right - spread still has to be paid. Even more - we should pay double spread. So, if avarage loss less -(2 * spread)  (or if we take absolute value - average loss more then 2 * spread) - reverse will be profitable
Valerii Mazurenko
2600
Valerii Mazurenko  
newdigital:

Yes, because of spread.

The other reason about why the reversal of "highly unprofitable" EA will not help to make it profitable one in most of the cases -  is the following:

  • market is not moved in 2 directions only (uptrend and downtrend). I mean - we are placing stop loss and take profit value on horizontal way/lines hoping that price will be moved to uptrend only or to downtrend only? But price is not moved on such a way ...

I remember one example/experiment which I did with one broker (it was long time ago): I opened buy trade and sell trade on almost same market price with same values of sl/tp, waiting ... and 2 trades were closed in almost simultaniously with opposite direction - buy trade was closed in profit and sell trade was closed in profit :)

I understand what you mean. Nevertheless, if we make "reverse" we should make it in same time, when original EA make trade. I mean, if we buy gpb/jpy on 12:03:45, so we should sell gbp/jpy on 12:03:45, when we are reversing this trade.

But your description of reverse - it's not reverse. It's just another EA :)

Sergey Golubev
Moderator
120290
Sergey Golubev  

Just some moments:

  • there is spread
  • there are bid and ask prices
  • market/price is not moved to upward or downward only. It moved in more complicated ways.
  • trading system - some EAs are based on trading systems ... will they work (i mean - indicators) on the same but opposite way with good results? we do not know ...

Of course, it may be good to have some settings/parameter in any EA such as 'reverse = false/true' ... but I agree: to find highly inprofitable EA is the same case as to find highly profitable one :)