I am a full time chemical engineer with a strong interest in numerical problems, programming, optimisation, trading and money! I became interested in forex trading approximately 3 years ago but have only been 'seriously' into FX for 12 months or so. My "worst enemy" in trading is the "human" aspect of it that I am sure many traders share - being able to take a small profit but being unwilling to accept a loss. My solution to overcome this was to take my emotion and decision-making out of it completely, and devise an automated system into which I have put careful calculation, checking and robustness to create a trading style that suits me.
About the Signal
This is a fully automated trading algorithm but does not involve a standalone "EA". I have studied many signals from the MQL4 website and spotted many common issues that represented an unacceptable risk to me. This included trades placed without any stop-loss and trades placed using "gridding", "martingale" or other questionable staking methods, and placing multiple, identical trades (presumably to inflate MQL4 stats and make the signal look more proven than it really is?). I wanted to devise a system that would have stop losses applied to all trades, not try any "tricks" to inflate Signal statistics, and follow strict-money management rules. It is my belief that if a trading system cannot make profit with "level stakes" (constant lot sizes) then any other money management system ("chasing", "martingale") etc will fail in the long run. Even if a stop is not particularly tight, it serves the same principle and protects capital for future trades.
The metrics below are intended to give "guideline" performance expectations for the signal in the long run and were determined following intensive calculation using the Google Compute Engine based on a large set of data. The performance of the trading signal will initially vary (potentially greatly!) from these metrics because it takes time for the true system performance and averages to be realised.
Trades per Week: xxx
Average holding time: yyy
Traded currencies: AUDUSD, EURUSD, EURJPY, GBPUSD, GBPJPY, USDCAD, USDJPY
Expected drawdown: aa-bb%
Expected growth: nn% / month
Expected win-rate: xx%
Trading Activity: Effectively 100%
Due to the way in which the system works, it is expected that trades will be open almost permanently on the account. It is also likely to have the maximum allowable trades (20) open most of the time too, and the average holding time is quite long. I realise that this upsets many traders and if this is something that represents unacceptable practice to prospective traders then I recommend finding a Signal that is less "busy" all the time. I intend to do some work in the future that may help decrease the average holding time and the average number of trades open at any one time, but this requires significant additional calculation.
The system follows strict money management rules that are applied the same for all trades:
Maximum allowable number of open trades: 20
Maximum allowable risk per trade: 1.5% of balance
Stop loss: 2500 points (250 pips), applicable to all trades
At any one time the exposure of the account is 30% (i.e. 20 trades of 1.5% each), however the probability of all 20 open trades resulting in a 250 pip loss is rather small, and was far from being observed in testing. Remember that even though the exposure at any one time is 30% of balance, the maximum drawdown may be greater than 30% as it is possible for the system to take a string of losses. Further protection against large drawdowns are gained through diversification across currencies - the system will only open 5 similar trades with the same "direction" and currency.
If you have made it this far through the description then thank you for reading! I'd just like to point out that this system/signal is not intended to be a get-rich-quick signal with some outrageously large growth in the first few months, nor I am pretending to be an expert trader (as Im clearly not!) that would bet his life on the back-test calculations upon which the system is based. I made the decision to go ahead with the signal because I thought that the potential for gains outweighed the risk, and my opinion is that no-one should even think of depositing in leveraged trading account without understanding the risks and even then should only use money they can "afford to lose". I have enough faith in the work I have done to "put my money where my mouth is" and invest 20,000 real GBP into it, and see how it goes.