Steinitz drawdown
Todder,
I believe I read your message on PipCop.com, if not you have company.
PipCop has a nice detailed listing of all trades. From this it is evident that there is a major problem with this robot.
It consistently takes small gains, often opening the same trade over and over again in succesion, until it hits a losing position. This really seems kind of stupid, and is of prime benefit to the brokers, but it does capture profits in a volitile market.
The problem occurs when it hits a bad trade, which is inevitable with this method. This system has no automatic exit strategy for bad trades. They are kept open untill they turn around and hit a profit target, or are closed manualy on a time stop. Don recomends closing all open trades at the end of the month.
This method may work in a long term trending market, but its very difficult with the current volitility. In a trending market your pullbacks will be smaller and quicker the the trending moves, so it is possible to just wait them out, however, this is rarely the best policy. Not only does it create huge drawdowns, (which are incorrectly kept seperate from the account balance and equity curve, after all this is a spot market, all profit/loss is applied directly to the account balance, there is no unrealized profit/loss), it also creates a large time loss, (time is money), and the associated missed trades.
In my reviewing of the past few weeks of trading it is evident that this system passed up major trading oportunities while it was holding losing trades. This is the result of a robot that has been optimized for idiots who want a hands off approach. Unfortunately, trading is a business that generally requires participation, it is possible to systematize it, but then you will have to take your losses with your gains, a program can not adapt and think as you or I can. It can only follow its protocol.
To correct this problem you could try setting a fixed stop loss amount, or a fixed stop/trailing stop combination. This will save you from devastating drawdowns, but it may also affect your long term profits. You could also run a smaller position size to handle the drawdowns better, however, without a known stop it is impossible to accurately predict risk, and set an apropriate position size.
My third approach, which is my favorite, and what I intend to use, (I havent bought this robot yet, but I intend to, it is the only robot on the market that has the transparency and adaptability to be managed properly). I am an active trader, I dont want a robot to work independantly as though I didnt exist. I want a robot that I can work with, and that can assist me where I get stuck, opening and closing trades quickly, and actively trading in a 24 hr market. My intentions are to actively manage any trade that lasts longer than a day. I dont mind reviewing my positions on a daily basis, and stoping out of trades that have obviously violated their trends, or that are carrying a negative interest carry. Trades that have simply failed the short term trend, but are still in a longer term tend and have a positive interest carry I will manage manualy. This frees the robot up to continue trading and not miss short term oportunities. These short term profits can more than make up for any losses.
As well this keeps me active and on top of the robots actions. This is a very adaptable program. I suspect that we can dictate exactly how we want it to trade, chosen time frame, exit strategy, specific directions for each pair, etc. I see no reason why this robot cant open multple trades on the same pair, short term trades, opening and closing on the indicator change, longer term carry trades, that I can remove and self manage, allowing the robot to scale into a large carry position.
These are just a few current ideas to consider, I am still researching this robot and still have concerns, such as I have no confirmation that this robot can actually exit on a Heiken Ashi signal. All the trades that I have seen have used a profit target, or a time stop. I have no conclusive proof that this robot can actually read a Heiken Ashi indicator and act on it accurately. All I have is the promotional copy and Don's statements. I have seen too many robots that dont do what they say they do.
In conclusion, you should consider any robot as a new unproven employee. Would you give a stange employee access to your accounts, without supervision, without known restraints, without proven results, simply on promises, spread sheets, and backtesting. I think not.
Dont believe everything you are told, especially on the internet. Dont risk real capital on promises. Test, test, test. Make the system prove itself. Find the liabilities. There is no such thing as a perfect system. Perfection in trading is a error in judgement, a psychological error that needs to be dealt with. There is only consistency, odds, and cumulative results.
Think, we are the traders, the masters, the robots are our tools. They do not think, we do. They are dumb machines that do what they are told. Trading is a personal experience, systems and robots are tools we can use to expidite the proccess.
Sorry for getting carried away. None of this is directed at you. Or at the Steinitz robot. Or at Don.
I think Don has the best robot on the market, that I have seen. Considering the price, I think it is a fantastic piece of equipment. It has my full interest and attention, and criticisms.
Thank You
