1. This site uses cookies. By continuing to use this site, you are agreeing to our use of cookies. Learn More.

Increasing an EA's Profit - NEW VERSION!

Discussion in 'Forex Trading Systems and Strategies' started by Albert.b, Feb 20, 2011.

  1. Albert.b

    Albert.b Sergeant

    Joined:
    Jan 7, 2011
    Messages:
    154
    Likes Received:
    0

    Now I have developed a new plan to reduce the risk dramatically, while at the same time increasing the profit potential!

    I have posted my first plan here below this plan, so you don't have to search for it, if you want to have a look at it.

    As in my first plan, you find a non-scalping EA, with a long term profit record that uses a large S/L.

    There is now the potential to dramatitcally increase the profits, for a few of the trades made by the EA.!

    We do this by using a trade the EA has made and has got it wrong!

    ***********************************
    I must explain that my second plan is so new, I have not yet tried it live, but the maths don't lie!

    First off, install your chosen EA on a DEMO ACCOUNT, WE ARE NOT GOING TO TRADE LIVE USING THE EA!

    Doing this means that we are going to miss out on a lot of winning trades, but as you will soon see, the gains will far outweigh any missed trades.

    This has now reduced our initial risk from -328 pips, to ZERO

    We are looking for trades where the EA has got it wrong, big time!

    On a perfect trade, there will not be trading until a trade is close to the S/L, but they will not all be perfect!

    As before I am looking at a 5 stage plan. This is not set in stone and can be altered to suit your own trading style.

    ***************************************
    Right, lets get down to business and explain it all to you!

    I am using a Buy trade for this example! For a Sell trade, use Pending Sell Stops!

    These would be live account trades!

    The stage pip numbers, I will keep as in my previous plan, 'Increasing an EA's Profits'!
    Stage 1 -40 pips, Stage 2 -100 pips, Stage 3 -160 pips, Stage 4 -220 pips and Stage 5 -290 pips.

    Any calculations will assume the exact numbers are hit!

    When your EA opens a trade on the demo account, keep watching it and if the following happens, you are in business.

    The S/L you see for the demo trade is what you set it for each stage, ie; they are all the same!


    Stage 1.

    When at about minus 40 pips - DO NOTHING AT ALL!

    Stage 2.
    If the price approaches minus 100 pips, place a Pending Buy Stop order for the price of STAGE 1 price, ie; on or about minus 40 pips - risk still ZERO!

    Stage 3.
    If the price approaches minus 160 pips, place a Pending Buy Stop order for a price, on or about the STAGE 2 price, ie; -100 pips - risk still ZERO!

    Stage 4
    If the price approaches minus 220pips, place a Pending Buy Stop order for a price, on or about the STAGE 3 price, ie; -160 pips - risk still ZERO!

    Stage - 5 Part 1
    If the price approaches minus 290pips, place a Pending Buy Stop order for a price, on or about the STAGE 4 price, ie; -220 pips - risk still ZERO!

    Stage 5 - Part 2
    If the price gets close to (+/- 10 pips) -290 pips we actually place an order - which gives a potential loss at this point of only -38 pips (if -290 is the actual price)!

    If my account can stand a larger loss and I think the market might do as I want, I may extend the S/L on this trade only, by 20/30 pips, sometimes even a bit more!

    This just gives it a bit more time to turn my way.

    I just try to justify the extra risk to my funds!

    ****************************************

    If you take a look at my first plan, you can see that the potential loss is 1,158 pips. It is a large amount, managed by using small lot sizes on the extra trades.

    With this new plan, if the Stage 5 trade is opened and the Stage 4 Pending Buy Stop is reached, there is already 70 pips of profit, some of which can be locked in with a trailing stop.

    If the market moves so that another stage is activated, you can lock in most of the profits, if you want to, with trailing stops.

    If you think that the market may go against you, you can close out any trades you want.

    Nothing is 'set in stone', if you are happy with any trades profit, then close it. It does not have to reach the T/P point.

    Here is an example using the same lot sizes as in my first plan:

    Potential profits from a perfect set of trades when taking profits at ONLY the EA's opening price on the demo account.

    Calculations are as 1.0 standard lot size = $10.00 per pip.

    No EA order opened on a live account, Profit/Loss ZERO!

    Stage 1 lot size 0.01 40 pips = $4.00
    Stage 2 lot size 0.01 100 pips = $10 00 + $4.00 = $14.00
    Stage 3 lot size 0.02 160 pips = $32.00 + $14.00 = $46.00
    Stage 4 lot size 0.03 220 pips = $66.00 + $46.00 = $112.00
    Stage 5 lot size 0.05 290 pips = $145.00 + $112.00 = $257.00
    Total lot sizes 0.12

    Most EA's will have a Take Profit of between 15 and 30 pips, so the risk (328 pips) against the rewards (15 to 30 pips) is not very good.

    *******************************
    Now as we all know, nothing is perfect, so what is the downside?

    At the very worst, if the market see-sawed up and down hitting each pending order without going into any profit on any stage there will be a maximum loss of 830 pips.

    On the above stage prices, this will be a loss of $136.60.

    Not bad at all, when if you had a live EA order of a 0.12 lot size (equal to the total lot sizes used above) there would have been a loss of $393.60.

    Of course the market could just retract and only two stages became 'live' and went to close out at a profit. It could be anything from stage 1 to stage 5 that ends up as a profit.

    This senario of not reaching a perfect set of trades, will be the most likely thing to happen. Sometimes though, it will happen!

    **************************************
    Here is another perfect trade example, using larger lot sizes.

    Stage 1 lot size 0.1 profit 40 pips = $40.00
    Stage 2 lot size 0.2 " 100 pips = $200.00 + $40.00 = $240.00
    Stage 3 lot size 0.3 " 160 pips = $480.00 + $240.00 = $720.00
    Stage 4 lot size 0.5 " 220 pips = $1100.00 + $720.00 = $1820.00
    Stage 5 lot size 1.0 " 290 pips = $2900.00 + $ 1820.00 = $4720.00
    Total lot sizes 2.1

    Worst possible loss using a total of 2.1 lots = -$2268.00

    Loss if EA placed a single 2.1 lot order and the 328 S/L is hit = -$6888.00


    Remember, keep lot sizes well within your account limits, you know it makes sense!


    That's it folks - I hope you like it!
     
    #1 Albert.b, Feb 20, 2011
    Last edited: Feb 21, 2011
  2. Albert.b

    Albert.b Sergeant

    Joined:
    Jan 7, 2011
    Messages:
    154
    Likes Received:
    0
    My First Version!

    If you find a non-scalping EA, with a long term profit record there is the potential to dramatitcally increase the profits for a few of the trades made!

    Some extra risk is involved but I find the rewards can be worth it.

    I only use EA's to trade, as my Forex knowledge is very limited but this works for me!

    First off, you have to be able to trade Micro lots (from 0.01 lots), unless you have a large account.

    For the best results, the EA must be long term profitable and use a large S/L. The one I use has a S/L of 328, which it does hit occasionally, but not too often.

    A lot of the trades which are opened by my EA, have a reversal before they move into profit. It is this reversal which I use to generate more profit.

    EA's with a large S/L become very high risk with a low reward when they have a large reversal.

    One of the worst things is, it can sometimes take several days for a reversal to happen and even if it hits the T/P, the return is sometimes just a dollar or two and not really worth the wait!

    The EA I use has a potential loss per trade of 328 pips with a profit of only around 25 pips. Over time though it has proved to be consistantly profitable, which is just how I want it!

    There is a problem sometimes, when there is a reversal and the T/P is not reached!

    Because of this when the original EA trade is getting towards profit, I watch what is happening and sometimes manually close out my profitable trades.

    The examples I give below are assuming that the T/P is set the same as the robot and it is hit!

    ******************************

    Right lets get down to business and see how it is done!

    Lets assume that the EA opens a Buy trade @ 0.1 lot and that 1 pip = $1.0.

    So if it hits the S/L I will lose $328.00. If it hits the T/P it makes £25.00

    Each stage below I set the S/L and the T/P the same as the EA!

    Stage 1. When a reversal reaches 40 pips, I open another Buy trade @ 0.01 lot (1 tenth of original trade), giving me an extra potential loss of 288 pips @ 10 cents per pip = -$28.80

    If it hits the EA's T/P it gives me an extra profit of 65 pips @ 10 cents = + $6.50 which is $6.50 + $25.00 = $31.50 total profit

    Stage 2. If a revesal gets as far as 100 pips, I then open another Buy trade @ 0.01 lot giving an extra potential loss of 228 pips @ 10cents per pip = -$22.80 + Stage 1 loss -$28.80 = -$51.60 total extra potential loss.

    If it hits the EA's T/P it gives me an extra 125 pips profit = $12.50 + stage 1 total profit ($31.50) = $44.00 total profit

    Stage 3. When a reversal is at 160, I open another Buy trade but this time it is a 0.02 lot. This gives an extra potential loss of 336 (168 x 2) pips @ 10 cents per pip = -$33.60 + -$51.60 = -$85.20 total extra potential loss.

    If it hits the EA's T/P it gives me an extra profit of 370 (185 x 2) pips = $37.00 + stage 2 total profit ($44.00) = $81.00 total profit.

    Stage 4. When a reversal is at 220 pips, I open another Buy trade, this time with a 0.03 lot size. This gives me an extra potential loss of 324 (108 x 3) pips @ 10cents per pip = -$32.40 + -$85.20 = -$117.60 total extra potential loss.

    If it hits the EA's T/P it gives me an extra profit of 735 (245 x 3) pips = $73.50 + stage 3 total profits ($81.00) = $154.50 total profit.

    Stage 5. If a reversal is at 290 pips, I open the last trade of a Buy 0.05 lot. This give me an extra potential loss of 190 (38 x 5) pips @ 10cents per pip = -$19.00 + -$117.60 = -$136.60 total extra potential loss.

    If it hits the EA's T/P it gives me an extra profit of 1525 (305 x 5) pips = $152.50 + stage 4 total profits ($154.50) = $307.00 total profit.

    As you can see, if it went all the way an extra $282.00 would have been made while risking only an extra $136.60.

    This reduces the risk/reward ratio from 13/1 to less than 2/1.

    Looked at logically, each stage does not become a risk, if it does not go past the next stage!

    The last trade I did using this method, produced an original trade profit of $18.80 along with extra profits of $111.41, for a total of $130.21.

    WARNING!

    While I have been working on this, I have had two very big drawdowns, resulting in near wipeouts!

    Both times it was because of bad money management on my part!

    I just got too cocky and started with the extra trade lot sizes, far too large for my account.

    I ended up having to manually close trades to protect my account from disaster! The annoying thing is, these trades both reached their T/P targets.

    The entry points I have stated for the extra trades are not set in stone, a few points either way does not matter. Even the number are stages, could be altered to suit your own needs.

    You can reduce the extra risk further by using smaller lot sizes on stages 3, 4 and 5.

    All this can be set using Buy Limit orders or Stop Limit orders, when your EA opens a trade. I prefer to wait to see how things are going before I take the plunge.

    Once I have got the first extra trade, I will then set limit orders for the next stages of that group.[/B]
    ***************************
    I have had another successful group trade!

    The original Buy trade ended up giving a profit of $5.12!

    As the market went down, I placed 4 more trades!

    The market went up and I closed the four trades, for a profit of $109.34, giving a total profit of $114.46
     
    #2 Albert.b, Feb 21, 2011
    Last edited: Feb 21, 2011
  3. Pharaoh

    Pharaoh Colonel

    Joined:
    Oct 3, 2007
    Messages:
    19,668
    Likes Received:
    2,206
    If I might make a suggestion.

    Why risk $328 for a possible $25 profit on the first trade? Cut that to 1/10 also.

    If you could get a free EA where you can get the code, just skip the first trade and have it wait for the new entry points.
     
  4. Albert.b

    Albert.b Sergeant

    Joined:
    Jan 7, 2011
    Messages:
    154
    Likes Received:
    0
    As you can see, by installing the EA on a demo account, by not actually trading it 'live', you have missed out the first trade.

    When you purchase an Ea, it works how it works - period!

    The vast majority who use EA's (just like me), have not got a clue when it comes to source code!

    This is a practical way, for us 'code dummies', to have a chance of making higher profits, for a vastly reduced risk from a proven EA.

    The EA I base this on, has had a 39/1 winning trade rate in the last ten months, with only ten trades hitting the S/L!

    This plan utilizes the fact that there is a S/L of over 300, this gives it time to work.

    Any EA made to trade this plan, would have to select the opening trade, but not trade it.

    Then it would have to place pending stop orders, in the correct order at the individual stage points.

    It would then have to open the stage 5 order, if it reached that far, then monitor it all.

    Compared with other EA's, to me, this looks much more involved.

    If you can code this (which I think would be extra complicated) and it worked properly, I reckon you would make a fortune in sales.

    Please let me have one for FREE, as it is my idea!
     
    #4 Albert.b, Feb 22, 2011
    Last edited: Feb 22, 2011
  5. joeyAcarroll

    joeyAcarroll Recruit

    Joined:
    Mar 14, 2011
    Messages:
    4
    Likes Received:
    0
    Apply to EA

    I have Forex growth bot and the honest Forex signals which is a trade copier. How do I apply this to my Forex growth bot?
     
  6. Albert.b

    Albert.b Sergeant

    Joined:
    Jan 7, 2011
    Messages:
    154
    Likes Received:
    0
    This stratagy will not work with FGB as it does not use a large S/L!
     
  7. Pharaoh

    Pharaoh Colonel

    Joined:
    Oct 3, 2007
    Messages:
    19,668
    Likes Received:
    2,206
    So, find one of those low-cost eas with the 10 pip take profit and 800 pip SL and give it a try. I'd recommend testing the theory on demo for a couple of weeks.
     
  8. Albert.b

    Albert.b Sergeant

    Joined:
    Jan 7, 2011
    Messages:
    154
    Likes Received:
    0
    Of course you should test, common sense really!

    The one I use has a default 25 T/P with a 328 S/L!

    It has a win ratio of 39/1 on the FPA demo test!

    My own live account is slighty better than this!

    As we all know, the biggest problem with Forex is that what works one day, one week one year etc, may not work forever!
     

Share This Page