Compare Metatrader EA questions regarding tests

[Fikky]

Hi All,

I'm a newbie here and have no FX trading experience (I do have previous futures and options trading experience, a long time ago now).

I want to learn and discover strategies that work for me (I don't even currently have an account anywhere, I'm not going to open one until I have investigated what strategies are being used that I can potentially back/forward test).

Anyway after getting my account verified I went to the strategies tab and looked at some of the results graphs (Metadata EA) and couldn't really understand some of the figures and why some of the strategies seem to be having consistantly small positive gains (which look amazing) followed by a massive loss in a single trade(as if there was no kind of risk management/stop loss being used). Was there a market event for example that would have blown out any in place stop losses or is there something very odd going on with these expert advisers?

1. Fxear. Brilliant run of winning trades (I would have been all over using that as an advising tool) but consistently small wins. Then trade #94 balance is 1233.73 drops down to 533.06 (how does that happen?)

2. Similar thing for FxPro Dragon
Single trade wipes out nearly 50% of gains (are stop losses not being used or were ineffective?)

3. From1toMillion
This graph looks great at the moment but I don't understand the average pips per week number is -6452 but the average P/L per week is +34.16% What is the -6452 number about (doesn't this mean that it should be losing and not winning?)

Sorry for my stupid questions (there will probably be lots more).

I will read through the Beginners bootcamp forum suggested reading materials but I couldn't help looking at the strategies section to start off with.

Any clarification would be helpful.

Thanks,

 

[compu-forex]

Different EA's have different trading strategies. Much of the time the basic strategy is weak, so the creator of the EA use certain tactics to "enhance" the returns.

The first 2 strategies you mention are typcal scalping strategies - it actually doesn't matter what the actual strategy is but they all have this in common, where the TP is very small, with a very big SL. The hope here is that you hardly ever hit the stoploss. It's more of a dream than a practical strategy.

The third strategy is particularly dangerous. Whenever you see positive growth with negative pips, it means the strategy is using increasing lotsizes(aka martingale) to try and recover from poor trade entries. Again, it actually doesn't matter what the basic strategy is.

In both cases - run away!

 

[Fikky]

Thank you very much @compu-forex for the info. It would be very easy for someone to look at those graphs and get the wrong idea.

All the best

 

[Fikky]

Really sorry but I don't really still understand where the negative pips value is derived from.

What you are saying is that someone is doubling up their position when a trade goes against them in the hope that at some point it will go the right way (right?)

Does negative pips give an indication of your maximum offside position (or an average of offside positions or something like that, either way I understand that it is a big warning sign, which is the main thing thanks very much)

I've tried googling it (how can average pips per week be negative but profit be positive) but it doesn't really come up with much that really explains what that -ve number is.

I thought that each point on the graph would be a trade rather than lets say a daily pnl so wouldn't you get -ve losses followed potentially by a big win (if the doubling up works for you, even if all the trades are closed out at the same time?)

It may well be that I am misinterpreting the chart (typical!)

Anyway thanks for your help

 

[Fikky]

I had a look at the statement which has the actual individual trades in and can see that there are long stretches with just buys or just sells (as you suggested, not always, but it seems to be increasing postiion size when the trade is going against them which is fine if you have infinite pockets but not in reality in my opinion)

 

[compu-forex]

What you are saying is that someone is doubling up their position when a trade goes against them in the hope that at some point it will go the right way (right?)

Exactly - not neccesarily doubling up - any amount of adding to the losing position until the trade goes in your direction.

I had a look at the statement which has the actual individual trades in and can see that there are long stretches with just buys or just sells (as you suggested, not always, but it seems to be increasing postiion size when the trade is going against them which is fine if you have infinite pockets but not in reality in my opinion)

Exactly.

There are a thousand and one metrics to check out the how good a system is but if you have negative total pips or a SL 10x bigger than TP then the system is weak and using dodgy tactics to improve returns.

Caveat - if a system trades multiple symbols then it is possible to have some negative pips because pips for Gold is not the same as pips for EURUSD, and so on. You need to investigate.

 

[Fikky]

Thank you very much for spending your time educating me, it is really appreciated.

 

[The Punisher]

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