EA's and DrawDowns

I have been reading and reading all of these posts(other sites too) regarding all robots(EA’s). I have observed and experienced a few things. The big problem with all EA’s is DD. Without saying them here there are a lot of good EA’s out there. Free and commercial. I have ran a few of them.
There is a pdf file called 5steps on forex factory that we all should read….very sobering article on Currency Trading. I will ask what step are you? I am step 2.
(just run a search and you will find it.) Please read this article and if you are a step 5 well share with someone who isn’t.

Facts….IMOHO
1. All EA’s would not get in to a trade if the robot knew there would be a 2-300pip DD. The only reason is @#$% luck that you get your money back. Robots are Technical Traders Only!
2. NEWS Happens. If you are on the wrong side of the trade it becomes [email protected]#t Happens!!! NO EA can plan for it and if it could well we all would be stupid rich.
3. To steal a comment from another thread EA’s are to make your Trading Easier not your Life Easier.
4. Losses happen….how you manage them is up to US not the Robot

EA's and indicators to help us trade….Technically of course!

If a trade has gone south on us, as currency traders it is totally up to US! as traders what to do. We can debate forever(and have) about SL’s but in the end it is up to US as currency traders. Shame on (commercial robots builders) telling us to use robots as a “set and forget”. Eventually a robot will crash. But what a robot will do better than an expert or human can is get into a trade based on the trend or counter trend.

When do we blow out of a trade? That is up to us. There is no magic formula. Fundamentals come in play….
1. Is it trending back? All Blue…All Red? Mixed? Other indicators?
2. What do the “Experts” say about your pair that is dieing a slow(or fast) death.
3. Whats the news say? What is the upcoming news? See fxopen or forexfactory.(calenders)


I don’t have the answers….wish I did. I wish I had some of the answers lol
We all have(myself included) have to learn how to trade if we want to stay in this biz. Tools are available. News is available. Knowledge is available. If we share all three we all can make it to step 5.

B-Cat

IMHO your DrawDown depends on your MM Settings.
If I want smaller drawdown I can have that.
With 70% winning rate, small losses and bigger winnig trades your DD will be
infact very small. Don't see the problem there.
I've had up to 2000% Return with as little as 5-8% DD.
And I also traded the news during that time.

Care to share what EA your are using....
I have been at this racket for over 6months.
While not posted I have read a tonne on this site
Did excellent in the beginning and have my butt handed
to me in the last month or so.
Congrats on your record BTW by my calcs you
pull in 2000pips for every 150pips lost or there abouts

B-Cat

No you get it a little bit wrong.
It has nothing to do with thousands of pips.
The way your EA performs only depends on how it trades.
It's as simple as that. There are strategies that will lead to higher
drawdown due to the nature of their style.
You can risk much and have little drawdown and huge ROI
or risk little with huge drawdown (huge loosing streaks).
There is no real correlation between that. Depends on how you trade.

You will find the EA that I'm using with a little research.
But it's not as simple as turning it on and getting rich.
If you don't understand what are the advantages and drawbacks and
limitations of any EA you will never have success with them.

OK I'll buy that....
I do agree with you....it is MM. But 300pip DD still hurts
But with all EA's if you correctly set MM you basically move sideways(profit) if you risk more then you can margin out or have a news realease that sends you into a big DD.
Even if you know how they work or build one(I built one) it is tough to
figure on what to do when you have a DD....ride it out or blow it away
Bottom line all EA's trade based on history. They all buy low sell hi(or sell hi buy low)
Build an EA that predicts the future and then you have something

cheers
B-Cat

if you don't have a 300 pip stop how can you have a 300 pip DD?

it is impossible to calculate risk without knowing where your stop is going. if you plan on risking 1% of your account per trade (just as an example) and your stop is 30 pips you will be able to put on far more lots than if your stop is 300 pips.

as you know there is as many arguments for not have any SL's or very large SL's as having small SL's(under 50) as planters has peanuts.
But good point Magnum....something to think about over the weekend

Years back I spent 6months messing with and writing some pretty complicated EA's and I really don't think a EA that just makes you money long term is viable, sure some kinds of EA might work in some kinda of market conditions, but in the wrong conditions, OUCH!!!

Your best bet is to Mix a EA with a manual trading system, ie you switch it on when you think a useable trade is in the making then let it get you in and take you out.

Or maybe you even enter the trade then switch over to Auto Matic, and likely pick the correct EA, depending on if you want a Scalp or a longer term trend hold.

CHOP based systems get killed my Trend, and Trend based systems get killed by Chop end of story sadly, trying to program a EA to understand in advance how to trade simply impossible

I have ea's that wins more than loses but setting 15/40 or 50/300 limits or and any cominbation there of seems to have minimal gains or the ea gets slapped around by a news event. F-bird does really well as long as the overall trend is right. So Turveyd your right when the trend is not clear OR bernanke is talking alot of "adaboys" get wiped out with one or 2 "aw's**t's". So not trading(during releases) or "driving" the EA is the something I will work on next week.

BorderCat

You post reminds me of where I was a few years ago. What you are describing is simply the reality of trading. Point of fact: There is NO trading without drawdown... It doesn't matter if you use an EA or your own head. NO ONE would get into a trade knowing in advance there would be a 300 pip drawdown, thus if you do find the one EA out there than can predict that future buy it quick before someone else does.

Personally I like an EA for many things including (but no limited to) the accuracy of entry signals, and the absence of hesitancy when entering or exiting a trade. That being said, they cannot take the place of the human factor, and it is always up to the trader to "manage" or oversee the trade.

As far as choppy markets or trending markets, if you can see it and define it, you can teach a computer to define and see it too. The issue is NOT how you define or see it, it is how you deal with success or failure of the ensuing trade.

With each trade comes an uncertain outcome, and because we are only using probabilities, we must trust that the method has an edge on the market. Thus not knowing WHEN that 300 or (for me (1,600) pip drawdown will occur you must "play the ball where it lies".

The moment you decide "good" trade or "bad" trade you are predicting the market and more often than not you will be wrong...yet another reality of trading. What makes a good trade from a bad trade is executing the trade as you planned, knowing that you've done everything you can to provide the chance to succeed. After that you must surrender youself to the uncertain outcome, knowing that eventually, over time, the odds will work themselves out in your favor.