VeeFX: Pespective on 100% WinRate and Inverse R:R Strategies
Folks here are only focussed and reacting the "100% winrate" without thinking about the whole picture. Please allow me to share my own perspective:
I have done some immense research on Inverse RRR systems:and if you have read my posts, I work with process of elimination and Inverse or Reverse RR is not a bad thing if you have thought about all the necessary controls required in place to take care of adverse market conditions and reactions. I would not call positive RR systems measured on a per trade basis to be a FALLACY because math supports positive RR to have a positive expectancy in any strategy. On the flip side, I would also not rule out negative RR based systems. It all depends on your edge which has to be proven by your own trading stats over at least 10000 trades.
In my opinion, the OP will fail in this endeavor if he has not linked his EA to myFXbook to analyze his ENTRY ACCURACY %. It is crucial to have at least an average of 85% entry accuracy rate for reverse RR to work. It is the first key ingredient such strategies need but that is not enough. Next key ingredient is TRADE FREQUENCY. I will get to this in a bit. 3rd key ingredient is the buffer one has to decide to stay within the desired drawdowns. Traditional calculations of calculating MaxDD wont work. This is absolutely crucial to avoid few losses to take out 100's of profitable trades. 4th important ingredient is to DEFINE YOUR ACCOUNTING PERIOD FOR YOUR TRADING OBJECTIVE AND GOALS Such strategies must be under weekly to avoid weekend exposure. I will say this again....
if you carry losers over the weekend, you will NOT survive for more than a year or two. Period!
Now, why I say trade frequency is key? Such strategies are always fighting for Faster Winners and Slower Loosers. The SPEED of winners and Losers will make or break your strategy from all the tests I have done (I have done over a million tests throughout my research based journey).
- Trade Frequency,
- Buffer to contain your equity/balance or realized gains/floating pnl. I will say this...traditional measurement of drawdowns must be ignored. You must focus on RoMAD at the end of your accounting period.
- Average win in pips vs Average loss in pips over at least 10000 trades must be positive
- Ignore per trade outcome..it is irrelevant
- ignore per trade RR...it is irrelevant
- Trade Duration..never let losers run out of control or over the weekend
- Efficient control and optimization of Free/Available Margin...this is a key for any strategy
- Thorough understanding of currency correlations, market volatility,, news, sentiment etc
- No use of SL but %equity stops are crucial because winners must be at a faster rate than losers on a trade by trade basis
- Requires FIFO bypass and Hedging to follow price whereever it wants to go (at least for me)
- Optimization of modelling to figure out the best pairs across which sessions, how many max trades to leave open at any point in time, spread of entries and exits and immense exposure management to avoid over-weighting of one country exposure.
- Very Good Understanding of Market Volatility
- Requires Automation to eliminate human emotions to interfere.
- Requires account reset at the end of a counting period to rinse/repeat
- Individual trade outcome must never dictate future trade decisions.
- Never add to losers or use martingale. This applies to any strategy
- Position Sizing...Never increase position size based on the outcome of previous trade. Base it on % of Free or Available Margin
So let's not rule out Inverse RR strategies :-)
Folks here are only focussed and reacting the "100% winrate" without thinking about the whole picture. Please allow me to share my own perspective:
I have done some immense research on Inverse RRR systems:and if you have read my posts, I work with process of elimination and Inverse or Reverse RR is not a bad thing if you have thought about all the necessary controls required in place to take care of adverse market conditions and reactions. I would not call positive RR systems measured on a per trade basis to be a FALLACY because math supports positive RR to have a positive expectancy in any strategy. On the flip side, I would also not rule out negative RR based systems. It all depends on your edge which has to be proven by your own trading stats over at least 10000 trades.
In my opinion, the OP will fail in this endeavor if he has not linked his EA to myFXbook to analyze his ENTRY ACCURACY %. It is crucial to have at least an average of 85% entry accuracy rate for reverse RR to work. It is the first key ingredient such strategies need but that is not enough. Next key ingredient is TRADE FREQUENCY. I will get to this in a bit. 3rd key ingredient is the buffer one has to decide to stay within the desired drawdowns. Traditional calculations of calculating MaxDD wont work. This is absolutely crucial to avoid few losses to take out 100's of profitable trades. 4th important ingredient is to DEFINE YOUR ACCOUNTING PERIOD FOR YOUR TRADING OBJECTIVE AND GOALS Such strategies must be under weekly to avoid weekend exposure. I will say this again....
if you carry losers over the weekend, you will NOT survive for more than a year or two. Period!
Now, why I say trade frequency is key? Such strategies are always fighting for Faster Winners and Slower Loosers. The SPEED of winners and Losers will make or break your strategy from all the tests I have done (I have done over a million tests throughout my research based journey).
- Trade Frequency,
- Buffer to contain your equity/balance or realized gains/floating pnl. I will say this...traditional measurement of drawdowns must be ignored. You must focus on RoMAD at the end of your accounting period.
- Average win in pips vs Average loss in pips over at least 10000 trades must be positive
- Ignore per trade outcome..it is irrelevant
- ignore per trade RR...it is irrelevant
- Trade Duration..never let losers run out of control or over the weekend
- Efficient control and optimization of Free/Available Margin...this is a key for any strategy
- Thorough understanding of currency correlations, market volatility,, news, sentiment etc
- No use of SL but %equity stops are crucial because winners must be at a faster rate than losers on a trade by trade basis
- Requires FIFO bypass and Hedging to follow price whereever it wants to go (at least for me)
- Optimization of modelling to figure out the best pairs across which sessions, how many max trades to leave open at any point in time, spread of entries and exits and immense exposure management to avoid over-weighting of one country exposure.
- Very Good Understanding of Market Volatility
- Requires Automation to eliminate human emotions to interfere.
- Requires account reset at the end of a counting period to rinse/repeat
- Individual trade outcome must never dictate future trade decisions.
- Never add to losers or use martingale. This applies to any strategy
- Position Sizing...Never increase position size based on the outcome of previous trade. Base it on % of Free or Available Margin
So let's not rule out Inverse RR strategies :-)
Staying in my lane...
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. Best of luck, NightOwl96. P.S It is demo at Dukascopy. {image}
