My Bat from team aphid trades

I am doing backtesting for Bat strategy from 2004 Jan, till today. in my previous backtests, I have never included account balance and money management. it was always just percentages or pips. But I realized that to increase my confidence, and to include all components of trading, I really need to include account balance and money management rules. IF U NEED a template i use for backtesting, pm me and ill email u.

Thanks for your kind words Mr Trend. I am just beginning to see some fruits of my hardwork. and it feels good. I am not a full time trader yet, but I hope to be one soon.

THE ISSUE OF CORRELATION:

I just thought i woudl share something I learned from a book. its the issue of correlation. I believe it was market wizards, and one of the trader had mentioned they use computer analysis to determine the correlation between their open positions. so if u have 8 different trades open and all of them are highly correlated, then u r basically only trading 1 position with 8 times the risk. a very good example is using the same strategy on gbp/usd and usd/chf. these two currency pairs are highly correlated. i read somewhere(sorry i m not good with citing sources) that their correlation is somewhere in the range of 65-75%. thats very high!!!!

Here is the trade summary for last couple of days

Long Entry 1.9943 original stoploss 1.9915 05/08 0300 GMT

Stopped out for 17 pips loss at 1.9926

No fib level trades taken bcoz it breached 161 level first.

Short Entry 1.9939 05-08 1100 gmt

stopped out for 13 pips of profit. this was a 61.8 fib level trade.

Account balance - 1028.7

Actually, a lot of pairs across the board are in that range... some are at the lows of 20-50, but overall, you'll see that most pairs have some sort of correlation between them.

I personally use this same technique, since I can have as many as eleven or twelve positions open at a time... in essence, I look for correlation of around 90-99% before I'm hesitant on pulling the trigger on two pairs simultaneously.

Folks sorry for not being able to update this thread this week. been busy this week. next week I will try to post the trades real time.

This week's summary:

Overall, this week has been great. I am at $5000 account balance now for this strategy, risking $125 per trade. Initially i was at $1000 risking $25 per trade, and I decided if i reach $125 of profits(which i did this week) I will deposit more money and increase my allocated amount to $5000. I will still do that for next two levels. then I will not be depositing any more of my money. I was doing some detailed money managemetn planning...at this rate...approx level 25 is million dollars. I am at level 3 right now. in my past backtesting.....I have seen a progress of about 1 level per month. and it looks like its taking shape in real life. I started out with $400 as level 1. then level 2 was 1000..now its level3. its a bit different from what i publisehd...but i increased it after doing some more backtesting. attached are the updated levels.

EXPECT IT!

The most important hurdle we all traders face is following the system to the T even when you have losses. when i backtested this strategy and i am still doing it....I found a couple of months where it basically was sidewards movement in my equity curve. so now I expect that to happen in real time, that way when it does come up..I will be ready for it and still keep executing trades. its good to be positive, but I have tendency sometime to have unrealistic expectation and get greedy.....but I lower my expectations of the system from 10 1000 pips trades to what the results were in backtesting.

Nice to have you back
And thank you for keep posting.

Current open trade:

short gbpusd 05 14 1000 gmt 1.9815....currently 15 pips profit

Backtesting results from 01/04-09/04..

Hello friends,

attached are backtesting results for this strategy from 01/04-09/04. This strategy would have turned $1500 into $9500 in those 9 months by using my money management ladder. and of course, all the credit goes to team aphid.

When i got to thinking about the closest profession to ours....I think its being a sniper in the military. why? because just like us, they are engaging in a war. secondly, they wait patiently for their target to appear...they dont just shoot at any one tha walks by...they have specific mission. just like that, we as traders also wait patiently for our strategy to give us signals, we dont just trade any signals. sometimes they wait for days and days, just like us.

THIS trade has been closed at 1.9808 at 05-15 0800 gmt time.

3 trades opened and closed today for loss...

Trade 1 Long Etnry 1.9808 Stop losss 1.9770 -38 pips

Trade 2 Long Entry 1.9797 stopped out at 1.9768 -29 pips

Trade3 Long entry 1.9790 stopped out at 1.9768 -22 pips


Current Account balance - $4852

Net Loss - (-$148)

even though I am in negative, I am finished backtesting year 2004 and the results are very promising. thats why I will do something that I dont recommend you do. I will be depsoting the rest of the money and jump to step 5 in my money management ladder. which is 20k and $500 risk per trade. I know its a bad idea in some ways, but the backtesting gives me confidence. from this point onwards, I will not be depositing any more of my own money. so the current balance is $19852...if it drops to $10k I am out of this strategy.

BTW, there was a nice long trade that opened at 1.9808 again. but I forgot to set a limit order before going to sleep....and i missed it. otherwise it would have given me a huge boost. that trade is still open with 45 pips of profit.

During my backtesting of this strategy, one hurdle i faced was being neutral about the expectations. sometimes after a drawdown or sidewards trades, I got negative and started expecting the system to perform badly. sometimes, I became overly positive. during these moments, I had to take a break and convince myself to come back to the neutral stage.

I am forward testing this strategy on gbpusd yet I would like to introduce this with another currency cross not related to the gbp, non-correlating currency that is, say usdchf for example which offers about -61 correlation on the hourly, is this something we should explore ? Does a positive correlation on say gbpjpy (around 92%) work better, has anyone explored this way of diversifing ??

I personally wouldnt recommend trading with another currency pair that has a strong correlation with gbpusd. because that just means that you are taking a single trade with double the risk. in my backtesting, I have seen the highest drawdown of about 25%. if I were to test gbpjpy, I am almost certain that the same time gbpusd had this drawdown, gbpjpy would also have a drawdown. 50% drawdown would be very hard to handle for even an experienced trader. I would say if you can backtest it on something with less correlation, that would definitely help.

BTW - another trade opened up while i was sleeping(this time i didnt forget to set my limit order).

Short entry 1.9837 05/16 1100 gmt stop loss 1.9876 already about 20 pips profit at this time

the trad ethat i entered at 1.9837 currently 1.9736...about $1250 in profit.....awesome........

Hey Folks,

I just got back from my great vacation in Myrtle beach, SC. I still kept trading this strategy while on vacation. I will post the summary later on...

I'm pretty sure Team Aphid said they trade this on GBP/USD, GBP/JPY and EUR/AUD.

Yes, that might be true. but the reason why I only trade GBP/USD is because

1 - Team aphid's backtests and my personal backtests were only on gbp/usd.

2 - I havent checked the correlation levels amongst gbpjpy euraud and gbpusd. If they are highly correlated, then its basically just same trade * 3 times the risk.