u/HobbyTraderDK

After the strategy has been running live on a demo account for a week—during which news like US Non-Farm Payrolls (NFP) missed expectations—it is time for the first analysis. I would recommend running a strategy on a demo account for 1–3 months before copying to a live account. In this initial analysis, I will review some of the things I have noticed and highlight what I intend to focus on moving forward.

News
There are several places where you can monitor the news that affects the currency pairs you trade in the forex market. Sites such as MyFxBook or FTMO’s calendar feature are good options, and both are free to use. News events are divided into three categories; I would recommend focusing only on those classified as having "High" impact. High-impact news can be dangerous, as the market moves very unpredictably in a short in a short amount of time and spreads widen significantly (something backtests do not account for).

For example, if you are trading the USD, you should pay attention to NFP, PPI, and CPI.

Example of how high-impact news affects the market.

Fluctuations like these are best avoided. That is why I have noted that the following pairs—AUD/CAD, EUR/USD, and GBP/USD—exhibit very large, unpredictable fluctuations.

Number of trades
Since the Martingale strategy relies on opening multiple, increasingly large trades, it is also important to consider how many trades the various pairs have been involved in. On MyFxBook, I can see from the history that four pairs have engaged in six trades within a single trading sequence. This can be a warning sign, though not necessarily a bad thing if it happens only rarely. If it occurs too frequently, the pair may be too volatile to continue trading.

Sorting by lot size on MyFxBook.

Profit
By going to MyFxBook -> Settings (see image below) and selecting all the traded pairs, I can compare the profits generated by the different pairs. Ideally, you do not want to see any single pair standing out too much. While high profits are fine, excessive gains can indicate either an excessive number of trades or positions that are too large. A good pair and a sound strategy do not require trading every day.

Shows the distribution of profit among the various parties.

Evaluation
Based on the evaluation above, I would categorize the pairs into three groups, depending on the likelihood of them proceeding and being copied to a live account:
Temporarily excluded: AUD-CAD, EUR-USD & GBP-USD
Under observation: EUR-CHF
Candidates to proceed: GBP-CHF & AUD-NZD

A lot can change over the next three weeks; this is just what the results so far have revealed.

My rules for this series.
-All questions must be asked and answered (if possible), publicly in the thread.
-I'm not allowed to change anything in the strategy without publishing it on Reddit first.
-All expenses would be added up on an ongoing basis.

Time for some answers and thoughts that have come since the series started.
Feel free to came with input and thoughts on the series, and ask questions in the post if you can think of any.

Why did I start this series?
Starting the series to teach new Forex traders how to think outside the box sometimes, and to learn some of the things from me that I wish someone had taught me when I first started. The series will run as long as possible. I have seen the series as a challenge for myself, to teach others how to look at things, and at the same time keep the costs of what I use as low as possible. That is why I only wanted to mention the name of the tool I use myself, and what properties the tools should have, so that people can make their own or find alternatives if they wanted to.

Why use a bot at all?
Many Forex traders get emotionally and psychologically affected when the market doesn't behave as they thought. Some get so emotionally affected by losing trades that they start revenge trading, which is a big NO GO. A bot doesn't get emotionally affected, it does what it is programmed/set to do and ONLY that. That said, any bot would require you to look over its shoulder a bit, in this series we will do that by setting up the copy trading tool so that we get notifications on our mobile as soon as the free margin or margin level reaches a certain point.

If you are profitable, why not share the setup you are using so we can all use it?
Unfortunately, that is not how learning works. There is also a big difference between using a bot and knowing HOW to use it. I know how my setup reacts, when to be serious and when to tell it to stop opening more trades. That would be like people just learning to ride a bike and then they think they can ride a race bike. Furthermore, if everyone uses 100% the same setup, it would end up NOT being profitable.

Isn't martingale a dangerous strategy?
Yes it is, if you make the 3 classic mistakes. Blindly trusting it without manually entering when needed. Running it directly on too small an account. (That's why we would later use copy trading, to use the extremes of the strategy). Getting too greedy and either running too many pairs, setting multipliers too high or setting starting lots too high.

Why a $1,000,000 account is unrealistic to start with.
Starting with that live, 100% agree. That's why it's only a Demo account, whose only ability is to act as a master of the strategy. It's intentionally so unrealistically large, as I test many pairs at once, and wanted to see how much drawdown the different pairs create, without one pair ruining the entire test for the others. Its purpose is to start trading and see how the market behaves, with spreads, news and whatever else comes into play that you don't know in advance.

Why not test the strategy on a smaller account?
My experience is that martingale requires a lot of space to trade on. When we have the data we need, a copy trade would be set up between the master account and the smaller and more realistic slave account. The copy trade would have a gearing and be set up to only start trading when the master account's trade reaches xx Lots. That way, there would be the possibility of skipping some of the first trades, which might have resulted in a loss, statically speaking.

Why didn't I choose gold? Many others have big profits with XAU-USD.
Gold is very volatile and has only increased in value in the long term over the last many years. A 1% daily increase today is equivalent to more dollars than it did 5-7 years ago. Since the chosen strategy is based on an increase in dollars, it would therefore have to be optimized every six months. Currency pairs are within a more stable range in relation to each other. Especially now that international politics and trade are increasing.

Why haven't I backtested the strategy on the different pairs, did I start it on the demo account?
A backtest only gives a small idea of ​​whether a strategy is profitable. I have had strategies that in the backtest only gave 5% drawdown, and reasonable profits, which ended up failing. Many people make the classic mistakes by over-fitting and relying 100% on the result, without having any kind of safety net. Backtests do not always take into account what the spread is at different times. If there is big news on USD like PPI, SPI or NFP, there would be a big spread. A trade here in the backtest could hit TP, but in reality it would not hit, due to the widened spread. Metatrader 5 does have the ability to do "out of market samples". It looks at how markets HAVE behaved and makes a prediction on HOW they will behave. However, this still does not always take spread into account.

Simplified example: We have to flip a coin heads or tails 4 times. After 3 flips, all 3 lands on tails. Based on the 3 previous flips, it shows that there is a 100% probability that the 4th flip will also be tails. But statistically speaking there is still a 50% chance of 4th flip being heads. (Again a VERY simplified example of how to view backtesting).

Why haven't you mentioned SL?
I would get to that point when copying between the accounts (master and slaves) will start. The tool I use for copy trading has a built-in daily max loss, equity protector and magic level protector. Plans are to use it as SL and to protect the account. You could change the settings yourself on an ongoing basis so that your account wouldn't be margin called.

Why share the settings this series setup runs with?
So everyone has the opportunity to join in on the sidelines and try it out for themselves. If you change just one little thing in the settings, you would get completely different results, maybe better, maybe worse, who knows.

What is the purpose of the series? :
Showing the way from an idea to a strategy to something runs automatically with minimal manual intervention. From data collection on an unrealistically large account and finally, the series should end with some currency pairs being copied to a smaller $500 account. It would be reviewed how to split the pairs from the master account and later reassemble them. This series is for inspiration only and does not constitute financial advice; remember to conduct your own tests and research.

About me :
As my username suggests, I am a hobby trader who has been profitable trading forex for the last 5 years using a bot/EA and the last 3 years experimenting with copy trading. My past results are publicly available on MyFxBook.

The selected strategy and why?
RSI + Martingale. RSI was chosen as the starting signal for the trades and martingale as shelling. Martingale is a much maligned strategy as it is often run directly on a small live account, without any safety net. In this series, it would later be used the same with a copy trading tool that would act as its safety net.

My rules for this series.
-All questions must be asked and answered (if possible), publicly in the thread.
-I'm not allowed to change anything in the strategy without publishing it on Reddit first.
-All expenses would be added up on an ongoing basis.

Trading pairs in the test phase:
AUD-CAD, AUD-NZD, EUR-CHF, EUR-USD, GBP-CHF, GBP-USD & NZD-CAD. In order not to overexpose a single currency, each currency must be repreciated no more than 2 times. This would reduce the vulnerability to news for individual currencies. The selected pairs also have the same value between them, which is between 0.9 & 1.35, which is a good starting point for this series.

Broker :
I am using a broker I have previous experience with, and which offers advantages beneficial for this series. The account starts as a $1,000,000 demo account with 1:500 leverage. This account would ONLY be for data collection, as I need to be able to see how much the different pairs need to move, and I wouldn't want one pair to ruin the entire data collection.

Setting :
RSI sell = 70
RSI buy = 30
RSI period = 9
Multiply = 1.6
TP Pips = 6
Step Pips = 10
Trading timeframe = 5min
This is a default setting for data collection only. I would recommend people backtest themselves to find their settings.

Expenses :
Bot = Available for free in several places on the web. Usa MQL5 og Google.
VPS = 5$/month.

Total = -$5

The associated account for this series is publicly available on my MyFxBook profile. All trades would be confirmed through them.

Hello Forex traders of Reddit

Would there be anyone here on this part of Reddit who might be interested in following a small "series", for selecting an EA/bot, strategy, the thoughts behind it, analysis, setup for copy trading for a smaller account, following what running costs would have been with the chosen setup and more?

https://preview.redd.it/0pwc01sfpv5h1.png?width=1765&format=png&auto=webp&s=b25f4312258339fdbd74c4e118458468d6d8d644

Har prøvet at lave en visualisering af, hvordan de forskellige typer af investering bliver beskattet. Kom gerne med input, eller eventuelle rettelser.

https://docs.google.com/spreadsheets/d/10m_x7L6ouLbPn_E41hiXx1lP3-J4hV0_LXO122CoYeE/edit?usp=sharing