What should I be optimizing for?
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Call me a dinosaur or whatever, but I have been using mt4 to test and optimize EAs for like 6 months or so.
My first question is, what is your process for finding the best settings? What should I be optimizing for? All of these new statistics like recovery factor and sharpe ratio were not things that I could study on mt4. What should I do differently now to make the outcome better based on your own experiences with using mt5? Do you focus on # of trades, % drawdown, or what? Also, how should I interpret optimization vs forward testing data?
My second question is is there a rule of thumb for how long you should back test/optimize the settings for a particular amount of time? Like lets say I want the EA to run for a certain amount of time, how long should the back/forward test be to feel comfortable letting it run? Obviously I am going to check up on it every single day, but I only want to reoptimize every 20-30 days to keep it consistent and also up to date.
I'm relatively new to the EA game so any advice you have would be appreciated.
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@giitch I'm a not a forex guru so my opinion is just as good or bad as anyone else's. IMHO the best option is using MT5. It is designed to be much better at optimizing. However, fxDreema is not as well developed for MT5 as it is for MT4.
Other than that, I always try to optimize highest balance possible with lowest DD possible.
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Hi! As you say, it is not that you are a dinosaur, etc. In my humble opinion as long as you refer to Algorithmic Trading, not doing Back Testing and general optimization and the Specific Pair is not an error, it is even worse is throwing money away, if you have plenty of my advice is to donate it to the poor people and not that you throw it away doing trading and giving it to billionaires, with this I answer the 1st. consultation.
Now I answer the 2nd. And technique, every strategy, whether algorithmic or manual, needs these points that I list below in that order and with rigorous performance and rigidity, otherwise you will lose your money silly at 100%:
1º Develop a strategy and score points to follow one by one without any change when applying it.
2º Carry out a manual Baktesting for a minimum of one to two years.
3º Once the manual Baktesting has been carried out without having changed an apex to your strategy, make an assessment of these points.
3.1 Profit factor minimum 1.5, less bankruptcy accounts.
3.2 Drawdown less than 15%, never exceed 18%.
3.3 Nr. Negative transactions max. 10
3.4 Nr. Positive transactions min. two
3.5 If points 3.3 and 3.4 are not fulfilled, the mathematical expectation is never less than 0.3.
And last
3.6 % Annual profit between 5 -10% minimum.
Once these values have been verified in the Manual Backtesting- Apply your strategy for a minimum of one month in the Broker's Demo account where you want to use it in the Real account. Ideally, you should obtain a minimum of 500 operations in a demo account. If they are H4, D1 or higher strategies, you must have a minimum of 50 or 100 in demo.
- If everything applied obtains the same or better results than previously obtained in the Backtest, only then can you apply it in real account, before it would be a very serious error and a great inprudence on your part.
Regarding optimization it is not essential but it is highly advisable, since from my algorithmic experience I have more than proven and the great gurus keep it for it, a strategy does not work the same for EURUSD as for GBPJPY, etc. for one it is a loser and the other can give you great benefits, if you optimize it it can serve you with different parameters for almost all pairs, indices, etc. you just have to optimize and adjust for the torque, index, etc. even for the temporality that also affects the same pair, index, etc. to equal importance in all senses that is why optimization is highly advisable if not essential.
I hope I have helped you and eliminated your doubts and erroneous appreciations that, as you say about a dinosaur, I am a 63-year-old dinosaur. and I know what you say.
Ah! Regarding what @l-andorrà commented about going to MT5 because it is better, I have to contradict @l-andorrà, this is very wrong is how to compare the programming of fxDreema with Mql4, a programmer of Mql4 code will tell you that the visual environment is prettier than that of the MT5 but only that, I've been programming in Mql4 and Mql5 for some time after having done many EAs, s in fxDreema and I left fxDreema for two reasons, the 1st. the same EA in fxDreema had 3000 lines of code against 138 in MQl4 and 780 in MQl5 with this a programmer will tell you and with good reason that the execution responses and rigidity are better with short codes and not with long or extra long codes in addition to more file size more errors you will get and more difficultly you will be able to correct.
and 2nd reason it gave me 50% false entries in fxDreema against the same in Mql4 and this happens the same with Mql4 and Mql5 but in 20%. -
I prefer 5-10% per day, hahaha.
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@biztet Pues o eres millonario o vas ha perder hasta la camisa, eso estadisticamente, matematicamente es imposible y la realidad es que lo ganaras en uno o dos dias y despues perderas el doble o el triple en un solo dia y varios dias seguidos hasta quebrar la cuenta. Es la peor gestion monetaria que puedas hacer. Si los super broker ganan un maximo de un 20% con inversiones millonarias dudo que tu con una microcuenta lo consigas. Suerte.
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@XYON126 There are groups of traders worldwide trading manually everyday, making deposit $100 and close the day with 50%-1000% profit, even more. It is not impossible if you are an expert trader and trade manually. And of course, most of them are crazy of Gold/XAUUSD.
But since I'm not an expert trader, well, unlike you, this is my rate. This is also why we are struggling to make a really profitable EA, to gain ourselves money to spend everyday, automatically.
If you really have a very good strategy, like a sharp shooter, entry on highs and lows, with $100 startup, should be easy for you to gain $5 daily, from just 1@2 trades per day. I assumed you have tried manual trade on demo account. Try trade XAUUSD, 30pips-50pips, or make it 3 trades with 20pips each is not so hard if you follow the trend.
It's not just luck if you have knowledge and patience.
Unless, if you are talking about $10,000 startup capital.....
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Before discussing what we look after in optimization or what strategy can beat market etc .. we need to look at market as a weather forecasting or a sudden natural disaster .. based on all criteria we have and knowledge in deep analysis the condition >> forecasting is just a prediction comes from a template base data analysis which is built based on given parameters (BUT) no one can predict what future hides and how situations can get worst or even better ..
We need to acknowledge this while we trade and accept the fact that what we own ( cant ) oversee market future
Yeah market is a scenario that running throw a process of demand and supply ,, yeah market is leading by big investors and banks .. etc
Regarding Algo .. personal point of view and what i actually do .. i stopped using backtesting and i do all testing throw demo account and observe the situation and try to figure out what its missing
u need to concentrate into one idea and keep digging into it till u find the best result .. and keep improve it more and more till u have a much better one >>> (THERE IS NO PERFECT ALGHO ,, THERE IS HIGH QUALITY ONE)
what does HIGH QUALITY refer to ? its where the algho achieve two targets (together) >> Lower DD + Higher profit.
if u can find an Algho that has daily profit > 2% .... Drowdown < 12% .. then that one is the market beast
no back testing at all .. study and understand nature of each pair currency and u need to have a target
For me .. this is my target >> Lower DD + Higher profit.( daily profit > 2% .... Drowdown < 12% )
one more important point >> u need to establish your own analysis algho
u need to invent your own math / physics / etc whatever deep research it takes to hit your target
Alot to talk about but these points are the most useful one
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There are lots of EAs on the net that you can test, and lots of EAs that you can use to make profit with it. Just don't be greedy. If the EA is working for you, just make sure you withdraw the profit weekly until you get back the capital. Because most of the EA that being said profitable is using martingale strategy. Better watch out, use cent account if you are not a millionaire.
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@l-andorrà Alright sounds straight forward thank you
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Guys I ended up winning the challenge. I had to take a manual trade to win on both phases because the market just was not in peak condition and I did not get enough setups. But now I can just let them run risk free with my automatic daily loss limit stopper in place.
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@giitch Hola amigo, puedes por favor compartir tu filtro de limite de perdidas diario, por favor eso sera de muchicima ayuda.
