Ok, I have devised another way to trade the Euro-Blaster EA that you might be interested in. The idea is to still take advantage of the aggressive preset but not expose yourself to so much risk (i.e., losing your account in just a couple trades).
The key to this method is in closing all orders at the end of each month and starting fresh with the next month. Here’s how it works:
1) First, at the beginning of the first month, only deposit 25% of the capital you have available for trading Euro-Blaster. So, if for instance, you had $2,000 to work with, you would only deposit $500 for the first month. That is what you are risking for the month.
2) Set the EA to the aggressive preset and let it run for the entire month or until you get a margin call (because of hitting the stoploss).
3) At the end of the month, taking into account your new equity level, only keep 25% of that amount in your account (depositing or withdrawing the necessary amount to get to that level). Rinse and repeat step #3 until you are a millionaire or lose all your starting capital.
Let me give a quick example of how it works. Let’s say I have $2,000 to begin with. So I place $500 into the account for Euro-Blaster to use. Looking at 2009, that $500 would have netted $1,698.07 in profit for January. So my total equity was then $3,698.07. For February I then reinvest 25% of that amount, or $924. That yielded a profit of $1,638.76 in profit, bringing the total equity to $5,336.83. For March, I would invest $1,334. In that month, we experience a loss of $1,316.02, bringing my equity back down to $4,020.81. For April my investment would be $1,005. And so on and so on. Hopefully you can see how that even in a month where you hit a stoploss and lost almost your whole investment ($1,316.02 out of $1,334), a lot of your profit from previous month was still protected, allowing you to keep trading.
This method is much more profitable than just running a conservative setting on Euro-Blaster. It will give decent results most years, even if there are several stoplosses hit during those years. It will also allow you to rake in the big bucks during the well-performing years. Here are the results (based on MT4 backtesting) going back to 2004:
2004: +99.8%
2005: +88.7%
2006: -36.2%
2007: -8.6%
2008: +31,903%
2009: +114.6%
So, if you started with $2,000 back in 2004, with compounding you would be sitting on over $3 million dollars today! Not bad at all…
4 Comments until now.
I don’t quite see how your end result becomes a million plus.
Here are your figures done on a spreadsheet. with the speadsheet calculating the gain from your percentages given and then adding that to the previous years total, shown under, “Total £”, from which the next year’s percentage takes its starting capital and ending in a loss.
When I did this I had laid it out properly, but the columns crumpled, here is a second attempt.
. . . . . . .% gain/loss . . . . . P. or L . . . . . Total £
………….—————-………..———-………———
Starting . . capital . . . . . . . . . . . . . . . . . . .2000
2004 . . . . . 99.80 . % . . . . . 1996 . . . . . .3996
2005 . . . . . 88.70 . %. . . . . .3544 . . . . . .5540
2006 . . . . -36.20 . .% . . . . -2006 . . . . . .1539
2007 . . . . . -8.60 . % . . . . . .-132 . . . . . -2138
2008 . . . . 31.903 .% . . . . . .-682 . . . . . . -814
2009 . . . 114.60 . % . . . . . . -933 . . . . . -1615
Hi there. Well, you’ve made a couple mistakes, the largest of which is the 2008 line. The percentage gain for that year is 31,903% NOT 31.903%. I am guessing you are from one of the countries that uses commas for a decimal point, and maybe that is the confusion? The gain in 2008, even with this “monthly method” is over 31 THOUSAND percent! It was an incredible year for this system. Your second mistake is that you are not compounding your profits. I have updated your table to reflect how I got to the numbers I posted. Hope that clears it up for you, but let me know if you have any other questions.
. . . . . . .% gain/loss . . . . . P. or L . . . . . Total £
………….—————-………..———-………———
Starting . . capital . . . . . . . . . . . . . . . . . ..2000
2004 . . . . . 99.80 . % . . . . . 1996 . . . . . .3996
2005 . . . . . 88.70 . %. . . . . .3544 . . . . . .7540
2006 . . . . -36.20 . .% . . . . -2729 . . . . . .4811
2007 . . . . . -8.60 . % . . . . . .-414 . . . . . .4397
2008 . . . . 31,903 .% . . 1,402,775 . .1,407,172
2009 . . . . 114.60 .% . . 1,612,619 . .3,019,791
Yes that clarifies matters.
I did take the 2008 figure as 31 point 903, not a small difference.
Thank you for that.
As a matter of interest which broker were you using?
I find when doing back tests with this EA, I get different results from different brokers. Even when ensuring the parameters are the same and the starting capital is the same. I know their spread makes a difference and that can affect the outcome considerably in some cases even causing the EA to stop,
Which leads me to another question; why would the AE stop long before the completion data after loosing three consecutive trades, yet having plenty of capital left? This has happened several times on a backtest run.
All my backtests were done with Alpari-UK.
Like you, I also got varying results with other brokers. That is to be expected. As mentioned before, though, I don’t put a lot of faith in backtesting. It only gives you a rough idea of how a particular EA will do — nothing definite. The key question to ask is, “Does it look like it will generally be profitable and safe to run on my live account?”
As far as your last question, I am not 100% sure. I know at least some brokers will shut down all your trades if you fall to a certain equity level just to assure that your balance doesn’t go negative.
Comment!