Q. I would like to ask, if GBPJPY trend down condition, what is the solution for
this EA to anticipate Loss to keep an stable equity. Because this EA without stoploss.
A. Firstly, there is a stoploss. In a falling trend, the following will occur;
1) Once the trend is determined to be falling (version 3 and previous use a DAILY
chart, but in version4 will be the current chart timeframe), it will stop
trading, and close all positions in profit (it can also also all positions not in profit
also if it is set that way). Only once the trend resumes upwards will it
start trading again.
2) The pairs chosen all pay significant swap. Every day we are in the market we
are being paid positive rollover interest. This increases our ability to survive
drawdowns over the long term, and on the higher paying swap pairs is equivalent to around 2 pips/day.
3) The lot size have been carefully calculated to be able to survive all but the
biggest drawdowns. the last drawdown that would have wiped out the system was in
the 1970's. Since then nothing big enough has occurred, quickly enough.
There is a stoploss you can set, but when the trend is down it will close open
trades that are in profit.
4) No more trades will be placed whilst the trend is falling for a particular
pair. However, looking at the monthly chart, there are still opportunities on
shorter term basis. You would then switch to another pair and continue to trade on there, or you could, and
this will be a future modification, be able to trade bi-directionally.
5) If you run the EA on more than one pair you are starting to introduce an element of diversification and hedging. It is better
to run on a few pairs each with low risk than one pair with high risk.
Q. What is the largest drawdown you have experienced with this system. As
calculated as a % of your account.
A. I have never experienced a significant drawdown, beyond 5%, as the pairs i am trading are trending in the direction of
the swap. One day there will be one, and that is why the lot size calculation is so important. Frequently the pairs will correct to the tune of 600 pips or so, as we must be able to deal with this, and significantly larger drawdowns.
