Hello traders, today’s post discusses how to improve an EA without adding more indicators to it. By optimizing the tests of an EA, you can improve its performance without changing the code or adding more indicators. We will also cover why a trading robot can stop working and how to fix it.
By the way, some of the methods are applicable to manual trading as well, so, maybe, classic traders will also find some useful points.
If the trader wants to improve the trading results of the Expert Advisor, he chooses one of three options:
- Optimization in the tester – search for new indicator settings and parameters;
- Adding indicators to the trading system – filters of “false” signals;
- Radical action – search for a new trading system.
Before you start changing your trading strategy, you might want to consider whether there are simpler ways to improve the results you’re getting.
In order to fully apply the following tips, a number of conditions must be met:
- The Expert Advisor must be connected to myfxbook service statistics
- The trading history of the robot must be at least six months.
One of our trading accounts is taken as an example to illustrate the application of the tips:
This trading account uses the standard settings that we offer to our clients by default.
The algorithm has been tested since March 2020; as you can see in the figure above, the last trading period looks like a flat, which makes you think about optimization. How to do it without changing the presets – we will learn from four simple tips that will work for any strategy, including manual trading.
1 – Remove unnecessary pairs
The scalability of the trading algorithm to other currency pairs is a definite plus that allows you to diversify your strategy and reduce losses. It is written in many theories, but statistics is a stubborn thing. To see it, let’s turn to Advanced Statistics by clicking on the tab “Summary” on the monitoring page of Myfxbook.
The Elon Musk EA trading robot worked on 14 currency pairs simultaneously.
USDCHF currency pair brought 5 trades with a total loss of $68.40 – this result, barely covers the cost of the spread and the broker’s commission, and GBPUSD currency pair brought 429 trades and $16248.95 of profit.
The main purpose of this method is to get rid of currency pairs that bring the least income.
2 – Trade time optimization
Traders familiar with Larry Williams’ works know about his numerous tests of trading strategies’ performance on different days, weeks and months. The myfxbook monitoring allows you to track the summary statistics for each working day of the week in the “Daily” tab of the Advanced Statistics section:
In this example, the Expert Advisor trades positively throughout the week, and if a loss-making day is detected, it should be defined as a day off.
If the Expert Advisor is actively trading within the day, then it is worth analyzing the hourly chart. In the example above, there are no special claims to it – the statistics everywhere show the percentage of profitable trades above 50:
You can often see a picture of low efficiency of deals early in the morning and late at night, which is due to the low liquidity of trading in the Asian session. The situation is shown in the screenshot below:
Elon Musk Ea, has a functionality that will allow you to limit the time ea work.
3 – The principle of non-interference
When trading intraday, sometimes even in medium-term strategies, traders are advised to avoid trading when important fundamental news are released, and they disable advisors. The paradox of this situation is that this is not the case in tests, and this already points to the mootness of the usefulness of such actions.
The Expert Advisor is not insured against market force majors, which occur more frequently and have a greater impact than an “unexpected output” of data or unexpected change of the Central Bank rate. Suffice it to recall the actions of the Swiss National Bank, the closure of banks in Cyprus, the big sale of gold “at market price” by China, the Brexit referendum, the election of Donald Trump, etc.
Negative reactions to fundamental news will not dramatically change the loss picture due to the money management calculation, but a positive effect can bring super profits, if instead of taking profit there is a system of following the trend. To deprive yourself of “working off” the news means to interfere with the rules of the trading system, the result of which took into account the profits from the news.
4 – Sandbox
If the Expert Advisor stopped being profitable immediately after launching or a bit later, do not rush to optimize, try to reduce the lot size to a minimum and transfer the strategy to a “cent” or demo account. The whole point is that the right idea behind the trading system may be subject to seasonal periodicity of profits and losses, or may be related to low liquidity in the market at the moment.
Having placed the Expert Advisor in a kind of sandbox, continue to observe the trading results. As soon as a steadily growing profitability is established over a month or two – begin to gradually increase the lot size or transfer the system to a real account.
Over time, you will be able to establish an average statistical duration of the profitable trading period and determine the duration of the loss-making time. This will help to plan the maximum and minimum investment in advance.
Many ideas work on the market with a certain cyclicity – the same night scalpers have several profitable years followed by several losing years, breakout strategies, grids and many other classic tactics have similar periods of “stagnation” and periods of profitability. It’s like with farming: there’s harvest time and then there’s time to wait out the winter. Come “spring” and you can go back to these tactics.
A trader cannot take into account volatility, cyclicality of markets, changes in monetary policy of central banks, the state of the world economy by making tests. This can be done simply by taking into account trading activity within a day, within a week, or the rejection of currency pairs whose fundamentals have changed.
The tips listed in the material are based on existing trading statistics. They won’t require testing and won’t affect your Expert Advisor’s trading algorithm.