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Sharks, Your approach to this is fantastic I reckon everyone...

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Zestfulmocha

2,311 Posts.

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05/12/18

09:02

Post #: 36753651
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Originally posted by sharks37 ↑

Great discussion guys.

For my part, I am now into this journey full time for 2.5 years. After 18 months of study including a solid 3 months of spreadsheet backtesting on my 1st strategy I started trading my 1st strategy live on 12 markets at the start of this year. This strategy has made a profit (115% ytd) but since its on a $10K account the profit is not enough really to make a living (I have not withdrawn any funds and let the balance compound - of the 115% return, 77% was achieved without compounding and 38% was contributed by compounding), it was more about getting the experience and establishing processes/disciplines and ultimately a reality check of "can I do this". The monthly results were not consistent, there was one losing month (-3%) and 2 months of 1% or less profit. Half of the profit was produced in one month (August, 52%), 3 months in the 10-20% range and and the rest were between 1-10%. Maximum drawdown was 12% - I have a 20% cut-off which I did not have to use.

But one of the learnings for me is that trading manually, even H12 or Daily strategies, is not for me. The benefits of EA trading have opened my eyes to the possibility of scalability and so I have spent much of this year learning to develop EA's which led to me launching the EA equivalent of that manual strategy mid-October. While Novmeber wasn't a particularly good month for the strategy I am happy with how the EA has performed and it performed better than my manual trading (in terms of variances). I am still working on launching another 2 EA's before the end of this year - my launch dates have slipped several times, but I am ok about that and would rather make sure that the EA's work correctly than launch them with bugs.

My goal is to develop and launch an additional new EA once every 3 months which if I hit that target I will have 7 running by the end of next year. I think that goal is conservative because I do expect to get quicker at developing and launching them, but I am also aware there can be delays.

I have fine tuned my launch risk strategy somewhat since the start of the year. Whereas I started with a standard risk of 1% (per trade) and use compounding to accelerate returns, my policy now is to start with 0.5% risk per trade until I achieve a certain profit level (gives time to validate the EA live and find any final bugs, while risking minimal capital) and once profit has hit the 20% level I plan to switch to 1% risk, so if the EA then hits my 20% cut-off I have not lost anything other than time, and in the meantime up till that point I risk at most 10% of the capital for that EA (my stratgy is to allocate a standard $10K per EA).

Additionally, until an EA hits that 20% profit level to trigger 1% risk per trade, I do not withdraw any funds since the objective is to accumulate the equity as fast as possible while only risking 0.5% per trade, to get to that 20% profit level. Once each EA has passed that level, the plan then is to switch an EA into distribution mode, whereby I will take a 50% monthly dividend only if the EA has achieved a new equity high.

So while I have been at this for 2.5 years, I think I am still 12 months away from a modest income from my efforts. Almost equivalent to doing a 4 year college degree in terms of time and effort and lost income, but I enjoy what I'm doing and hopefully I will be good enough at it to eventually make a good living (while the EA's work for me...).

Cheers, Sharks

PS: Zest re your comment about EA signals, I have tried that, or actually invested in someone else's strategy. I found that I didn't really achieve my primary goal of learning anything from it, and when it was in drawdown I felt less confident about it than I do my own, and I realise its because I didn't do the work myself. So I pulled out of it. However if you get access to the code then that would be worthwhile learning value if you are learning to code.

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Sharks,
Your approach to this is fantastic I reckon everyone could take a page out of your book when it comes to having a disciplined and planned approach to developing their trading strategies.

You are exactly where I hope to be on my EA journey some time in 2019, and I reckon that pipeline strategy you have and managing a portfolio of EAs rather than trying to sink into the holy grail is a really good one, and will surely hedge you against changing markets and massive draw downs over the years. Plus the added benefit is as some EAs start to under perform you can just replace them with a better one, and over time that benchmark for %gains, draw down, risk, etc. will all get higher and higher?

Exciting stuff mate and sounds like you're already seeing some great results from your EAs which is great.

Can I ask regarding the returns on your current EA, you mention more consistent/less variance than manual trading that same strategy - when you were manually trading did you experience a bigger variances in the months up vs months down, or were you referring to the actual %return and %draw down variances?

On an unrelated note... how do you keep a register of your back testing - do you use an excel template or something similar?

I have recently started to run some, but on the fence as to whether I tweak the inputs and then run a back test on 'all markets' options, or just focus on one symbol at a time and run it using the 'genetic algo'. still not sure if slow complete or fast genetic is better - the last time I tried to run one of those, it needed to do like 12,000 passes!! I estimated was going to take nearly 3 days on my quad core i5 surface pro lol.

If you are able to shed any light on how you structured your approach to this and what settings or method you found has worked best for your testing that would be greatly appreciated! And if you have any templates that you found easy to use that you could email I would be very grateful.
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