How to select MQL4 Live trading result for profitable automated Forex Trading

How to select MQL4 Live trading result for profitable automated Forex Trading

Return on Investment (ROI)

 

This is an old term used in many investment projects and it is used to determine how profitable the program is. Comparing to Stocks and unit trust performance which is between 10 to 20% annually, Forex trading gives higher ROI of 100 to 200% annually. This is due to the leverage of the currency and the 24 hours trading features which makes it easy to trade and small capital of 1:200 leverage required to trade and hold. This in the case of stocks, can be option warrant or contract for difference, but the holding power is still much less attractive then Forex.

 

Leverage

 

Some Forex broker accound provide 1:500 leverage, which means you only need $ 200 to hold on to a 100k full contract or $ 20 for mini lot 10K or $ 2 for micro lot trading (0.1 of mini lot or 0.01 of standard lot). You can execute 5 trades while still have the margin to carry on and earn potential $ 2000 profit with a 200 pips gain (1% to 2% currency value) compare to $ 50 for a 5% gain in stock and share assuming 10K capital used for both trading setup.

 

Duration of Live trading

 

In most case ROI is measured against monthly or annually. A good strategy Forex trading program will give 10% ROI monthly. Which equal to more then 100% anuually returns. But this is the average ROI, there may be months that is -10% and months that is +40%. Therefore, trading is almost looking at long term consistent profits, not short term gains. For live trading, at least 12 months of trading would gives a good ROI indicator of the program.

 

Profit Factor

 

This is important to any Forex trading program as it is a measure of its true abilities to trade and gain profit. Profit factor is measured by taking total profit winnings divide by total losses. Any number that is more then 1 will means that the program actually earn more then it lose. A good profit factor of 2 or 3 is desirable as it have to handle stop loss and bid-spread pip losses. This are 2 main problem for many Forex trading program and one of the most effective ways to counter it is to increase the profit factor. Anything less then 1.2 is consider no good.

 

Max Draw Down

 

Draw Down is common in Forex trading when the trades has not hit any stop loss. But comparing to Maximum Draw Down, it is the largest losses the account made include realized profit (loss) and unrealized profit (loss). Realized profit refer to trade that loss pips and are executed by the broker (Buy and then sell or Sell and then Buy). Unrealised profit is trade that is still holding on yet to let go. This is significant as it will affect your margin call calculation when you are running multiple trading programs. As a general rule is to have less then 15% or 20% draw down. You still have room to run another 2 more program to maximum your ROI while maintain your account margin.

 

 

Source: http://www.bestforexranking.com

I support green products and actively involved in recycling movement. Currently am blogging, affiliate marketing, selling holiday gifts online and trading Forex to earn extra income to support family on top of having a full-time job. Visit my website http://www.sngerge.com and share my ideas.

 

I am currently hosting a Forex review website at http://www.bestforexranking.com and also sharing Forex news, broker, trades and charting information. Last year, I started affiliate marketing and setup http://www.sngerge.com which features free tools and tips. My recent involvement is selling holiday gifts which provide world wide delivery at my personal blog http://leyangshop.blogspot.com

How to select MQL4 Expert Advisor for your Forex trading

How to select MQL4 Expert Advisor for your Forex trading

Expert Advisor are created from programming language and tested in MT4 strategy tester. The program language use is similar to C and uses a text editor for coding. The Strategy tester use historical data to test the program and out put the summary results at the end of the testing. User can choose the duration of the back testing period, the currency trading, the time period chart to use and the various algorithm testing model to use.

 

Back Testing Results that matters.

 

Many people with programming background can program any strategy into codes call Expert Advisor and let it trade for you automatically. Let’s look at some of the back testing results before putting it to run on live trading account.

 

Profit Factor

 

This is the first important results to look our for, which is the profit factor. This determine the total winnings divide by the total losses. Anything more then 1 yields profit in the long run. But due to market conditions and trading news outbreak, a profit factor of 2 is more desirable. Anything between 1.3 to 1.8 have to be reinforce with multiple strategy as backup to one another.

 

Max Draw Down

 

Draw down is the lowest loss at any point of time the account is trading. Maximum Draw down simply means the maximum lowest amount you have in your capital at any point of time (realized or unrealized profit trades). This is extremely critical to your setting configuration to avoid margin call out. General rule is good to have an EA that product less then 20% max drawn down. Anything 50% to 21% is dangerous and have to be properly set to avoid margin call. Nothing above 70% as it is too risky.

 

Expected payoff

 

This figure measures the gross profit, gross loss, the duration and the initial deposit. The highest this figure is the better and more profitable is your program. Anything that is more then 100 or 150 will yield profitable results.

 

Duration of testing

 

It is important to test the strategy for at least 12 months of historical data as it covers major news release and season changes for majority of the traders. Forex prices will change when fundament news like Non-farm payroll or unemployment rates are announced and the market will react according to forecast difference. During holidays break in United States and Europe and Japan will also affect the volume and forex prices will rise and fall aggressively. The EA have to be tested thru all these events for the year.

 

Max and Average Loss

 

Am not looking at winning trades but more on losing trades as this is important for margin call and setting it to run with other automated forex program. Avoid EA which have zero or have little losses, instead look at average loss that is no more then your winnings trade. It may have large losses but on the whole in the long run, averaging it will give small loses and gain your profitable income.

 

Last Words

 

There are other factor like short position, long position, consecutive loss, modeling quality, are equally importance but I put them secondary to Profit factor and Max Draw Down, which I focus mainly when select expert advisor to run my automated trading account.

 

Source: http://www.bestforexranking.com

I support green products and actively involved in recycling movement. Currently am blogging, affiliate marketing, selling holiday gifts online and trading Forex to earn extra income to support family on top of having a full-time job. Visit my website http://www.sngerge.com and share my ideas.

 

I am currently hosting a Forex review website at http://www.bestforexranking.com and also sharing Forex news, broker, trades and charting information. Last year, I started affiliate marketing and setup http://www.sngerge.com which features free tools and tips. My recent involvement is selling holiday gifts which provide world wide delivery at my personal blog http://leyangshop.blogspot.com

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