Why such small TP and big SL ?

[wiptheman]

Hi Guys,

I have been testing your EA for several months on test accounts and live accounts. The outcome is quite positive with more or less 9% return in two months on the live account but I was wondering why are the SL so big and the TP so small ?

Have you ever tested the EA with tighter SL and bigger TPs ??

[Support_AdrianS]

Dear wiptheman,

From our real and demo accounts statements,
the Average win is 5.5 pips and the Average Loss is -7.2 pips for FRPEA version 5 (Risk / Reward = 1.41)
and the Average win is 7.37 pips and the Average Loss is -13.59 pips for FRPEA version 6 (Risk / Reward = 1.84).

The Stop Loss defines the maximum value in pips when the robot will close a losing position. Our robots use a dynamic Stop Loss algorithm and most of the trades are closed at a lower loss than the maximum Stop Loss permitted.
Same story for the Take Profit.

Those values were optimized for the last 5 years of backtesting on tick data.

What is more important after all, to lose less on a bad trade or to win more on longer term?

Even if it seems strange, a lower Stop Loss generates a higher Maximum Draw Down and that is more dangerous and could result in blowing up the account.

I know that nobody likes to lose, but loss is part of the trading and cannot be avoided. The most important thing is to win more than you lose on longer term.

Kind regards,
Adrian.
ForexRealProfitEA Team

[zaff]

i understand your statement but i've seen several times that the bot closes the trades too early resulting on loosing positions, even if later the trend goes to the tp level.
why is it closing that fast? thanks (you can take as example today's eur/usd sell trade (10/10/2012)

[Support_AdrianS]

Dear Zaff,

It's all about statistical probability on longer term.
Even if there are times when closing later is better, on longer term there are more times when this approach is less profitable.
We could optimize the strategy for a shorter period, to perform better on current market conditions, but we don't know how much time will last and this will transform the robot on a program based on circumstances, not on a long term, reliable in any condition, profitable strategy.
We prefer losing on shorter term with a long term reliable strategy than wining on shorter term with a long term unreliable strategy based only on short term circumstances.
We constantly seeking better improvements on all strategies used and we always add such improvements on every update.
We like to trade only with robots built to last at least 5 to 10 years on any conditions.
So far all our accounts are in profit and we trade on real accounts for more than 2 years with our robots and that is the proof of what I said above.
Believe me that I hate losing also, it spoil my day when it happens, but I like winning on long term more and that is more important.

Kind regards,
Adrian.
ForexRealProfitEA Team

[zaff]

thanks for your reply adrian.

[zaff]

well i think that this trending bots are working fine, but they risk to loose too much to earn very little. and they enter pretty much all the time. i don't know what conditions are they expecting but i would like them to go on when a huge probability of winning is possible. i'm actually watching this thing taking a buy on a downtrend and latter taking more buys on that same downtrend.

or at least to have some trend strength indicator that allows it to define whether the trend is strong or there is a reversal coming.

i'm not ranting about loosing, it is part of the game. i just have bots that enter a few times per month but they are pretty accurate and profitable.

[Support_AdrianS]

Dear Zaff,

Our robots are designed to win more than they lose on longer term (monthly basis) with a win rate of 70% and an average win of 6 pips and average loss of 10 pips (that's from our real account statement 3).

All the new strategies that we will add in the future will work differently, with fewer trades and a lower SL and more accuracy, but until then everything is working fine this way.

It's very hard to be that accurate using only technical analysis and automated trading without human intervention and fundamental analysis, especially with a small stop loss.
Are those robots that you mentioned running for a long time and are they trading all day, because it sounds almost too good to be true?


Kind regards,
Adrian.
ForexRealProfitEA Team

[zaff]

Hello adrian, it trades all day but it rarely enters the market, but when it does it has a huge probability of winning.

here is my account

http://www.myfxbook.com/members/zaff/ppst-k/333092


and here is the vendor's account.

http://www.myfxbook.com/members/TulipFX ... ings/68427

[Support_AdrianS]

Dear Zaff,

Your example is not that great as you think.

First, I will make some comparison between your results and ours.

Your results:
Pips won = 475
Average win = 9.58 pips
Average loss = -15.28
Longs won = 65%
Short won = 65%
Best trade = 90 pips
Worst trade = -120 pips
Avg. trade length = 4h 6m

Our results:
Pips won = 1732
Average win = 6.06 pips
Average loss = -10.56 pips
Longs won = 75%
Short won = 71%
Best trade =48.1 pips
Worst trade = -120.4 pips
Avg. trade length = 2h 40m

In conclusion, your robot has a lower win rate than ours, the risk is more than two times higher and TP is lower than SL also. The only advantage is that it loses less (in pips) than ours (only for a short time). The results are the same, with a risk more than 2 times higher.

I will not comment the vendor results, because I don't trust vendor statements that has any restrictions on their statements. It means that they have something to hide.

From my experience the robot that you mentioned has a built in some kind of martingale (which I hate the most). It can make profit for a long time and lose the account suddenly.
There is a statement that has been erased from vendor, but you will find it here:
Link: http://eareview.net/review/kangarooea

You can be easily deceived by those kinds of robots, the vendors are selling a lot and when the big draw dawn comes, their account is full already. They will only start another statement, after most of the traders don't remember what happened.

Our robot was designed to trade our own money, we have nothing to hide and what you see is what you get.


Kind regards,
Adrian.
ForexRealProfitEA Team