I notice DD has been as high as 40%, but has been lower lately. Have you backtested this strategy to see what the maximum drawdown has been over say the last 5 years? Would be great to see some backtests as concerned right now about what the maximum drawdown could be?
Good question. The profit is getting lower every month as I had allowed the balance to rise without raising the position sizes. Also there has been an element of the market being less volatile (with some exceptions like BREXIT). At one point the NZDJPY position sizes were 50% lower than the AUDUSD position sizes. As of a few weeks ago I have raised the position sizes in NZDJPY to equal AUDUSD so it should raise profits going forward without hugely increasing risk.
The strategy is a manual grid strategy and not an EA. While it has traded exotic and EM pairs profitably in the past it only trades major and minor forex pairs now to reduce the cost of SWAPS and the inherent political/geographic/economic uncertainty around many exotic/EM pairs. When markets are overbought or close to overbought trades are opened counter-trend. When profit targets are hit trades are closed. If the market continues to move against the initial position then a second trade is opened based on candlestick price action and how the market is trading/pending news etc. Up to 12 positions maybe opened.
When markets are oversold or close to oversold trades are opened counter-trend. When profit targets are hit trades are closed. If the market continues to move against the initial position then a second trade is opened based on candlestick price action and how the market is trading/pending news etc. Up to 12 positions may be opened.
Risk control is achieved through position sizing. Position sizing MUST be the most important feature of the strategy because there is no hard stop loss and no hedging. People will often happily accept extrordingary profits and only query the strategy when they experience a stressful drawdown in their own account even while the master account remains quite safe. This is because they have failed to understand how crutial position sizing is for the strategy.
While there is no hard stop loss there is a soft one which is market dependent and as follows;
This strategy has produced excellent profits since 2015 and is now one of the oldest strategies on most copy trading platforms. It is the inspiration for three MAM accounts managing $2m of other peoples money. I never place trades in client accounts that I do not wish to place in my own accounts too and as at June 2019 my own commitment to this strategy across all three risk levels is $190k.
These are the basics. To give any more information would be to reduce my flexibility and take away the major advantage of a manual strategy and make it effectively automated. As a former stockbroker I like to watch all markets at once and get a sense of what's going on rather than put blind faith in back-testing which in the end only tests the past. Links below to Blackwave Money Accounts which demonstrates my personal commitment to this strategy.
Is it a requirement to use fixed lots when copying in signalstart as stated by you earlier 0.01 per $1500 because our account will obviously have a different balance to yours when copying...? So do we need to put this setting in?
My understanding of SignalStart is that it will attempt to give you proportionally the same risk as the master account. Copying Blackwave Pacific you should have roughly the same risk as the master account if you are trading 0.01 lots per $1500. If you have something greater than that you are taking bigger risks.
thanks gary. last question i have is that my account with the broker should it be in the same currency USD as that is what Blackwave pacific runs in. or does it not matter if i have the broker account in GBP?
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Leverage creates additional risk and loss exposure. Before you decide to trade foreign exchange, carefully consider your investment objectives, experience level, and risk tolerance.
You could lose some or all of your initial investment. Do not invest money that you cannot afford to lose. Educate yourself on the risks associated with foreign exchange trading, and seek advice from an independent financial or tax advisor if you have any questions.
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Past performance is not indicative of future results.