Added "Optimize Preset Indicators" option

moonsky wrote:

Can we optimize the preset indicators while generate strategies?

Yes, you can. In order to do so:
- Check on the option "Optimize Preset Indicators"
- Open the Strategy Reactor and enable "Optimization"

The Reactor will generate strategies with the Preset Indicators included and will try to find better params by optimizing all indicators.

Added "Optimize Preset Indicators" option

Can we optimize the preset indicators while generate strategies?

"Calibration" versus "Optimization"

If you optimize it to the full range of parameters again and again, you'll have basically a different strategy (even with the same indicators) and overfit it to every out of sample segment. Instead we should just calibrate, optimize to a few parameters and limit the range to avoid such drastic change/overfitting.

This concept it's very relevant when you try out a walk forward optimization, so this make sense for me also.

Best Regards

How to Add a Simple Money Management for Portfolio EA in 2 Easy Steps

zaphod72 wrote:

Hi guys,

I want to put a money management code in my EA but can't find any of those lines you are referring to. Can you help me?

This trick is for portfolio expert mq4 files generated by EA Studio, did you open the correct file?

"Calibration" versus "Optimization"

Optimization vs Calibration...

I just had an "ah-ha" moment. Maybe it's obvious to most people -- I don't know.

Whenever I see people back test an EA using 2-year old, 5-year old and even 10-year old historical data I can't help but shake my head and wonder why would anyone bother testing an EA using old, stale, irrelevant data. Unless you have a time machine and plan to go back in time to trade, I don't get it.

And then something just occurred to me. I see it written all the time about "optimizing" an EA. MetaQuotes (the developers of MT4) are particularly guilty of this. Plus they perpetuate the use of the word "optimize".

Here are the dictionary's definitions for "optimize" and "calibrate":
optimize: to make as effective, or perfect as possible
calibrate: to determine or check the accuracy of an instrument

When people think they have "optimized" an EA, then it implies a process that was performed once and the EA will then perform well forever more. If you were to instead realize you have simply "calibrated" an EA, then it is understood this is a temporary check and the EA will need to be "re-calibrated" again in the future.

Perhaps because people have this misconception their EA has been "optimized" then it means back tests that date back to 2008 or 2011 or 2015 or even 2017 have relevance to how the EA will trade tomorrow. That is a totally misguided belief. And your own charts and back tests show it -- yet, most everyone chooses to ignore the obvious. Perhaps it's also due to the fact we are all lazy and really wish for it to be true that our "optimized" EA is perfect -- the alternative being we have to spend time to "re-calibrate".

Perhaps if we instead began using the word "calibrate" then it is better understood the current settings are only temporary and will need to be "re-calibrated" in the future (to take into account changing market conditions).

Does this make sense to anyone?

How to Add a Simple Money Management for Portfolio EA in 2 Easy Steps

Hi guys,

I want to put a money management code in my EA but can't find any of those lines you are referring to. Can you help me?

Hannah's Trade/Portfolio Management Tips

Thanks Steve for your kind words.

Hannah's Trade/Portfolio Management Tips

Wonderful post -- I enjoyed reading it and learning from it.  Thank you, Hannah

Hedging System

Hi Tobias,

I've make some comments with regard to hedging which you may be interested to read

Hannah's Trade/Portfolio Management Tips

Hedging, is there a need for automated trading?

First of all, I would recommend users to read an article from FX Sumo on the misconception of hedging. … use-of-sl/

Here is an extract from the article:

What is hedging (guys, read this – 95% of You are interpreting this the wrong way)? – to hedge a specific position, trader must look for alternative asset (in our case – currency pair) through which to minimize risks of the existing position.

Now we have clear the misconception of hedging, let's examine the disadvantages of the "conventional same pair hedging tactic"

1. Hedging often arise due to mis-calculation or wrong/mis-interpretation of the market.  Wrong prediction

2.  Wrong predictions can arise from a) "conflicting signals/indicators" due to market consolidation such as ranging markets or/and wrong trading theory/concepts, hence the fault lies in the trading theory, in another words, in whatever type of markets, the trader/theory simply repeating his mis-judgement of the market/trading conditions.

3. Wrong predictions means the original position is sustaining some level of floating losses that the traders aren't prepared to close and suffer the loss.  Cos no one really hedge when a position is having a small floating losses.  Most likely hedging occurred after a huge breakout in the wrong direction. 

If a trader is hedging in a ranging market, he shouldn't even be trading at all, since he is unsure of the possible breakout.  Wait till the trend is formed and then trade would be a better choice for those who aren't really good in predicting the breakout direction.

What's the real underlying cause of such a messy situation?

a) 1st of all, wrong trading concept/theory that cause mis-interpretation of the market as explained above,

b) 2nd possible reason is, no "reasonable" SL was applied (or none at all) and hence the floating losses went above comfort zone to close with a loss, i.e. huge floating losses.

c) the decision to act (close original trade) is too late and hence, hedging seem like a temporary solution to "prolong" your need to decide and the trader is stuck in this "paralysis" of decision making process.

d) the lack of ability to decide when to close the original position earlier would also caused the trader the same problem of not knowing when to "un-hedge" the position.  Hence the trader is in a psychological trading "paralysis", not knowing which direction to go.  His emotions and fear of losing ruled his decision instead of making trading decision based on market analysis.

Is Hedging necessary in automated trading?

Firstly, every EA consist of it's own trading conditions/theory.  So it is odd to have an EA that is activated because another EA is failing.

Imagine...enter into trade when a position is suffering a floating loss.  So this EA only has entry rules and what's the exit rule? (no exit rule but manually close the EA?)

Such hedging rule aren't really a trading theory, it is not entering the market due to certain market conditions signaled by indicators.  It is simply "rescue" EA/rule meant for "bad robots".

Even if you really want to hedge, it should be based on sound trading rules (not because an original trading position is at floating loss).

Now this is why in FSB/EAS, there is no need for hedging EA.  Every EA has to enter a trade/position due to certain trading concepts/conditions/theory, based on market analysis instead of emotional trading.

The solution is therefore to create a portfolio of EA that consist of various trading concepts such as ranging vs breakout, intraday vs positional trading etc.

Once you have a healthy pool of EA, these portfolio of EA becomes your "natural" hedging tools because these EA may open opposite directions based on their market cycle, especially during "uncertain" and ranging times and hence, they are effectively hedging automatically for you and the decision to "un-hedge" will be solely based on market conditions instead of driven by fear and psychological trading.

Lastly, I wrote this because I've often been guilty of the above hedging issues and have to learn the painful leasons of not repeating my mistakes.  My EA are now a better trader than me.  They act fast and accurately and not interfered by emotions.  Purely driven by market analysis.  Now the real challenge is to develop a really robust EA based on sound trading rules and your hedging woes will go away.

PS: There are highly experienced traders who know how to use hedging to their great advantage.  I'm not discounting these group of people who truly know how to use hedging tactic, together with their great wealth of trading experience to exploit the markets.  Hedging are more suitable for manual trading, not for automated trading as I've mentioned, every EA entry rules are independent of other EA's performance, i.e no EA enter into a trade because of another "bad robot" poor performance.  Thus in automated trading, hedging is unnecessary because a portfolio of diverse EA would automatically create hedging positions especially in uncertain market conditions.