Comment: The comment the trades will have. Magic: The Magic Number the trades will have.
This EA follows a unique architecture, that is not very common. Usually risk management and lot sizing is done with a simple approach: Use X amount of lots, or use X amount for each 1000$ on your balance. The Risk Management Architecture of Traders Meta is different, for the sake of diversification and simple understanding. This approach allows traders to allocate capital to strategies instead. But it is of utmost importance to understand how it works.
Traders can set the percentage of the balance used for a given strategy. This input can be any number from 0% to 100%. The strategy will then calculate a simulated balance for itself. For example if you have a 10k account and your input is 50%, The strategy will “see” 5000$ allocated to it. The profits and losses of the trades the strategy took will be then added to this simulated balance. If the strategy is successful and manages to triple the initial 5k to 15k and now you have 20k in your account, the strategy will have a simulated balance of 15k and will “posess” 75% of your balance instead of 50%. If the strategy fails and loses 2.5k and now you have a balance of 7.5k, your strategy will “posess” only 25% of your balance.
Why is this method better?
It gives access to more capital for successful strategies and takes capital away from failing strategies. The other key aspect is that it leaves room for diversification. It compliments other trading strategies, by letting the trader decide, how much capital each strategy can trade with.
Another key concept is the management of Drawdown.
Two important drawdown limits can be set using this strategy: The overall maximum drawdown and the daily drawdown limit.
If the overall drawdown is reached, the strategy won’t open any new trades. If the daily drawdown is reached, the strategy won’t open any new trades on the given day.
Both the maximum drawdown limit and daily drawdown limit should be interpreted as the allowed drawdown of the simulated balance.
For example if the strategy made it to 15k and the drawdown limit is set to 10% the strategy will stop at 1.5k drawdown. This will be a 7.5% drawdown of the 20k portfolio, assuming there is 5k the strategy does not use.
The risk percentage of each trade will also take the simulated account balance into account, to calculate the exact desired risk.
Besides having a low cost broker, many other key factors should be addressed.
The first important one is the Instrument the strategy runs on. This is a trend following breakout strategy, so the best assets are the ones that have strong trends. This strategy is not very likely to have good results on mean reverting forex pairs like NZDAUD or AUDCAD or EURGBP. The best option is to optimize for assets like Bitcoin, Gold and Nasdaq.
Another key factor is timeframe. The bigger the timeframe the more important the support and resistance levels and the less the trading costs matter. For this reason I’d recommend using a timeframe of at least 1 Hour.
The backtest results can show extreme profits under some conditions, but it’s important to note that backtest results are not accurate and even if they were, past results are not indications of future performance.
For a starting point I’d recommend using the setfiles, on the given assets.
