limit DD protection

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Francisco 123321
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backtest


Backtest CP v. 2.25 ,default settings,  Lot size (fixed/per 1000=0.02), on 5M chart of all 2020 wiht IC Markets  Leverage 1:500,  4.000.-€ initial deposit. It took a few days to complete. Very good results but note 4 big decreasing DD in the chart . First one of 81,39%. The proposal is to implement a kind of security protection of maximum DD with an option to auto hedge 5 martingale current opened positions when Equity < 50%-60%.  EA would check a trend filter like  MA50 or smoothed Heiken Ashi filter of bigger TF (1H - 4 H) and when price bar crossover the trend filter close the hedged and restart nomal functionality. It is obvious that when big DD occours its becouse there is a long trend in place as seen in the chart below and somehow it could be put undercontrol using trend filter of bigger TF. It would be worhwhile despite of having worse overall results and even if it makes small losses  sometimes, as a kind of account protetion insurance. 


Image 672

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drago babnik
Quote from Sai Pratap

Guess this should be moved to new risk management idea. :)

I liked this idea, though at the cost of compromising on profits.We shud take reverse positions once certain % DD has crossed. Thanks.

Hi Sai, 

I would really appreciate if you could refine this idea a bit and move it to new risk management ideas.

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Sai Pratap
Quote from drago babnik

How to manage a big DD? 

When DD rises to 30% there is a high probability that something is going wrong. I manually manage such a situation as follows: I hedge with a single deal that the number of lots is equal (sell = buy). I wait at least 1-2 weeks or until the monthly maximum or minimum price (the most important thing is patience). Closing all sell or all buy positions is allowed only with a large profit or. when all indicators indicate that there will be a change of direction. I close all deals that show a profit (I still have 60-70% DD available here) and wait for the next 1-2 weeks or when the loss of open deals is very small. In this way, I can achieve even better profits on a monthly basis than in normal months. The question is how to build this into EA. I think it's possible!

Guess this should be moved to new risk management idea. :)

I liked this idea, though at the cost of compromising on profits.We shud take reverse positions once certain % DD has crossed. Thanks.

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drago babnik

How to manage a big DD? 

When DD rises to 30% there is a high probability that something is going wrong. I manually manage such a situation as follows: I hedge with a single deal that the number of lots is equal (sell = buy). I wait at least 1-2 weeks or until the monthly maximum or minimum price (the most important thing is patience). Closing all sell or all buy positions is allowed only with a large profit or. when all indicators indicate that there will be a change of direction. I close all deals that show a profit (I still have 60-70% DD available here) and wait for the next 1-2 weeks or when the loss of open deals is very small. In this way, I can achieve even better profits on a monthly basis than in normal months. The question is how to build this into EA. I think it's possible!

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Francisco 123321

Yes, you are right. We should not open new deals while in "Lock DD" mode. 


Let's see if we succeed in protecting the account under any market conditions with the less possible impact to the overall results of CP v2.25 default settings which are great.

Thank you. 

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Andrey Khatimlianskyi
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Quote from Francisco 123321

Yes, I like this idea. Thank you. 


I was thinking that  “Lock DrawDown” mode should not take in consideration, at first, Smoothed Heiken Ashi Indicator to trade its own rules. Unless you had already planned for it.

I meant that CP EA v.2.25 places its deals as per its own rules independently to Smoothed Heiken Ashi.


“Lock DrawDown” would only manage the 5 existing opened positions with big DD by blocking temporarily the increasing overall lose with a hedge until Smoothed Heiken Ashi of higher TF reverse the trend of higher TF (4H). 


Even while the hedge is on the EA should place new deals as per its own default settings. After one bar 4H or X TF closed up Smoothed Heiken Ashi indicator and reversed the trend, EA  would close the hedge and continue its own recovery martingale rules.

You'll be able to apply HA to the new openings or not.

As well as apply it to "Lock DD" algorithm.

But I don't agree with you about continuing of open new deals as usual in the "lock" mode. EA shouldn't open new martin deals if it is in lock. It will open the next martin deal as soon as lock is closed.

Let's implement it!

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Francisco 123321

Yes, I like this idea. Thank you. 


I was thinking that  “Lock DrawDown” mode should not take in consideration, at first, Smoothed Heiken Ashi Indicator to trade its own rules. Unless you had already planned for it.

I meant that CP EA v.2.25 places its deals as per its own rules independently to Smoothed Heiken Ashi.


“Lock DrawDown” would only manage the 5 existing opened positions with big DD by blocking temporarily the increasing overall lose with a hedge until Smoothed Heiken Ashi of higher TF reverse the trend of higher TF (4H). 


Even while the hedge is on the EA should place new deals as per its own default settings. After one bar 4H or X TF closed up Smoothed Heiken Ashi indicator and reversed the trend, EA  would close the hedge and continue its own recovery martingale rules.

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Andrey Khatimlianskyi

But on your screen only 1st buy was opened on growing Heiken Ashi. All other trades were opened on the down-trend ;)

I'm trying to think global and to make universal parameters.

So, I'm going to add HA filter (you'll be able to use it for open/close/open martin/partial close, as all other filters) first.


Then we can add "Lock DrawDown" mode which activates on some DD % (or just on move from last order) and assign it's deactivation to HA filter (or to any other filter available in the EA).

Do you like this idea?

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Francisco 123321

No, we should not open any BUYs on descending Smothed Heiken Ashi.  I do not mean to add any new signal to CP EA v.2.25. Only that if we found this situation of 5 opened positions with an extrem DD, the EA should scan and check the price position in relation with Smothed Heiken Ashi (bigger TF) and use it as a guide to end the hedge when we have the reversal to prevent margin call.  Its more confortable to see the descending way with a hedge!. Maybe it makes more sense for a very extrem situation and a time filter as well. For example DD -70% (could be selected %) during more than X time,  just to not interfere too much with its normal functionality of the EA which is allready very good.  The fuction  is based  in the observation that in a long and big DD there is always behind a clear trend well identified by Smotheed Heiken Ashi indicator. 

In my chart above, 1,2, 3, 4,5 represent the 5 martingale opened positions. 

I think that all EA users are interested in safety so if its ok with the comunity it would be nice to give a bit more peace of mind to who would like to use this account protection option. Thank you.

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Andrey Khatimlianskyi

Why should we open any BUYs on descending Smothed Heiken Ashi then? )

Your idea is clear: lock the loss at some point and unlock it by signal.

Let's start with implementing Smothed Heiken Ashi filter (we have such topic, I guess) and then add this "DD locking algorithm".

What do you think?

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Francisco 123321

No, we would close the hedge when we have a bit of evidence that the trend has concluded. Look at the first chart of Tradingview, the third arrow. When the bar of 4H TF crosses and close up the smothed Heiken Ashi indicator the hedge would be closed giving profits to the balance to support  DD. Smothed Heiken Ashi indicator is quite good to detect trend changes. So its combined two TF: operations on 5M and trend filter on 4H