Trading with MACDX in safe way Options

[Admin]

I was successfully trading with MACD about month but then have a couple of big losses about 100 points each that wiped out half of my profit. I'm scared and don't know what to do next.

The first thing you have to realize whether those losses are usual for the system or not. MACD-X, especially the latest releases, have many safety settings and you may trust the statistics obtained from Strategy Tester. Do the next:

1. Download and install the latest MACDX available from updates area
2. Run optimization for last 3 months and see if it is possible to find settings that deliver stable profit.
3. Select the best, test that and note profit factor, drawdown and maximum loss
4. If you can find such settings for selected instrument, adjust your lot size to feel comfortable in case of worst scenario. What does that mean? If tester shows maximum drawdown of -260 pip, lot size must so big, so you don't panic if current loss is near that number.
5. If tester shows -100 pips loss might happen, you must accept that with patience on real market -- it's inevitable. The only thing you must to do in advance -- do not overtrade, i.e. the biggest loss should not destroy your deposit. Losing $100 on $1K account is nothing but catastrophic for $200 deposit. Let your lot size will be $0.2/pip in that case ($20 max loss).

You may duplicate the results on screen shot by using the attached set file and running tester on Alpari (US) data (January 4 - April 8, 2010) with GBP/USD. Profit is quite decent -- ~ +800 pip/month.

You may use those values to estimate profit factor:
======================================
< 1 - bad
1..3 - mediocre
3..5 - good
5-10 - very good
>10 - excellent

P.S.
If you cannot find settings for good performance, probably it's time to change instrument (currencies pair) or even broker. There are still some that doesn't fit for automatic trading. Among those are AVAFX.

Attached File(s)

 fxb_macdx_alp_gbpusd_2010_0104_0408.zip ( 815bytes ) Number of downloads: 4