How to increase MT4 modeling quality

I really do not understand why forex data is not accurate when back testing.

There is a trick to increase modeling quality. Even if forward test is the best way to test an EA.

Download pdf file and follow the steps.

CLICK HERE

What leverage is really all about

Leverage the control of a position larger than your own funds would directly allow. It’s available in one form or another in basically every market and is accomplished either through borrowing and/or the use of derivatives.

You will see things like 50:1 leverage or 100:1 leverage. A 100:1 leverage ratio means that for every $100 in position value you would be required to put up $1 in deposited funds.

Now margin is closely tied to leverage. Margin is the deposit money used to secure a leveraged position. It is normally expressed in percentages. For example the margin on a position when employing 100:1 leverage would be 1%. At 50:1 leverage it would be 2%. An so on.

There is the additional topic of gearing or effective leverage or real leverage. Those are just different ways of talking about the actual leverage one employs when holding a position. For example, you may be able to trade at 100:1 leverage but if you have a $10,000 account and are trading a $100,000 position you are actually only using 10:1 leverage - meaning your are only controlling a trade 10 times the size of your account.

I think most people get that part of it all.

Here’s where the confusion comes in. I have seen a number of traders say that leverage equals risk. This simply isn’t true. What is boils down to is this. Allowable leverage tells you one thing - how big you can trade, either in terms of position size or number of positions. That’s it. No more. No less.

Risk comes down to one thing, and one thing only - the size of your position. The larger the position, the greater the risk. It’s that simple, really. High degrees of available leverage certainly allow for larger positions, but they do no require them.

The thing that I think causes the most confusion is thinking in terms of margin and not account size. If you trade at 100:1 leverage you would have to put up 1% margin. That means a 1% move in the market against you would wipe out your margin deposit. If you were trading on 50:1 leverage the same 1% move against your trade would only take out half your margin. That seems like less risk.

Here’s why it isn’t.

Assume a $10,000 account and a $100,000 trade size. For a 100:1 leverage account the margin requirement would be $1000, while at 50:1 it would be $2000. If the market moves against the position by 1%, that would mean a $1000 loss to the account, or a 10% decline in account value. It doesn’t matter whet here the trade was done in a 100:1 or 50:1 leverage account. A 1% move on a $100,000 position will always represent a 10% change in account value for a $10,000 account.

The only time differences in leverage mean differences in risk is when you are talking about different position sizes, basically meaning using all available funds for margin. The 100:1 leverage $10,000 account could trake $1 million, while the 50:1 could only go as high as $500,000. Clearly, when the accounts are maxed out like that a 1% move in position value is different. The 100:1 account would be wiped out, while the 50:1 account would only lose have its value.

Stolen from HERE

Trailing Stop EA

Metatrader does not allow trailing stop smaller than 15 pips.

When you are scalping this is not enough to manage your position.

HERE you can download an Expert Advisor to make TRAILING STOP easly.

Scalping Trailing Stop

Is Trailing Stop really useful to manage Scalping opened positions?

If the move is often smaller than 20 pips the answer is NO.

See the picture above. It represents a test with two trailing stop types: normal trailing and step trailing.

With a normal trailing we start changing the stop loss as soon as the price moves on the expected direction. This reduces the "space" the price has to move down.

With step trailing we change the stop loss value when the step value is reached.

In this example the initial SL is 10, the step is 5 and spread is 3 (initial loss).

The result is:

With normal TS we need move 10 pips to reach BE in case of direction changes.

With step TS we need move 19 pips tu assure break even.

PS: Assure BE means to have a SL value at initial price +spread.

If we have small amplitude movements Trailing Stop may reduce gains instead of help us to get more pips.

EURGBP trades

A new blog to follow some EURGBP trades with a very simple strategy.

http://eurgbp.blogspot.com