Does starting balance effect profitability of a trading system?

[Sooner]

I backtested nearly every set of FAPS settings I could get my hands on this past weekend and today something occured to me. Often times during my testing as I moved the starting balance down the system began to fail, even with the same leverage settings as the higher balance.

So that made me think, the measure of a group of settings is not how much profit it can make, but rather how much it can increase the starting balance without a blowout on a percentage scale. With that in mind, when we are back testing with a 10K starting balance, are we in a sense stacking the deck in our favor knowing that we have a large cushion to withstand a drawdown or loss instead of looking for the system that would return the same percentage gains from $1,000 as it would from $10,000 or $100,000? For that matter should your system change based on your starting balance, or should one system with sound rules fit nearly any situation (this assumes you don't put in just enough to buy one lot with no room for movement before a margin call, say a starting balance of $500 or $700 as a minimum).

Additionally, I notice when back testing multiple years that January 14-15 through February 02-03 always seems to be a losing trade, and the middle of the month seems to be when trades either really start going your way or you get into a massive draw down situation that stalls your gains until the end of the month when the trade is closed.

I would appreciate your thoughts on this as I am sure this has occured to someone other than me.

[drewwood5]

of course
starting with 500 could blow your account, and itl take awhile b4 making big bucks
compared to the quickness of a 5000+ acc
i think of the 500 bucks as a pre game warm up, itll take a couple months of safe settings
then you can get ready for the big game

[Earl]

it's not the amount of capital...its the money management...

with autolots is sometimes pick lots that are too big for your account..

if your testing under 1000 you can set you max lots to more than 1 you most not move that untill you get well past 10k

[Sooner]

Ok so with that in mind would it not make sense to do our back testing with smaller amounts and judge them by percentage gain from the starting investment as opposed to total profit? It would seem that any settings that could provide consistent and solid returns from such a small investment would continue to do well regardless of the investment size.

[Big Toe]

Ok so with that in mind would it not make sense to do our back testing with smaller amounts and judge them by percentage gain from the starting investment as opposed to total profit? It would seem that any settings that could provide consistent and solid returns from such a small investment would continue to do well regardless of the investment size.

I agree Sooner. When you are talking about a small starting account it seems prudent to begin with a much more conservative strategy. I've been doing a lot of backtesting with a $1000 starting account. I've come up with a couple of inputs that yield consistent gains (although they are not as sexy as the incredible strategies some others have come up with.) The only strategies I'm comfortable with have stop losses in them. I know some people seem to be against stop loss inputs but thats the only thing that seems to be able to keep a small account from being blown out. Perhaps we really need to have several different inputs that change when a particular balance threshold is met. For example:

$1000 to $5000 use Big Toe's inputs

$5000 to $25000 switch to Sooner's inputs

$25000 to $$$$$$$$ use Earl's inputs

If we all combine our ideas for each of these different strategies then I think we might be on to a viable, consistent investment program.

[Willsell]

it's not the amount of capital...its the money management...

with autolots is sometimes pick lots that are too big for your account..

if your testing under 1000 you can set you max lots to more than 1 you most not move that untill you get well past 10k

I found that the autolot will not go past .01 on amounts less than 1000.00.

[Earl]

yup the lowest is 1 lot...to bad...LOL

but if you are doing a under $1000 back test max lots can more than 1 or it will blow out the account

[Willsell]

it's not the amount of capital...its the money management...

with autolots is sometimes pick lots that are too big for your account..

if your testing under 1000 you can set you max lots to more than 1 you most not move that untill you get well past 10k

I found that the autolot will not go past .01 on amounts less than 1000.00.

[Willsell]

I found that the autolot will not go past .01 on amounts less than 1000.00.

Here is a chart that you testers can use ...hope it helps.

[Sooner]

Willsell that is exactly what I have been looking for and have begun putting together myself... very nice information.

[Craig BC]

Thanks Willsell
I really like your PDF
I'm going to test with your settings myself. (just cause it is fun):D
Also, with LRR set at 1, the account balance needs to go to about $1500 before it rolls over to set it to .02
I tried it on a demo account starting with $10,000 and it set the lot size to .07

[toms_supra]

Here is a chart that you testers can use ...hope it helps.
The settings you've provided look a bit risky/good, but what is the net profit? I'm assuming this is gross profit listed at the $300k+ mark....right?

[Willsell]

The settings you've provided look a bit risky/good, but what is the net profit? I'm assuming this is gross profit listed at the $300k+ mark....right?

Nope the profit is NET

[toms_supra]

Nope the profit is NET

Wow ! That's crazy with the amount of profit it has listed. I've been testing these settings on a $500 demo account the last day and 1/2 on EURUSD M5. The account has already doubled to $1000 with a -135 floating loss right now. I'm hesitant to put these settings on a live account, so I'm going to keep testing for the next couple of weeks and see what happens.....

[Willsell]

Wow ! That's crazy with the amount of profit it has listed. I've been testing these settings on a $500 demo account the last day and 1/2 on EURUSD M5. The account has already doubled to $1000 with a -135 floating loss right now. I'm hesitant to put these settings on a live account, so I'm going to keep testing for the next couple of weeks and see what happens.....

I think what all this testing has shown is that one must be flexible because there are different strategies for different investment amounts.
Keep in mind that these back test reflect activity over a 11 month time span.
The strategies also assume that the investor will not deviate from what FAPS does (hmmmm hard to watch a breakout and watch FAPS not react to it).

[toms_supra]

I think what all this testing has shown is that one must be flexible because there are different strategies for different investment amounts.
Keep in mind that these back test reflect activity over a 11 month time span.
The strategies also assume that the investor will not deviate from what FAPS does (hmmmm hard to watch a breakout and watch FAPS not react to it).

Yeah I know - this is exactly why I want to test it on a demo first because it's hard to keep your hands off if the trend reverses. The negative trade that I posted earlier has since recovered a bit and FAPS has taken out several buy and sell positions so it should even out. I think keeping up with the news and being aware of what's going on is really important so you can at least discipline your trading by turning the thing off if need be.....otherwise it seems to be doing good with these settings - check the pic

[alan]

I backtested nearly every set of FAPS settings I could get my hands on this past weekend and today something occured to me. Often times during my testing as I moved the starting balance down the system began to fail, even with the same leverage settings as the higher balance.

.

It began to fail due to the drawdown! If you lower the starting balance you HAVE to lower the leverage/risk as well! FAPS needs room to play.

Also with a small starting balance you'll have to get GREATER returns to make a reasonable profit yet still maintain a sane risk level.

[toms_supra]

I've been using the most risky settings that were in Willsell's graph posted above. It took a $500 account up to around $2100, but since the market has jumped from roughly 1.26xx to 1.33xx the account has been DESTROYED. It was left with about $130 and has since made a few more trades today and gotten up to $190. I can't believe that....well, I guess now I can. I'm just glad I didn't have real money in that account.

[alan]

Ouch! The scary part is that some people I bet will have that loss on a real account!

You gotta be really careful with FAPS. It's great when "it's in the groove" sort of speak but when it catches one of these big trend reversals you better prey you either have a SL or are there to supervise it.

[Willsell]

Ouch! The scary part is that some people I bet will have that loss on a real account!

You gotta be really careful with FAPS. It's great when "it's in the groove" sort of speak but when it catches one of these big trend reversals you better prey you either have a SL or are there to supervise it.

You are 100% correct on FAPS. It has to be managed as well ...set it and forget it is a no no, no matter what settings are employed....especially since Faps does not use SL which is real scary. My demo account was demolished in an instant because I did not use SL. The lesson that I have learned after days of testing is this:
1. backtest is no guarantee of how FAPS will behave going forward.
2. It defies all reason that one should wait until FAPS closes losing trades
when there are money making opportunities during reversals.
3. Fap should be used as a tool to increase leverage etc. it is not the end all
4. Bottom line ......No robot can out perform the human brain.
5. FAPS and all other EA's play on human nature which is to find the easy way to make a buck....it aint happening.
6. If I am wrong ...then who did not get hurt using FAPS during the past weeks... without manual intervention?
7. How many FAPS users actually had FAPS exccute favorable trades when the trends changed?

HMMMMMMM .....back to manual trading for now...lol

[arto74]

my autopilot seems to enjow my .03 lots with a live account starting $500.

[toms_supra]

my autopilot seems to enjow my .03 lots with a live account starting $500.

What are the rest of the settings that you're using though?? Also, with the settings you've got, how did FAPS do since the market has made such a major jump?

[jip]

HI,

A result of a little 100usd IN ONE WEEK with a 100.000 USD demo account seems poor now?
This with FAPT 23 and default settings with proper GMT off set.
LRR:3 on EUR/GBP, LRR :2 on 3 other pairs all with scalper !

thanks for comments !

jip

[jayski8]

Hi everyone... I never traded forex.. I trying to gain general knowledge about the fx market before I order the Fap turbo. My my concern is, It seems like the different between making money and losing money with this software is in the setting. Fap turdo has 3 live accounts starting from 370usd all the way up the 5k. Does this software tell you the proper settings according to your investment size?

[toms_supra]

Hi everyone... I never traded forex.. I trying to gain general knowledge about the fx market before I order the Fap turbo. My my concern is, It seems like the different between making money and losing money with this software is in the setting. Fap turdo has 3 live accounts starting from 370usd all the way up the 5k. Does this software tell you the proper settings according to your investment size?

Well the turdo...lol... will use the proper lot size if that setting is at "0", but I think that if your settings aren't right you will blow your account regardless of investment size. However, if you start with a higher investment you get a better chance of the account staying alive even through the drawdown (which is inevitable).
I'm trying to find good settings that will stay alive with a minimal starting balance e.g. $350, maybe less...