+6593 Pips In 3 Weeks… And Counting! 27


Salve a tutti,

I already started talking about a fully automatic strategy I’ve been working lately. I worked hard on it and I can say that it is finished.

Its name is “ReticoloFX“. “Reticolo” in Italian means “grid”.

It is running on 8 demo accounts since April 23rd and today I want to show you for the first time the results.

A sneak preview of the whole set of EAs:

As you can see ReticoloFX has pocketed a grand total of +6592.7 pips since inception.

Some of the account have even less than 3 weeks. Some are 2 or even only one week old.

The strategy is based on grid trading so it is totally mathematical and automatic.

Differently from the usual grid EAs, ReticoloFX uses a pyramiding strategy, so it adds positions while riding a winning trend. The strategy runs simultaneously on a specific set of currency pairs. If the set is composed of N pairs, than the strategy requires N EAs running on N charts. Each strategy runs independently from the other. Every strategy keeps busy monitoring exclusively the total profit of all its currency pairs. When it reaches a predefined target profit, all the EAs on all the charts of the set, close their trades at the same time. Ready to restart trading again.

The grid step is not fixed but based on volatility. So in periods with a higher volatility, steps are wider. Vice versa, in periods with lower volatility steps are smaller. Also the grid adapts to the average daily range of each pair. We know that there are pairs that on average move more than others. All is made to optimize profits and make the EA automatically adapt to the pair characteristics and to the period volatility.

Forward testing suggests that this approach works great :)

Another very important thing are the set of pairs.

We have 8 distinct trading systems, each of them implementing the same basic strategy described above, but applied to a different set of pairs.

The set of pairs is chosen according to a “basket” or “ring” logic.

Baskets are composed of all the major pairs related to a specific currency. We have two baskets running at the moment: USD and JPY. As an example the USD basket is composed of AUDUSD, USDCAD, USDCHF, EURUSD, GBPUSD, USDJPY and NZDUSD. So 7 pairs for each basket. Each ReticoloFX basket requires 7 EAs running simultaneously on a MT4 platform.

Rings instead are composed of all the pairs coming from the combination of 3 currencies. We have 6 rings now running but we are trying to “find” other ones that are profitable. As an example the CHF/EUR/USD ring is made of EURUSD, EURCHF and USDCHF. So 3 pairs only for each ring. Each ReticoloFX ring requires 3 EAs running simultaneously on a MT4 platform.

Here are the equities of each of the 8 trading systems running:

We need to test ReticoloFX a little more, but we’d like to release it before the end of May. So maximum a couple of weeks from now.

So be patient 😀 We’ll keep you updated!

Andrea


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27 thoughts on “+6593 Pips In 3 Weeks… And Counting!

  • Paul

    Hi Andrea & Team,

    Wow you guys come up with some fantastic ideas 😎

    I actually think this might be my first foray into automated Forex!

    Can’t wait – Up till now I have just bought the indicators but this looks fantastic!

    Paul

    • Andrea Post author

      Well the strategies are quite different.

      Crescendo adds positions when the open actually open position is in loss. ReticoloFX does the opposite. It adds to winnig positions.

      ReticoloFX trades multiple pairs at the same time, closing when the total value of ALL the positions opened across all of them reach the target price. Crescendo can trade multiple pair but each one independently even on the profit calculation.

      ReticoloFX does hedge.

  • Dan

    Great work. I have been looking for something exactly like this. It seems like a very intelligent beast. If you have the time I have some questions as I’m keen to get my head around it:

    Is it similar to Duetto DLS with the addition of group basket TPs using multiple pairs?

    What is the exit strategy if the trend reverses against you during mid-basket cycle? ie, does it only open trades in the direction of the trend or does it hedge both ways?

    What is the advantage of using a variable grid step over a fixed one? I would have thought in a period of higher volatility you would want more trades to take advantage of the trend.

    How many hours or days do you see the average basket cycles running for? I noticed that the average basket trade length on your screenshots is 1 day while the ring lengths are 2 – 3 days.

    Would you run short and long basket cycles on the same group of pairs? For example a USD basket short cycle combined TP of 100 pips and long cycle combined TP of 500 pips.

    Do you see it being more successful during trending periods or quite stable across all market conditions?

    • Andrea Post author

      DuettoFx and ReticoloFx have nothing in common :)

      If trend reverses, ReticoloFx opens trades in the opposite direction (hedging).

      Difficult to say the average trade length. So far we have an average between a little less than 1 day to 2 days. It depends on the volatility. The more volatility the more trades are closed. The strategy should work quite very well in trending markets. The only situations when it can get stucked is in markets with continuous changes of direction.

      As I told you it does hedge so can have both long and shorts. But you can run with different target profits. Or starting them in different times.

      I’ll write more about the strategy in the next days giving more details.

  • Laurence

    Andrea,

    Since ReticoloFx appears to work across multiple pairs symultaneously, aproximately, how much or what would be the minimum starting balance it would need to work with?
    This apporach is most interesting…
    Laurence

    • Andrea Post author

      We are running them on separate 10k accounts with 0.1 lot size per order. The maximum floating DD we had so far is 16% on one of the baskets. The baskets do more money on average but also have larger floating DDs. Rings are well below 10%.
      So on a 1k account using 0.01 lots we can expect the same floating DDs level.

      The problem came when you run more ReticoloFx on the same platform. That can lead to a more balanced equity but also you’ll have to sum floating DDs. So I’d say between $500-$1000 for each ReticoloFx running, trading with 0.01 lots.

  • Leyenda

    Hi Andrea,

    This concept sounds very promising. Much better than traditional grid trading. I’ll analyse it further once we get more details, but I know from grid trading that it requires a lot of room for margin, because you can get a loosing trade that carries on for a long time when direction changes just before the profit target is hit. However, if profit targets are set for the entire basket, that might not happen that often. What’s your take on this, and can you tell anything yet about the drawdown for this strategy. And (it never hurts to try): is there a beta version I can get my hands on? :-) Cheers on this new achievement, Kim

    • Leyenda

      Hmmm… it seems refreshing before posting should do the trick. I asked the DD question, and after posting it, your answer showed up on the previous post :) So, if I understand correctly:

      – 10k account, Lot size 0.1, ring type, max. DD 10% per ring
      – 10k account, Lot size 0.1, basket type, max. DD 15-20% per basket

      • Andrea Post author

        This is based on our experience so far… so can’t say “max”.

        But I’m thinking about adding a safety “total” stop loss so you can decide how much to risk. Usually I don’t like that but I understand that someone may want to know the maximum risk they are taking even if hedging is a safety bag itself.

        But only once you get the full details of the strategy you can understand that perfectly :)

  • Morse Mehrban

    Forward testing for a couple of weeks is hardly worth touting. I suggest you publish backtest results going back at least five years. If you don’t, we’ll know why. You can’t use the “MT4 can’t backtest” argument for this one.

    • Andrea Post author

      Unfortunately it’s not possible to backtest on MT4. As the close is made when the total profit of all the orders on all the pairs reaches the target profit. And that can’t be tested with MT4.

      But there are a couple of things about backtest: first is that they can be easily “forged”. Second is that they mean almost nothing as what happened in the past has nothing to do with what’s happening in the future.

      So what I trust more is the “understanding” of the Forex market and how it works. Understnading the principles behind it is what makes a strategy work most of the times.

      If you traded Forex in the last years you know how much the Forex market has changed. How many trading strategies and/or EAs you know that are still working years after years. Even those with many years of backtests fail.

      I’m sure that in one year from now you’ll be using DuettoFx or PotenzaFx with the same results you have now as they are based on how Forex works… Correlation, strength/weakness relations, etc. They let you read the market changes and easily adapt to them.

      ReticoloFx is an almost purely mathematical approach. I’m sure, we’ll be trading with it in years from now.

      But I don’t ask you to “believe” that 😀

  • Todd

    Andrea
    Refreshing, All though I am wondering can you hedge by just say go from AUDUSD long then go AUDJPY short for hedge so US citezens can take part?
    Pip On
    Todd

    • Andrea Post author

      Unfortunately it’s not possible for now.

      What I should do is “synthesize” the total positions into just one for each pair. I’m doing something like that for Crescendo Ultimate but it’s not ready yet. Maybe in the coming months I’ll be ale to release a “non-hedging” version. But probably not for the first release.

      But from what I know there are US brokers allowing hedging. They do the synthesize in their backend.

  • Todd

    Andrea
    If it is almost all mathmatical this might work out for me as for the hedging. The brocker I have in mind is ok, I just have issues with getting signals to match up with indicators v.s other brokers. So mathmatical solution might be just fine.
    Could you please explain synthesize? I would realy like to understand how this works please.
    Pip On
    Todd

    • Andrea Post author

      Maybe I used the wrong word :) I’m using the iPad and it keeps “correcting” me 😀

      But I mean summing up all the hedged positions to have just one.

      So for example if I got 0.2 lot long and 0.3 short, it means that in total I’m short 0.1 lots. This process can be made to avoid using hedging and reducing everything to a single positions made out of the sum of long and short trades. This should be made “internally” by the EA so that only the “final” lot size is sent to the broker and adjusted as new virtual long/short positions are “opened”.

      I hope I’ve beel clear enough 😀

    • Andrea Post author

      Hi Edwin,
      it uses hedging so it depends on the US broker you use. Some allow hedging and some not.
      Ask to your broker. We’ll try to have a list of brokers allowing hedging in the next few days.

  • Todd

    Andrea
    This discussion has got me wondering about a manuel trading stratigy using two tightly corelated pairs. Have you ever tried playing that way against two pairs so to always close in proffit a basket? Interesting. You got me thinking again. You are good at that!
    Pip On
    Todd

    • Andrea Post author

      Yes it’s a known technique that you can use to avoid hedging in the same currency. You take two directly or inversely correlate pairs and use their correlation relationship to hedge positions. I think I wrote something on that… don’t remember sincerely. If not I’ll surely do 😀 Let me do a research.

  • Tim

    Hi Guys, I know you plan to set up a forum eventually so that we can discuss and share ideas – but in the interim, how about setting up something like a Skype group so that we can all discuss strategies and ideas amongst each other?
    You are developing so many wonderful EA’s, indicators and strategies with so much potential. It would really benefit us (and you also) if we had a forum where we could easily discuss these strategies and share ideas.

    Thanks,
    Tim

    • Andrea Post author

      You’re right Tim.
      We first want to setup a “members” area so that we know that people writing in the forum, really own and use the indicators and EAs.