hi and welcome back to trading strategy testing channel where we backtest your
trading strategies and share with you tips on how to become a successful trader
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few weeks back we received a strategy submission from anthony who is one of our channel subscribers
anthony wanted us to review a premium expert advisor that he bought for 500
we were extremely curious to see how this ea works and whether it's profitable or not the
guru was running the expert advisor on a live account using real money but the account has
suddenly disappeared so in this video we will backtest this premium expert advisor and compare
the results with a free one that runs according to a simple moving average crossover strategy
well this is the summary of today's video we will start off by describing the free as well
as the 500 forex strategy then begin back testing the two expert advisors
we will use the same conditions such as the volume and lot size
currency pair and time frame once done we will reveal the results and share with you
our feedback and some tips on how to use expert advisors to trade your financial investment
the first strategy we will be using today is based on a free expert advisor
that you can download from the official meta trader market for free
it is based on the crossover of 5 10 and 51 period exponential moving averages we will use the 15
minute time frame and aim for 20 pips profit and risk 10 pips every time the slip page value is 3
and we are going to stick to the default settings recommended by the developer of the expert advisor
the premium expert advisor that our subscriber has sent us is sold at 500 according to the developer
of the ca it would help you make up to 70 profit per month which is an astronomical return on
investment it is also leveraging an advanced real-time algorithm a time filter and multiple
features that we are unable to verify the seller does not provide the source code used to develop
the ea so we can't see what metrics it uses the best way to verify the claims is backtesting
before we go any further we would like to thank Anthony for the strategy he shared with us
and let you know that you also can submit your trading ideas at
3wtstlife.com we always look at your suggestions before creating content
all right let's begin backtesting we should first import the expert advisor
while maintaining its default settings then we will select the right backtesting settings
including the forex pair time frame and date range make sure to use an ECN forex broker
we are using our recommended tier 1 broker to make sure that the spreads are not high
in case you need one make sure to check out the link in the video description
other than that remember to select every tick backtesting option in order to get an accurate
and reliable report and the visual mode to be able to see how the trades are executed on the chart
as the backtesting process is running you can monitor the equity of your balance by visiting
the graph tab let us know in the comments section if you have any questions regarding the process
I personally like to run the visual backtesting process at a normal speed to be able to take
notes or record any interesting events you can also add other indicators to
the chart if you are planning to use another trading indicator to the strategy afterward
in order to filter out the losing trades well let's keep it simple this time
great we have just finished backtesting the free indicator let's go through the
report together we can see that the equity has significantly increased
but this is not enough to judge whether the strategy is good or not
the modeling quality is ninety percent which means that our test is accurate
we have made three hundred fifteen dollars using the free expert advisor and the maximal drawdown
is not bad actually, on the other hand, we had seven consecutive losing trades it's always good
to have a large number of consecutive losing trades as you can easily review the chart and
define the reason behind it you can then develop a filter approach to optimize the strategy later on
all right let's now backtest the five hundred dollars, expert advisor, across the same period
of time again we will use the recommended settings that the developer has shared on his website
this expert advisor works in forex indices and even the stock market but we will test it on the
EUR/USD 4H chart to make the comparison easier for us we have just launched the backtesting process
let's see if a 500 expert advisor is worth it or not before you purchase or use any expert
advisor for the first time make sure to ask the developer to share with you the optimum settings
a properly developed expert advisor needs to go through long phases of backtesting we
need to know the suitable currency pair time frame recommended balance and even lot size
otherwise our financial investment will definitely be blown up and it's just a matter of time
let us know in the comments section whether you prefer trading with or without expert advisors
other than that some expert advisors should be installed on a VPS hosting so you won't miss
any entry or exit. I once had a student who installed the expert advisor on an unreliable
virtual machine he blew up his account as the VPS service provider had some technical issues
let me know in the comments section if you want us to make a series
where we talk about some of the technical issues that we witnessed throughout our
experience as full-time traders and how we managed to overcome some of them by the way
we keep on receiving offers from VPS companies which want us to review their services and offer
some coupons to our subscribers let us know if you are interested in product review tutorials
we have just finished back testing the five hundred dollars expert advisor
feel free to give the video a thumbs up if you enjoy this type of content
and don't hesitate to share the video around let's look at the results now the first element i like
to check is the equity and balance graph well we can notice a significant drawdown from the
second half of 2020 onwards we need to look at the detailed report for more information
the first thing that captures our attention is the high drawdown of 56 percent
we are running this backtest with one thousand dollars and trading a volume of one micro lot
if we used a higher volume size we won't be able to remain in the market for more than four months
we only had one consecutive losing trade which is good actually and made two hundred fifty three
dollars using this strategy which is not that bad however the strategy is extremely risky in my
opinion we can also notice that the gross loss is almost as much as the gross profit well if we add
in the price of the expert advisor which is five hundred dollars to the equation we will be on the
losing side already let us know in the comments section what you think about this strategy
all right this table compares the key indicators for both strategies
tell us in the comments section which strategy you think is better next time we will try to optimize
the strategy together it will probably be the first time where we share our personal approach
when it comes to improving and optimizing trading strategies see you soon and happy trading
you