Reply To: Description of Midnight EA

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#4752
Dominik
Administrator

@nuganics wrote:

Hi Dominic,
I get so confused with time zones :) Love that you have tested 2012-2016. Just wondering do you have any thoughts why the gains are so large in 2016-17 compared to earlier years? Where can I read more generally about what is happing at midnight?
Kind regards
Tim

Hi.

Why are you so confused with time zones? :) Gains aren’t larger in 2016-17. It only looks that gains are bigger on graphs made on backtests with auto-lot, because at the end of backtests balance is bigger than initial, so size of lot is bigger too and profits grow almost parabolically. If you look at these 16 charts of each pair (which are created with fixed lots) you will see that the profits grow linearly, not parabolically. In this way (backtests with fixed-lot) you can find out how big will be your gains or losses weekly/monthly/annualy/etc, because that is what matters in real trading.

To check maximum Drawdown which may occur on your account with specified strategy, the best way is to create a backtest with automatic lot, because even if your account will be bigger proportions will be preserved (lot/balance) and Drawdown in % will be real. You know that if you could have 1,000,000$ balance you wouldn’t trade with 0.01 lot, right? 😆 Imagine the situation that you invest 20,000$, you trade with 1 lot and you make 10% gains per month (2,000$) and you pay out all your profits, so you have always only 20,000$ on your account and ratio lot/balance is always constant. This is the whole logic in making backtests with auto-lot.

Regards!