Around June 2011, my Oanda demo using Crescendo v1.3 closed
out a basket of trades in major loss when the account reached 50%.
There were 9 trades really 11 trades that lost -$5,094.90 due to a
700 pip run to the downside.
You can see the trades and stats here:
I have learned a few things from this experience.
1) I was trading too large of a lot size of 1 mini for a $10,000
balance on a 50:1 account leverage account.
2) However if I did want to use 1 mini lot for a $10,000 balance
I should have increased the Max DD % to 70% instead of 50%.
3) And most importantly, the fact that we may experience technology
error, broker error or possibly broker abuse. In fact, this point #3
really can affect points #1 and #2 and are really out of our control.
I was looking at my demos using the different versions of Crescendo
and looking at Max DD’s and ROI’s etc. and thought of emailing you
my analysis. However as I was writing this to you I noticed what
really happened to this Oanda account.
Yes the account lost 50% due to the Max DD setting set to 50%
however there is something more grave than that. I see technology
error or perhaps broker error. I can’t really pinpoint it right now.
I suppose I could go to the log files and try to figure it out but the
main point is that we as traders have to prepare for these two
very important aspects of automated trading.
When I started to look at the trades I noticed that there were more
losses than what was showing on the chart. I thought there were
9 loss trades because that’s all I saw on the chart by looking at
the arrows and lines painted on the chart. However I went to
the MT4i statement and noticed that were 11 loss trades than
and what is more strange is that the lot size on one of trades is
2 minis instead of 1 mini. And on some of the trades they were
duplicated or doubled. In other words, two trades entered
essentially at the same time.
Here are the calculations on what happened:
$323 margin requirement for 1 mini of GBPUSD
9 positions margin requirement = $2,916
but really 11 positions were open due to the
double trading = $3,553 for margin
50% of the $5,000 account – $3,553 only left
$1,447 breathing room for the price to move
and come back and therefore was not enough.
The errors are in bold below:
-707.80 pips or -$1,415.60
-707.80 pips or -$707.80
-628.70 pips or -$628.70
-565.50 pips or -$565.50
-488.50 pips or -$488.50
-392.90 pips or -$392.90
-285.70 pips or -$285.70
-208.60 pips or -$208.60
-208.60 pips or -$208.60 (Double trade)
-139.30 pips or -$139.30
-53.70 pips or -$53.70
Total of -4387.1 pips or -$5,094.90
If you look below, why is there such a big difference
in transaction numbers between 502 and 523? Why
did it open it at 2 minis and then open it at 1 mini?
And then on down you will see the double trading
again with transaction # 7464012 and 7464013
Notice how the transaction numbers were back
|5976502||5/30/2011 23:00||Buy||0.2||GBPUSD||1.6546||7/12/2011 2:48||1.58382||-1 415.60||-707.8|
|5976523||5/30/2011 23:00||Buy||0.1||GBPUSD||1.6546||7/12/2011 2:48||1.58382||-707.8||-707.8|
|6052042||5/31/2011 23:00||Buy||0.1||GBPUSD||1.64669||7/12/2011 2:48||1.58382||-628.7||-628.7|
|6083262||6/1/2011 11:03||Buy||0.1||GBPUSD||1.64037||7/12/2011 2:48||1.58382||-565.5||-565.5|
|6129170||6/1/2011 23:01||Buy||0.1||GBPUSD||1.63267||7/12/2011 2:48||1.58382||-488.5||-488.5|
|6636923||6/10/2011 11:00||Buy||0.1||GBPUSD||1.62311||7/12/2011 2:48||1.58382||-392.9||-392.9|
|7018971||6/16/2011 11:00||Buy||0.1||GBPUSD||1.61239||7/12/2011 2:48||1.58382||-285.7||-285.7|
|7464013||6/22/2011 23:00||Buy||0.1||GBPUSD||1.60468||7/12/2011 2:48||1.58382||-208.6||-208.6|
|7464012||6/22/2011 23:00||Buy||0.1||GBPUSD||1.60468||7/12/2011 2:48||1.58382||-208.6||-208.6|
|7496312||6/23/2011 11:00||Buy||0.1||GBPUSD||1.59775||7/12/2011 2:48||1.58382||-139.3||-139.3|
|8687210||7/11/2011 11:00||Buy||0.1||GBPUSD||1.58916||7/12/2011 2:48||1.58379||-53.7||-53.7|
If you notice from the screen shot below that all I needed was
to use a tiny bit more of the available equity to allow the price
to come back up to the 50% fibonacci retracement level in order
to eventually close the basket. But because I had the Max DD
set to 50% it didn’t allow it.
You will see that in the screen shot below that price moved
700 pips against the very first open Buy positions. However
notice that the basket most likely would have closed at the
50% fibonacci level or at 1.6171.
Just curious, what’s your opinion on this experience?
And what would you do to help or prevent this from
happening to you?
Thanks for collaborating with me on this.