Currency going beyond historical Limit - Official RoboMiner, RoboMiner Pro and PipStrider sales and support

edja00 · 01-29-2010, 05:36 AM

I have read the "proof" document and have a question about it.

You see, my main concern for trading with the Robominer is the drawdown in case the currencies go beyond their limits, a kind of breakout. You need insurance for this to prevent a margin call.

Now it is stated in the proof document that : in the United States a banking meltdown happended which caused the EURUSD to go 48% beyond their original limits. Where does this 48% come from ? Was their really a high which was 48% higher than previous high?
I don't get this 48%, looking to the charts of EURUSD.
Can someone explain to me??

Greetings, Edja

Forex Goldmine · 01-29-2010, 09:24 AM

Hi Edja,

You are right, it is important to be aware that the currencies can move beyond their historical limits. If you are following the recommended settings for lot size in relation to your account balance, Robominer can handle moves past the extremes.

However, I don't see anything in the Proof article that speaks to the EUR/USD, nor a 48% movement. Can you provide me with that information? RoboMiner is not designed to place trades on the EUR/USD, and I should wouldn't recommend it be used on that pair.

edja00 · 01-29-2010, 04:02 PM

Thanks for the fast reply,

Yes, you are right. I looked it up and it was mentioned in the PDF-file : Robominer explaining draw-down problems.pdf.
This document starts with : What a difference a year can make.

The 5th paragraph mentiones the following, I quote :

"Does that happen? Yes. In the United States, a banking melt down caused the EURUSD to go 48% beyond its historical limits. But this didn't happen in the blind. We all saw it coming. If this was to take place in the AUDNZD, what would we do. We simply open our settings box for the AUDNZD and turn the “do trades” switch, off. As I write this, the EURCHF has drawn down to within 9 ranges of the lowest that it has been since there was a spot market (2001). It has reached a point where I may be interested in capitalizing on the draw-down by changing the magic number. (More on this later). The danger is mostly for those traders that have an aggressive balance-factor, 4000 or less trading both pairs."

Hope this helps to answer my question !!

Forex Goldmine · 01-29-2010, 04:53 PM

Ah, I was looking at the wrong document, sorry about that.

I believe what Jerry meant by that is that the EUR/USD moved a LOT more than the historical high. (I can get the exact time frame he refers to from him if needed.) The point he is making is that some currencies are very volatile and not suitable for RoboMiner. If you had been trading on that pair, you would have been wiped out. The AUD/NZD are far more stable, but you do have to pay attention for breakouts. RoboMiner accounts for that by trading with very safe default settings.

If you are a more risky trader, like I am, you would have to be prepared to fund your account to handle more drawdown (I run anywhere from 2x to 4x the risk depending on where we are in the grid.)

Does that answer your question?

edja00 · 02-11-2010, 05:31 AM

Well, sorry for the late reply.

Are you in for a long reply ?

I'm sure that Robominer can be a very profitable strategy. I think the only reason for concern is the possible drawdown. It is the only concern I read about when Robominer is discussed (oh, sorry, besides swap). Everyone has to decide for themselves what risk / balancefactor they want to use.
I tend to look back to the past and check when the historical limits were tested and to what extend. How much higher / lower is this High/Low compared to previous High/Low. This defines my balance-factor and my grid setup.
Now, if it is 48%, I need a very high balancefactor to be able to withstand this drawdown. But I cannot find this 48%.
As the current grid for aud/nzd is made, (from 1.0432 to 1.3072) the grid End is already about 100 pips higher than the 60 month limit. That's already some insurance. You propose 300$ extra insurance above the max. drawdown, which is again about 150 pips (79.20$ per grid).

Bottomline, if it is not to much trouble, I still would like to know how this 48% is calculated. I suppose it can help me undertstanding the way you calculate the drawdown.

And since I'm posting now, I have two more questions :

1) When prices are near their limits and are turning back, you tend to profit extra by opening trades with another magic-number.
Wooow, that is dangerous. Your Drawdown is already high and when you see prices reverse, you open extra trades. What if this price reversal is just a pullback or correction and prices go back to the limit (e.g. double top) ? Margin Call?
So on what criteria do you decide to open the extra trades (or changing the take-profit which I think is less dangerous)?

2) Swap is annoying. On a demo which I am running now, swap charges are more than 1 pip per day (short). That means, 2 months and all the profit is eaten. I have now 12 trades open and already swap has consumed as much as the normal 40 pip profit for 3 trades.
If I set AllowInternalClose =True, AllowforSpread = True, StealthMode = True and TakeProfit = False will the trades really be closed if also the loss in swap is compensated ?
I ask this because in the on-screen comments for Robominer 1 line mentions :
Profit for this instance of EA : -xx.xx
But this profit is NOT including the swap charges

Greetings Edward

Forex Goldmine · 02-11-2010, 12:02 PM

Hi Edward,

Quote:

Originally Posted by edja00

Now, if it is 48%, I need a very high balancefactor to be able to withstand this drawdown. But I cannot find this 48%.

...

Bottomline, if it is not to much trouble, I still would like to know how this 48% is calculated. I suppose it can help me undertstanding the way you calculate the drawdown.

I've forwarded this question to Jerry and will have to get him to reply, since he wrote that document.

Quote:

Originally Posted by edja00

1) When prices are near their limits and are turning back, you tend to profit extra by opening trades with another magic-number.
Wooow, that is dangerous. Your Drawdown is already high and when you see prices reverse, you open extra trades. What if this price reversal is just a pullback or correction and prices go back to the limit (e.g. double top) ? Margin Call?
So on what criteria do you decide to open the extra trades (or changing the take-profit which I think is less dangerous)?

The criteria really is up to the individual trader. It's a high-risk, and non-recommended strategy. Personally, I do it when I think my account can handle it. I am comfortable with very high risk, though. Therefore, it's an individual decision.

Quote:

Originally Posted by edja00

2) Swap is annoying. On a demo which I am running now, swap charges are more than 1 pip per day (short). That means, 2 months and all the profit is eaten. I have now 12 trades open and already swap has consumed as much as the normal 40 pip profit for 3 trades.
If I set AllowInternalClose =True, AllowforSpread = True, StealthMode = True and TakeProfit = False will the trades really be closed if also the loss in swap is compensated ?
I ask this because in the on-screen comments for Robominer 1 line mentions :
Profit for this instance of EA : -xx.xx
But this profit is NOT including the swap charges

Yes, I really don't like swap. What I do for trades with high swap fees is simply to increase the TP. The robot does not take swap fees into account, but I will suggest that to Jerry because that would be a nice feature to do it automatically.

edja00 · 03-11-2010, 05:00 AM

Hello Again,

Seeing the recent developments in the breakout of aud/nzd, i'm getting more and more interested in knowing where this 48% drawdown comes from.
Do you know already how this value was derived ?

By the way, are you the same Bob as is posting on the forex-assistant.com forum?
If you are, please do not stop the weekly news posts there, as they are a delight to read and give a useful possible insight in why the currency behaves as it does?

Greetings Edja

Forex Goldmine · 03-11-2010, 09:07 AM

Hi Edja,

Bob said that he was using the EURUSD as an example from back at the beginning of this decade, when the price went down below its historical low, to about 0.9100 or so. He said that it was easily a 48% drop below its previous low. He is gathering more data on the exact details and will send it to me.

And actually I am James Fullerton. I run this sales & support site on behalf of Jerry and Bob to allow them to spend more time working on the robots etc.

01-29-2010, 05:36 AM	#1 (permalink)
edja00 Junior Member Join Date: Nov 2009 Posts: 5	Currency going beyond historical Limit I have read the "proof" document and have a question about it. You see, my main concern for trading with the Robominer is the drawdown in case the currencies go beyond their limits, a kind of breakout. You need insurance for this to prevent a margin call. Now it is stated in the proof document that : in the United States a banking meltdown happended which caused the EURUSD to go 48% beyond their original limits. Where does this 48% come from ? Was their really a high which was 48% higher than previous high? I don't get this 48%, looking to the charts of EURUSD. Can someone explain to me?? Greetings, Edja

01-29-2010, 04:02 PM	#3 (permalink)
edja00 Junior Member Join Date: Nov 2009 Posts: 5	Info to document 48% beyond historical limits Thanks for the fast reply, Yes, you are right. I looked it up and it was mentioned in the PDF-file : Robominer explaining draw-down problems.pdf. This document starts with : What a difference a year can make. The 5th paragraph mentiones the following, I quote : "Does that happen? Yes. In the United States, a banking melt down caused the EURUSD to go 48% beyond its historical limits. But this didn't happen in the blind. We all saw it coming. If this was to take place in the AUDNZD, what would we do. We simply open our settings box for the AUDNZD and turn the “do trades” switch, off. As I write this, the EURCHF has drawn down to within 9 ranges of the lowest that it has been since there was a spot market (2001). It has reached a point where I may be interested in capitalizing on the draw-down by changing the magic number. (More on this later). The danger is mostly for those traders that have an aggressive balance-factor, 4000 or less trading both pairs." Hope this helps to answer my question !!

02-11-2010, 05:31 AM	#5 (permalink)
edja00 Junior Member Join Date: Nov 2009 Posts: 5	The extend of historical limit Well, sorry for the late reply. Are you in for a long reply ? I'm sure that Robominer can be a very profitable strategy. I think the only reason for concern is the possible drawdown. It is the only concern I read about when Robominer is discussed (oh, sorry, besides swap). Everyone has to decide for themselves what risk / balancefactor they want to use. I tend to look back to the past and check when the historical limits were tested and to what extend. How much higher / lower is this High/Low compared to previous High/Low. This defines my balance-factor and my grid setup. Now, if it is 48%, I need a very high balancefactor to be able to withstand this drawdown. But I cannot find this 48%. As the current grid for aud/nzd is made, (from 1.0432 to 1.3072) the grid End is already about 100 pips higher than the 60 month limit. That's already some insurance. You propose 300$ extra insurance above the max. drawdown, which is again about 150 pips (79.20$ per grid). Bottomline, if it is not to much trouble, I still would like to know how this 48% is calculated. I suppose it can help me undertstanding the way you calculate the drawdown. And since I'm posting now, I have two more questions : 1) When prices are near their limits and are turning back, you tend to profit extra by opening trades with another magic-number. Wooow, that is dangerous. Your Drawdown is already high and when you see prices reverse, you open extra trades. What if this price reversal is just a pullback or correction and prices go back to the limit (e.g. double top) ? Margin Call? So on what criteria do you decide to open the extra trades (or changing the take-profit which I think is less dangerous)? 2) Swap is annoying. On a demo which I am running now, swap charges are more than 1 pip per day (short). That means, 2 months and all the profit is eaten. I have now 12 trades open and already swap has consumed as much as the normal 40 pip profit for 3 trades. If I set AllowInternalClose =True, AllowforSpread = True, StealthMode = True and TakeProfit = False will the trades really be closed if also the loss in swap is compensated ? I ask this because in the on-screen comments for Robominer 1 line mentions : Profit for this instance of EA : -xx.xx But this profit is NOT including the swap charges Greetings Edward

03-11-2010, 05:00 AM	#7 (permalink)
edja00 Junior Member Join Date: Nov 2009 Posts: 5	Recent developments about 48% Hello Again, Seeing the recent developments in the breakout of aud/nzd, i'm getting more and more interested in knowing where this 48% drawdown comes from. Do you know already how this value was derived ? By the way, are you the same Bob as is posting on the forex-assistant.com forum? If you are, please do not stop the weekly news posts there, as they are a delight to read and give a useful possible insight in why the currency behaves as it does? Greetings Edja

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01-29-2010, 09:24 AM	#2 (permalink)
Forex Goldmine Administrator Join Date: Jul 2009 Location: Sterling, VA, USA Posts: 138	Hi Edja, You are right, it is important to be aware that the currencies can move beyond their historical limits. If you are following the recommended settings for lot size in relation to your account balance, Robominer can handle moves past the extremes. However, I don't see anything in the Proof article that speaks to the EUR/USD, nor a 48% movement. Can you provide me with that information? RoboMiner is not designed to place trades on the EUR/USD, and I should wouldn't recommend it be used on that pair.

01-29-2010, 04:53 PM	#4 (permalink)
Forex Goldmine Administrator Join Date: Jul 2009 Location: Sterling, VA, USA Posts: 138	Ah, I was looking at the wrong document, sorry about that. I believe what Jerry meant by that is that the EUR/USD moved a LOT more than the historical high. (I can get the exact time frame he refers to from him if needed.) The point he is making is that some currencies are very volatile and not suitable for RoboMiner. If you had been trading on that pair, you would have been wiped out. The AUD/NZD are far more stable, but you do have to pay attention for breakouts. RoboMiner accounts for that by trading with very safe default settings. If you are a more risky trader, like I am, you would have to be prepared to fund your account to handle more drawdown (I run anywhere from 2x to 4x the risk depending on where we are in the grid.) Does that answer your question?

03-11-2010, 09:07 AM	#8 (permalink)
Forex Goldmine Administrator Join Date: Jul 2009 Location: Sterling, VA, USA Posts: 138	Hi Edja, Bob said that he was using the EURUSD as an example from back at the beginning of this decade, when the price went down below its historical low, to about 0.9100 or so. He said that it was easily a 48% drop below its previous low. He is gathering more data on the exact details and will send it to me. And actually I am James Fullerton. I run this sales & support site on behalf of Jerry and Bob to allow them to spend more time working on the robots etc.