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Testing outages and problems is exactly what demo accounts are for. Some beginners think that demo accounts are a waste of time because they want to make real money right away. One of my brokers didn’t survive January 2015. In the morning, at about 10:00, my account looked fine. At lunchtime, the broker had massively raised his margin requirements.
That caused a mass closing of open positions. If you do proper strategy tests that can improve system predictability in the long run. How did I start? At some point in time, I started to worry about my open positions and I wanted to use a trailing stop. So I went to Google to find a solution. And that was when I found out that it was possible to get that thing automated with MetaTrader.
Doing a back test for your strategy will not even be difficult. It will be no effort and it will not cost me a dime to do it. Building a system that can survive outstanding situations requires that you know that they exist and how bad it can get. Often I couldn’t improve anything, so I needed to start over again and try another approach. You don’t have to sit in front of your screen because you don’t need to look at the charts.
We don’t have to guess if something really works, it is possible to really measure it. If you want to bake a cake with a recipe, you need to know the ingredients, the order of the steps to process the food, and the right temperature of the oven. And for trading, you can create a recipe for your trading software. If you are still hoping, probably you only do a few manual trades each week, instead of a few hundred automated trades in an hour. Ulysses begged for relief when he heard the sound of the sirens, but he was smart enough to protect himself before the temptation.
Most traders have a number in mind where the pressure is getting too high for them. When you see that your equity is going down in a steep curve, it might be time to use the brakes and avoid a crash. For me, a good result would be a high profit with a low risk for at least ten years. What do you think is causing your losses? It is the way that thing works.
To be profitable in the long run, you need to set up the system in a way that will increase the probabilities for you. If you just made a loss after a profit, the loss probably will feel five times as bad as the profit was enjoyable. Ulysses knew that the sirens killed hundreds of sailors because they tricked them to go overboard with their ingratiating voices. I think that the whole trading industry works in a way that losses are likely. Your broker will probably try to make you trade as much as possible and as fast as possible.
He will offer you a bonus to do that. He will give you free advice on how to get started right away. Testing two versions for ten years multiplied with ten currency pairs equals 200 backtests, each one for one trading year. Could you do that without automation? Probably not.
Have you ever heard that it is a good idea not to put all your eggs in one basket? Your broker will even make money when you lose. That is why he encourages you to trade as much as possible. He knows that most people will lose money. That is just a numbers game.
If most traders would make money, he would soon be out of business. In January 2015, the forex market went crazy. I have never seen bigger candles on my charts before.