Funds Management (2) - PlaygroundFX

This topic discusses a kind of misunderstanding about the requirements for funds management. Let us find the best trading strategy at PlaygroundFX.


2 minute read

A Kind of Misunderstanding about the Requirements for funds management (2)

We prefer to use Fintechee as our trading terminal.

I wonder why no algorithmic traders tell the funds manager the truth that there is no grail-level EA. If they convince him that it’s possible to develop a grail-level EA, why don’t they use it to make money for themselves? Why does the leader of the funds management still insist on a void product even if he lost an amount of money?

What technical methods do the algorithmic trading developers use?

If they(algorithmic trading developers) can convince the leader of the funds management that there is grail-level EA, they must have tested it and got a perfect trading backtest ing report. So I told the funds manager to show me some indicator s of the report.

I checked them, including the Sharpe ratio, Calmar ratio, profit factor. The indicator s showed that it’s not a good EA. Especially the profit line to track the records of equity/balance. There are too many signs of drawdown to be risky to the position.

“Is there any screenshot of backtest ing”, I asked. “Yes, they set up a license for using it. It’s not expired yet. So, we can run backtest ing now”, the leader of the funds management answered. “Let’s run backtest ing and analyze what technical methods they are using.”

After checking the process of backtest ing and the signals the EA made, I understood that it’s a martingale trading robot

Martingale is an algorithm to put more money to bet when a position starts losing money and keep the position until the market reverses. it’s a very aggressive strategy. It works under two conditions.

  1. You have enough money.
  2. The broker allows you to bet unlimited money.

If the two conditions are met, then you can always earn money. But as long as one of the two conditions doesn’t match, the position will be closed out and a margin call occurs.

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