In recent weeks, the financial markets have experienced more significant fluctuations than in previous months. The regional market corrections, strengthening USD, and the Fed Rate cut speculation have left both Bullish and Bearish traders uncertain about their biases. Recently, the return of swing traders has also contributed to greater fluctuations in 2024. This raises an interesting question regarding how manual trading systems execute and react to such sharp market movements.
One thing is certain: when a manual trading system is mathematically formulated, it is almost impossible to build the necessary predictions to handle market uncertainty. These systems use historical data to anticipate future events. Therefore, when the market behaves in ways that have never been seen before (anomalies), the system may not work effectively. Consequently, every trading system requires fine-tuning by incorporating more relevant data as the basis for its testing.
In recent years, statistical process control (SPC) technology has become an integral part of manual trading platforms, such as the Account Metric on our in house Platform. This statistical control technology can help you find the right system to manage risk. On the FATS platform, you need to navigate to the performance menu. Here, you can explore the available trading systems using the following parameters:
⦁ Profit ($) – The profit or loss generated by the system using a 100k size, including overnight fees. This is the total profit earned by the system and is calculated by converting profit in pips to USD based on one regular lot.
⦁ Pips – The total profit in pips earned by the system.
⦁ MAX DD – Maximum Drawdown. This parameter represents the system’s largest loss period. The closer the MAX DD is to zero, the better.
⦁ Max Positions – The maximum number of positions a system can open simultaneously for each currency pair. For example, if a client chooses a system with 6 max positions and sets the lot size to 10k, the maximum number of positions that can be opened in that account is 6 positions with each having a 10k volume, meaning the maximum potential volume size is 60k.
⦁ Profit Factor – This factor represents the total profit divided by the total loss and shows the profit-to-loss ratio. The higher this factor, the better.
⦁ Risk Adjustment Rate (RAR) – The ratio of total profit in pips to the Maximum Drawdown. A value above 1 indicates that the system has more profit than loss. Thus, it is better to choose a system with an RAR value above 1.
⦁ Average Profit Trade – The result of dividing the total profit by the number of profitable transactions in USD. This factor can measure a system’s performance effectively, provided there are enough transactions over the selected time period.
⦁ Number of Trades – The number of trades made by the system over the chosen period. This parameter is important and indicates a system’s reliability. The higher the number of trades, the higher the reliability. For example, the performance results of a system with only 10 trades over 3 months will not reflect the system’s true performance. On the other hand, this parameter will provide insights into a system that has completed 100 trades within the same period.
Important Note: One parameter that can be misleading is the win percentage of a system. Here, a high percentage may appear even though the system does not generate profits. For example, a system that has opened 100 trades with 99 of them profiting by an average of 2 pips, while the last position closes with a loss of 300 pips.
Other considerations when choosing the right trading system include factors like margin endurance and investor risk appetite. It’s important to remember that a client with a $1,000 balance has limitations on using one or two systems compared to a client with a $10,000 balance. The larger the capital, the greater the margin endurance. Another factor is the client’s character and the level of risk they want to manage. Some traders prefer aggressive systems, while others prefer conservative ones with lower risk. The various options available on the PF360 platform provide you with the flexibility to choose a system that suits you.
From these various trading systems, you can filter the ones that are right for you. The concept of the PF360 platform is that trading system vendors rarely reveal their trading strategies because these are the vendor’s profit formulas, and very few are willing to expose them. Therefore, you cannot know the actual strategy of the system, but you can always identify whether the system is aggressive or conservative by observing how it trades.
How can we recognize a system’s character?
⦁ Aggressive Systems – Systems that have a high Maximum Drawdown. High profit and high drawdown indicate an aggressive system and carry higher risks. We can conclude that in its pursuit of profit, this system can suffer significant losses. Another indication of risk is the Risk Adjustment Rate (RAR), where systems with an RAR below 1 fall into the higher risk category.
⦁ Conservative Systems – Systems that can deliver high profits with low Max Drawdown.
⦁ Average Trade Time – Some systems open positions for the long term, while others are for the short term. It’s essential to remember that all systems want their positions to close in profit, regardless of when the position was opened.
⦁ Scalpers – Systems with very small stop loss and take profit values fall into the scalper category.
Another important menu is the System Seeker, which can help you filter the available systems and find the best one that suits you. You can filter based on the following parameters:
⦁ Time Frame: Provides the trading performance data of a system based on the selected testing period. You can view the results since the system was first tested and registered on the FATS platform. Since the forex market is volatile, it is crucial to focus on short-term results, meaning results over 3 months or more.
⦁ Pips: Profit in pips for the chosen testing period.
⦁ Max Drawdown: The system’s drawdown during the selected time period.
You can use other filters by clicking “Open More Options,” where additional filters such as Maximum Positions, System Name, Pair, Number of Trades, and Risk Adjustment Rate (which shows the ratio between profit in pips and max drawdown) will be available.
That’s it! You’re now ready to trade using a manual trading system. If you want to try a demo account, you can register through the website: https://my.primefund360.com/register Once you’ve found a solid vision, your system is just plug and play away.
