Originally Posted by confusedxx

Hi Muddyguy

I spent the last couple days reading the PDFs on your yahoo groups and then last night started the EA on a demo account. So far I have to say it is quite impressive. Both simple and boring, but brilliant and "safe". . . Not only will I be starting a managed account with Gofx but I also want to continue demoing and learning more about this strategy.

I have a couple questions regarding the user inputs and how it works.

Trade Frequency: The example you give is very helpful where you would add 0.01 standard lots for each $50 gained in interest. The question I have then is What value would you enter into Trade Frequency to accomplish the example? 50 or 0.01 or 1% (50/5000)?

AddLots1-2: What is the difference between this and Trade Frequency or the relationship between the two variables?

Relative Profit: What is the relationship between relative profit and Take profit? If I have a take profit of $300 and I want a relative profit of $300 and I am trading 4 lots, what happens?

Stop Trigger/Trailing Stop: Is the value expected for Stop Trigger absolute or relative to the number of lots being traded? For instance I want a 15% stop loss. Does it accept %
What if I put in 150 into the stoploss how does that work if I am trading 4 lots?

What pairs have proven to work best in back testing and without any stoploss or take profits, what amount of DD was experienced during July and August? Those months were quite tough and showed some large revaluations.

Originally Posted by confusedxx

I have been doing a bit of calculations to see what I come up with and wanted to share the following with you. Hopefully you can use it and help me understand if I am totally wrong. I was trying to figure out how to get 1% - 2% a day, but so far I am not coming close.

Assumptions:
Short GBP/USD and Long USD/CHF in ratio of 1:2. Current YTD Correlation between GBP/USD and USD/CHF closing prices is -0.63. That is how I came up with the ratio of 1:2

Based on published swap rates at IBFX on mini accounts, you would earn an overnight swap of $1.81 for each set of 0.3 lots you hold (0.03+0.89+0.89)

Take a $5000 account and trade 50% of your capital (50:1 leverage) you can hold 1.25 lots. Very high leverage and not really what anyone advises, but this is for illustration purposes.

So what you have now is 4 sets of 0.3 lots (1.2 lots) and $1.81*4 =$7.24 swap per day. This represents 0.14% interest per day.

If you fully invested your 5k account at 100:1 leverage and NEVER got a margin call, you could theoretically hold 5 lots. This would pay you a daily swap of $30 (remember 1:2 leverage earns $1.81 for every 0.3 lots). $30/$5000 = .6% daily interest.

I know I must be missing something in the strategy as maths is not my strength, but based on the daily swap I cannot see how to get 1% of the account.

Originally Posted by ElectricSavant

You get it with trading not carry...but Bill is better to answer...I will read with interest,,,(interest hhehe)

Originally Posted by Muddyguy

Hi,

First, let's be clear that this particular discussion is how to use the robot to manage a long term carry trade. Everyone together on this? Good.

Next, I personally don't use correlation to determine ratios between the pairs. Correlation is the likelihood it will move together/opposite, not the range or volatility. I use volatility to develop my ratios. Please check my post regarding how correlation works for more details. http://www.forex-tsd.com/132583-post273.html

The GBPUSD/USDCHF does not provide a lot of swap on a carry trade, and the returns are relatively low. Higher returns on a carry trade require a JPY pair and higher leverage. We all learned last month that that isn't always a good idea to sit in carry trades like this.

To achieve those returns in a safer manner, one must actively trade the correlation divergences. This is different than carry or hedge trading.

How do you do this? One relatively simple way is to draw trendlines on two pairs that should move together. When one diverges, look for a reason and if it appears they will "snap back", throw on the trade.

Trade carefully,
Bill

Originally Posted by confusedxx

Thx Bill for the response and clarification. So far it has done extremely well and I am quite happy.
I know how to determine correlation between pairs based on historical prices. But what criteria best determine which pairs to use for trading the c4? Here is what I would understand:

Carry Trades: Strong Neg or Pos Correlation (with appropriate long/short positions) to minimize DD and price fluctuations - thus earning swap (not much but some income).

Trading: This is more difficult. Need to have clue where market is going and that can be used to determine direction to trade on correlated pairs. What we are looking for here is pairs that are highly pos or neg correlated and we want to trade on divergence between them. Trouble can be the DD - so stop losses should be used if a pos correlated pair is traded in same direction. What is your thought process Bill on determining the pairs to use for Corr trading?

Originally Posted by confusedxx

Thanks for the info Muddyguy. I just rebuilt an old pc to turn it into a demo machine for MT4. I put the C4 expert onto a chart and set it all up. The smily face is there, but there is no text that usually appears in the lower right hand corner. I know the market is closed right now, but is it normal that the text disappears when the market is closed?

Originally Posted by ElectricSavant

It will appear soon after the opening tick...it did not appear and disappear in this case...it has never appeared yet as this is a new install on your rebuilt machine..

cd...you will also find that you can add manual trades and use the comment that this robot recognizes and it will even manage that for you...this robot is extrmely stable and written well. It is ready for commercial prime time...

I know you were posting to Bill..so please excuse the interupption he will be here soon...and answer...

ES

Originally Posted by confusedxx

No worries ES. thanks for the reassuring words. I am hoping to start my managed account in the next week as well