Evaluation of Steinitz Methods

newdigital · #1 (**permalink**) 11-18-2007, 05:03 PM

I stated this thread just to provide some information about Steinitz Method.

Everybody knows I think that Steinitz Method can be very sucessfull with some traring condition.

But there are some problems concerning way of selling and some mistakes made by the author.

I will do some posts copied from original commercial threads without any comments.

Everybody can join this thread with any other comments.

newdigital · #2 (**permalink**) 11-18-2007, 05:04 PM

It is the post of the author:

Quote:

Originally Posted by steinitz

I am only going to address your second question. You can PM me on the first if you wish. By the way I have discussed this numerous times so here I go again for the umptenth time!

My robot has many many functions of which some will allow for losses and some will not. Please read this last sentence 100 times until it sinks in your brain!

If you choose to use a SL, trailing stop-loss, ATR SL, high or upper TF exit on color change YOU RISK THE CHANCE OF A BOOKED LOSS.

READ THAT AGAIN

Now if you don't use any type of stop loss and trade it like I do (this is not advice given and you need to trade at your own risk as my disclaimers point out) then you will not BOOK A LOSS. Look at my website on my performance page. I have 32 years over 4 currencies with 8 years each that have NO LOSSES.

I trade with 10-12 currencies (any currency you want, GBP/JPY should be traded with 1/2 lot size). I risk 1% per pair with 10% total being risked. Broker leverage has no bearing on this equation.

I am experimenting on my own account with 11 currencies and 2% risked on each. I am not advocating this. Its for my own edification.

Deposit size is irrelvelent since 10% risk remains constant.

Last July 2007 I personally encountered 65% DD with 24% risked including GBP/JPY. It recovered and even made profits. Look back at your daily charts and you will see how far the pairs drawdown and where they are today!

My contest results are not indicative of how I currently trade. I used a TP trigger (60-100 pip trigger) method with no 5 pip lock in and a 150 pip SL.

I currently use a 20 pip trigger with a 5 pip lock in and no stop loss.

If you back out the contest results with my current trading set-up I would be in a much better ranking with no booked losses or DD that would margin me out.

Don

newdigital · #3 (**permalink**) 11-18-2007, 05:06 PM

And it is my post summarizing everything:

Quote:

Originally Posted by newdigital

...

Sorry that i am posting here.
I asked Steinitz to post something on the 2nd post. He did it. I asked just to finish this discussion. Not to start.

I don't agree completely with Steinitz words on 2nd post, especially after the word "interestingly"

But it does not matter absolutely.

There are some contradictions with the following:
- Stainitz words about this EA as ads;
and
- reality with this EA.

Besides there were no any technical evaluation of this EA. Because as you understand Steinitz did not provide it: some his words we can understand as the ads only. May be all his words are the ads. And Igor and other people provided emotional evaluation only.

What is emational evaluation? It is the following: "all the members of this forum are idiots and I am very clever regular guy and I want to protect idiots from very very bad Steinitz". Your sentence above about "from little Childs that don’t understand a thing about the Forex market" are fully related to emotional evaluation.

Steinitz said everything so that's all.
His EA may be good in trending market. But when the market is reversed so his EA may kill the account by margin call for example. Especially if trading 17 pairs all together. Everybody understand it. If you know that market will be trendy next wek so you can use this EA.

As to using any EA without stop loss hoping that EA will change the price itself to right direction

so we all understand that it is very risky and .... you know ... no comments.

That is some contradiction between great expectation and real situation:
- expectation was great and many people expected something very very proftable all the time;
- and real situation is different - EA is good for some market condition only.

The only problem is that it should be mentioned minimum deposit size to use this EA with differebnt settings (with stop loss, without stop loss and so on). In the same way as project1972 did it for Alpha9 EA and Electa EA in elite section.

To help the people to understand - yes. But to act as the mother for them trying to say 100 times: "don't trade without stop loss please!" - sorry. They will use it anyway.

I just hope that big agiotage aroud this EA will be finished as all the people understand that this EA is something usual and nothing special.

newdigital · #4 (**permalink**) 11-21-2007, 08:08 AM

I think someone should evaluate this EA with collaboration with the coder and it is only way to know about this EA.

kjhfdgjfhdghdf · #5 (**permalink**) 11-22-2007, 01:48 AM

What is there to evaluate?
It is based on a MA cross Heiken Ashi Smoothed is a Moving Average Cross.
Running it on multi time frames makes it even worse especially following a D1 trend on smaller TF's.
It has some profits then during some times it has big losses eroding all profits and capital.
I tried this EA because I thought who cares of waste $50 but then I lost $1000 actually using it.
The guy who sells it is constantly trying to fix things with it etc which in turn never makes it any better because of what its based on.
Its massively marketed and lied about constant lies over and over again just to try and sell it.
100's of people who've bought it now don't use it anymore because it makes bad losses.
It shouldn't be sold during development stages it should be given as trial version etc.
Bad system Bad EA will never make any long term consistent profits because its flawed from the get go from what its based upon.
The seller should give everyones money back.

Mr.Marketz · #6 (**permalink**) 11-22-2007, 08:08 AM

When Steintz first introduced "his" method on FF it was nothing more than a simple idea of using a HA ma on 3 multiple time frames. I helped out by introducing that 2 bit jag-off to using the multi-bars below (see post link)

HAS Indicator - Misc indicators & EA's - Page 3

Since then he has taken full credit for developing "his" super-duper trading system. He is not a trader and never will be. At best he's a half-assed marketer. He, like many other trading enthusiasts, lacks the deeper comprehension behind a system/strategy.

As far as the evaluation is concerned, all you really need to do is look at how "his" system manages the positions. That's the bread and butter to any strategy... order management. There is nothing thought provoking or clever about Steint's approach to order management. Primarily the reason for that is because... I never shared one with him. The bottom line is that he's made his money (from selling EA's) and now it's to for him to move on to his next nickle and dime venture.

iGoR · #7 (**permalink**) 11-22-2007, 10:05 AM

I would like to make an evaluation of this EA and system and realy stick to facts without any personal or emotional attacks what so ever to the author of this system.

1) The author of this system claims that this system does not make any losing trades. IF it is used without any stoploss like he is using it ( see posting #2 above)

2) The author of this system says that he makes very nice profits and that with a strategy of trading between 10-12 pairs ( see posting #2 above).

If one takes a look to the monthly chart of ONLY 1 pair. The GBP/USD. And aspecially to a NO stoploss strategy.

Those who know the rules of this system can easely spot that in Nov. 1980 the system was in a full long mode and would have triggered only long trades. After Nov 1980 that index dropped 14.000pips. So without a stoploss that would have resulted in a total burning of the account.

In Febr.1985 the system would have been in a full short mode and would have triggered only short trades. After Febr. 1985 the system changed into a bull market and went up more then 9.000pips and without stoploss would have resulted in 9.000pips loss or a compleet burning of the account.

In Jan 1991 the system would have been in a full long mode and trigger only long trades. After that the cable drops + 3000 to the downside. Wich would result again in a total account burn.

The same for Aug 1992 and some more periods that are not that outspoken but would have the same result on the account.

One can now say: Those burnings of the account are many years ago.
But each particular pair of the 10-12 pairs that are traded have exact same examples and that can be more recent and that would lead to a total burning of the account.

As long as one does not encounter a strong reversall like the ones that are mensioned then the risk stays pretty small and the chance that the price will come back sooner or later to its initial entry point is realistic.

But the author himself says that at somepoint this year (july) he encountered a drawdown of 65%. He is pointing out to the rectracemets on the daily charts over that period.
But if one looks to the monthly charts (wich are taken in calculation for the system) one can hardly see any retracement over that period.
But one can spot a lot of far bigger retracements over other periods. So if the month of july of this year leaded to a 65% drawdown, one can only conclude that in retracements that one can realy see on monthly charts, that the accounts would be burned in many cases.

If one is speculating on the fact that without these retracements one can make nice profits but neglect the fact that if one would encounter a big retracement period that he could burn his account, then that is more an aproach of a gambler then of a trader ( wich is the background of the author: professional gambling in casinos--wich he stated himself).
It is a bit of an all or nothing system. With the only difference that if this system is traded long enough the nothing will happen with 100% certainty if used without a stoploss as the author of this system is strongely sujesting.
AND the results of this system used WITH a stoploss have been prooven by many users of this EA. The results were: a very poor hitrate and a gradualy descent of the account till margin calls showed up.
This fact must be well known by the author of this system because that is the reason why he strongly sujests to trade without stoplosses.

regards..iGoR

el cid · #8 (**permalink**) 11-22-2007, 11:47 AM

Hi Folks

Here is my evaluation and conclusion.This is my final word on Steinitz .

The conclusion on the Steinitz E A

Every indicator is a lagging signal. and if you have multitime frames you have multi indicators and u have multilagging, therefore all the signals are way lagging after the event.

Every indicator included in any trading system will reduce the number of entries for trading.The more indicators you add ,the lesser the profitability of a system.The more filters you have the fewer the trades .

The Steinitz MTF is made up of many indicators , each of which will reduce the overall profitability of the Steinitz method.Even if it was possible to backtest the Steinitz system,it is unlikely to ever be hugely profitable.That is the reality

There is no way this system will ever beat mediocre trading systems ,let alone be profitable

El Cid

No1Viking · #9 (**permalink**) 11-25-2007, 05:46 AM

Dear reader

I am sad to say that Don Steinitz do not want to have any connection with forex forums anymore. That includes ForexRobotSupport forum as the official support forum for his EA.

ForexRobotSupport forum will contain different commercial EAs in the future and we want you to recommend commercial EAs to discuss within our forum. More information about that can be found at ForexRobotSupport.

If you are a founder and/or a vendor of an EA and need support, don't hesitate to contact me for further discussions. We have a forum, a Support Ticket System and FAQ (knowledge base) as services.

Thank you

Michael

Brent Mack · #10 (**permalink**) 11-25-2007, 08:42 PM

"Now if you don't use any type of stop loss and trade it like I do then you will not BOOK A LOSS. Look at my website on my performance page. I have 32 years over 4 currencies with 8 years each that have NO LOSSES.

I trade with 10-12 currencies... I risk 1% per pair with 10% total being risked." - Don Steinitz

I would suggest that this definition of "risk" is very different from the universally accepted definition of "risk" as applied to Forex trading. In short, the author exhibits no understanding of "risk" whatsoever.

Frankly, this is a concept that should be comprehended by every newbie prior ever to launching their first demo trade. How this misunderstanding gets broadcast as part of a marketing appeal is completely bewildering.

Apparently the author bases the size of his trades on each pair initially consuming 1% of his account balance. While that is the initial size of each trade - it has NOTHING to do with the commonly accepted definition of "risk."

The fact of the matter is that the author's own words advocate using UNLIMITED RISK - which would be entirely consistent with experiencing a 65% drawdown of his account.

If his 1% and 10% figures meant anything - his total drawdown would have been 10% or less. So in reality, the author is confusing lot size with risk, and is not attempting to limit his risk at all.

It would be appreciated if the author would avoid the temptation of once again telling me that I don't understand the EA, and therefore don't know what I'm talking about.

The subject is Risk Management.

And your own words make it abundantly clear as to who doesn't know what they're talking about.