Profitable Expert Advisors With Consecutive Losses

There are many forex strategies which have consecutive wins and consecutive losses. This often happens because of market conditions changes. For example, strategy has many wins in a row when volatility or other factors are beneficial to the strategy and at some point in time it starts to loose. Losses often come in a row because something has changed in the market and strategy fails under new market conditions.

There are several ways to solve this problem. You can find some indication of changed market conditions and do not trade at this time. However this is easier to say than to do. This leads to the easier solution which can be incorporated in any expert advisor. If forex system has consecutive wins and consecutive losses you can make it more profitable even without knowing the reason why it starts to fail. Money management helps here. More specifically – decrease factor.

What is decrease factor in money management and how it can help you in forex? By using decrease factor you can decrease your position size after defined number of consecutive losses. E.g. let’s say your usual position size is 1 lot and you decrease this size to 0,2 lot after one loss or several consecutive losses. It will minimize draw down during bad streak. You will go back to normal order sizing after the first win.

In order to understand better how decrease factor helps we can take example when 5 consecutive losses happen and make some calculations. Let’s say that your usual position size is 1 lot and you are risking $300 on one position. The total loss in bad streak would be:
Without decrease factor: 1 + 1 + 1 + 1 + 1 = 5 lots (5 * $300 = $1500 loss)
Decrease to 0,2 after 2 losses: 1 + 1 + 0,2 + 0,2 + 0,2 = 2,6 (2,6 * $300 = $780 loss)
Decrease to 0,1 after 1 loss: 1 + 0,1 + 0,1 + 0,1 + 0,1 = 1,4 (1,4 * $300 = $420 loss)

Losses can be decreased several times so you need less time to recover from them when market conditions becomes in favor of the strategy. Decrease factor lowers the risk and decrease draw down for your forex strategy. Sometimes it can even help to turn unprofitable strategy into profitable one.

Of course it can affect the profit as well so you should find the right combination which works: when to decrease and how much to decrease you can find out by testing the strategy.

This may not help strategies with evenly distributed wins and losses, but usually these wins and losses are not evenly distributed during time. Often there are more wins in some periods of time and more losses in other periods of time, so decrease factor can help in those cases.

By: EA Creator

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If you are interested in using decrease factor in expert advisors, you can find a tool with this feature at www.EACeator.com. You can easily add decrease factor to any EA which you make online by using this application.