Today, we want to discuss something customers asked us again and again through emails. There were similar questions like :
* Why SteadyWinner enter so early it suffered 15 minute draw down before break even?
* There is a beautiful trend on M15 chart, why didn't SteadyWinner trade it?
* Why can't SteadyWinner exit earlier seeing a counter trend formation to avoid loss?
Some of these questions were for curiosity while others were from users sharing their sorrows after suffered SteadyWinner loss trades. Anyway, all such emails point to the same problem - Users are not aware, there are fundamental differences between Manual Chart Trading and Auto EA Trading. Let's pick one case as an example and we can discuss the points in some detail.
Special thanks to Dr. Edward Owens from Seattle WA USA for providing a classic case and attached a high resolution chart we can use.
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Customer's Comments:
"Can you look at this trade and see if SteadyWinner is performing correctly...The trade seemed to close out prematurely, as it was heading back in the right direction, then closed out. Any info you can give me would be appreciated!" ...
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In SteadyWinner entries are triggered by a set of indicator criteria while exits are triggered by stop loss hit, trailing stop hit or by indicator criteria met for closing whichever happen earliest. Even without factoring the broker's price difference and execution problems, there are countless possibilities for how a trade can go so we it will be very difficult for us to help investigate what happened in a particular trade.
While human being can look at charts and say "hey, there's a trend formation here" or "look at that, the price has come back on track", EAs have no eyes and they are essentially blind to charts. An EA can only read prices and all indicator values derived from prices. If a change in indicator value trigger a trading criteria say "Close Now", the EA will go ahead and close it even the indicator value just crossed the border by 0.00001. So may I say all the comments like "Late entries", "Premature Exits" or "A nice trend wasted" do not apply well to EAs.
When we designed SteadyWinner we tried countless combination of indicators and entry / exit criteria and picked a set that could produce the best long term results. Occasional losses are still unavoidable but let it run long enough and it will turn around and the losses will be well offset by the much stronger wins.
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We are traders ourselves so we know how losses hurt but may I say a trader is supposed to trade only money he/she can afford to lose. Then sit back, relax and let the EA trade your account. That is the correct approach to EA trading.
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