Trading Gold with an Expert Advisor

Juliana1996FX

Trader
Apr 5, 2021
7
0
6
25
California, USA
Hi traders,

I am a new trader who is extremely interested in gold trading, I find it much easier to follow and learn unlike the other forex currencies, do you guys recommend me using a small trading expert advisor with let's say 1 micro lot volume size?
I am planning to invest $1000 and to reduce the risk, I read that we should be trading the smallest volume possible?

Let me know what you think?
Thanks
 

Loneblade

Trader
Oct 9, 2019
23
4
14
Singapore/Beijing
Hi traders,

I am a new trader who is extremely interested in gold trading, I find it much easier to follow and learn unlike the other forex currencies, do you guys recommend me using a small trading expert advisor with let's say 1 micro lot volume size?
I am planning to invest $1000 and to reduce the risk, I read that we should be trading the smallest volume possible?

Let me know what you think?
Thanks
1K is too small to make money from, but it is enough for live practice if you are trading SpotFX or $0.10 per pip. But account size versus unit size is very much a personality thing. When I was trading CFD/SpotFX my unit size was $1 (per pip) . Now I'm trading futures my unit size is based upon the smallest contract which has decent liquidity. If you really want to be very successful in gold trading, you will need to know the other markets (eurusd, oil, commodity index etc) which correlates tightly with the gold market. You will want to see fundamental value in your trading otherwise you will probably be lured into the herd of retail mindset, trading with indicators, back-testing countless of those until you are 80 years old probably, trying to find that holy grail settings with a retail pride blah blah blah etc.
 
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Enivid

Administrator
Staff member
Nov 30, 2008
16,049
818
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Odessa
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Your trade volume should depend on the stop-loss of your trades such as that the risk per trade is limited to some fixed percentage value. For example, it is common for Forex traders to risk about 1-2% per trade. $1,000 should be enough for you to live-practice your trading system on gold if your broker provides a decent leverage on gold.

Also, if you are a new trader, where did you get an expert advisor to trade gold?
 
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Juliana1996FX

Trader
Apr 5, 2021
7
0
6
25
California, USA
Your trade volume should depend on the stop-loss of your trades such as that the risk per trade is limited to some fixed percentage value. For example, it is common for Forex traders to risk about 1-2% per trade. $1,000 should be enough for you to live-practice your trading system on gold if your broker provides a decent leverage on gold.

Also, if you are a new trader, where did you get an expert advisor to trade gold?
thanks a lot for your reply.
I read somewhere that if you have a clear system that is profitable while backtesting it, and you develop a good risk to reward ratio (1-2%) as you mentioned above. you can be profitable right?

I found a video on Youtube about the EA which was backtested in the past. I am thinking to open a $1000 account and set up an EA to open trade with one micro lot and keep it running for some time. I think I could make some profit right?

This is the type of strategy I am interested in, please let me know your opinion, I am a beginner and my apologies for these basic questions :)

 

Juliana1996FX

Trader
Apr 5, 2021
7
0
6
25
California, USA
1K is too small to make money from, but it is enough for live practice if you are trading SpotFX or $0.10 per pip. But account size versus unit size is very much a personality thing. When I was trading CFD/SpotFX my unit size was $1 (per pip) . Now I'm trading futures my unit size is based upon the smallest contract which has decent liquidity. If you really want to be very successful in gold trading, you will need to know the other markets (eurusd, oil, commodity index etc) which correlates tightly with the gold market. You will want to see fundamental value in your trading otherwise you will probably be lured into the herd of retail mindset, trading with indicators, back-testing countless of those until you are 80 years old probably, trying to find that holy grail settings with a retail pride blah blah blah etc.
thanks for the feedback.

Do you think trading with an EA that is 100% based on technical analysis is more profitable than discretionary trading where you make a decision based on fundamental analysis?
I am new to the forex space and wondering if I can just use a simple EA for the smallest account size, let's say 1 micro lot as you mentioned above.
Gold is much more interesting to me but I would consider the commodity index as you mentioned above.

Thanks a lot for your help :)
 

Loneblade

Trader
Oct 9, 2019
23
4
14
Singapore/Beijing
thanks for the feedback.

Do you think trading with an EA that is 100% based on technical analysis is more profitable than discretionary trading where you make a decision based on fundamental analysis?
I am new to the forex space and wondering if I can just use a simple EA for the smallest account size, let's say 1 micro lot as you mentioned above.
Gold is much more interesting to me but I would consider the commodity index as you mentioned above.

Thanks a lot for your help :)
A personal no for me, it can be profitable but not more profitable because confirmation from fundamental analysis (using value lines for statistical arbitrage etc) will increase my win % and confidence in trading decision. Momentum traders (trading EA that is 100% based on technical analysis) tend to ignore value or fundamentals. Institutions also trade using Momentum Algos. But they only switch them on under favourable conditions, then switch them off again when conditions are unfavourable. Of course many of them use Value and Fundamentals to help make those On/Off decisions.

A friend of mine wrote hundreds of EAs. None of them traded any better than he did manually (which was not particularly well back then). I would never trust an algo that I'd written unless I'd done a huge amount of testing with it. I'd also never trust an algo that was written by somebody else - who might have lower standards than me. But unless you have a proven system ( tested by successful manual trading) then what makes you think an Algo designed and written by you will even be as good as your manual trading - since it will only contain a fraction of your knowledge and experience. Let's assume an EA is no longer limited to just Trend Following and so it's able to deal with more (but not all) market conditions. But again obviously the trader has to be aware of what the market conditions actually are!
 
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Juliana1996FX

Trader
Apr 5, 2021
7
0
6
25
California, USA
A personal no for me, it can be profitable but not more profitable because confirmation from fundamental analysis (using value lines for statistical arbitrage etc) will increase my win % and confidence in trading decision. Momentum traders (trading EA that is 100% based on technical analysis) tend to ignore value or fundamentals. Institutions also trade using Momentum Algos. But they only switch them on under favourable conditions, then switch them off again when conditions are unfavourable. Of course many of them use Value and Fundamentals to help make those On/Off decisions.

A friend of mine wrote hundreds of EAs. None of them traded any better than he did manually (which was not particularly well back then). I would never trust an algo that I'd written unless I'd done a huge amount of testing with it. I'd also never trust an algo that was written by somebody else - who might have lower standards than me. But unless you have a proven system ( tested by successful manual trading) then what makes you think an Algo designed and written by you will even be as good as your manual trading - since it will only contain a fraction of your knowledge and experience. Let's assume an EA is no longer limited to just Trend Following and so it's able to deal with more (but not all) market conditions. But again obviously the trader has to be aware of what the market conditions actually are!
Thanks a lot for your feedback.
Honestly, I didn't get some parts of your answer, maybe because I am still at the beginning of the journey but I will google each one of them.
So basically you meant that EAs are not reliable as they don't take into consideration major events and fundamental factors. is it possible to add fundamental factors into an EA? I mean are there any algo systems that somehow review the fundamentals and use the data to make a trading decisions on our behalf?
Thanks
 

Enivid

Administrator
Staff member
Nov 30, 2008
16,049
818
144
Odessa
www.earnforex.com
thanks a lot for your reply.
I read somewhere that if you have a clear system that is profitable while backtesting it, and you develop a good risk to reward ratio (1-2%) as you mentioned above. you can be profitable right?

I found a video on Youtube about the EA which was backtested in the past. I am thinking to open a $1000 account and set up an EA to open trade with one micro lot and keep it running for some time. I think I could make some profit right?

This is the type of strategy I am interested in, please let me know your opinion, I am a beginner and my apologies for these basic questions :)

Ugh... How do I put it? That was a rather weird video. They received pretty random results in the initial backtest. Then they curve-fitted them with optimization to the same period reducing the number of trades to 15 (which is very low for getting any understanding of the strategy's reliability) and then they tested it again on the same time period, which is rather useless.

There are so many things wrong here - both with the strategy and their backtesting and optimization process:
  1. 1-pip trailing stop doesn't make any sense as it won't work in a live account due to a stoplevel setting.
  2. They backtest it in MT4 on simulated ticks, which isn't a very accurate backtesting method.
  3. Optimization should be performed on one period, and then the selected optimal set of parameters should be backtested on an out-of-sample period.
  4. 5% drawdown with 7% profit and 15 trades is a random result - it's just some statistical noise.
  5. Live account conditions - swaps, slippage, and widened spreads - will simply destroy this strategy's already subpar results.
Unfortunately, their EA archive file is password-protected, so I couldn't backtest it on an out-of-sample period, but I believe it wouldn't be a very good result.
 
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Loneblade

Trader
Oct 9, 2019
23
4
14
Singapore/Beijing
Thanks a lot for your feedback.
Honestly, I didn't get some parts of your answer, maybe because I am still at the beginning of the journey but I will google each one of them.
So basically you meant that EAs are not reliable as they don't take into consideration major events and fundamental factors. is it possible to add fundamental factors into an EA? I mean are there any algo systems that somehow review the fundamentals and use the data to make a trading decisions on our behalf?
Thanks
There are no Fundamentals trading Algos that I know of, other than the ones the big Banks have which read Central Bank statements etc looking for changes in key words.
 
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Juliana1996FX

Trader
Apr 5, 2021
7
0
6
25
California, USA
Ugh... How do I put it? That was a rather weird video. They received pretty random results in the initial backtest. Then they curve-fitted them with optimization to the same period reducing the number of trades to 15 (which is very low for getting any understanding of the strategy's reliability) and then they tested it again on the same time period, which is rather useless.

There are so many things wrong here - both with the strategy and their backtesting and optimization process:
  1. 1-pip trailing stop doesn't make any sense as it won't work in a live account due to a stoplevel setting.
  2. They backtest it in MT4 on simulated ticks, which isn't a very accurate backtesting method.
  3. Optimization should be performed on one period, and then the selected optimal set of parameters should be backtested on an out-of-sample period.
  4. 5% drawdown with 7% profit and 15 trades is a random result - it's just some statistical noise.
  5. Live account conditions - swaps, slippage, and widened spreads - will simply destroy this strategy's already subpar results.
Unfortunately, their EA archive file is password-protected, so I couldn't backtest it on an out-of-sample period, but I believe it wouldn't be a very good result.
thanks a lot for the feedback,
Apparently, MT4 is not the best software to backtest a strategy. personally I am using tradingview but it's torturing my eyes as I only know how to do that manually, I have got the following questions please:

1. Is there any software that you recommend to backtest trading strategies?
2. Are there any software to simulate the forex market especially when the market is closed?

Thanks
 

Juliana1996FX

Trader
Apr 5, 2021
7
0
6
25
California, USA
There are no Fundamentals trading Algos that I know of, other than the ones the big Banks have which read Central Bank statements etc looking for changes in key words.
Thanks for the answer.

I have heard that some expert advisors are pulling out the information from some major websites such as Investing.com or forex factory then add use them in the expert advisor.
 

Enivid

Administrator
Staff member
Nov 30, 2008
16,049
818
144
Odessa
www.earnforex.com
1. Is there any software that you recommend to backtest trading strategies?
MT5 - there is an option to backtest on real ticks data there. However, one must still learn how to backtest and optimize properly to avoid common mistakes. I recommend the book Evidence-Based Technical Analysis by David Aronson if you are interested in learning it.
2. Are there any software to simulate the forex market especially when the market is closed?
I don't use any market simulators, but there is little point in them - there are plenty of instruments available for trading during weekends (cryptos, synthetics). But the major question is why would you need a market simulation at all? You could still backtest on historical data in MT5 even during weekends.
 

mytst

Trader
Apr 26, 2021
1
0
6
Australia
Hi traders,

I am a new trader who is extremely interested in gold trading, I find it much easier to follow and learn unlike the other forex currencies, do you guys recommend me using a small trading expert advisor with let's say 1 micro lot volume size?
I am planning to invest $1000 and to reduce the risk, I read that we should be trading the smallest volume possible?

Let me know what you think?
Thanks
Hi, this is a simple "manual" strategy I use for silver trading. I agree, gold (and silver) are much easier to follow and trade. I wait for a Silver Indicator crossover, then wait for a MA crossover to confirm the trade entry. Exit is made when the Silver Indicator crosses again.
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