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Author Topic: do you have a solution for such flash crashes?  (Read 394 times)

Attractor

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do you have a solution for such flash crashes?
« on: August 14, 2019, 10:39:56 PM »
I want to post this conversation here because is a very important question, a trader and me were talking in relation to the SFE Night Scalper, but is a general question that affects all the EAs.

Anyone who wants to participate sharing his experience or 'bad' experience problably in this case, is welcome.

"yes, I am aware of this particular big crash on all JPY pairs at the beginning of this year, and of some other flashes (like CHF) before and I know that even best EA can get catched into that. Your EA has been actually very lucky that the trades were closed at that prices, it went much lower.
For this particular JPY crash - it could have been avoided by not trading over Christmas and New Year. In generall this is the most dangerous time due to lov liquidity. also End of July - August is a time where it's good to have a break to be on the very safe side, ;-)

-> but in general, do you have a solution for such flash crashes, not only for your EA, but in general? I don't believe any stop losses can work in such situation, it's not controllable. what is your method?"



- the closes the day of the flash jpy/aud crash (the two currencies were affected, was a double crash!) , in some orders weren't in the worst price, but in others, I have closes in prices that never were exist, because I suppose that in some moments, the spread was ultra wide. Some of the orders were closed more than 100 pips far of the worst price....

SL is not controlable in this  kind of situation, but still acts as protection although the price goes much far.

What is the way for prevent? two, the first is what you has told, learn from previous experience and in this dates of very low liquidity deactivate the EA is very smart. My EAs don't control this kind of calendar situations for the moment, so for the moment, must be a manual action. Or for example, disconnect the EA the day of the brexit vote or similar....

The second, is diversify, diversify, diversify. In this sense I always work, I recommend to use EAs that works with different pairs / systems / timeframes... and if is possible, merge different good EAs the most uncorrelated possible, not use the 100% of balance in every EA obviously, and in this way, is virtually impossible to see your account with a big damage from one day to another. Can happens that if the systems don't works, you enter in a progressive losses, but at least, if you use systems very diversified, and still better, more than one system, you know that you are safe in this sense.

So, in systems like SFE Night Scalper, has been hitted 100% by the crash, but because is a very diversified systems which use a lot of pairs, this big loses in some pairs didn't were the wipe of the account, like happened with other systems that bets all on few trades or even worse, these sytems that never close the losing trades!

In the Night Scalper, after that day, I rebalanced the weight of the trades in the different pairs ,and the weight of the JPY and AUD trades was decreased because these two currencies are the more dangerous at these hours. I also changed the management of the opened orders, trying to exit more quick with exits in steps, this way the exposition at a punctual moment can be more little than previous versions.

And the day of the CHF crash some years ago, SFE Price Action were hitted also in some trades, but the same, is very diversified, and was a day with a big lose but was recovered in few weeks.

Obiously I can't guarantee continuous profit, and some of my EAs are currently in drawdawn or stagnation process, but in all these years, I don't have news that any of the users of my EAs has wipped his account. For this reason, I think that all this that I said is 'correct' and is confirmed by the facts.
« Last Edit: August 15, 2019, 02:35:27 AM by Attractor »

Castellers de Vilafranca

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Re: do you have a solution for such flash crashes?
« Reply #1 on: October 15, 2019, 09:43:56 PM »
Unfortunately I was one of these traders that lost a whole account this Jan 2019 on the AUD flash crash. In 2-4 mins my whole account margin called and into minus money where I even had to owe the broker thousands of dollars. The worst thing is that within 8 minutes after prices were back, ans then within 1 hour my account would of been making even great profits.

This was all manual trading that I did myself but I was over leveraged and there was no stop losses set. What you should be careful of is that during the flash crash the broker will close out trades in a terrible order. It means that your account balance goes down fast, then you end up margin called. But the most important thing is that during these flash crashes the spread becomes hundereds of pips. So even though on the chart afterwards it looks like you should of made profit, in fact you lose because of the spread jumping to 50 or even 200 pips. In this if you are overleveraged you can do absolutely nothing. The only thing that will save you will be to have enough money in the account to stop the spread from margin calling you. If i had an extra 20% money in my account for this flash crash then i would of received no margin call, then in 1 hour I would of had 10-15% profit, but instead i had 110% loss. Very heartbreaking and very stressful.

This is why I now try some EA's. And this is why I will never trade with 100% of my account on a single strategy.

This is also why I am cautious with something like the GBP this very instant for the Brexit news this week/end of month. I rather lose the potential to make 3% on GBP in this time than to risk a GBP flash crash. i would recommend everyone else take this advice. It is better to play the long game than to try to get rich quick. Trust me I know all too well.

There is another night scalper, very successful. It is called Cyborg. Probably Joel's competitor, it uses a very smart risk setting where it only will allow 2 trades per currency to reduce risk. Well even with this safety feature it still lost 10% yesterday just because of 2 GBP pairs. What the owners of that night scalper EA should of done was disable GBP completely like Joel has given the option of on his EA's.

Anyway i hope my terrible story helps someone else to not lose money. For me it has been a very bad year because of this flash crash. I had to get another job, I had problems with my wife, and it put a lot of stress in my life. So always think of the risk and not of the gains.

Attractor

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Re: do you have a solution for such flash crashes?
« Reply #2 on: October 16, 2019, 12:02:41 AM »
Wow, thank you for share this experience, one of the objectives of this forum is give to the people true information about forex, from the side of retail (but not dumb) traders like us, and usually the reality is a lot more hard than the runners of the business want to explain, and also we have a sea plenty of scams in form of EAs, courses, etc...

For this reason this kind of comments are very apreciate.

And what to say about the brokers... at this moments, they can do whatever want, this market is not centralized and if they want to put 10, 20, 200 pips of spread, they will do it.

For this reason, diversify and diversify is the key. Is not easy because how many profitable systems are out there? really seems that aren't not much. But for my side I never surrender and I search and search for improve the existent and find new systems. I agree Cyborg is a good system and it's true is similar to Stealth, are in the same league.

I'm excited when in next months I will cross calendar information with the development of the EAs, I think this will help to avoid some situations.

Talking about the AUD / JPY flash crash, we have to remember that TWO! currencies were affected, not only one, this happened a the begin of the new year. I have been searching information, and one thing that is true, is that the FOREX market is opened more days than the central banks or the main banks that provide the liquidity, then, these days when the big players are closed, but the forex market is opened, are VERY RISKY days, because the liquidity is very low, and problably this explain part of what happened that black day.

For this reason, in the current versions of SFE Night Scalper and SFE Stealth, I disabled trading form December 20 to January 8.

Jimmy

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Re: do you have a solution for such flash crashes?
« Reply #3 on: October 16, 2019, 01:05:07 PM »
Thanks for sharing your experience. Itís painful and I totally understand how you feel...I also lost about $50K in one night a few years back, and  my wife was very very angry at me... :'(

I am just glad that I stumbled upon SFE Price Action and Joel in 2016 whose systems are robust and actually trade with proper statistics and probability to get a long term edge over the market.

I am sure if you stick to Joelís systems and use reasonable risk, you will be able to eventually make back your losses and start making profit just like me :)