HomeArticlesMegadroid Version 1.40 – Update

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Megadroid Version 1.40 – Update — 17 Comments

  1. It seems we have 4 new advanced strategies:
    – VolatilityAware
    – DollarAveraging
    – SecureProfit

    I understand the first two seem to introduce extra risks if enabled…. and it seems it’s default after the upgrade….
    I understand the third one reduces the risk, but also the profit…

    Anyone, comments?

    Richard, how do you plan to operate your account?

    Are you going to test each separately?

    Regards,
    Roger

  2. the pdf files provided dont seems to explain about the upgrade and also there were no explanation on the new variables and how it will affect the EA. Please do share if anyone here have any info.

  3. As support says:

    VolatilityAware – increases StopLoss if volatility gets higher during trading hours.

    DollarAveraging system makes extra trade in same direction if basic trade have little chances to close in profit.

    SecureProfit – closes half of the trade at 5 pips target profit. This system was added because of low volatility of the market.

  4. At this stage I’m just using the default settings i.e all 3 settings true, but that might change.

    I don’t really like the idea of increasing the stop loss.

    I don’t like dollar cost averaging either. That usually means adding to a losing position. I rarely do that even with my normal trading unless I have clear evidence that the trade is turning in my favour or, ideally, if an already profitable trade is looking great.

    I’ll have to think about it some more. I might end up disabling some of these new features,

  5. Hi Richard,

    I agree with you… I wouldn’t increase stop loss and I wouldn’t add to a losing position.

    I’m only considering the new SecureProfit feature. On yesterday’s trades (15th Nov), the first order closed with about 1 pip profit. I don’t have SecureProfit enabled already… but we can see at the “Real Case Study” on MD page that half of the order was closed at 5 pip profit…. so they have SecureProfit enabled…. and on average they got (1+5)/2=3 pips profit… better than 1 pip.

    Wasn’t your SecureProfit feature enabled? I see your trade didn’t have half position closed at 5 pips.

    I previously found that this 5 pips mark is like an average for MD profits… and I for some time I’ve been closing trades that go above that level (like a manual take profit order) with positive results. I would even prefer that the new feature could close all the position….

    Please let me know your thoughts.
    Regards
    Roger

  6. Hi Roger,

    Yes I have “SecureProfit” enabled, but it didn’t seem to have an effect.

    At this stage I might disable all 3 features before the next weeks trading session.

    The problem with the Megadroid strategy right now, is that the volatility and ranges in the forex markets are currently very low and have been that way for the past 6 months or so. We’re barely getting any trades and when we do the profits are small, but we’re still vulnerable to large losses that happen from time to time when unexpected news gets released when we have an open trade.

    So, the question really is when/if the volatility will return to the forex markets, or is this a permanent change.

  7. Richard,

    I agree with your opinion. Raising stop loss is not the answer in today’s market. MD is still making profits, though much smaller now on average. The real killer is still the unexpected news as it’s always been. So the real solution should be how to close the open trades quickly when an unexpected news happen that against our position.

    I would think MD team should be able to use their REmoteSafetyMode feature to automatically close the trade when such situation happens.

    I am quiriuous about what you and other users think of this idea.

    Cheers,
    Jamie

  8. Hi Jamie,

    I think the timing and the estimate of the impact would be the problems when implementing this idea.

    Most of the times the market starts to feel the impact before the news is made widely public. If there was some impact already, closing the trade would probably result in losses, without any chance to recover. A few times that it happens would probably wipe all profits ending up in losses.

    It’s my opinion… I would be happy if they are able to do that, but I frankly doubt it.

    Regards,
    Roger

  9. The problem is gauging the impact of a news event at the time.

    In hindsight, it’s easy to say that some unexpected news had a huge impact on EUR/USD for example, but when the news is actually unfolding, it’s unclear as to how the market will react i.e. will it move 30 pips or 300 pips?

    Trading the news is a VERY competitive and tricky endeavour. Many institutions and private traders pay a lot of money to get economic news data milliseconds before the competition. And then there’s algo’s that are activated around news events that stop run before making a clear move.

    I also trade US equities and options, and the exact same thing happens on those markets.

    So, it’s a pretty difficult task for the owners of this EA to work out when to close a trade based on a news event. The best they can do is disable trading after a major scheduled news event like FOMC, or if some other big news had hit the markets i.e. another credit crisis etc. And even then it’s really only a guess as to whether such trading conditions will be detrimental to the strategy.

    I’m not really sure if theres an easy solution with automated trading. But as a general rule, minimising the duration of the trade will reduce the chances of catching a bad news event. Averaging into trades, like this new version is doing, might reduce the trade duration, by getting a better average entry. This should mean the average trade duration is less because a break-even will be hit sooner if the trade doesn’t work.

  10. Hi people.. I used Megadroid for some time and now I have a little more experience on forex market, I think the problem is the concept… Megadroid target few pips with wide stop loss… why don’t calculate SL and TP with the old and good Risk/Reward ?! This way you would avoid a all this “suprises”.

  11. Hi Felipe,

    I think the problem is that this strategy just hasn’t worked that great over the past 12 months, although the past 2-3 months have been OK following the changes made to version 1.40, and some volatility returning to the markets. We’ll have to wait an see though.

    Megadroid has always had large losses relative to the winners, but it was quite profitable in it’s first few years because the win-rate was high, and the frequency of the large losses low. It’s a fine line though. Just a few extra large losses in a year, can have a large impact on the overall profitability. The big trap, is over-leveraging after a 2-3 month profit run, and under-estimating the large size of the inevitable losing trades.

    On “Risk/Reward”, the traditional teaching with trading is that you should have a 1:2 to ideally 1:3 ratio i.e have average winners 2-3x bigger than the losers. But, it really depends on the win-rate of the strategy.

    For example, stock swing trading strategies may have a low win rate (40%), but have wins 2-3x than the average losses. By contrast an options spread strategy might have a 90% win rate, but have losses 8x the size of the average wins. Both approaches can be profitable. It really depends on the nature of the strategy.

    I think the markets have changed a lot since 2008, mostly because of the escalation in large scale electronic trading. This means trends are more choppy. Traders seem to be adapting by holding positions for a shorter time, and so going for a higher win rate at the expense of a lower average profit relative to the loss.

    With my main trading outside forex, my own stats show my win rate is about 60-65%, but my average wins have only been about 1-1.5x my losses at this stage. In practise it’s very hard to shoot for a 1:3 Risk:reward, just because the markets are choppy. I generally try for that objective when I place trades, but in practise winning trades are closed out much earlier due to various reasons.

  12. I am a little confused by the results. ON a 10k account based on average pips what would have been the profit each month for last three months. It doesn’t seem anything like the returns shown in the website and frankly not much to write home about. Maybe I am missing something though.

  13. Hi Mark,

    The monthly trade counts and pip returns have been way down in 2013 compared to previous years.

    We’ve just been fortunate that there haven’t been any large losses thus far.

  14. I’ve ben running megadroid on 3 different practice accounts with 3 different brokers and it hasen’t traded AT ALL in 6 weeks…anyone else having suce poor performance?

  15. Hi Warwick,

    That’s strange. Megadroid has been quiet over the past 3-4 months, but you should have got 4-6 trades over that period. So there might be something wrong with your setup.

    Here’s my November results: http://www.megadroidresults.com/2013/11/01/november-2013-summary/ It wasn’t a great month, but I did get some trades through.

    Which brokers are you using?

    Are you sure the platforms are running 24/5? Megadroid opens new trades between 4 and 6 PM EST.

    Is Megadroid authenticated on your MT4 platforms?

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