The first installed trading algorithm is a very profitable bot with an excellent track record. It trades breakouts, i.e. it detects trends when the price of a currency breaks out. See the live the performance of this bot below. If you click (right-click -> open in new tab) the image you see detailed data of the account. Myfxbook is an awesome service which shows you live (it updates every 5 minutes) every trade in an account and its detailed statistics. Futhermore it can verify accounts, i.e. it can proof that the history of trades is not manipulated and that the publisher of the account is the owner of the account. Before we go live with a algorithm, we backtest them up to 10 years back, then we go live or we do a forward test on a demp account.
"Rapier" trades in four currencies (EURUSD, GBPUSD, USDJPY, AUDUSD) which have a great liquidity and show strong trends. For all pairs Stop-Loss is between 34 and 40 pips, Take-Profit is between 43 and 55 pips. For large accounts we recommend to run the system with a lower trade size than the displaied account, maybe half the size would be suitable (so also the yearly profit would be smaller accordingly). But always remember: past profits do not garantuee profits in the future.
What is algorithmic/bot trading?
An asset or derivative is traded solely according a fixed set of rules. These rules can be programmed so that trading software can execute the trades more or less automatically.
How does algorithmic trading works?
Algorithmic trading or bot trading normally uses technical trading resp. chart analysis to place trades. There is also bot trading that uses arbitrage techniques (like HFT trading) or that execute market making. But here only automatic chart analysis is used.
The algorithms are analyzing 24h a day the chart and recognize different patterns and trends. With every incoming tick the chart is analyzed again; if certain conditions are met, a position is opened. In Forex a certain derivative is used, a so called SWAP. If you want to go long the currency pair EURUSD, you buy a SWAP EURUSD. Like that you buy e.g. 1 Lot of the SWAP EURUSD, meaning that you buy 100'000 EUR and sell 100'000 USD. To avoid that people need huge amounts of money on their Broker accounts, brokers allow leverages of 1:75 up to 1:1000. With a leverage of 1:100 you need only 1000 EUR to open a position of 100'000 EURUSD (in reality you need more than 1000 EUR, because if the position goes into loss, you have very soon less than 1000 EUR on your account).
Can algos foresee the future?
Not really, they are based on very simple guesses about the future: When a trend is established, the bot assumes that this trend will continue for some time in the future. Or when the market is in a stable state and the price breaks out, it assumes that the price will swing back (reverting to the mean technique). It can be compared to a weather forecast: The chaotic system "atmosphere" can't be calculated, but if a low pressure system is nearing with a certain speed, you can predict that there will be bad weather in x days with a high probability.
What about economic or political events like decisions of central banks?
This can’t be foreseen be anybody, let alone the price reaction on it. Many algos are turned off during the announcement of such events. There are news-trading algos which exploit specific price action of news, but they normally don't use the content of the news.
What about the pre-installed trading algorithms?
Disclaimer:
Please note that this summary of the terms does not constitute to be a prospectus of any sort, is not a solicitation for investment or an initial public offering or share/equity offering and does not pertain in any way to an offering of securities in any jurisdiction. This service is for entertaining purposes only. Trading requires risking money in pursuit of future gain. That is your decision. Do not risk any money you cannot afford to lose. This document does not take into account your own individual financial and personal circumstances. It is intended for educational purposes only and NOT as individual investment advice. Do not act on this without advice from your investment professional, who will verify what is suitable for your particular needs & circumstances. Failure to seek detailed professional personally tailored advice prior to acting could lead to you acting contrary to your own best interests & could lead to losses of capital.
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What's next?
algo.land has many good algos that can be used for the pool. But not for all sytems there are live forward tests available yet. Further, some systems must also be tested for the current broker (especially Scalpers can be very broker dependent). Other systems are not suited as they can have massive drawdowns. In the diagram below there are two systems, a NZDUSD and an AUDCAD system. The AUDCAD system is quite safe, it opens maximal 5 positions and all have the same trade size. The NZDUSD system is dangerous as it piles into losing positions and increases the trade size, so that it might even lose the whole equity (we trade such systems on our private accounts because we withdraw profits regularly). The system "Dissident Aggressor" is similar to Rapier.
The participants too can certainly contribute their own algos to the pool.
We have profitable forward- and backward-tested algorithms ready contrary to all other cryptofunds