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Importance of Trading Consistency using Investible Attributes with Darwinex

In the previous post on trading consistency, the focus was on the consistency of returns. A strategy with the same fixed take-profit and stop-loss levels will generally have a high returns consistency.

However, not all strategies follow these fixed take-profit and stop-loss levels. Seasonality strategies, for instance, usually have time-based entries and exits. The entries and exits will be at the same time of day, or week, or month. Similarly, the exit criteria will usually be at a specified time.

A strategy that opens a trade at London Open and closes the trade at London Close is an excellent example of a seasonality trade. Now, this strategy trades in a consistent manner, but the returns will have a higher variation than a strategy that uses a fixed TP/SL.

Does this mean that a lower returns consistency means a lower trading consistency?

Not at all; it just means another way of measuring it is needed. For this reason, Darwinex created the Duration consistency (Dc) Investible Attribute. The (Dc) IA measures the consistency of when a trade is closed based on using time as a factor, not the returns.

With this in mind, it’s reasonable to assume that a DARWIN with a high (Dc) score may not have a high (R+/R-) score. As an investor, you can use this knowledge to provide clues on how the underlying strategy may operate.

Of course, the underlying system may have multiple components, in which case it may have high or low scores in both Investible Attributes. The key take-home point here is that you have tools at your disposal to help you make informed choices.

As traders and investors, that’s all you can do. Make the best decisions you can with a suitable amount of information and data.

If you need further insight on Darwinexs’ Investible Attributes, don’t hesitate to reach out to us at info@darwinex.com and we’ll be happy to help.

Brought to you by Darwinex: UK FCA Regulated Broker, Asset Manager & Trader Exchange where Traders can legally attract Investor Capital and charge Performance Fees.

Risk disclosure:
https://www.darwinex.com/legal/risk-disclaimer


Content Disclaimer: The contents of this video (and all other videos by the presenter) are for educational purposes only, and are not to be construed as financial and/or investment advice.

PROs and CONs of Commercial Expert Advisors Trading Strategy Analysis Trading Strategy Analysis

Trading Strategy Analysis using Darwinex’s Investible Attributes

The last post showed how to create a free user account to use Darwinex’s Investible Attributes for Trading Strategy Analysis. Before diving into this further, it’s vital that you know the basics to allow you to get the most from these tools. 

Firstly, you need to create a free basic account and link your existing trading account from your current broker. To Link your trading account, you can follow this guide.

Once you’ve completed a few simple steps, you’ll be able to analyse the linked account within 24-48 hours

Next, you’ll need to familiarise yourself with what each of the Investable Attributes cover. We’ll be covering these in detail, so keep your eyes on social media for updates. 

Should you decide that you want to compete for a share of Darwinex’s Prop allowance called DarwinIA, you’ll need to create a funded account with Darwinex.

Darwinex invests up to €45 million every year in the top 120 traders. Darwinex announces new allocations monthly, and the allocation is for six months.

As an example, NWO currently has €462,000 of DarwinIA capital allocated to it. 

This allocation is only available to Darwinex clients who have created a DARWIN. A further benefit of having a DARWIN is commission rebates. If your DARWIN achieves a 60+ D-Score at month-end, you’ll get a 40% reduction in commissions on ALL trading accounts. 

Back to the Trading Strategy Analysis

Deciding on the best entry and exit times is often an overlooked variable. If you use Trading Indicators, it’s hard to know if an earlier or later entry or exit would improve performance. 

Darwinexs’ Open Strategy/Close Strategy Investible Attributes have you covered. The (Os/Cs) IAs run a what-if scenario on each trade. What would the trade outcome be if I entered/exited earlier or later? 

I run a strategy that uses overbought/sold signals from a MACD; timing adjustment won’t help me. 

True, you can’t directly adjust your timing to an earlier entry. But you can Investigate other parameters within the indicator to see if changing the variables in line with earlier or later entries provides any benefit. If it appears your entering too early, you could delay entry after the signal is received. 

The (Os/Cs) IA excels in analysing time-based strategies entries, such as exploiting seasonality effects.

Let’s run a hypothetical scenario. 

The hypothesis of this strategy looks to open a momentum trade on EURUSD at London open and close at London close. If at 8 am Price is above the 20 SMA on the hourly chart, it goes long. If it is below, it goes short. The trade closes at 4:30 pm. 

In this scenario, the (Os/Cs) IA will rank the quality of entry/exit compared to simulated alternatives. The trade duration is 510 mins (8.5 hours x 60 mins).

The simulation runs ten alternatives in 10% increments of the trade duration (51 mins) from -50% to 50% on both the open and close time. 

So in this example, 7:09, 6:18, etc.

This simulation allows you to clearly and quickly see if your entry/exit times are optimum. You could monitor this monthly and try to forecast changes in the market, allowing you to adjust accordingly.

Alternatively, you could use this information to adjust entries and exits.

The purpose of using the Investible Attributes for Trading Strategy Analysis is to provide you with different levels of easily accessible and digestible trading information to allow you to make informed trading decisions

Whether you use these metrics to inform trading decisions or just use them as a filter to priorities your research effort. They’re available to you should you choose to use them. 

Brought to you by Darwinex: UK FCA Regulated Broker, Asset Manager & Trader Exchange where Traders can legally attract Investor Capital and charge Performance Fees.

Risk disclosure:
https://www.darwinex.com/legal/risk-disclaimer


Content Disclaimer: The contents of this video (and all other videos by the presenter) are for educational purposes only, and are not to be construed as financial and/or investment advice.