Inconsistency in Maximum Drawdowns for EURUSD

williamkirin

Hello everyone,

I've recently conducted an optimization on the EURUSD currency pair with an H2 timeframe, spanning from October 16, 2022, to October 16, 2023. The set of parameters I obtained resulted in a maximum equity drawdown of just 1.94%.

However, when I applied the same parameters to a 2-year backtest (from October 16, 2021, to October 16, 2023), the maximum equity drawdown jumped to 11.33%. Is such a drastic change in drawdown considered normal when extending the backtest period?

Additionally, has anyone here had experience with the "cTrader Smart Grid Trading System" specifically for EURUSD trading? Would you recommend it as a way to potentially improve my results?

Looking forward to your insights.

clickalgo-neptune-eurusd-eurusd-h2.cbotset

2kB

Mike

Hi, William,

If you only optimised for 1 year then the settings are fitted for that time period, if you use the previous year in a backtest you are using fresh data. Optimising or data fitting only increases the probability of winning trades in fresh data but does not guarantee it. A news event could cause significant losses and the markets are unpredictable. As with all automated trading systems, use them for entry, exit and risk management, but you will also need to manage the trades yourself using your trading skills, the systems are not fully automated.

These articles should help you.

https://clickalgo.com/optimisation-guidelines

https://clickalgo.com/neptune-optimisation-handbook

Most traders optimise regularly over short periods.

williamkirin

Hi Mike,

Thank you for your quick and insightful response.

I'm relatively new to algo trading and cBot, so I'm still exploring different strategies and systems. Since you've mentioned that most traders optimise regularly over short periods, I've been re-optimizing my parameters either weekly or bi-weekly to adjust to market conditions.

I'm considering other options as well, like the "cTrader Smart Grid Trading System". Given your experience, how would you compare its trading strategies for EURUSD against those of Neptune? Is one generally better-suited for risk management and consistency?

Your advice would be highly valuable to me as I continue to fine-tune my trading setup.

Mike

Hi, The Neptune system provides easy optimisation for data fitting with only a few adjustments for risk management, it is based on 50+ trend indicators, so it works only in trends.

The smart grid system allows much more customization but requires much skill to adjust for each symbol and knowledge of when to turn on or off the system, you can also use it for any symbols, Crypto, Indices or Forex, where the Neptune system is only for the 10 major Forex pairs.

I would download the trial of the smart grid and see if you can provide good backtest results for the symbols you want to trade.

But for both systems, you need good trading skills to also manage the trades and know when to turn them off when the markets become volatile.