Last week I wrote a post which was fairly optimistic about the trading of the Pointbreak expert advisor. I said that I was convinced about the trading strategy, it's closing and opening mechanisms, etc. But well, to err is human. The expert advisor itself has shown me this week how all I believed it was supposed to do was incorrect.
I had the following notions about Pointbreak (maybe you have them too) . I though that the expert :
- should make profits when there is a strong trend
- was supposed to keep draw down at a low level (below 7% at least)
- is supposed to give a 10% annual return
- controls draw down effectively
This week, Pointbreak showed me how all of them (except the 10% annual return which I did not prove or disprove) are - in my opinion - not entirely correct. The expert advisor managed to obtain a massive open draw down (for the conservative setting) which was above 9%. This puts the annual risk reward ratio in the 1:1 area, something that is way too risky for the amount of profit I am waiting to obtain.
The EUR/USD also clearly trended upwards from the beginning of this week (see chart below). Pointbreak didn't show this on it's results, only increasing it's open draw down as it accumulated sell orders (something I wouldn't have expected it to do).
This puts a question on my mind. How much does it have to accumulate to realize a loss ? It is clear on my mind that if it didn't close trades with a 9% open draw down then this may happen with a larger loss, this for me, to win only a 10% yearly profit (as they say this is what they guarantee) , is clearly unacceptable.
This of course, has made me decide to stop trading the Pointbreak expert advisor. My final opinion on this expert advisor is then pretty clear. I consider it - through careful examination of forward testing results - to be extremely risky for the amount of profit obtained. I consider the risk of a massive draw down due to sudden market movements a reality and I also consider the margin requirement of Pointbreak to be excessive for it's risk reward ratio.
The expert has clearly showed me that it does not catch trends as accurately as I would have liked, it also showed me that it does not close positions even on a 9% open draw down and it also showed me that profit accumulation is excessively slow and accompanied with an almost hidden open draw down risk. You have seen my comments (both positive and negative) on the forward testing results. You can see the trading statement here. Judge for yourselves.