The Algo Bot Losses: My Experience and Lessons Learned - Algorithmic Trading 4UAlgorithmic Trading 4U

Fixing A Bad Tractor

When I started with my first “tractor”, I was very accepting of all of its behaviors. It didn’t matter if I kicked its tires and begged it to be a better bot. I had no other choice. Now that the farm is producing from a number of different fields, I do have the ability to compare.

The first tractor that fell into this category was my EFX Octane bot. I ranted about this bots issues in numerous posts before. The biggest failure is the bots inability to manage trades should something happen to the hardware, software, or internet connection. After a significant loss where these issues were factors, I decided I could no longer tolerate an algo trading bot without these abilities. I shut this bot down.

EFX will try to blame me, but they share responsibility for some of this loss.

The second tractor that caused me a loss was caused by me. The Precision bot scalps gold. And, it scalps it well unless the owner gets greedy. While scalping, it takes many trading positions. Multiple positions allows the “Take Profit” price to be reduced. (Each new position influences the take profit value.) If there is a extreme change in the gold price, Precision will be impacted. And, if the lot sizes chosen are larger than the recommendations, a large drawdown/loss can result.

How did I solves this problem? I made sure the lot sizes for Precision were conservative for the account size. It has been very consistent since these changes were made.

After April’s loss, I adjusted the lot size settings to ensure consistent results.

The third tractor issue is a little harder to define. The Aviator’s loss earlier this week may find blame in a couple of places:

The Aviator operates with a great deal of drawdown. Did I restrain it too much? Should I have allowed it to dig a deeper hole before clawing its way out to profit?
I don’t think of any last week “margin lowering” issues affected this bot. Yet, there is a little doubt.
This bot trades on just 3 Forex pairs. Was it just a crazy event that made all of these pairs choke at the same time?

Because of my doubts, I have given this bot another chance with revised settings. My fuse is short, but until further notice, it is still working the crops on my farm.