Forex Robots Knowledge

Question 1

What is back testing?

Answer 1

The process of testing a trading strategy on prior time periods.

Question 2

Three models used in MT4 Expert Advisers listed by descending accuracy?

Answer 2

1. Every Tick
2. Control Points (Uses OHLC of Smaller Time Frame)
3. Open Price ( Uses Open of Current Time Frame)

Question 3

What is forward testing?

Answer 3

The repeated run of the best optimization results on a different time period. Such a possibility allows to eliminate the fitting of parameters on certain history data.

Question 4

What is the recommended ratio between Backtest and Forwardtest lengths?

Answer 4

3:1

Question 5

Equation for Profit Factor?

Answer 5

Profit Factor = Gross Profit / Gross Loss

Question 6

Equation for Expected Payoff?

Answer 6

Expected Payoff = Net Profit / Total Trades

Question 7

What is a trailing Stoploss?

Answer 7

The Stoploss is automatically maintained a set distance from the price and moves to control/reduce the loss from the price going against the trade.

Question 8

Three ways to import Historical Data in MT4?

Answer 8

• Use Home Key
• MetaQuotes Data (From History Center) (Note this data is different than the Brokers server!)
• 3rd Party Data

Question 9

How does MT4 calculate the values of currencies and how does that change in a 4-digit and 5-digit system?

Answer 9

MT4 calculates currency pair values based on a point. A point is defined as the least significant digit.

4-digit: 1 pip = 1 point
5-digit: 1 pip = 10 points

Question 10

What is recovery factor an indicator of and how is it calculated?

Answer 10

Recovery factor (RF) is an indicator of how quickly a system can recover from a drawdown.

RF = Net Profit / Max Drawdown

Question 11

What is a good recovery factor?

Answer 11

> 2

Question 12

What did Kirill recommend for Stability Criteria for optimization?

Answer 12

Profit Factor > 1.6
Drawdown < 10% to 15%
Recovery Factor > 2

Question 13

What is a genetic algorithm and how is used in optimization?

Answer 13

A search heuristic that mimics the process of natural selection. Used to minimize run time of optimization calculations for Forex strategies.

Question 14

Important concept of genetic algorithm?

Answer 14

Every result is unique and is not an “exact” solution.

Question 15

Five main process to implementing an Expert Adviser on a large scale account?

Answer 15

• Optimization and Backtesting
• Forward Testing
• Demo Test
• Real Test (small account)
• Rolling Optimization