Hi there merchants,
We’re happy to announce a major replace to our Skilled Advisor (EA), accessible by the MQL5 Market, which introduces a brand new danger administration device designed to guard your capital and improve long-term profitability: the Forex Publicity Filter.
The Hidden Threat in Multi-Pair Buying and selling
Many foreign exchange merchants diversify throughout totally different foreign money pairs to unfold danger. Nevertheless, this method can result in unintended over-exposure to a single foreign money course.
Contemplate this situation:
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Promote AUD/USD (promoting AUD)
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Purchase EUR/AUD (promoting AUD)
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Promote AUD/JPY (promoting AUD)
These seem as three distinct trades, however they lead to triple publicity to AUD weak point. If the AUD strengthens unexpectedly, all three positions may incur vital losses concurrently.
What’s the Forex Publicity Filter?
The Forex Publicity Filter is an clever danger administration device that forestalls over-concentration in any single foreign money course. It analyzes every potential commerce to find out:
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Which foreign money you’re shopping for.
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Which foreign money you’re promoting.
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The variety of present positions in the identical foreign money course.
How It Works
Earlier than opening a brand new place, the filter performs the next checks:
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Forex Path Evaluation: For a EUR/AUD purchase sign:
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Shopping for EUR ✓
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Promoting AUD ✓
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Publicity Depend: Counting present positions promoting AUD:
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Threat Choice: With a setting of Max Forex Publicity = 2:
Actual-World Demonstration: Backtest Outcomes
To show the effectiveness of this characteristic, we carried out backtests with varied settings.
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Backtest Interval: January 1, 2020 – July 26, 2024
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Preliminary Capital: $100,000
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EA Settings: Default settings, various solely the filter parameters.
Situation 1: Default Settings (Filter OFF)
With out the filter, the EA operates as in earlier variations, with no restrict on trades in a single foreign money course.
(Picture 1: Default Enter Settings)
The outcomes present excessive revenue potential however vital drawdown when the market strikes towards concentrated positions.
(Picture 2: Default Backtest Outcomes)
Situation 2: Filter ON, Max 1 Place/Path
This conservative setting ensures the EA by no means opens a couple of purchase or promote place for a similar foreign money.
(Picture 3: Enter Settings with Max Publicity = 1)
The outcomes show a major discount in drawdown, providing enhanced account safety at the price of decrease income attributable to skipped buying and selling alternatives.
(Picture 4: Backtest Outcomes with Max Publicity = 1)
Situation 3: Filter ON, Max 2 Positions/Path (Really useful)
This setting balances security and profitability, permitting the EA to capitalize on alternatives whereas controlling concentrated danger.
(Picture 5: Enter Settings with Max Publicity = 2)
The outcomes present managed drawdown with enticing revenue ranges, making this our really helpful beginning setting.
(Picture 6: Backtest Outcomes with Max Publicity = 2)
Situation 4: Filter ON, Max 4 Positions/Path
This setting gives extra flexibility, approaching default habits whereas sustaining a primary layer of safety.
(Picture 7: Enter Settings with Max Publicity = 4)
The outcomes point out larger income than Situations 2 and three, however with elevated drawdown, appropriate for merchants with larger danger tolerance.
(Picture 8: Backtest Outcomes with Max Publicity = 4)
Essential Word: Threat vs. Reward Commerce-Off
Enabling the Forex Publicity Filter reduces drawdown, enhancing account safety. Nevertheless, this may increasingly decrease income by skipping trades that exceed the danger restrict. Disabling the filter or setting a excessive restrict will increase buying and selling alternatives and potential income but in addition raises the danger of upper drawdown. Select the setting that aligns together with your danger urge for food.
Integration with the Correlation Filter
The Forex Publicity Filter enhances our present Correlation Filter, creating a strong dual-layer safety system:
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Correlation Filter: Prevents extreme trades on extremely correlated pairs (e.g., EUR/USD and GBP/USD).
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Forex Publicity Filter: Limits over-exposure to a single foreign money (e.g., promoting AUD).
Get Began At this time
The Forex Publicity Filter is now accessible within the newest replace of our EA, accessible through the MQL5 Market. We suggest beginning with the Max Publicity = 2 setting and adjusting primarily based in your danger tolerance. Obtain the replace from the MQL5 Market to combine this characteristic into your buying and selling technique.
Efficient danger administration prioritizes long-term profitability and capital safety over short-term alternatives. Generally, the most effective commerce is the one you keep away from.
Joyful buying and selling!