Service myfxbook: Learning to read EA monitoring correctly. Part 1

Using myfxbook Expert Advisor monitoring when trading is considered good form these days. It's used by every self-respecting seller Advisors, a PAMM-account manager, a trader who demonstrates the results of his trade to attract investors. However, the analysis of monitoring service myfxbook causes a number of difficulties for many, especially beginners, whose eyes from the abundance of information are scattered, and they do not see anything but going up the balance curve.

What is the correct way to read trade monitoring using the myfxbook service? Let's take the robot monitoring as an example.

Characteristics of the trading account

We start reading the myfxbook EA monitoring from the beginning, that is, from the top.

Pay attention to the following indicators:

• Real is a type of account. The myfxbook service confirms that the account is real. When monitoring demo accounts there will be an inscription "Demo". It's no secret that execution of trading orders on real and demo accounts is different. There are also a number of Expert Advisors that show profitable work on a demo account, and do not trade on a real account at all. On the one hand, using a demo account for monitoring already makes you think twice. On the other hand, a demo account is better than no monitoring at all.
• USD is the base currency of the account. This means that the account is a dollar account, not a cent account. For cent accounts the inscription "USD Cent" will be present. It should be noted that before the myfxbook service did not distinguish Regular and cent accountsTherefore, a cent account of $100 (10,000 cents) was displayed as $10,000.
• DivenFx is the name of the broker where the account is opened. This is also a very important point. For example, there is an account monitoring where the trading expert demonstrates a super profitable trade, but the account is opened at a broker about which nobody has even heard - this is another reason to think. For reference, some brokers may offer accounts with "special" conditions for the EA to get a nice "picture" of monitoring.

Information about the account and its owner

Let's move on up to the top.

• Track Record Verified field. The green check mark in this field is an indication that the trading history of this account has been verified by the myfxbook service to access the account using investor password. That is, the trading history, which is at the broker, is identical to that on the service. In case the check for some reason has not been passed, in this field will be a red cross. It is worth noting that the myfxbook service checks the trading history at a sufficiently high level and inspires confidence, of course, within reasonable limits.
• Trading Privileges Verified. A green check mark is a confirmation that the account owner has been verified by the myfxbook service and it is the account owner who performs trading operations on this account, and the account monitoring is not exposed by a third party who has the investor password. If the myfxbook service does not have reliable information on who carries out trading operations on a particular account, this field will contain a red cross.

Updating the bidding results

Before proceeding directly to the trading results, you should pay attention to the date the information was last updated.

If you see a similar picture - there is no reason to worry, the information about the trade has been updated. Otherwise, it may be a sign that the account is simply lost, and the owner has not updated the monitoring after "plummeting". It is also possible the usual "freezing" of the monitoring, which began to happen sometimes on myfxbook after the update of the MetaTrader 4 platform to build 600+.

Defining an Expert Advisor Type

Now we can move on to analyzing the trading results of the Expert Advisor. The name of the Expert Advisor may not say anything specific, so first of all, we have to find out if we are dealing with a robot that uses in trading Martingale method. To do this, it is necessary to compare the results of trading expressed in currency and in pips.

For example, in the scalper's monitoring the profit in both currency and pips will be a positive number.

Advisors that use the Martingale method of trading, as a rule, have positive profit in currency and negative profit in pips. This is a characteristic feature of averaging unprofitable positions by increased lot.

Another sign of experts using the Martingale method is the presence of characteristic yellow line depressions on the chart. In trader's slang such dips are called "bruises".

The red line on the graph shows the balance curve, the yellow line - the curve of free funds or equity. If the yellow line is much lower than the red line - it is a characteristic sign of a significant open drawdowns. In this case, if the gaps are narrow and have a sharp shape, it means that the Expert Advisor uses the Martingale method. If the lines "break off" from each other for a long time, it is a sign that the Expert Advisor does not close the losing trade, hoping for a price pullback, that is, it simply "survives" the loss.

Profitability and profitability of the Expert Advisor

So, the type of Expert Advisor is determined, we can move on to the trading results. The profitability of the Expert Advisor on the myfxbook service is demonstrated by the Gain and Absolute Gain parameters.

What is the difference between these parameters? The word "Gain" in English means profit.

The Absolute Gain parameter is calculated as the ratio of the total profit to the total amount of funds deposited into the account, multiplied by 100. To apply to Figure 10, Absolute Gain = $6,377.49/1000.65 x 100 = 637.33%. Nothing complicated here.

With the Gain parameter, things are a bit more complicated. First, you have to read the "drop-down" help.

Two things are clear from the description:

• In the myfxbook service, profits are calculated for each trade separately as a percentage, and then the profits are summed up as compound interest. In practice, it looks something like this. For example, two trades are closed with a profit of 30% each. The calculation is not simply adding 30% + 30% + 30% = 90% but as follows (1+0.3) x (1+0.3) x 100% = 169%.
• To calculate the profit as a percentage for each trade, only two values are taken: the account balance when opening the trade and the profit on the trade. The deal profit (in currency) is divided by the account balance (in dollars), the obtained result is multiplied by 100% and the deal profit in percent is obtained.

What are all these descriptions and calculations for? One important conclusion can be drawn from them. If an Expert Advisor trades by one order rather than by a basket of orders, and calculates the volume of a position to be opened as a percentage of the account balance, then the deposit or withdrawal of funds will not affect the Time-Weighted Return (TWR) parameter, which is described in the help and is the main one in the myfxbook service. In practice it is expressed as follows. Let's take the previous example. One closed trade has brought 30% to the initial amount of money in the account. Now we open a trade with the volume increased by 10 times and it brings another 30%. The Gain (TWR) = (1 + 0.3) x (1 + 0.3) x 100% = the same 169%.

What is the purpose of this indicator? Simply put, the Gain parameter is a characteristic of the profitability of the Expert Advisor (trading strategy) at full reinvestment of the gained profit, that is, the increase in the volume of the next transaction at the profit of the previous one. The Absolute Gain parameter is an indicator of actual profit on the account.

Which parameter to choose as a reference point depends on the type of Expert Advisor. For example, for a scalping Expert Advisor, it is better to focus on the Gain parameter, because it is not affected by input or output. For Martingale advisors, the Absolute Gain parameter will be more important, because periodic profit withdrawal is an element of this strategy.

Drawdown analysis

In addition to the profitability of the Expert Advisor, the value of the maximum drawdown plays an important role. The drawdown can be of two types: fixed (all losing trades are closed, the loss is taken to the account) and open or floating (losing trades are not closed, the amount in the account remains the same, the loss only affects the amount of free funds). In the myfxbook service the value of the maximum fixed drawdown is displayed in the Drawdown tab and the left panel.

The attentive reader may notice that the numbers on the right and left are different: on the left the maximum drawdown is 99.99%, on the right - a little less than 60%. Which figure should we trust?

The most accurate value is the value in the left panel. Its value is always greater than or equal to the value in the tab.

Why are they different? The explanation is simple. The drawdown on the Drawdown tab is fixed only at closing of a position in the account, it is not visible on the open trades (it should be noted that the floating drawdown is not shown on the balance and equity diagram either). The value in the left panel includes the open drawdown, that is why they are different.

Can the actual drawdown exceed the one displayed in the monitoring on myfxbook? Yes, it can. It all comes down to how often the trade results are updated. For example, if you analyze EA monitoring which is updated, for example, once a week, then the real open drawdown may be higher than the one that is displayed at the moment of monitoring updating. Another option is to connect an account, on which you have already traded, to the myfxbook service. In this case the service will gain access to the trading history, but the information on the possible floating drawdown is not available. Therefore, the drawdown value in myfxbook monitoring should be taken with caution.

In fact, the myfxbook service includes many tools that can be used to thoroughly analyze trades that we haven't even mentioned. Therefore, we will continue learning how to read EA monitoring on myfxbook properly in the next issue.

Continued