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Tutorial Easy Ways to See Quality Signals on the MQL5 Site | Cara Menilai Kualitas Sinyal MQ5

Discussion in 'Tutorial Forum' started by Budiman Cahyo CPA, 01 Jan 2022.

  1. Budiman Cahyo CPA

    Budiman Cahyo CPA Member Credit Hunter

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    Easy Ways to Assess the Quality of Trading Signals on the MQL5 Site | Cara Mudah Menilai Kualitas Sinyal Trading di Situs MQL5

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    Tips for choosing a good signal provider. MQL5.com is a site provided by MetaQuotes Software Corp. as a social trading service. The features provided in MQL5 are very complete because they are intended to evaluate the trading quality of a trader for consideration by potential investors/potential copyists. The easiest way to judge the quality of a trading signal is to look at the total growth in the signal provider's account and see the reliability of the signal.

    The picture above is the top rank of a good signal provider, it can be seen from the growth of the account and the reliability in green.

    But actually it is not enough just to look at the total growth and reliability, we should look at the detailed trading statistics. There is a lot of trading data displayed, which is actually not all important, to assess the quality of a signal, you just focus on these 4 things besides trading growth and reliability. 4 things to watch out for are:

    1. Trading Activity
    2. Drawdown Graphics.
    3. Deposit Load Chart.
    4. MFE and MAE Distribution.


    1. Trading Activity
    The trading time is determined by the rules used by the signal provider. Long-term strategies can usually open positions of up to weeks, whereas scalpers usually open positions for only a few minutes to several hours.
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    Trading Activity is displayed as a percentage of the total time when there were open positions in the trading account. If the number is close to 100%, it means that the account has almost always an open position, which also means that the subscriber's capital is also at risk because of the always open position. For example, when a position is always open, suddenly there is news and then the price moves significantly, then the subscriber can experience a large loss, and it is even more dangerous if the signal is not accompanied by a Stop Loss.

    You may ask, what kind of trading can be close to 100% trading activity? Trading with the martingale system such as grid trading with averaging techniques makes a trader's account always have an open position all the time as long as it is not clear when it is still experiencing a floating minus.

    You should be suspicious of this high trading activity because signal providers may carry out averaging which is a big risk because there are always open positions all the time. Because averaging can cause margin calls and stop outs.

    On the other hand, if trading activity is low, it indicates that the trader is a scalper. Scalpers usually enter the market in a very short time, only a matter of minutes to a matter of hours. You might think that it's good, because the trader is a scalper in and out of the market quickly, but you need to be careful because a scalper wants to make profits in a short time, a scalper can apply high risk in every position, some even don't use stops. loss too.

    Then ideally you should look for the middle one, which is around 50%, meaning that the trader is not the one who holds positions continuously and is not also a scalper, but if trading activity is high and every time the position is floating profit then that is good, because the trader usually let profit until he is hit by take profit or until he makes as much profit as he wants

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    2. Drawdown Chart

    Account balance and capital are monitored since the first signal is made, the difference between account capital and account balance will be positive if it shows floating profit and will be negative if it shows floating minus. Now the negative is what is called a drawdown. There are 2 types of drawdown, namely drawdown based on balance and based on equity. Based on the balance when there are open positions, and your positions have experienced a minus before finally making a profit, whereas if the drawdown is based on equity, it is a drawdown when at the beginning of trading, you experience a losing streak, i.e. many positions are hit by SL or you cut losses so you experience a drawdown before the next position is profitable. Keep in mind that the bigger the drawdown, it means you need to provide sufficient capital and be able to close the drawdown before the next position is profitable.
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    The picture above is a trader with an ideal trading activity and also with a very small drawdown. The biggest drawdown ever experienced was in September 2018 which was 27%.
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    3. Deposit Load Chart
    The next thing to consider when evaluating trading signals is the Deposit Load Chart. This graph shows what is the largest margin ever used to open a position. This section is quite important because it relates to risk management, which is also why the deposit load graph section is in the risk tab.

    Deposit Load = Margin / Equity * 100%

    For example, if the account capital is $10,000 and the required margin to open a position is $5000, then the deposit load is 50%, which means that the trader uses half of his capital as margin to open a position. Margin depends on leverage, because the smaller the leverage, the smaller the margin needed to open a position. An account with a leverage of 1:500 will need 5x less than an account with a leverage of 1:100. In the picture above the trading signal uses a small leverage of 1:50 so naturally the deposit load is also small, because of the large margin requirement the trader cannot open a large position with a large volume, in terms of risk the trader is a trader who manages risk very well without using a large leverage.
    load chart.jpg

    But you have to be careful too, if the max deposit load history has ever reached 90%, it means that the trader is almost MC because he uses 90% margin to open a position, meaning that he has little free margin left. So when the deposit load was high, the trader had time to open a lot of positions using a margin of up to 90% of his capital.
    Actually you can limit the deposit load on your account when copying signals from that trader by making settings on MetaTrader 4 as shown below.
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    4. MAE and MFE Distribution
    Now this is important, the trader's risk is displayed on the deposit load chart, and below that there are MAE and MFE charts. MFE and MAE are mathematical calculations in trading, details of which are here.

    Because the explanation is long, I will only explain briefly. Look at the image below.
    MAE.png
    The more green dots on the MFE chart, it means that the trader does not use take profit and uses the let profit run principle. Meanwhile, the more red dots on the MAE chart, it means that the trader rarely uses stop losses. Trading without a stop loss is dangerous because there is no clear risk limit.
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    Conclusion
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    Based on the 4 criteria above, you can already assess the quality of a good trading signal portfolio. Signals with very low trading activity (<5%) can also be a problem, because it means that the trader rarely opens a position/enters the market, even in a month he can only enter the market 1 or 2 times so that the profit per month will not necessarily cover it. signal subscription fee (because copy trade service in MQL5 nothing is free except demo account).

    A high drawdown also indicates a high profit potential but is worth the increased risk.

    A high deposit load especially with a large leverage on a signal provider account will make the copying account a loss if the leverage is small/unequal, because the copyist account does not have enough margin to open a position. That is why the leverage of the signal provider account and the copyist account must be the same.

    The MFE and MAE charts can be used to see how often the signal provider's traders use take profit and stop loss.

    Thus the trading article on how to evaluate trading signals in MQL5. Hopefully this article is useful, especially for those of you who want to copy trades from traders who are already consistently profitable.

    Source Information https://memberforex.com/cara-mudah-menilai-kualitas-sinyal-trading-di-situs-mql5/
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    Last edited: 01 Jan 2022

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