Tutorial-style YouTube video by Alan Solarsh explaining how his Forex EA (expert advisor) works. He uses a roulette analogy to contrast naive Martingale doubling with his EA’s approach (40% incremental lot increases, timing mechanism, and aggregated take-profit) and describes an equity-protector that closes and reboots when a configurable share of equity is at risk. He cites multi-year backtests (six years) and gives example numeric settings to illustrate behavior.
Questions this video answers
0.2 lot
40% increase per new trade
0.27 lot (rounded down from exact 0.28)
0.39 lot
Speaker sets his to 50%; mentions others use 30%, 20%, or 5%.
Alan Solosh here, the passive income guru, in this video tutorial explains to you how the bot operates.
Right? So the best analogy I can give you is to compare it to roulette and gambling so that you can fully understand exactly how the bot operates. So let me show you how roulette works. So roulette works on a. If you're playing red or you're playing black on a roulette table, the winnings are 2 to 1. So as you can see with the picture on the right hand side, you've got a bunch of numbers. And these are the numbers that would appear as the numbers that were spun in a previous spin. So let's say your initial bet was on black and you bet $50 and red came up, you would lose the $50. But then your next bet, what you would do is the normal thing people. The normal thing that people do is that they double their bet the next bet. So let's say your next bet you bet on black again, but you bet $100. Okay? But Red comes up and you lose again. Okay? So what, you carry on doing this, okay, until you, you get the color that you've chosen, which is the black. So there you go. Black has come up and now you've won and you won $350. So what did you win? Okay, the total dollars that you won was $350. As you can see over here, you've won $350 and the total that you bet was $350. So here's your bet. 200150 equals to 350. So over three or four spins, you've basically broken even, you've made no money. Now, the only way to win in, in roulette, doing it this way is to triple your bet size. So let's have a look at what that looks like. The initial bet, you bet on black and red comes up. So what you do is, is that you triple your bet the next bit on black again, okay, which is $150. But what happens? Red comes up again and you lost again, right? So the next bet that you take is $450 and it comes up with black, and you win 450 times three, which is 1300 $50. So what did you win? You won a total of $1350. It cost you $650. That's what the bet is, $450 plus 150. 600 plus 50 is 650. And you won in total the 1350 minus the 650 is $650 profit, you've now doubled your money, okay? And that's the only way that you can actually double your money in, in roulette is when you triple your next bet if you've lost your first bet and so on. And you go like that until you win. The challenge is, is that the casinos have a table limit, usually three to four times more than your initial bet. So you can only triple once or twice. And unfortunately, this strategy doesn't work. The casinos know about it, so they've closed this loophole and there's no way to do that. So the house always wins, unfortunately. Right, so let's understand what the bot is actually doing on a. I'm going to use a 0.2 lot size and my doubling effect is going to be 40%. So each trade that the bot takes is going to be 40% larger than the previous trade. So let's have a look at an Excel spreadsheet and let me show you what 40% is, how 0.2 is increased by 40%. So if I. My first trade, this is trade one, is, is 0.2. Now if the bot has made a mistake and the trade goes into a loss of, after a certain amount of pips lost, a new trade will open, okay, at 40% more than the previous trade. So the next Trade will be 0.2 plus 40%, which is a lot size of 0.8. And the new lot size will be rounded up to. Rounded up, probably not down to 0.28. So let's go and have a look at the bot. So here is the first trade that the bot did, which was a 0.2. And, and here is the second trade. So it was rounded down to 0.27, okay, as per the, the duplicating effect. And that's how the bot is designed. So if these two trades, if the currency then goes further into a loss, then a new trade will be opened, okay, at a 40% increase, which will be the 0.28 plus that is the 40% of the 0.28 is equals to. If you add these two together, it's equals to 0.39. So there is the next trade, which is 0.39 then. And then I reset my bot with the new EA and I gave it the wrong, the wrong lot size. So unfortunately I can't continue. But if it was, if I hadn't reset my bot, then the next lot size would be 55, 77, 108 and 151, depending. Now over here is the take profit okay, so as a new trade opens, the take profit is then moved. So all these trades, okay, are lumped together. So when the last trade goes into a profit, when the last two or three trades or four trades go into a profit, as you can see here, when all these trades go into a profit over here, okay, this one will remain in a small loss against a 0.2 lot size. It's very small. Okay, when it goes into a very small loss and all these trades, the green dots is when the trade was opened, okay? So when the, when the, when the currency retraces all the way up, all these trades will be in positive. And then when the trade hits here, all the trades together will close out in a positive and you'll make a profit. Okay, so why does this work in forex and it doesn't work in roulette? Now the reason being is because you're buying at different prices. So the price is different over here as you can see. So you're entering the trade at a different price. So you're buying a currency at a specific price and when the price goes up, you'll make a bigger profit. And that's how the EA works. So what's so, you know, unfortunately on other EAs, what happens is, is that there is no timing mechanism for the, when the next trade is open. So after a certain amount of pips, the trade has made a loss, a new trade will open. Now what happens with this EA is that this EA has an algorithm that it doesn't open a trade based just on the number of pips that, that it's missed or where the trade has gone wrong. A certain amount of pips later, the trade opens, there is a timing mechanism. So if there's volatility, let's say the price spikes 20 or 30 pips, the bot realizes that there's a price spike and it'll wait for the volatility to calm down for the, for the, for the price to retrace a little bit and then it'll see that it's time, the right time has occurred for the bot to place a trade and then the bottle then place a trade. Now in normal Martingale bots is there's no timing mechanism. And what will happen is, is that the, when the price spikes, a new bot, a new, a new trade will open. When this price spikes, a new trade will open. With price box, a new trade will open. And what will happen is, is that after a certain amount of maybe 12 or 20 trades, eventually you've run out of equity and Your account is blown. Now this bot works totally differently as we know from the backtest. So from, from the year's history, from six years history, we know that the strategy that he's using is not just a Martingale strategy. He's got many different other mechanisms in his strategy that prevents the are you from blowing your account? And also you've got the equity protector. Now I've explained the equity protector before, but I'll explain it again. How the equity protector works is let's say you set the equity Protector up to 20%. It means that when 20% of your currency of your equity. Sorry, when 20% of your equity is involved in trades, then the bot will then close out all the trades in a negative position and the bot will then reboot and buy a new place, a new trade. What would have happened is you would have lost 20% of your equity and then the bot reboot. So maybe there was an anomaly or something and.
Your risk factor was 20%. You were comfortable losing 20%. Then the bot reboots and then you, you, you start trading again. So my equity Protector is on 50%. Some people is on 30%, some people is on 5%. I think 5% is way too low. I think even 20 or 30% is way too low. But it all depends on your risk profile. What I recommend is that you go through the strategy back tester to see different and set the equity protector to different values and then you can decide on a risk profile that better suits you and your personality. So just check out the equity the, the backtest strategy video in section four. I think it's video two. Go and do some strategy back tests and then you can assess your, your, your risk profile to suit your personality. So I hope you enjoyed this video. I hope you are subscribed to my channel. If you're not subscribed to my channel just under this video, on, on the right hand side of this video is a subscribe button and a little bell icon. I highly recommend that you subscribe to my video, my YouTube channel so that when I do come out with new videos, you are emailed the notification that I've come out with a new video and you can then be up to date of what's going on. So to be able to subscribe to my videos, you need to have a Gmail account. You need to be logged into your Gmail account and then you can click on the subscribe button. And next to the subscribe button is the bell icon. And the bell icon when you click it means that. YouTube will then send you a notification when I come out with new videos. So I hope you enjoyed this video and you have a better understanding of how the EA works and I'll see you on my next videos.
