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ABOVE GRAPH IS LIVE | THIS IS A LIVE FEED OF A LIVE ACCOUNT ON THE BEA-1 SYSTEM
BEA-1 is a simple day trading system
that attempts to capitalize on trends by taking large amounts of small profits (high frequency, low individual profit), as opposed to more complicated systems that may have more complicated entry and exit logic.
The system includes an indicator that will determine the market trend. As long as this indicator is correct, multiple small profits will be taken. If it is wrong, it will increase it’s position based on a separate market timing indicator, until it is profitable.
Risk is controlled individually, by pair.
For example, if the manager decides the max risk of AUD/USD to be 2%, then if the floating loss is greater than 2% on AUD/USD, the system will close on AUD/USD if the floating loss is greater than 2%.
Therefore, this system should be executed as a portfolio, which would include the system being loaded on a combination of pairs. As an example, the manager could load BEA-1 on 8 pairs, each with 1% risk, adding up to a total of 8% risk. This is a total risk, it does not suggest that the system would continually realize an 8% risk.
1% stop out vs. maximum capital gain.
With BEA-1 it is important to optimize for the best risk/reward settings according to potential realization of 1% stop out vs. maximum capital gain.
This can be done by backtesting or other methodologies, although they can only serve as a guideline for particular pairs, as no one can model what will happen in the future.
Simple, Stable, and Controllable.
This system is simple, stable, and controllable. It does experience drawdowns, and it is not the holy grail.
However, the developers have tested thousands of EA systems, and while this system has it’s flaws, it has proven to be more functional than many more sophistocated EAs due to it’s simplicity, stability, and controllable risk factors. While there are risks, the risks are known and controllable.
Mathematically Simple Risk vs. Hidden Risk
In a high risk environment, the system generated nearly 25%/month for 3 months. In the 4th month, the system (as of this writing) is down 4.9%. As the system is dependent on risk/reward variables, 25%/month could be 2.5% / month.
The simplicity of the system allows managers to understand the simple math of the risk compared to systems with hidden risks. This control allows managers to decide the risk appropriate for the account, either based on the circumstances of the account or based on market conditions.