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Steady Winner EA v5 - Expert Advisor Review

As Expert Advisors go, the Steady Winner EA has got to be one of the most transparent MT4 EAs on the market today.

Steady Winner EANot only is the Steady Winner website informative, containing test results together with lots of useful information about the EA, but Henry and Ming, the EA's developers, are very helpful and open in their approach, and you get the instant impression that they do genuinely care about their users and understand what it will take for them to succeed.

There's even a free copy of the EA available for download which only works on small accounts so that prospective users can try Steady Winner before they buy.

What's most impressive about Steady Winner, however, is the fact that the developers' ethos is not about how much money you stand to win through using their EA but, instead, it focuses on how much you stand to potentially LOSE if and when things don't go quite to plan.

That's the same approach as is used by professional traders and serious investors across the globe. Those guys are able to accept losses in their stride because they always ensure that their losses are never large enough to spook them out of the game, and they have the confidence and ability to move on to better and greater things.

Regular readers of my reviews will know by now that it's an understatement to suggest I'm not the world's greatest fan of the Martingale gambling technique. What's unique about the Steady Winner EA is that it features a money management approach which I believe can only really be described as a type of anti-Martingale. In its strictest form, an anti-Martingale system would actually increase the next lot size after a winning trade, but safety is all important with Steady Winner and there's absolutely no increasing of lot sizes whatsoever within its workings.

So how does that work exactly?

Well, with a Martingale-based system, an EA will increase the trade size following a losing trade in an attempt to recover from the loss quicker. The Steady Winner EA does the exact opposite and REDUCES the lot size of the trade following a losing trade. I'll explain a little more about how they go about implementing this in a moment but, for now, it's fair to say that their anti-Martingale approach can be used to reduce Steady Winner's drawdowns considerably.


About the EA

The Steady Winner EA works on the EURUSD symbol and applies its jiggery pokery to a combination of several moving averages to identify a trend in the market and open a trade in the same direction as that trend. Having entered the market, it sets an initial stop-loss of 110 pips and a fixed take profit of 55 pips, although it also uses logic to lock in a profit and trail its stop-loss once a trade is more than a certain amount in profit. This results in the vast majority of trades being exited ahead of either their full SL or TP being hit. I suppose I should also mention at this stage that Steady Winner works with ECN and STP-style brokers and, because it only has one open trade at a time, there are no NFA issues with hedging or FIFO.

Having identified a trend, the EA is then reliant upon this trend gaining some momentum and continuing for a while so that it can continue taking trades in that direction. Personally, I'm 100% in favour of trading in the same direction as the trend, as I wrote in an earlier article entitled Let the trend be your friend till the bend at the end. As each trend develops, the Steady Winner EA will continue to trade its signals and my strategy test results will suggest that it should win, on average, nine trades consecutively.

When the bend arrives at the end of each trend, however, the Steady Winner EA is nearly always going to incur a losing trade. At that point in time, there can often be much to-ing and fro-ing in the market as the bulls and bears wrestle for control, and it's not uncommon for traders to mistakenly think that one side has won the battle and enter a trade prematurely, only for the other side to regain control again and the trader incurs a loss. In other words, these are the times that Ming and Henry try to keep out of the market as they have identified them as being the most dangerous to trade.

Whilst Ming and Henry would ideally like to avoid trading completely during those difficult times, they figured that this approach would be very difficult to implement within an MT4 Expert Advisor, so they sought an alternative solution to the problem. They decided that the best thing to do after their EA incurred a loss at the end of a trend would be to take the next trade at the smallest lot size possible. If that trade subsequently won, it could be fairly assumed that a new trend had commenced and that it would be safe to start trading with normal lot sizes once again. If that trade lost, the Steady Winner EA would continue trading its smallest lot sizes until such time as the EA did start to win again.


Setting Steady Winner up

The Steady Winner EA comes with its own 48 page PDF manual and is very simple to set up. There are only ten external parameters which can be adjusted. Of these parameters, there are two which I feel are more important than the others. The first one relates to the percentage of free margin that you want to risk on each trade which happens to be capped at 6.0%, and the second important parameter is used to control the EA's anti-Martingale feature which happens to be called "TestLotScale".

Steady Winner EA To explain a little more about this parameter, its setting can range anywhere between 0.0 and 1.0. Setting it at 0.0 means that the next trade after a losing trade will be at your broker's minimum lot size. Setting it at 1.0 will mean that the next trade will be at its normal size and test lot scaling won't be applied. The parameter can also be set anywhere between the two extremes to control the size of the next trade on a kind of sliding scale.

The EA's other parameters control things such as the maximum allowed spread and whether the EA is to trade on a Friday afternoon and in late December. If you do want the EA to trade during those periods, it's worth noting that test lot scaling will be applied to those trades, so there's no need to worry about risking your shirt while everyone around you is tucking into their Christmas turkey.

The only thing to note about trading on a Friday afternoon is that users will need to calculate their broker's GMT offset and apply the trading cut-off time manually, as the EA doesn't calculate it automatically.

Finally, I noticed that the EA allows 3 pips of slippage which isn't adjusted in any way to discriminate between brokers with 4 and 5 digit pricing. Personally, I never allow any slippage whatsoever so I set this at zero. Users should nonetheless adjust this value to suit their own needs.


The Strategy Tests

My initial strategy test was aimed at finding out how good the EA is normally, without reducing the lot sizes after a losing trade. I figured this approach would enable me to ascertain firstly if the EA had underlying profitability in pips and, secondly, it would provide a benchmark so that I would be able to judge just how beneficial the anti-Martingale test lot scaling strategy is.

As with previous reviews, I once again chose to use Tadawul for these first tests. It's not that I have a preference towards Tadawul in any way, far from it, but their combination of fixed 2.0 pip EURUSD spread and older style 4-digit pricing can often help to portray an EA in a manner which highlights its weak spots. Basically, if an EA can survive a Tadawul backtest, I would hope that the vast majority of retail Forex clients would be able to achieve similar results.

Tadawul - EURUSD - 2.0 pip spread - Trading All Times - Test Lot Scaling 1.0
Steady Winner Strategy Test<

This test certainly suggested that the EA is profitable of its own accord, with a healthy Profit Factor of 2.19 and a relatively modest drawdown of 17.61%. My next test, therefore, was to run Steady Winner with the test lot scaling applied so that I could compare the results. The white 'gaps' along the length of the green lot size plot below indicate those points where the lot sizes were being reduced to their minimum following a loss trade. These are the points in time where the drawdowns should hopefully be reduced and you should see a smoothing of the equity curve.

Tadawul - EURUSD - 2.0 pip spread - Trading All Times - Test Lot Scaling 0.0
Steady Winner Strategy Test

Although the net profit is reduced by around 20%, there are obvious benefits for applying the test lot scaling, as the Profit Factor increases to a very impressive 4.02 and the relative drawdown is reduced by around 2/3 to 5.92%.

Because the Steady Winner EA doesn't use a DLL which can slow things down considerably in the Strategy Tester, its backtests were running quite fast which afforded me a bit of time to look at a couple of other parameters within the EA to see whether or not they were of any overall benefit.

The EA includes options to trade late on a Friday afternoon and to trade throughout the Christmas period. If a user does choose to trade through either of those periods, the trades at those times will all be at the test lot sizes. I decided firstly to test the EA so that it didn't trade through those two periods at all.

Tadawul - EURUSD - 2.0 pip spread - No December Trading & No Friday Trading - Test Lot Scaling 0.0
Steady Winner Strategy Test

Although the EA avoids approximately 10 or 11 trades each year by keeping out of the market completely during both of those periods, it seemed to me that any advantage gained by not trading was only relatively minor. I also tested each of the two periods individually to ensure that the effect of not trading one period wasn't offsetting the effect of trading during the other one, but that doesn't look to be the case. I guess the fact that you'd only be trading minimum lot sizes during those periods helps to keep the difference in performance low.

To reduce pageload times by avoiding an excessive number of images in this review, I've provided text links to each of those backtests in case anybody reading this article wants to see the results for themselves.

Tadawul - EURUSD - 2.0 pip spread - With December Trading - with full Test Lot Scaling
Tadawul - EURUSD - 2.0 pip spread - With Friday Trading - with full Test Lot Scaling

Finally, having decided in my own mind that it was probably better to trade through Fridays and through December with full test lot scaling, I decided to see what impact different brokers were likely to have on Steady Winner's performance.

One of the features of the Tadawul account that I've been using for the Steady Winner tests so far is that both Tadawul's minimum lot size and lot increment is 0.5 lot. I wanted to see if running some tests with a microlot (i.e. 0.01 lot) broker would affect performance in any way.

For my microlot test, I opted to use Alpari and I fixed the spread at 0.8 pip which is obviously tighter than Tadawul's 2.0 pip that I had been using.

Alpari - EURUSD - 0.8 pip spread - Trading All Times - Test Lot Scaling 0.0
Steady Winner Strategy Test

It's evident that there is no significant improvement in drawdown within the Alpari test, and I guess this is probably because the Tadawul drawdown was already as low as it is every likely to get. Let's face it, if the risk is 3.5% on any single trade and the worst case drawdown is only minimally higher at around 6%, it's going to be nigh on impossible to improve things any further except by not trading completely!!

At 89.28%, the Alpari win rate was over 1% better than Tadawul's, however, and this is almost certainly attributable to the tighter spread being used in the Alpari backtest. In turn, the higher win rate probably resulted in fewer test lot trades being taken overall which had the effect of increasing both net profit and Profit Factor in the report.

I didn't really see the point in carrying out any further strategy tests at this stage, as I felt that I'd already covered both the best and worst case scenarios that users could expect.


Conclusion

Clearly the Steady Winner EA looks to be profitable over a sustained period of time. Although it is not an exceptionally prolific trader (Steady Winner only takes around 10 trades each month), it wins in terms of the number of pips without being reliant upon any money management, and it comfortably survives an 11-year backtest with only relatively modest drawdowns when test lot scaling isn't being applied.

Theoretically, the use of test lot scaling will improve results further, although there is a significant caveat which I believe is likely to affect performance significantly from one user to the next.

I'll try to explain this caveat by taking two sample users who are both using the same broker. It could be any broker. One user has a $1,000 account and the other user has a $50,000 account. Both users start using Steady Winner at the same point in time, applying the same level of risk and they share exactly the same trades. The $1k user will be taking trades of, for example, 0.02 lots and the $50k user might be taking trades of 1.0 lots. When Steady Winner takes its first loss, both users will take the same size next trade of 0.01 lot. The $50k user will see a 99% reduction in his lot size, whereas the $1k user will only see a 50% reduction. The $50k user is clearly better placed to take advantage of Steady Winner's test lot scaling feature than the $1k user. If this test lot size trade loses, then the smaller user is going to see a higher relative drawdown than the larger user whose drawdown will be barely noticeable.

Similarly, you could have two users, both with £1k accounts, but one has an account with a microlot broker and the other user has his account with a minilot broker. The minilot user is likely to suffer higher drawdowns than the microlot user because Steady Winner will find it more difficult to apply the test lot scaling to the minilot account and that scaling is less likely to have the same beneficial effect.

A further consequence of this is that every user's drawdowns are likely to be at their worst when they first start using Steady Winner because that's the point in time that their account balances are likely to be at their lowest. Assuming users leave their money invested and continue to run Steady Winner for a few years, however, their account balance should increase markedly, test lot scaling will be able to work more efficiently and the relative drawdowns should be lower as a direct result.

My only conclusion from this is that the majority of users will probably need to exercise considerable patience and run Steady Winner for a number of years to allow their account balance to increase sufficiently to allow the test lot scaling feature to work with maximum impact. Unless, of course, you're already a BSD (that's City slang for a Big Swinging Dick trader) with a spare $100k to play with.

To assist my determining whether an EA is any good or not, I would normally carry out a risk simulation at this stage which involves replaying all of the strategy tester trades in a multitude of different random sequences to try to ascertain what might happen to an EA in a worst case scenario. In the case of Steady Winner, however, I believe it will be impossible to carry out a proper risk simulation with test lot scaling being applied, as there is an essential correlation between certain trades in so far as the small lot size trades are ONLY applied immediately after a losing trade. Therefore, replaying the trades in a random sequence would completely destroy that trade correlation and the results wouldn't be indicative of what would happen in reality.

What I can do, however, is to carry out a risk simulation of my very first strategy test results where test lot scaling isn't being applied. If users then run the EA live and opt to apply test lot scaling, it should then be a fair assumption that actual performance is likely to show an improvement on this risk simulation by an indeterminable amount.

Steady Winner Risk Simulation

The risk simulation suggests that a reasonably high number of users should be satisfied with the EA, and that a relatively low account deposit is needed in order to run the EA.

I can also tell you that the average winning trade size expressed in pips is 10.5 pips and that the average loss is 37.3 pips leading to a Risk/Reward ratio of 3.55. When test lot scaling is applied, the Risk/Reward ratio based upon my first Tadawul strategy test results reduces to 1.94 which highlights the fact that using test lot scaling is definitely beneficial to Steady Winner's performance.

I also decided to look at the risk value being applied to each trade, to see how increasing it affected the level of drawdown. In my Tadawul tests, with test lot scaling being applied, I had been risking 3.5% on each trade and relative drawdowns were only around 6%. It's not for me to suggest users may want to risk any more than this amount, but I thought it might be useful to see the possible effects of different risk levels anyway.

Steady Winner Risk Optimisation

Having carried out my tests, I have to say that I have a reasonably high expectation level of Steady Winner, although I'm pretty sure that I will need patience in order to see it really start to pay. Aside from the prospect that the test lot scaling feature is really only likely to be of benefit once the EA has been running for two or three years, a close inspection of the backtests suggests that, like many other EAs, Steady Winner can go several months and only break even during that time. Personally, that's not something that bothers me in the slightest, but I can understand how some users might have a higher level of expectation and not be quite so patient.


Forward Tests

As part of my testing, I've set the Steady Winner EA up on a $5k FXCC demo account trading the EURUSD symbol on the 1 hour timeframe. It's possible that I may be doing Steady Winner a disservice by using FXCC, as their minimum lot size is 0.1 lot so, as I discussed above, the test lot scaling feature may not start to work properly until the balance has increased after a couple of years or even longer. I'm trading at 3.5% risk per trade, and on the assumption that the test lot scaling feature will be ineffective initially, I'm prepared for drawdowns up to around 15% or even 20% over the first few months of forward test in accordance with the backtests I've performed together with my risk simulation.

Whilst I could easily put the EA onto a different broker's account, and hopefully witness a lower drawdown as a result, I don't believe it would be appropriate to do that. If nothing else, this forward test will hopefully serve to prove that my reasoning above has merit.

As further evidence of how ineffective test lot scaling could be on a minilot account with a relatively low balance, I've taken a screenshot of some trades taken by Steady Winner since it has been in its FXCC forward test.

Steady Winner Account History

If Steady Winner had been on a different account which allowed microlots, the two trades taken at test lot size which followed the $8.85 losing trade would have both been taken at 1/10 the size they were. The first of those two trades would have only lost $10.90 and the second trade would have only won $0.62. Taking into account the original $8.85 loss, the combined loss of the three trade sequence would have only been $19.13 instead of $111.65.



In setting Steady Winner up, I also had to consider that FXCC are a raw spread ECN broker who charge a 1.0 pip round trip commission per trade.

To compensate for those commission charges, I have increased Steady Winner's take profit amounts and reduced the stop-losses by 1.0 pip.

I've also set the EA up to allow a 2.0 pip maximum spread with no slippage on trades whatsoever.
Steady Winner will also trade on Friday afternoons and during late December, as I'm not convinced that disabling trading during those periods would be that beneficial.

You can monitor Steady Winner's performance at MellyForex by clicking here and there is also a thread on the MellyForex forum here for users to discuss the EA.

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