Trading strategies: how they are built, and how far a test can be trusted
Solvex writes rule-based trading software for MetaTrader 5. This page explains the approach and its limits. It is information about software, not investment advice, and Solvex does not manage anyone's money.
The approach
Rules, written down
A strategy here is a fixed set of conditions for entering, sizing and exiting a trade. The software applies them the same way every time; there is no discretion and nobody watching a screen.
A stop on every trade
Every position has a stop loss at the broker from the moment it opens, and the size of a trade is calculated from the distance to that stop. The loss of a single trade is decided before the trade exists.
Few trades, uneven results
Trend-following breakout rules lose small and often, and win large and rarely. Long runs of losing trades and losing months are part of how such rules behave, not a malfunction.
Tested where it will run
Rules are simulated in the MetaTrader 5 Strategy Tester on the broker's own tick history, with the trading costs the tester models, and then checked in more than one modelling mode.
What a back-test shows and what it cannot
What a back-test shows
- How a fixed set of rules would have behaved on a particular history of prices, under the tester's model of fills and costs.
- How large the losing streaks and the falls in the balance were on that history.
- Whether the software does what its rules say: in a repeatable test mode, the same input produces the same trades.
What it cannot show
- What prices will do next. Markets change character, and rules fitted to one period can stop working in the next.
- How rules chosen by studying a history would have done on it honestly — the choosing already used the answer. Results on the data that shaped the rules are an upper bound, not an estimate.
- Your own execution: spread, slippage, rejected orders, a broker's swap charges, a computer that was switched off.
- How you will behave during a long losing run. Most people who stop a strategy stop it near its worst point.
What is published
Solvex Gold Robot
An early-session breakout strategy for gold (XAUUSD), sold as licensed software that runs on the buyer's own MetaTrader 5 account. Its product page shows the full simulation — every year and month, the losing years and the size of the falls along the way.
It is the only strategy Solvex has published. Other work is not described here until it has been tested and released in the same way.
Risk warning
Trading leveraged instruments can lose all the money in an account. Automated rules do not remove that risk; they only apply a decision consistently. Simulated and past results do not predict future results. Solvex Space sells software, does not hold or trade client funds, and gives no investment advice.