PROP FIRM CHALLENGE MANAGER DOCUMENTATION AND BACKTESTING RESULTS (PART 02) – Other – 5 March 2023

1. IMPORTANT CONSIDERATIONS

a) The Prop Firm Challenge Manager Expert Advisor, which we will call PFCM, was initially designed to offer a steady, safe and possible “tool” for the user who decides to pay for a Prop Firm’s challenge and pass it without breaking any of its rules.

b) For that, I asked the Prop Firm’s support about all the requirements it takes for an Expert Advisor to be accepted to be run in an Evaluation Challenge without breaking any of its rules. Then, basically what they ask for is a “Risk Management” Expert Advisor, which must obey some items:

1. all orders must have stop loss as soon as any order is opened;
2. it must trade at a safe pace, not opening too many orders in a way the terminal or the broker might not be able to handle all the orders running together;
3. it must be able to prevent large drawdowns or the opening of too big lot size that might hurt the account’s balance;
4. it must be able to respect all the other requirements the Challenge demands, for example, no order should continue open after Friday or during the weekend. That causes the account to be canceled.

That said, I created this PFCM based on a Expert Advisor that I use personally to pass the Evaluation challenges. Its strategy is based on the “Peaks and Valleys” as well, just like my other EA “My Forex Funds Accelerated Account”, but this one does not have all the features capable to fulfill the Evaluation rules. So, in short, I upgraded an existing EA of mine and turned it into a professional and safe Expert Advisor adapted to the Prop Firm Challenges.

2. IS THIS EA CAPABLE TO PASS THE MFF’S EVALUATION CHALLENGE?

Yes, it is! But you must understand clearly that a prop firm’s challenge is called like that for an obvious reason: it’s not so simple to hit the profit target required without having large losses or undesired drawdown in a short limited time of just 30 days. To reach that, the trader has to apply a very profitable strategy that, at the same time, does not cause huge losses.

The strategy adopted by the PFCM, based on “Peaks and Valleys” price action, offers a trading system that might accumulate some frequent losses, but they are very small compared to the profit it gets when the Take Profit is hit. That aspect combined with an innovative “incremental martingale”, which does not multiply the lot size, but just adds more lot units to the base lot size in mathematical logic, makes the high risk/reward ratio this EA has very capable to recover the losses of the past from bad trades.

So, when the NASDAQ Index is naturally behaving in a “directional” way, the PFCM can easily make large profits because of its “trend following” setup. But in the moments NASDAQ is more sideways, this EA will be “defending” the account’s balance with its “prevent drawdown” functions.

However, the Evaluation Challenges don’t allow the trader to pursue the profit goal by taking all the time he wants at a slow or personal pace. The Challenge demands the trader be more aggressive than usual to reach the profit in time without breaking any rules. So, we need to run the PFCM in a more aggressive style, knowing that the chances of it breaking some of the Evaluation rules will be much higher than breaking the Accelerated Account rules.

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3. HOW TO USE THE MMF EA TO PASS THE EVALUATION CHALLENGES?

Below I will present the functions created especially to enable the Expert Advisor a series of tools capable of increasing the chances of the user succeeding in challenges:

a) Function Profit Target ( ):  as soon as the Account’s Equity is equal or superior to the Challenge’s profit target, the Expert Advisor must close all the orders in profit, then remove itself for safety. Otherwise, if the EA continues trading without the user noticing the profit target has been hit, there might happen that a new trade causes a loss. So it must be avoided. This “profit target” function exists for this reason. Also, as soon as the profit target is achieved, the EA sends an alert and a notification to the user.

b) Function Daily Loss and Daily Profit ( ): As you must be aware, the Evaluation Challenges have a maximum daily loss rule which can’t be broken. For that, the EA must be able to prevent any open order to cause a total of losses in a day that may overcome the maximum daily loss allowed. The “daily profit” function is just for the user who also wants to have a maximum daily profit in his trade system. As soon as the Daily Loss is achieved, the EA closes all open orders and stops trading for that day, and only returns to trade the following day. The Daily Loss must be, obviously, in a value inferior to the maximum daily loss required by the Challenge. For example, in a 5K USD MFF Challenge, the maximum daily loss is 5% of the original balance, so it is $ 250. For the Daily Loss function to be beneficial, the user could set it at $ 220. So, if all the losses on a particular day are $ 220 or more, the EA will take the actions said above.

c) Function Equity Daily Loss Prevent ( ): Another important rule in the Challenges that do not exist in the Accelerated Accounts is the so-called “Equity Daily Loss” which may happen when a profitable trade is carried along another day. So, the user might think no issues can occur from trade in profit, but the fact is that the Prop Firms, in the Challenges, calculate the Daily Loss every day, resetting the “equity”. So, if a trade in profit reverses, this trade might trigger the maximum daily loss and break this rule. To prevent that, this Function was created. The user must inform a value inferior to the Prop Firm’s maximum daily loss value.

d) Function Secure Profit( ): In the MFF, if the trader reaches the 30 days limit in Phase 1 without achieving the profit target without committing any breaches and with the account balance above the initial one, the trader can be entitled to prolong the challenge for 14 more days twice. So, this “Secure Profit” function is made to protect the balance against bad trades after the account achieves a comfortable profit that would allow the trader to ask for an extension of time. What this function does is give the option to open half of the original lot size or double it to achieve the 8% goal safer or easier. Another feature this function offers is to set a permanent Breakeven level to protect the account against a sudden series of bad trades so that the trader can at least ask for the Reset of the Challenge and try again one more time the whole challenge from the beginning.

e) Function Free Repeat Chase( ): Finally, the last function specially created for the Evaluation Challenges is this one I call “FreeRepeatChase” or just FRC. What this function does is, by informing the amount of x days passed, if the Account Balance is below the original one, the EA will take some actions chosen by the user (half the lot size or double it) to recover the original balance. Right after achieving that, the EA closes all open trades and is removed. So by doing that, the user can wait until the end of the Challenge’s time to request free unlimited repeats or retakes, as they call it.

So, as you can see, I’ve added five functions specially created to give the user of this EA many tools for helping you to pass the MFF’s Challenge or any other Prop Firm’s.

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4. HOW THE EA PERFORMED ON EACH MONTH?

Now I will show how the EA performed each month in 2022 based on backtesting with Tickstory’s historical data using a theoretical 20K USD Account. But first, there are some considerations you must know:

a) December and January are not good months to trade NASDAQ or any other asset when you apply a trend following setup or need the asset to be directional. As you probably know, December and January usually lack volatility and volume. So, don’t try to pass any Evaluation Challenge in any of these months. That’s why December and January will not be part of this analysis.

b) As said above, My Forex Funds allows the trader to ask for an extension of the limit time up to 28 days as long as the account balance keeps positive and no rules are violated. For that, the backtesting will consider a total of 58 days with the EA trading every month trying to reach the Challenge’s goal.

c) The .set file used for these results will be available for download in the next section of this document.

It took a total of 56 days to hit the target profit. February was the worst month in the backtesting. The user would have to request the two-time extensions or just go for the retake. Even though the EA could keep the balance safe and not break any rules.

It took a total of 23 days to hit the target profit.

It took a total of 21 days to hit the target profit.

It took a total of 48 days to hit the target profit. The user would have to request two time extensions. The EA could keep the balance safe and not break any rules.

It took a total of 28 days to hit the target profit.

It took a total of 25 days to hit the target profit.

The EA would not be capable of reaching the profit target but could keep the balance safe and not break any rules after hitting the break-even placed by the Secure Profit Function. The user could eventually request a free retake.

The EA would not be capable of reaching the profit target but could keep the balance safe and not break any rules after hitting the break-even placed by the Secure Profit Function. The user could eventually request a free retake.

It took a total of 23 days to hit the target profit.

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5. HOW TO CONFIGURE THE PFCM TO PASS THE CHALLENGES

I provide you a .set file with the most optimized configuration I have found so far in order to make this EA safe and profitable enough to pass the Prop Firm challenges most of the times. And what I mean by that is you must understand that no human trader or Expert Advisor can give 100% certain to be capable to pass a challenge all the times. It is different from the MFF’s Accelerated Account, for example, which can be managed and traded in a slower and safer pace.

That understood, all you have to do is using the .set file and backtest it in order for you to do your own analysis about the Expert Advisor’s performance in the Challenge along the months.

You can find the optimized .set files for the Evaluation Account Challenges on the product’s page, HERE.

DISCLAIMER: Although this Exper Advisor has many features created specially to offer a greater chance for the trader to pass the Prop Firm Challenges, you must do your own research and be aware of the market conditions in order to act properly. This Expert Advisor must be considered as a tool, not a 100% perfect magical solution. I cannot guarantee this EA will always perform in a way capable to give you an extraordinary profit. If I did so, I would be violating many rules of the Prop Firms about Expert Advisors. So, just be aware of that!