Can accuracy be increased in algo trading from 40%?

#1
Hello All,

I recently started algo trading using python with Zerodha. I tested multiple strategies and whenever I backtest any of these strategies I noticed that in a month the accuracy never goes above 42% to 44%. Are you able to achieve a better accuracy rate?

My algo setup is simple:

Go long when 10 EMA crossed above 20EMA and recent close should be greater that PSAR.
Exit condition is if 10EMA cross below 20EMA or PSAR is above the last close.

The same is reversed for short. Do you have any suggestions on how the accuracy can be improved?

Thanks in advance.
 

mohan.sic

Well-Known Member
#2
Hello All,

I recently started algo trading using python with Zerodha. I tested multiple strategies and whenever I backtest any of these strategies I noticed that in a month the accuracy never goes above 42% to 44%. Are you able to achieve a better accuracy rate?

My algo setup is simple:

Go long when 10 EMA crossed above 20EMA and recent close should be greater that PSAR.
Exit condition is if 10EMA cross below 20EMA or PSAR is above the last close.

The same is reversed for short. Do you have any suggestions on how the accuracy can be improved?

Thanks in advance.

Algo or Automation cannot increase accuracy of a system/code. They help in execution errors, emotional errors, behavioral issues.
 

mohan.sic

Well-Known Member
#4
I believe what you are trying to say is 40% is a decent accuracy in algo?
No. I mean system success rate and algo are different aspects. These algos or automation can help in correct execution than manual trading but if the system itself does not have good accuracy what can algo do. Algos will simply execute your in efficient system perfectly.
 

against_tides

Well-Known Member
#5
No. I mean system success rate and algo are different aspects. These algos or automation can help in correct execution than manual trading but if the system itself does not have good accuracy what can algo do. Algos will simply execute your in efficient system perfectly.
Do you also trade thru algo
 

against_tides

Well-Known Member
#8
I wonder if there any successful algo traders in this forum who has got a decent accuracy.

I missed mentioning that I use 5 mins in algo and hence the accuracy of 42% but same system executed on 15 mins gives around approx 54% accuracy.
Higher time frame with more accuracy in any system but the stoploss is big
 

Schatz

Well-Known Member
#9
It does not matter if its algo or manual trading. Hit ratio is always inversely proportional to risk to reward ratio. With 40% hit ratio one should tgt 1:2.5 R R. With 70% hit ratio u can't expect the same R R. It would be close to 1:1. So you chose ur method based on what is more comfortable to you.
Both of them will have similar bottom line but journey to reach those bottomlines will be very different.
 
#10
It does not matter if its algo or manual trading. Hit ratio is always inversely proportional to risk to reward ratio. With 40% hit ratio one should tgt 1:2.5 R R. With 70% hit ratio u can't expect the same R R. It would be close to 1:1. So you chose ur method based on what is more comfortable to you.
Both of them will have similar bottom line but journey to reach those bottomlines will be very different.

From what I understood, higher the HIT ratio the RR would be less. Currently per my system I am letting the trades run till I get exit signal.

So, in my case to increase HIT I have to reduce to mostly 1.5R or 1.25R. Do let me know your thoughts.
 

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