Sunday, November 30, 2008

EUR/JPY Evolution Expert Advisor by

After searching through many different commercial experts I decided to try the Evolution EUR/JPY system made by the Forex Global Trading Company. This expert advisor is, according to the company, their most reliable and consistent expert advisor which has been able to provide solid proof of profitability throughout the last year.

As you know, this is not nearly enough to convince me about the profitability of a given expert advisor. I know ea seller speeches like the back of my hand and I am very hard to tempt with the "forex dream" or any of the usual gibberish used by regular marketers. What really caught my eye regarding the forex global trading company (fxgtc) or their expert advisors was their clean cut, no marketing, straightforward approach.

When you look at their website you are greeted with brief descriptions of the expert advisors which upon entering give you the immediate option to look at forward, live and backtesting statements of their expert advisor systems. No only this, but they are also eager to let you access their live account information through the use of investor passwords. This is all the evidence anyone would like to have to use an expert advisor system.

This was all I needed to test their expert advisor, Evolution EUR/JPY, which has been around for more than a year. The ea provides solid trading with consistent monthly profits in the style of God's Gift. My newsletter subscribers will have access to both forward and live testing of this expert advisor plus my weekly analysis of it from this week on. If you want to learn more about other commercial or free expert advisors please consider buying my ebook on automated trading or subscribing to my weekly newsletter to receive updates and check the live and demo accounts I am running with several expert advisors. I hope you enjoyed the article !

Thursday, November 20, 2008

Expert Advisors : Is your ea Broker Sensitive ?

When one finally decides to buy an expert advisors which seems to be robust, adequately tested, well behaved and likely to give consistent monthly profits one believes that the problem of having a fully automated money making solution is solved.

Well, what broker are you going to use ? This question is important for many reasons different than those you may be thinking of right now. When people consider brokers, they generally consider things as spreads, honesty, slippage, stop hunting, etc. These are all things that affect the trading of the expert advisor but should all be good when using a decent forex broker.

What really starts to matter are details which you should not have paid attention to at the beginning. In essence, the price feed and the time of the close and opening of the candles. This may sound trivial but the same expert advisor may perform completely different between two brokers with different price feeds. Completely different does not mean a few pips, what I mean is that this may make the difference between having a profitable or an unprofitable return on your expert advisors.

So how do you know ? If you have bought an expert advisor which you have adequately evaluated (you can check my ebook for further details on this). You should have had access to live or demo account information. If you have the investor password and know the broker the ea creator uses, you should use the exact same broker to test your expert advisor. Changing brokers can be fatal for an expert advisor's profitability, particularly when they have take profits smaller than 20 pips or rely heavily on the opening or closing prices of candlesticks to evaluate market decisions.

If you would like to know more about expert advisors and how to evaluate their likehood of being profitable please consider buying my ebook on automated trading or subscribing to my weekly newsletter to receive updates and check the live and demo accounts I am running with several expert advisors. I hope you enjoyed the article !

The Investor Access, What you SHOULD ask for !

In the world of forex automated trading, many expert advisor creators offer many sorts of testing information to backup the supposed profitability of their trading expert advisors. They show you backtesting, forward testing and (in the best cases) live testing to show you that their expert advisor have been tested and properly conditioned to respond well to the forex market.

We are customers and we are in general honest people who want to get some money by investing hard earned trading capital so we are psychologically prepared to believe in the evidence that they show us because we like to judge people by how we are. So if we are honest, we believe ea creators are honest too. This proves to be the case most of the time but if you are going to put money in the market using an automated trading system, trust, is just not good enough.

The most adequate solution I have found to this solution inside the world of forex automated trading is the use of investor access. That is, ea creators, if they have forward or live testing, are provided with an "investor" or "read-only" password once they create their trading accounts. If the accounts are real and the trading statements are not forged, the ea creator should be able to give you an investor password so that you can access the account and check the truthfulness of the trading history by yourself.

These trading histories cannot be forged, they are what they are. So next time you are thinking about buying and expert advisor demand an investor password that gives you access to their live or demo results, that way, you will now what your actually getting. No investor password ? Ok, then you move on. The only reason why an ea creator would not like to provide investor access should be the fear of being caught. If you would like to learn more about how to evaluate the profitability of expert advisors please consider buying my ebook on automated trading or subscribing to my weekly newsletter to receive updates and check the live and demo accounts I am running with several expert advisors. I hope you enjoyed the article !

About Ebay Expert Advisors, Beware !

If you arrived at this webpage you have probably been looking for reviews or information on some expert advisor you saw on ebay or on another auctioning website. I have to say, expert advisors that come from this type of webpages are particularly dangerous. I will now give you some pointers on why :

1. Many times, the seller is not the creator : This is true in many cases. The seller poses as the creator of the expert advisor when in reality he simply downloaded some code (which is probably free) and made some back tests in doubtful conditions to create conditions under which the ea showed profits.

2. Test results are many times forged : People here most of the time forge their live, forward or backtesting information in order to sell the customer their product. They add, delete or modify trading entries, percentages or quantities in order for people to believe that their products are profitable. Remember, you should always request investor access to live accounts when purchasing expert advisors.

3. Audience is prone to hype : Because of the very nature of the ebay market and the people who use it, people who sell expert advisors in ebay tend to sell more the dream than the product. They tend to underestimate the importance of real evidence such as accounts with investor passwords and overestimate the importance of trivial easily forged things like testimonials, etc. Beware, you should see through that.

My advice. Do not buy any automated trading system sold on ebay. Most of them are affiliate sellers of commercial expert who will do anything to close a sale or scammers who sell you experts you can get for free with no support or real results that show you profitability. If you have liked this article and would like to learn more about expert advisors and my reviews about several commercial and free experts please consider buying my ebook on automated trading or subscribing to my weekly newsletter to receive updates and check the live and demo accounts I am running with several expert advisors. I hope you enjoyed the article !

The SDS or Simple Daily System, A Free Worth Testing Expert Advisor

Readers of my newsletter have known about this trading system for a little bit more than a month. The SDS or Simple Daily System was created conjunctively at . I, in particular, have been using a version of this ea programmed by a person whose online alias is Derek.

The expert advisor is programmed to follow long term trends based in part on the PSAR market indicator. What I like a lot about this expert advisor is the fact that it uses a money management technique referred to as D'Alembert money management. This tecnique simply increases lot sizes linearly with loses in order to ensure faster equity recoveries. It is ideal for expert advisors that rarely suffer from large streaks of consecutive loses but are likely to have several win, loss, win, loss sequences and several profitable trades.

Almost every expert advisor may be extremely improved by additions of proper money management and this is a great example of this. Without this system, the SDS ea would be a practical loser since it's winning trades do not overcome it's loses by great numbers and even sometimes fall behind as per backtesting. However, introduction of this money management greatly increases the odds of this expert making substantial profits.

You should also take into account that people at often overtrade their systems. Most of them have tested this expert on several currency pairs at the same time when this is a sure way of losing with this system as you risk about 25% equity draw down for each 5% of consistent monthly profit you want to make.

I have forward tested this expert (EUR/USD daily) for the past month and up until now, it has fulfilled my expectations. The current rangy EUR/USD market is sure to let us know whether this expert will or will not be considered likely profitable. If you want to take a look at the trading statements or learn more about this and other free and commercial expert advisors I have reviewed please consider buying my ebook on automated trading or subscribing to my weekly newsletter to receive updates and check the live and demo accounts I am running with several expert advisors. I hope you enjoyed the article !

A Proven Profitable Forex Expert Advisor

Ok, this is what all of you have always been looking for and probably the reason why you entered my website. You are looking for a proven, profitable expert advisor that you can trust and trade in your live account with the most minimal risk of large equity draw downs.

With all due respect : You are delusional.

Let's start with the facts. What do you mean by proven ? Someone has made money with it ? Someone has been making money with it for an x amount of time ? Many have made money ? It has made money on different brokers ? As you can see, the answer to this question is very difficult by itself. I will now make something clear to you which you may have already suspected and which may seem a little bit hard to read : There is no such thing as a proven system in the forex market and there is no such thing as a low risk expert advisor.

Yes, that's right. There is no such thing. This happens by definition, because the forex market is dynamic, ever changing and unpredictable in nature. Hence, it is what you would call a high risk market. It is high risk because (you guessed right) the risk of losing capital is very high ! And this cannot be avoided by using an automated trading system. There is no such thing as a low risk opportunity in a high risk market. If you expect to make money consistently, for years, in the forex market, using automated systems, without high risk, please choose another investment vehicle. Perhaps something less risky, like T bonds, would better fit your risk profile.

Does this mean that evaluating expert advisors is meaningless ? No. By testing expert advisors in live and demo accounts we can get an idea of how they work, under what circumstances they work, what consistent profit and expected draw downs we might get. This is because even though the forex market is unpredictable, it can be statistically studied. We cannot tell what will exactly happen, but we can estimate the probabilities and this is one of the things that tells a profitable trader apart from a failing one.

Let's say for example that certain automated trading system gets a 4% profit from 2005 to 2008 in live testing. We can look at overall market conditions and the past 60 years of market history and tell if they are likely to change, to what and what the probability of working would be if said conditions would change. Was the market in an uptrend ? Downtrend ? going sideways ? What was the volatility ? In essence, the longer an ea works, the more robust it it, that is, the more change in market conditions it can withstand. However, if market conditions were to change to something that did not happen for the last x years the ea was tested on, then it can fail.

This is were that disclaimer we have all read comes into play "past perfomance does NOT guarantee future results". Read it about a hundred times.

What is our defense against this ? Have more than one expert advisor, have a portfolio and have them on separate accounts, if all of them have been tested and are robust, when one fails, the most probable thing is that the other will not and vice versa. You need to diversify in automated trading because the systems have limited visibility, they cannot overcome big changes in market conditions due to their rather inflexible nature. Will every tested ea ever programmed have a period in which it will wipe an account ? The answer is, probably yes.

If you would be interested in learning a little bit more about my opinions, criteria and what expert advisors I have tested and consider worth trading please consider buying my ebook on automated trading or subscribing to my weekly newsletter to receive updates and check the live and demo accounts I am running with several expert advisors. I hope you enjoyed the article !

Sunday, October 12, 2008

Forex Money Managment Strategies, the Difference Between Success and Failure

Many people, specially new traders, overestimate the paramount importance money management has on their trading. In fact many strategies can be turned from losing to giving decent returns when adequate money management is applied to them. People tend to think (as I have said on other posts) that the most important factor in forex is the entry, they couldn't be more wrong. Most trading systems are profitable either because of their exits or their money management strategies, both of them give the systems an additional edge over other ones.

So, what is exactly money management ? It is simply the adequate control of position sizing inside a strategy to make it more profitable. As you know, there are many ways in which positions can be managed, the traditional approach being to trade a fixed percentage of your account size every time. However, this strategy is not as profitable as people would think because it needs a trading system which is right most of the time and whose exits are very favorable. The advantage is that this system is very good at preserving capital but up to date I have not seen a single system which has demonstrates on live trading to work well based on this money management.

So what systems work ? We have what we would call "progression systems" which increase lot sizes after any loses are attained. The most popular is the Martingale strategy which doubles lot size after each loss, however, if your equity is not infinite, this trading system will wipe out your account eventually because of lot sizes becoming obscenely large. Can it be traded profitably ? Sure, you can demo trade a martingale until it collapses then enter it and withdraw your profits every week, the system will eventually collapse and wipe your whole account but luckily you have made back your account and some additional money. Then you return to demo trading, wait for another collapse, etc. This strategy works because Martingales tend to trade in cycles, they collapse, produce profits, collapse, etc.

Since what we want is a trading system that does not fail with time, we have to find a compromise between increasing lot sizes after loses to recover capital and increasing them too much as to expose us to increase our risk too much. So here comes the variations of the D'Alambert money managment system. What this system does is increase lot sizes linearly with loses and decrease them with profits, so if you have 3 loses and 3 wins and your initial lot size is 1, your traded lots would have been, 1,2,3,2,1,1 . It has been shown with automated systems that variations of the D'Alambert system work the best, that is, not decreasing lot sizes linearly but increaseing them until new all time highs are achieved. These systems give a good compromise between risk and profits.

If you want to learn more about automated trading systems with different money managements and their profitabilities please consider buying my ebook on automated trading or subscribing to my weekly newsletter to receive updates and check the live and demo accounts I am running with several expert advisors. I hope you enjoyed the article !

Saturday, October 4, 2008

The Forex Autocash Robot an Unbiased Review

Today I decided to write a review about a piece of software called the forex autocash robot. It is a metatrader expert advisor designed to automatically trade the forex market. I have to say, I am repulsed by the way in which this product is shunned upon people on the authors website, it is disgusting that a person can grip such cheesy and unethical marketing tactics in order to convince people to buy a product.

But well, the way in which a product is marketed doesn't make it good or bad so now I am going to focus on what the software really is. The expert advisor is a typical scalping ea, with a 6 pip take profit and a 650 stop loss targeted at an audience of not too knowledgeable forex traders. The webpages claims that the product has remained in profit for more than 8 years without a single loss. This claim is not backed up by live or forward testing of any kind and with such a small take profit it is very plausible that, even if this results really showed on a backtest, that they are not coherent with reality (due to interpolation in one minute candles). So the first problem with this ea, is that it's claims are unproved. The fact that the author does not say or discuss the differences between back and forward testing anywhere is just a blunt proof of dishonesty.

I have had the opportunity to discuss this software with some people who bought it and they all have argued software problems and inconsistency between the websites backtest results and their own at high modeling qualities. So does it show any loses ? Yes, it does.

So now the question appears, with a 6 pip take profit and a 650 pip stop loss, how many trades does the forex autocash robot need to win in order to break even with a single loss ? Well, that number is 108 ! The odds of any system getting such high winning rates is small but, we are not taking into account spreads (which the author never discusses !). So, if the EUR/USD had a 2 pip spread you wouldn't need 108 but 162 trades to recover from one single loss. You can now figure the odds of becoming rich using this systems.

If the system's claims are correct and if the author is honest, he should provide live or at least forward testing information so that people can realize how it works. The author should also provide investor passwords free of charge so that people can verify his claims through watching an unaltered live or demo account.

I have to tell you, expert advisors that deliver what the forex autocash robot promises, do not exist. It is not lack of vision, it is reality. I recommend that when you buy an expert you follow your gut, if it is too good to be true, it probably is ! I wouldn't buy this system, would you ?

Finally, I would like to invite you to read more posts on my blog and if you are interested on other commercial expert advisor reviews or how to really find profitable expert advisors please consider buying my ebook on automated trading or subscribing to my weekly newsletter to receive updates and check the live and demo accounts I am running with several expert advisors. I hope you enjoyed the article !

Trading Forex, It's all about the Exits !

I decided to write an article about general forex trading since many people have a completely wrong idea of what is and what is not important when trading forex. A very common newbie and even experienced trader mistake is to think that the most important thing when trading is to enter the market at the right time. You couldn't be any more wrong. In fact, you can enter the market at anytime in a direction predicted by a coin toss and the strategy could be profitable if you know when to exit the market.

The most important thing when you are trading and what distinguishes a loser from a winner almost all the time is the ability to exit the market correctly. But, what is to exit the market correctly ? Well, there is a common phrase in forex trading that says, cut your loses, let your profits run, it is exactly that. But we all learn eventually that this is easier said than done, exiting the market requires you or your automated trading strategy to have a very careful plan, there must be some clear exit signals, market orders, etc. These exit signals cannot be any signals, they must be carefully designed to allow you to have the minimum possible risk to reward ratio.

Many people that make automated trading systems do not understand the paramount importance of this concept and they assign any values to stop loss, take profit and trailing stop levels, the system could have the best entries, but exiting the market at the wrong time is quiet fatal. Each assignation of these market order values needs to be carefully studied through deep analysis of the pair's trading ranges, the average movement of the pair after an entry, etc. When you study automated systems carefully, you realize this is almost their most popular Achilles heel, another one is money management which we will discuss at a later post. If you want to learn more about automated systems please consider buying my ebook on automated trading or subscribing to my weekly newsletter to receive updates and check the live and demo accounts I am running with several expert advisors. I hope you enjoyed the article !

Sunday, September 28, 2008

Forex automated trading : Why you need a VPS !

Many people start to enter the world of metatrader forex automated trading and think that it can all be done from their home computer. That is very wrong ! One of the main reasons why automated systems fail for new traders is that they try to use them on their home computers. The reasons why this does not work are very simple. An expert advisor needs to run in an absolutely ideal environment. That is, a computer that has redundant power, internet connection, no viruses etc. When you run your expert advisors inside your home computer, you are exposed to black outs, internet disconnections and viruses brought from your day to day activities. An expert advisor is not meant to be run while a browser and an mp3 player application are running, an expert is decided to run by itself with enough memory and cpu power available in order for it to do it's trading appropriately.

So what is the solution to these problems ? A VPS ! A virtual private server, is a computer that is held inside a data center and is run every day under ideal conditions with uptimes very close to 100%. You should also be aware that virtual private servers are not very expensive, as a matter of fact, they are several providers which offer them below 20 USD like . You also get other providers which are completely specialized in forex metatrader clients like . You must realize that there is a great difference between running your expert advisor on your home computer which is unreliable by definition and a data center which is say, reliable, by definition. If you are wondering what expert advisor to use with your new VPS please consider buying my ebook on automated trading or subscribing to my weekly newsletter to receive updates and check the live and demo accounts I am running with several expert advisors. I hope you enjoyed the article !

Friday, September 26, 2008

Bogie-NN-v8 Expert Advisor by William Boatright, a Review

Today I decided to write a review about an ea that has been around for a while and has attracted the attention of many forex traders. The expert advisor I am talking about is the Bogie-NN-8v advisor developed by William Boatright. This ea is said to be neural network based and has managed to get profits in excess of 50% on some months.

Well, first of all, let me tell you, in my opinion, what Bogie is and what Bogie is not. Bogie is an automated trading system based on an indicator developed using a neural network approach, Bogie is not a neural network. What does this mean ? A neural network is supposed to optimize itself continously, that means, with each new tick, the expert should reevaluate and reoptimize itself to better adapt to current market conditions. A neural network, in analogy to your brain, should be able to "learn" from past experiences and therefore increase it's possibilities of trading the market profitably.

Bogie does not do this, the expert advisor does not continuously optimize itself but is based on an indicator developed months ago which is now, most probably, obsolete due to changes in the way market conditions have changed. To compensate for this, Bogie has to be optimized, that is, some parameters have to be changed in order to adapt the ea to current market conditions. The problem, as you may infer, is that the ea is always being adapted to some period of time before the present which may or may not represent current market conditions.

In essence, trading Bogie is like flipping a coin, if your parameters are aligned with current market conditions you will make money, if you don't you will lose (very volatile, you can expect +/-50%). This type of approach for an expert advisor is unreliable as it is true that expert advisors can remain profitable without constant optimization, which is, anyway, like guessing current market conditions. When do you reoptimize ? How do you know it works ? You can't know.

Furthermore, the use of the NN indicator is completely pointless since it can be replaced by any other market indicator. You can always optimize a variation in any indicator and correlate it with price as you would with the Bogie indicator.

In my opinion, although William's intentions with this ea are good and I believe him to be an honest person with the retail trader in mind, the expert advisor simply does not work, it's approach is flawed by design since the ea is not really a neural network and the optimizations needed are not guaranteed to improve the experts performance. If you want to see how Bogie has performed on forward testing and learn more about reliable and profitable commercial and free expert advisors please consider buying my ebook on automated trading or subscribing to my weekly newsletter to receive updates and check the live and demo accounts I am running with several expert advisors. I hope you enjoyed the article !

Wednesday, September 24, 2008

Scalping Expert Advisors, why most are not working anymore !

In general, scalping is a trading technique which tries to exit trades with very small profits, risking several times the amount won in order to augment the trader's probability of success. Scalping is a trading technique discouraged by many brokers because these small fluctuations in market prices (3-4 pips), can be predicted by someone with a direct bank feed and used with an advantage against the broker. This can be done due to the delay that brokers have when processing data streams (which can be 2-5 seconds).

However, in the world of automated trading, an expert advisor is usually called "scalping" even if it's take profit is more than 3 times the spread (which would not be considered scalping by most brokers). Examples of such expert advisors are Shark and Viseu which have small profit targets (8-10 pips) with stop loss orders in excess of 30 pips. As with every trading strategy, there are some advantages and disadvantages to using such experts. For example, these experts have the advantage of having a high probability of success per trade as they take money rapidly from the market. The greatest disadvantage they have is that their risk to reward ratio is too unfavorable, they need to get at least 4 profitable trades for every loss in order to get to the upside again.

So, why have we seen a broad decline in profitability this past few months ? Why have expert advisors like Shark and Viseu reduced their profitability so drastically ? Well, many of these experts are based on moving averages, which by their very nature, are very lagging indicators. They work very well when market conditions stay constant for a while and then change in a very slow fashion, so slow that moving averages can adapt smoothly to the changes made. What we see in today's markets is completely different, we see rapidly changing market conditions which don't give lagging indicators like moving average the opportunity to react. Therefore, this expert advisors are always thinking about yesterday's market and they trade as if market conditions were like they were a while ago. When these experts based on moving averages finally adapt to what it's happening, it quickly changes !

So what you get is a scalping ea massacre, they sell when they had to buy, they buy when they had to sell and with a risk to reward ratio so high, it is not a surprise that they fail to deliver what they had delivered from 1999 to 2006 when market conditions were very different and lagging indicators like moving averages worked a lot better. Sounds familiar ? Past performance does not guarantee future results ! IF you would like to learn about results obtained both for shark and Viseu and many other expert advisors please consider buying my ebook on automated trading or subscribing to my weekly newsletter to receive updates and check the live and demo accounts I am running with several expert advisors. I hope you enjoyed the article !

Saturday, September 13, 2008

The PID SP4, SP5 expert advisor, a review : Why I never bought this ea

A small while ago there was a lot of hype about this new expert advisor called P.I.D SP4. People were getting mass returns on this expert advisor and so many more people began to converge on this ea and start to trade their capital using the expert.

I have to say, I warned them ! Expert advisors that offer mass returns on some months are very or more exactly extremely prone to lose all their money and even more. As I have said on an earlier post, in my experience, profitable consistent expert advisors seem to have at least a 30-40% draw down of every 10% consistent profit they get on the account. This is simply the balance demanded by the market and the reason why top fund managers almost never get more than 20% profits a year, they are extremely conservative because they know the inherent risk that comes with high profitability.

I never traded P.I.D myself but saw it trading on many friend's accounts. The results were just like I expected, this correlation based ea found a point of divergence and the whole account got wiped out. Then, a second version, P.I.D SP5 was released, which although promised to be much more stable than the ea before it, wiped the entire author's demo account less than a month after it's release. I don't think the author realized how dangerous and prone to catastrophe his strategy is by design and I don't think he purposefully deceived people into buying something he knew would fail. I think this was just a consequence of a lack of understanding of what the market demands for what the market gives. A consequence of trying to find a holy grail. If you would like to read more about profitable expert advisor, how to find them, etc, please buy my automated trading ebook or subscribe to my weekly newsletter were I analyze current experts I am testing each week (you also get investor access to live and demo accounts).

Tuesday, September 9, 2008

Why 95% of forex traders fail and you are one of them !

I have given the subject of "why people lose so much money in forex" a lot of thought and so I decided to write this small article to show you all my conclusions.

We all know it. Ninety five percent of all forex retail traders lose their first trading account. But we all know that doesn't apply to us, right ? We are smarter, we are more intelligent, we have sharper minds... What could possibly go wrong ? Everything !

Have you ever considered what the average forex trader is like ? Yes, he/she is just like you ! Average forex traders are not stupid people, most of them have some level of higher education and many of them have the will and drive to learn about the market and earn an income by trading the foreign exchange. The why do most of them (with a high probability of you being included here) lose money ?

The answer is a mixture of things. I have found that new traders are mainly impatient, draw down intolerant and emotional. This of course, are some really big red signs in the forex market. But these "qualities" as you may have guessed, are very natural to humans and indeed, very difficult to suppress. Even when using automated systems, these defects prevail, reason why the most sold and used systems are really the ones that are not profitable, people really cannot bear the consequences of using the profitable ones !

Let me explain. One of the main aspects of being profitable in the forex market is being not. What ?!? Yes, I have found that regular profitable traders and profitable systems are subject to a draw down (being open or net) proportional to their average monthly profit percentage, with this being about 30% draw down for each 10% consistent profit. Of course, some people manage 30% a month with a 5% draw down, this people are amongst the top 0.05% traders and their cash is extremely difficult to tap (if you have a treasure in an island the treasure will remain the same no matter how many people have the map).

So, people are very keen on things with small draw downs and dump strategies or systems when their draw downs go beyond a certain point (usually too small) for systems to show any recovery. Don't get me wrong, not all systems with draw downs are profitable and this is what causes traders to change them. They feel uncomfortable with draw downs and would do anything to change that ! (so their natural behavior is to change the trading system)

My advice... Simple ! Find something that has worked for some time for someone and follow it even if your gut tells you sometimes not to. Remember, most people follow their gut about systems but you don't want to be like those other 95 people that lose their money ! If you are not very keen on manually trading please consider buying my automated trading ebook which is a guide to currently available automated trading systems or subscribe to my weekly newsletter in which I analyze experts each week.... If you liked my website or the article but don't want to buy anything, please buy me a cup of coffee following the link at the left bottom side of the webpage :) Thanks.

Sunday, September 7, 2008

Free Profitable Expert Advisor, God's Gift 7c

For those of you who have not read previous posts about God's Gift, it is a free expert advisor coded by Matt Edmonds which I have been testing from January 2008. I stopped publishing results on this website since the ea is a very infrequent trader and it took it several months to accumulate a good amount of trades. Now I will show you my results for this free, profitable, expert advisor.
As you can see on the graph, the ea has performed very well for the past 9 months as it has been predicted by it's backtesting. The expert has very good market entries. With about only one entry per week, this ea enters the market only on high probability trades. I have to say, I thought this ea would blow up the account by June but it has indeed surprised me by banking profits as expected. Up until now, the ea has a profit of about 50% with a maximum draw down not exceeding 10%. The ea uses a fixed stop loss and it seems to have a low risk trading style. This is the type of ea you would like to use for consistent, long term profits.

Even though the amount of time is significant (9 months) and enough to say this ea is extremely likely profitable (has survived drastic changes in market conditions), I have to tell you that, as with any automated trading system, you should trade it with care and at your own risk. If you wish to get the settings and the expert advisor from me you can either buy my automated trading ebook (which contains information about many commercial experts) , subscribe to my weekly newsletter (which comes with investor passwords for live and demo accounts) or simply buy me a cup of coffee using the link on left bottom side of my webpage and I'll be glad to send you this information to your email ! (this is to support the vps in which the ea is run and keep me awake :) ) Thanks in advance for your purchases and donations !

Tuesday, June 10, 2008

Doubleplay, Trend Tracer and Other Expert Advisors : An Interview With Hal Chapman from

Fellow traders, today I have the pleasure to share with you an interview I did with Hal Chapman expert advisor creator and owner of . On his website, Hal sells several expert advisors which have been subject to much testing, critics and reviews. In my own website, you can find reviews on Doubleplay and you can certainly feel my doubts about the systems as well as some of their good points. However, having done business with Hal for a while and knowing how he genuinely cares for the retail trader, I decided to do an interview in which our doubts as retail traders would be cleared and we would have a more informed view about his experts. As always, I didn't get paid for the interview, neither did I get free expert advisors, commissions or the like. This interview is an unbiased as it can be. I hope it is as informative for you as it was for me ! Enjoy it.

My first question is relatively simple. I would like you to tell us what expert advisors you are offering and what are their general characteristics.

Sure, Halcyon Forex offers 2 main type of what I call “raw” Expert Advisors. Everyday trading EA's and News trading EAs.

In addition to that, we offer what I refer to as a “Complete Solution” which includes the EA of your choice, a VPS, complete setup and Premium technical support.

The difference is that “raw” EAs are just the EA itself with the user manual. Raw EAs are intended for people who are well versed in the use of MetaTrader 4, who know how to set up a VPS and so on. The Complete Solution is designed for folks who are new to this, they are not very familiar with MT4 and wish to participate and let someone else do all the setup and configuration.

Now, within the actual Expert Advisors that we offer there are the following:

Everyday 24x5 EAs:
Trend-Tracer 1.4 build 15
DoublePlay 4.5 build 203
PipCollector 2.0

News EAs:
Condor 2.0
SimpleNEWS 2.0

2. If you were a Forex retail trader looking for expert advisors, what solid reasons would you have to purchase each one of your expert advisors ?

I would be most inclined to purchase Trend-Tracer 1.4 because:

#1 It has a high winning percentage
#2 If it takes a loss or losses, it works to get that back and get back on track
#3 While the money management becomes aggressive to recuperate lost equity, it does not do so blindly. It has a safety system built in to reset the increments in the event the account is not back on track within the allowed runway. I do not like the idea of digging deeper and deeper into a rabbit’s hole. That is why this safety is built into both Trend-Tracer and DoublePlay.
#4 So in summary, it wins much more often than it losses, it fights to get back any loss and it does all this within the safety of a framework which puts the odds in my favor as the investor.

3. In the last versions of Doubleplay and your new expert advisor you implemented a new money management system that increments lot sizes after loses. Could you please explain the reasons why you decided to change your previous money management system ?

I would be happy to.

Initially I wrote DoublePlay (version one) back in November of 2006 and throughout all of 2007 I noticed it was a good system but not perfect because it would suffer draw downs. Even though it was winning a higher number of trades than it was losing; The amount when a loss happened was many times more than the amount resulting from the winners.

I realized that I needed some way to ensure that the amount produced by the winners end up larger than the amount resulting from lost trades.

Meanwhile, I was exchanging ideas with numerous other investors, customers, money managers and Forex traders. This is how I became familiar with the Essex Money Management principle as well as the Binary Math money management principle. These higher level money management disciplines, specially Essex money management, seemed to address the limitations of the current DoublePlay and merited a further look.

I researched these doctrines and once I understood the mechanics behind them I began to attempt to automate them. What I ended up with was neither Binary math nor pure Essex money management but inspired by both and quite effective. This work was completed last summer. However, I was even then extremely reluctant to introduce it into the production DoublePlay which my customers were using at the time. I am extremely conservative when it comes to changing production software as I realize this is what folks are using to make money. A change in that is something I have to sleep on quite a bit. Even if it looks like a good change because I have learned that in Forex, many things that SEEM to make all the sense in the world somehow just do not result in real life the way they should. Also, I realized that the aggressiveness of the money management would be disfavored by many investors. And so I held back at the time.....

After more successful testing and code adjustments as well as further conversation with one of my more trusted and experienced money manager colleagues, I was finally convinced that this was the right path and I released DoublePlay with the new money management.

Why did you choose this particular incremental type system ?

I chose this system for several reasons. Number one is because it works. But more importantly, I want to make sure that the account maintains a good equity curve. If you take a loss on a regular EA and then the next trade is smaller than the one you just lost, even if you win that trade, you will still be left behind. You would have to win a lot of trades to get back on track. With the Halcyon Forex Money Management when you increase the stake and win the account gets back on track or higher than it was before with just one or two trades. Then it becomes a matter of what are the chances of winning that next trade? With Trend-Tracer, you are looking at a 74% chance or better that the EA will in fact win.

Many people are afraid of this system as incremental lot sizes after loses are associated with Martingale systems which are considered to be proved losers, blanking people's accounts in the long run. What is the difference between your system and a Martingales system and why do you consider your system better ?

Great question!

The martingale doubles your stake endlessly. You can either win a few pips or tank the entire account.

The Halcyon Forex Money Management works with several parameters: Lots, step, top and bottom. The Lots represent the starting lot value. If a loss is encountered then the lots size is incremented by the value of the ‘step’ parameter until one of 2 things happens, the account is back on track or the value of the ‘top’ variable is reached. If the lot size reaches the value of the ‘top’ parameter, then the EA automatically reduces the lot value of the subsequent trade to the value of the ‘bottom’ value and if the account is still not on track the progression begins again. Once the account recuperates any losses, the EA automatically returns to the standard lot size. This creates a type of loop that gives the EA a great deal of ‘wiggle room’ to get back on track and not go too far into a draw down.

In the past 3 plus months, anytime there has been a lost trade, DoublePlay has not reached half of its allowed runway before the account was back on track.

I want to take the opportunity to mention that this type of money management would not work unless the underlying trading system has a high probability of winning. That is why this type of money management works well with both DoublePlay and Trend-Tracer.

If you had to give a rough estimate, what would you consider to be the probability (from 0 to 100) of wiping an account using your expert advisors ?

Assuming that 100 is certain to be wiped out then I would say that my EAs have a 5 or less rating on that scale as long as instructions are followed and with the recommended parameters. (lower chance with Trend-Tracer, I would say 3)

If your system wins consistently then the above money management strategy would prove successful, however,based on the logic of your expert advisor, do you consider them to be robust enough to withstand abrupt changes in market condition, if so, why ?

Yes I do and I would have to admit that applies more to Trend-Tracer than it does to DoublePlay but both quality for a yes. DoublePlay has a healthy track record that indicates its winning percentage rate throughout the entire year of 2007 and into 2008. which affords exposure to ample market fluctuations. As far as Trend-Tracer is concerned, the EA is not based on indicators and is much more accurate altogether.

Many people consider exponential growth an important characteristic of expert advisors. As your experts currently grow equity linearly, are there any plans to implement some sort of alternate money management to increase equity growth ?

Yes, absolutely. I am working on developing a more sophisticated algorithm to do this. Several prototypes are already testing in the lab.

Finally, if you were to buy your own expert advisors, which experts would your buy, what currencies would you trade, with how much equity would you start and how much money would you be expecting to make each month ?

I would buy Trend-Tracer, put it on a mini account with no more than 100:1 leverage and at least $1,500 starting balance. As far as returns per month, it is too early to tell. The back testing of course looked amazing but I do not believe in back testing to foretell the future. Save to say that it is right on track winning and as time passes the actual per-moth expectation will become more clear.

Thank you for your very good questions and please let me know if there is anything else that I could be of assistance with.

Best regards,

Hal Chapman
Halcyon Forex

Monday, May 5, 2008

The Diversification Myth

It is very popular in the world of finance and economics to advise people to diversify. The usual phrase "don't put all your eggs in one basket" is usually cited as a great exemplification of the diversification principle.

In short, diversification implies the investment on not only one, but several financial instruments in order to reduce risk. This may, or may not reduce profit, depending on the level of correlation between said instruments. Generally however, diversification does carry the partial hedging of the different means of profit. If one financial instrument profits the other loses somehow and this effectively reduces the risks produced by having all your "eggs in one basket".

For me, diversification is protection, protection from ignorance. When one is not completely aware and confident of what one is doing, diversification is needed as protection, because the outcome seems blurry and unpredictable. If a person knows exactly what he or she is investing in, I mean, know it a hundred percent, then there is no need for diversification, because this will only negatively affect the profits of the first investment.

Since non of us can predict the future, we all need a certain degree of diversification. To what degree ? To what degree are you ignorant ?

Hedging Expert Advisors, The Double Edge Sword

Throughout my whole experience in the area of automated trading I have encountered a fair amount of expert advisors based on hedging as well as correlation strategies. Expert advisors such as the Five Pairs Hedging Expert Advisor have attracted a lot of attention because of the theory behind them. There are also a lot of other forex systems based on this type of strategies, like the Freedom Rocks Program for example, which tries to exploit swap while hedging positions.

First of all, let me explain to you the concept of hedging. To hedge, in finance, refers to the action of taking opposite or complimentary positions on different instruments to reduce risk. Hedging differs from diversification in that hedging implies a correlation between the two instruments while diversification may target completely unrelated things.

As an example, in forex, buying and selling a currency pair at the same time is the most straightforward way of hedging as the profit or loss of any of the two positions is compensated by the other. However, this does not carry any profit for the trader. In a more general fashion, one could hedge different pairs and profit either from the swap differential or from displacements in the overall correlation of the pairs.

The EUR/USD and the USD/CHF have had a historical correlation of almost -0.9, that means that 90% of the time USD/CHF goes up, EUR/USD goes down, and vice versa. If the pairs deviate from this correlation, say, EUR/USD goes significantly up but USD/CHF still does not go down, one could in theory profit from the reestablishment of the correlation by buying USD/CHF.

However, there is a catch. When correlations deviate between pairs, it is fairly difficult to know which pair deviated from the relationship. If EUR/USD went up and USD/CHF did not follow, who is wrong ? Did the EUR/USD pair go up unnecessarily ? or did USD/CHF didn't go behind it ? This is the question, not always does the first one who deviates is necessarily right.

Hedging is particularly dangerous when it is used as a means of protection, as when one wants to profit from swap. Correlations are a very wavy thing and they may vary and change in the future without ever warning the trader. This is the reason why I advice people not to use the Freedom Rocks system, which seems excessively risky to me and does not offer enough rewards for the excess of capital that is risked. A strategy like this can easily wipe out an account when currencies suddenly deviate a lot from their correlation.

Personally, I don't like hedging strategies, neither when they are used as protection instruments nor when they are the source of the profit. For me, hedging carries the additional charge of spreads paid for additional positions and does not guarantee the effectiveness of either the profit, or the protection. In my opinion, strong forex strategies that rely on hard stop losses and the use of one open position at a time offer the greatest potential for profit with the smallest possible risk.

Friday, May 2, 2008

Viseu Open 001, One Month, Up in Profit !

Many of you may have been following my blog regarding the testing of the Viseu Open 001 expert advisor. As we may have expected from backtesting results, this expert advisor has proven to be profitable for the time being. As I watched the expert trade for the past month, I realized that it trades in a fashion very similar to that of the Shark and Griffin expert advisors. In fact, the experts traded at exactly the same time on a few trades, which means that they have a similar signaling system, although I do consider Shark and Griffin's to be more complex.

I like Viseu's trading style, it has good entries, never has consecutive losses and does accumulate profit in a very sustainable manner. I am now considering a live trading account with this ea's name on it. If I end up a three month trial period with Viseu on the green, I will let it trade live.

I am very happy with this expert advisor, it may prove that we all may share this free alternative as part of our profitable forex portfolios. Just to finish this review I leave you with a picture of Viseu's equity curve for the past month.

New Improved Forex Killer Strategy (long term trading)

Well, as many of you may know, I have developed a new forex killer strategy over the last three weeks with good results. This strategy is much simpler than the older one I had published and focuses mainly on the four major currencies. So we will only be trading EUR/USD, USD/JPY, GBP/USD and USD/CHF. I also recommend forex killer users to take a look at automated trading systems, as they may prove to be more profitable and more hassle free than forex killer.

The strategy uses clever money management to improve our chances of taking profit over trading positions. For this strategy, we will use our forex killer software and the daily data for the major currencies saved from metatrader.

- For this strategy you will trade at the end of each trading day.

- Save the daily data for each one of the major currencies in metatrader 4

- Load the data on forex killer

- Calculate the results for all the currencies

- We want a short and long term signal probability higher than 75%. Yes, Long AND Short term graphs MUST have a probability higher than 75% or we do not enter the trade.

- After you get a positive signal go to your trading platform and open two trades in the direction of your signal. Each trade is opened so that a 200 pip loss is equivalent to 1% of your equity.

- Both trades will have a one hundred pip stoploss, one of the trades will have a one hundred pip take profit while the other will have a 100 pip trailing stop and a 300 pip take profit. This clever management means that after the first take profit hits, the other trade is risk free.

- After the trade is opened, wait until both orders are closed through either one of the market orders.

I have tried this strategy for the past 3 weeks on a demo account with very good results. I have had about 6 positive signals which are equivalent to 12 trades. From all these trades, 9 were profitable and 3 are still opened.

I hope you enjoy this new and easier to use, long term trading strategy for the forex killer software. I also encourage you to get my ebook on automated trading systems if you are new to automated trading systems and would like to find a profitable one !

Forex Autopilot Expert Advisor, Unbiased Review

A few weeks ago, I started to feel curious about this new expert advisor everyone seemed to be talking about. I went to it's cheesy marketing web page filled with marketing tactic ( where they say things like "75% discount, prices will come back to normal in three days!", date which always seems to be the same one after three days) and I took a try for this expert advisor which sells for a mere 89 USD.

At first, let me say the things that attract forex autopilot customers. It is a very cheap expert advisor compared to most of the profitable ones, which usually cost between a 250 one time fee and a 90 dollar monthly subscription. The webpage is also filled with unneeded ways to shove the idea of richness and desire into people's minds, you see champagne, cars, etc.

When it comes to putting their money where their mouth is, they still have a long way to go. I must say, I still don't have enough testing data to ensure whether it is a profitable system or not, what I can tell you is why I would never trade this expert advisor in my live accounts.

First, there is the way this expert trades. It opens roughly two trades per day, which seems normally selective, and trades on the EUR/USD one minute timeframe. It then opens orders based on some indicators and lets them run after they either hit the take profit or some indicator based exit signals. This is where we have a conflict. Indicator based exit signals ? As I have seen in forward testing, this expert advisor is comfortable with a 400 pip draw down, as seen before last week's FOMC meeting. If you put a stoploss on the expert advisor, it fails dramatically.

I am very skeptical about expert advisors which tolerate open draw downs like this, specially this ea. It is reasonable when you have pyramiding expert advisor like Pipforia or Pointbreak that close profits at the end of market cycles, and even these expert advisor have never actually seen an open draw down above 20%. The fact that the autopilot expert advisor doesn't use a stoploss and is quiet conformable with a 400 pip draw down without showing exit signals gives me the creeps.

Well, I have given you the facts I have experienced with this expert advisor. An expert which is tolerable to large open draw downs and that also lacks a consistent money management system. I would have to say, I would never trade it in a live account. Would you ?

Wednesday, April 30, 2008 Review , Best Broker, Enough Said !

I have to say, we have all been down the path of forex brokers. We all want to search for an ideal broker that is honest, that respects our orders, that charges us small spreads. Long story short, we just want them to do what they are supposed to do, manage our trades without screwing us in the process.

I for one, have found my holy grail forex broker. I have to say, about a month ago, I was quiet desperate to find a different forex broker. I have been trading with interbankfx (IBFX) for a while and although they have never ever done anything wrong, like hunting my stops, removing my orders, slipping my trades, etc ; I felt that a 25 USD charge for deposits and wire withdrawals was a little bit too much. I also wanted a broker that could transfer funds directly from my paypal account so that I could save some time.

Then I found, now I'm a believer ! At first it seemed just too good to be true. Flexible leverage from 1:1 to 1:500, minimum deposit of 1 USD, 1 pip spreads on all 4 majors (yes, that's right, just 1 pip !) , no withdrawal or deposit fees through paypal, etc. I mean, it was a dream come true. I started a mini account that same day and have been happily trading with them ever since. They honor my market orders to the pip, never had any slippage on more than 30 transactions at very different market conditions and they have never hunted by stops nor have they removed any of my orders or played "dirty" in any way. Their servers have also been rock solid with absolutely no disconnections, unlike interbankfx which tends to have disconnection issues sometimes.

Today I made two trades during the FOMC interest rate news release. They just increased the EUR/USD spread to 3 pips with an amazing volume. The spreads returned to normal about an hour after the release.

I have liked this broker so much, I felt compelled to write a review about them. The account creation process was easy and straightforward, their staff was really helpful and their trading conditions have been awesome. I also have to mention, their mini accounts are swap free, so that is a plus for me too.

Finally, they do have the inconvenience of not allowing american or canadian citizens due to the fact that they don't have the required permissions to let them. However, even though this may strike you as suspicious, they are regulated in Canada and I can say, through experience, that they have been all they say.

Tuesday, April 8, 2008

Forex Ebook V.1.0 Comming Soon

As you may have noticed, I have been selling a preliminary version of my ebook on automated trading and expert advisors for the past two weeks. I write this post to tell you that next week I will be releasing version 1.0 of the ebook which will include a few more expert advisors (both free and commercial) updated trading statements and a little more insight on expert advisor types and the like. The expert advisor ebook new release will cost 9.45 USD as it will be the first final edition. All the people who have bought and will buy the preliminary version before the day when I publish the new version will be receiving the new edition for free ! I would also like to thank everyone who has bought the ebook for supporting my work and sending feedback !

Saturday, April 5, 2008

Viseu Open 001 Likely Profitable Expert Advisor

As always, I have been searching for profitable no cost alternatives to commercial expert advisors. Recently, I came across the Viseu Open 001 expert advisor. I found it on an Asian forum and have grown a serious interest on it's trading methodology. The expert advisor makes trading decisions based on several moving averages and the rsi indicator. The system makes high probability, low profit trades, which I think is a good efficient way in which expert advisors can attain profitability.

The best news, is probably the backtesting I performed on the expert advisor using one minute data (90% modeling quality). I tested the expert advisor for almost nine years, from 1999 to 2008; using a 10 pip take profit and a 35 pip stoploss, the expert managed to grow an account from 10,000 to more than 10 million dollars (2% risk on each trade). The expert got a relative draw down of about 25% with an absolute draw down of 8.31%. Viseu was barely profitable from 1999 to 2001 but after that year it was constantly winning. Overall the expert advisor won a high percentage of trades (almost 84%) over the nine years.

I have now started the forward testing of this expert advisor on my vps to know for sure if there is consistency between back testing and real market performance.

I am sorry not to include the complete backtesting file here but it is too big to upload and share on my vps (would consume all my bandwidth if everyone checked it out) so I will include it on the next edition of my ebook (which I will send to the people who have already purchased and will purchase the preliminary version). Below is the back testing chart for this ea.

Wednesday, March 26, 2008

Doubleplay v.4.5 Expert Advisor, A new Beginning...

A few weeks ago, the new version of Doubleplay, which is version 4.5, was made available for download to all Doubleplay customers. I received the new program with both excitement and a little bit of concern as Doubleplay's money managment system was changed for a supposedly better one.

Backtesting results of the new version, available at (which is the developer's website), show the expert advisor being tested on the GBP/JPY pair for a period of 2 years. This backtests somehow increased my concerns. Even though the equity curve does seem much cleaner than before, with I have to say, increased profitability, there is an obscure risk factor surrounding this new money management system.

The system basically builds up position size as losses are incremented, which clearly makes recovery from losses much faster. But I cannot help to ask myself, what if the expert suffers too many continuous losses ? Will the expert drive the account to a margin call ?

The tests did show this troublesome issue to some extent, on all of the test, Doubleplay did experience periods of sharp draw down, that, although not available in the presented data, amount to almost 50% of the account by visual inspection. The ea did recover all losses and drew a nice equity curve on all of the graphs but... What if the market conditions had been worse ? Is the expert going to cause a margin call ?

I have never considered an expert with such a high level of draw down acceptable, so I should not consider Doubleplay v 4.5 as one merely because of this fact. I must say, I have run Doubleplay v4.5 on a live account since March the 17th and it does show me a clean advance with a gain of almost 5% on my account until now.

But what about those dark market times ? The ea seems to kind of protect itself by limiting the scaling of positions sizes with a top, but this does not keep me from worrying about such a high draw down in bad market conditions. I would have to say, there are other options, better options, out there right now. As always, time will tell if the expert has a high enough win:loss ratio as to keep our accounts safe from a kill. Don't forget to check out my ebook that explains expert advisors and reviews several commercial experts !

Monday, March 17, 2008

Ebook to be realeased soon !

I have been writing an ebook concerning expert advisors. The ebook will be available at a price between 10 and 20 USD, it talks about a few subjects. Ways to distinguish profitable experts from unprofitable ones, also reviews 10 very popular commercial experts advisors based on forward testing results and also talks about main expert characteristics and ideal expert advisors amongst other subjects. Stay tuned for the release !

Tuesday, March 11, 2008

God's Gift EA, 2 months, finally ... A loss !

First of all let me apologize for the diminished amount of posts I have published for the past month. I have been very busy with other projects so I haven't taken much time to write articles, on the other hand, I don't have many experts to review as I currently have only 2 in forward testing.

Now to the God's Gift expert advisor results... I have to say, I like this expert advisor a little bit more every day that I see it trade. It caught twelve profitable trades in a row, over a little bit less than two months. It has shown great accuracy with it's trades, only risking a moderate amount of pips (70) on each trade.

The ea attained it's first loss yesterday when it hit a stoploss on the GBP/USD after taking a dramatically wrong sell order just before 5 consecutive positive hours for the pound. I have to say, I am in part relieved by the expert starting to take some loses, I really want to see if the expert can live up to it's back testing results and provide a maximum draw down smaller than 15%. Currently, maximum draw down is 3.9%.

Well, I will review this expert again the following month when I hope we will have a better idea on the amount of draw down. If it exceeds 15% I will stop the expert advisor, if it does not, I will continue forward testing it until it does or until we have 2 years of forward testing. Best luck to you all on your trading !

Friday, February 22, 2008

Recommended Expert Advisors

My objective throughout this past few months has undoubtedly been the finding of a consistently profitable expert advisor with small draw down and a good risk to reward ratio. I have stated many times that I would settle for a 50% yearly profit with a 10 % maximal draw down and an open draw down that never exceeded 2%. That is a lot to ask for, if you ask an experienced trader, ea programmer, etc.

So after this much time doing forward testing, back testing and looking closely at the trading method of various commercial expert advisors. I have to say I truly recommend... Well, I really don't recommend any of them. This could have been the expected result from the beginning, but the sad truth is, I really cannot, on good faith, recommend to any of you any of the experts, free or commercial, I have tested so far. Here is a little overview on the whys, for each of the experts. Take this comments with a lot of seriousness and remember that it is your money that is being risked in live trading.

Doubleplay v3.5-4.0 : Not recommended because of the variability of monthly results and relative draw downs. I see Doubleplay now as an expert advisor with some dazzling months that has failed to keep up with a 10% profit it promised to deliver. I see it's performance as rather obscure and I would abstain from buying it until we have results for at least a year of forward testing.

Pointbreak : Not recommended due to it's really high open draw down relative to yearly profit promised. You are risking up to a 12% just to receive a 10% yearly profit. Makes no sense to me and makes the ea subject to much harder loses in the event of the right market conditions. Definitely. No.

Fx-Bandit : Not recommended. It's trading logic has clearly showed that it is subject to a margin call in the event of the right market conditions. And trust me, those conditions will come, sooner or later they will.

EUR/JPY Moneymaker : Not recommended. It's closing mechanism seems obscure, it does not have a hard stop loss so news releases or volatility spikes could definitely produce a market draw down

Well, these are the four commercial expert advisors I have been trying. The other non-commercial expert advisors I have tried (see expert portfolio section for names) have failed also due to large draw downs , open or maximal, and inability to produce profits steadily. I hope this little overview has been helpful to you and will let you know that if you buy any of these experts, it will be practically on faith, or at least, not on my recommendation.

Have a good trading !

Saturday, February 16, 2008

Shark EA from forexeasystems a Possible System to Try

I guess many of you have noticed that I stopped forward testing many of the experts I had on my vps starting this year. The main reason is that they showed me a substantially negative behavior that made me change my opinion and in consequence, consider them not worth testing anymore.

Because of this, I am actively looking for some expert advisors to test, free or commercial. I have always been interested on the Shark EA by which is the commercial ea I know with the most extensive forward testing on record (by the seller).

I would like to know if any of you have tried this expert, what your results and opinion are and if you would like me to review the expert, if you think it is worth a try. I think it is but then I don't know anyone who has actually traded it. Well, I thank you again, I appreciate your feedback ! Please leave a comment with your opinion !

An updated review of my opinions about this trading system and my experiences trading it through 2008 (on live accounts) will be posted on September 12, 2009. Please check the Label drop down list on the left side menu and select "Shark EA" to read this review after the 13th. If you would like to learn more about my EA evaluation criteria, why most commercial expert advisors fail and how you can start profiting from automated trading system using long term profitable experts with real profit and draw down targets please consider buying my ebook on automated trading or subscribing to my weekly newsletter to receive updates and check the live and demo accounts I am running with several expert advisors. I hope you enjoyed the article !

Friday, February 15, 2008

God's Gift Expert Advisor, One Good Month

I was very reluctant about writing a review on God's Gift right now. The reason is that the results up until now could be misleading to some people and could make them believe this is the holy grail. I will then try to tell you the results as objectively as I can ( cause I do feel a little bit of excitement myself about this ea) . As you know, I always try to have my opinions as unbiased as possible although there is always some bias coming from my own expectations on the experts (Impossible to evade as a human, I think).

For starters, this ea has had an amazing month. Never in the large amount of forward testing I have seen had I seen such a clean record. God's Gift has managed a perfect month. Absolutely no draw down, yet a hard stop and a trailing stop always in place. Eight wins in a row with an incredible capacity to pinpoint short term market direction.

I would say, I hate this ea because I have not seen it lose any money. When you are testing an ea you have to see it win and you have to see it lose. When you see this you know if your wins are much more than your loses or vise versa. Right now, I have absolutely no way to make this comparison. This, frankly, makes me a little nervous about the expert. I like experts than win and lose and consistently win more than they lose. An expert that always wins is impossible so I will just keep on watching until the losing streak comes.

According to back testing, this is something the expert does frequently. Has a large winning followed by a large losing streak. It is supposed to have a win to lose ratio of about 1:2 with 75% winners and 25% losers.

Needless to say, I am also impressed. It is incredible that an expert with a 70 pip stop loss and a 30 pip trailing stop can be this consistent. Not even one single losing trade. My emotions right now tempt me to try it on a real account. But time will tell, how much it wins or loses.

I will review this expert again in another month (due to it being a very slow trader), However, you can see the trading statement for the past month here. Remember that it took it almost two weeks to make the first trade !

Monday, February 11, 2008

Best Possible Real Forex Expert Advisor

I have spent a lot of time trying to find a good expert advisor. I have searched the ins and outs of the internet, I have spoken to other reviewers, programmers, creators, etc. I have seen the "turn 100 dollars into 5 million" promises, the flash, the whistles, I have seen a good deal of what the automated trading market has to offer regarding forex expert advisors. But I have, not even once, found an expert advisor that kept it's promises. Non of the commercial experts delivered exactly what they promised. Some of them were not profitable, some of them had larger draw downs than what they said, some of them exaggerated their risk to reward ratio. All of them had something untrue about them.

Making a profitable expert advisor is no hard task. Don't get me wrong, it is being profitable in the long term that is difficult. I can program 10 different expert advisors, each based on a different set of rules and I can guarantee that at least one of the ten will be profitable for at least 2 months. With massive gains. Then, massive draw down. That is why the government has a mandatory disclaimer that has to keep company to every expert advisor offer. So that at least you know somehow that past experience is no indicative of future results.

Making a long term profitable expert advisor is difficult because for such a scheme to work, there must be a consistent set of conditions in the market that indicate a mis pricing of a currency pair. This set of conditions must always be exploitable and must always repeat itself. In other words the market has to be inefficient for automated trading to be successful. There has to be something not taken into account by the price that is foreseeable by the expert in such a way that it can predict the mistake in price and take a position to profit from it.

This does happen. It has been shown that the market is inefficient, reason why some traders in currencies can be consistently profitable. But these inefficiencies are not enormous. They are also not a 100% accurate. So with this in mind you will have figured out by now that a profitable expert advisor will not be extremely profitable.

The best possible real forex expert advisor that I can think of has some interesting qualities which could be regarded as "not as good" for many traders but ideal for experienced forex traders and the like. These qualities are :

- A consistent profitability for a period of at least 25 years
- A yearly profit of 25 to 50%
- A maximum draw down of no more than 10%
- A maximum open draw down smaller than 2%

It does not sound like much, but it is much better than an expert that makes 150% for a month every two years and hence loses money by a much bigger amount for the rest of the time. This experts are based on temporary market inefficiencies which are caused by temporary fundamental conditions which will change with time and massacre the ea.

Please, I beg you, be very meticulous with the experts you buy. Do not fall for promises of large profits based on testing (forward or back). I assure you, no ea that produces more than 5% a month is consistently profitable. If you disagree, the burden of proof is with you, show me I am wrong.

Thursday, February 7, 2008

Free Expert Advisor Portoflio, Week 10, Final Words

As I had feared, the expert advisor portfolio we had been testing for the past two months didn't leave up to our expectations. The experts accumulated an abnormally high 42% draw down this week.

The main reason why this happened was an incredibly horrible losing rally shown by the Ichimoku5 expert. Against all the things I would consider logical, this expert advisor sold the usd/jpy all the way up on an uptrend. It got several, almost 10, consecutive stop loss hits.

My final words about this expert advisor portfolio is that it did just about as how 99% of us would have expected. Even though we may have had our hopes up sometime in the past, the expert revealed one of the many absolute truths in the forex market. Past records are no indicative of future results. But I bet that any person with an ea who has, sometime in the past, forward tested profitably for 2, 4 or more months will have no problem in selling it to the willingly believing.

So beware !

If you want to look at the final picture, you can see the final trading statement here.

Tuesday, February 5, 2008

Forex Killer, More Strategy

The past few days have been quiet moved for my Forex Killer strategy. I tested some hypothesis I had concerning the trading setup and so changed some parameters pertaining to it. I tried to test the reliability of forex killer's signals without looking at the daily trend. I have to say, quiet disastrous results. Three trades I placed on Monday with apparently high success probability (higher than 75%) failed. This, of course, is due to the fact that the signals were generated at the pinnacle of a retracement. Apparently forex killer mistakes retracements for trends when they extend for medium (4-6 hour) periods on the hourly charts. The result is a high probability signal followed by a sharp reversal which quickly triggers stop loss orders.

One of the trades, however, was in agreement with the daily trend. So what happened ? It seems that the stop loss given by forex killer is suitable for the hourly ranges of less volatile pairs. More volatile pairs, like jpy crosses, trigger either stop loss or take profit targets five times faster than USD pairs.

As a consequence of this trades, I decided to implement a modification to my trading strategy. I will not trade jpy crosses anymore as this would require an increase in the stop loss which I am not willing to take. This also diminishes the time it takes me to analyze pairs, to about 5 minutes.
I also wanted to share with you a trade I spotted a few hours ago. This trade on the USD/JPY pair, showed high probability and coherence with the daily trend. I hope it illustrates my trading strategy better so that you can better benefit from what I have learned from forex killer.

Saturday, February 2, 2008

Forex Killer, Live Trading Statement

I recently wrote a review on the Forex Killer system and suggested a trading system to accompany this product. As many of you would have liked it, I executed this strategy solely on a live account during the past week (which was very volatile because of the high news density). The results pleased me a lot (they can be seen here).

Even though conditions were harsh, I managed to get a 105 pip profit on my trading strategy. I did make two mistakes, involving entering a trade on EUR/JPY with a 69.5% probability which ended as a looser and a USD/JPY trade which I closed myself too early with a 0.51 USD loss, it would have been a 0.42 USD win if I had let it stay as is.

The system was therefore capable of producing profit in excess of 200 pips but since I was testing it, I did make the above "mistakes" for the sake of experimentation. As you can see, the trailing stop does make a difference, as I had tested for the two weeks before the last one, any larger or any smaller is detrimental to my trading plan.

I will continue to test this strategy for the following week. If it remains as profitable, I may increase lot sizes and consider it seriously as a part of my trading routine.

Free Expert Advisor Portfolio, Week 9, Giving up Profits

This week has not been a very good one for our free forex expert advisor portfolio. The expets suffered a lot of draw down owing to unstable market conditions attributable to the FOMC meetings and the NFP release.

The portfolio gave back it's profits up to almost a 10% profit margin. The expert that suffered the most throughout the news sessions was Moneymaker v2, which tanked towards the bottom with each negative trade. For some reason I have not been able to activate the stoploss on this ea. Even though I have set the variables to reasonable quantities.

The other experts somehow hedged Moneymaker's bad performance on the NFP, which was the greatest looser because it involved a sudden change in market direction, had the trade been the other way, the ea would have collected a juicy profit.

Nevertheless, this expert advisor portfolio is far away from finished as it still retains a 5% monthly profit margin and hopefully it will recover in the following weeks which will be free from these news releases which are by far the worst.

I will maintain the portfolio running as long as it remains above the 10,000 starting capital. If it goes below this level, I will take it out as there would be no point in having this automated trading setup. As always, the trading statement can be seen here.

Wednesday, January 30, 2008

Pointbreak Expert Advisor Final Review, Week 5, C'est Finit

After five weeks of trading the Pointbreak expert advisor and looking closely at the way it closes and opens trades I have just one opinion, for me, c'est finit, it is finished.

Last week I wrote a post which was fairly optimistic about the trading of the Pointbreak expert advisor. I said that I was convinced about the trading strategy, it's closing and opening mechanisms, etc. But well, to err is human. The expert advisor itself has shown me this week how all I believed it was supposed to do was incorrect.

I had the following notions about Pointbreak (maybe you have them too) . I though that the expert :

- should make profits when there is a strong trend
- was supposed to keep draw down at a low level (below 7% at least)

- is supposed to give a 10% annual return
- controls draw down effectively

This week, Pointbreak showed me how all of them (except the 10% annual return which I did not prove or disprove) are - in my opinion - not entirely correct. The expert advisor managed to obtain a massive open draw down (for the conservative setting) which was above 9%. This puts the annual risk reward ratio in the 1:1 area, something that is way too risky for the amount of profit I am waiting to obtain.

The EUR/USD also clearly trended upwards from the beginning of this week (see chart below). Pointbreak didn't show this on it's results, only increasing it's open draw down as it accumulated sell orders (something I wouldn't have expected it to do).

This puts a question on my mind. How much does it have to accumulate to realize a loss ? It is clear on my mind that if it didn't close trades with a 9% open draw down then this may happen with a larger loss, this for me, to win only a 10% yearly profit (as they say this is what they guarantee) , is clearly unacceptable.

This of course, has made me decide to stop trading the Pointbreak expert advisor. My final opinion on this expert advisor is then pretty clear. I consider it - through careful examination of forward testing results - to be extremely risky for the amount of profit obtained. I consider the risk of a massive draw down due to sudden market movements a reality and I also consider the margin requirement of Pointbreak to be excessive for it's risk reward ratio.

The expert has clearly showed me that it does not catch trends as accurately as I would have liked, it also showed me that it does not close positions even on a 9% open draw down and it also showed me that profit accumulation is excessively slow and accompanied with an almost hidden open draw down risk. You have seen my comments (both positive and negative) on the forward testing results. You can see the trading statement here. Judge for yourselves.

Tuesday, January 29, 2008

Forex Killer Review, an Unbiased Perspective and Strategy

Please do not consider this review as a recommendation to buy forex killer, I wrote it to help people who have already purchased the product and want to get something out of it but the software is barely of any more use than most of the freely available indicators out there. You can get the same or better results with simple indicator based systems !

I was looking at several forex trading systems the other day - mainly expert advisors - when I realized that my whole focus has always been on automated trading systems. I thought - maybe I'm missing on some opportunities - so I decided to take a look at some of the most broadly known forex trading systems. I mean, the mass marketed, almost scam looking, forex systems. The ones with the testimonial filled selling pages where you are almost pushed to buy.

One almost instantly caught my attention due to the enormous amount of positive "reviews" available online. I say "reviews" because almost all of the web pages are absurdly biased. They have affiliate links all over the review, not meaning they are lying, but implying they have a concrete reason to do so, mainly getting a profit. For me, any review made on a product that includes an affiliate link is by definition not trustworthy, not necessarily dishonest.

So I decided to test it myself. It really wasn't that expensive so I guessed it wouldn't have hurt if I bought it. The forex system I bought is called Forex Killer.

The system promises heaven (sounds familiar?), telling you that you will earn thousands of dollars everyday. Quiet enough to quit your everyday job and dedicate yourself to forex trading. The website also states that the system is good for newbies (no experience required) and is easy and profitable by itself. The system basically tells you that it is the solution to all your financial problems. Well... I have a story to tell you.

At first glance, it really looked like a trading system for dummies. Big buttons, simple graphs, apparently simple interface and a simple instruction pdf. Well, I started to try and see the software through the eyes of a forex newbie trader, I was frankly lost. The instructions really don't tell you much. They don't tell you anything about actually trading, how to precisely interpret signals, make decisions, etc. This was a real turn off for me. You would have expected such an advertised piece of software to explain the whats, whys, whens and hows of the situation. What you get actually makes you feel like an abandoned child which ultimately would lead to you loosing your money.

After a while I started to figure the basics of the software. Save Metatrader data, import, calculate signals, execute signals. The problem actually has nothing to do with importing the data or calculating the signals. The missing part and the most crucial one, is forgetting to teach interpretation and discretion. What signals to ignore and which ones to execute. I'm fairly literate and experienced in forex trading so I decided to apply some very basic rules and try to make the software work.

And I did just that. You can see the rules in the ebook I am selling for 75 USD - just KIDDING ! - I want to tell everyone this rules so that you can consider them yourselves and not actually loose the money you spent on this piece of software (keep in mind they are just a suggestion, no guarantees what so ever). The rules I am going to tell you have worked for me for the past week, actually making me 55 pips per day, average, still no losing days (only tested for two weeks though). I have managed to get about an 80% winning rate, all this on a live account (trading about 0.01 lots for safety !). I have spent about 10 minutes everyday on this.

It is a simple set of instructions anyone could follow (I hope even the newest of rookies) :

- Set a time of the day to start trades (does not matter what time, I have tested this, it still works). Do not trade on Friday's.

- Start up Metatrader (which you can download for free) and Forex Killer 2 (which I guess you bought).

- Open one hour charts for all the currency pairs available on Forex Killer (the ones on the drop down menu). Now save all the data from this charts in a given directory.

- Load one of them, for example EUR/USD, on Forex Killer 2

- Choose the appropriate currency and timeframe (1H) on the drop down menus.

- Press calculate and wait until it shows you the results

- This is the important part. You are going to see if the trading signals from short and long term periods match. If they do you, then you are going to look at the probabilities (below the charts) if they are above 70% (just has to be one of them), then you will return to metatrader and look at the daily chart for that currency pair. You will see where the daily chart trend is going (up, down, sideways), if your signal is in the direction of the daily trend, then we take the trade. For that we use the long term stop loss and take profit values. Also remember to set a 35 pip trailing stop for your order.

- If any of the above criteria is not met you do not take any trades and load another currency. If you take the trade then set up the trade and return to Forex Killer 2 and continue checking currencies.

- Setup as many trades as you find are completely compliant with the above rules.

- Let the trades be and check them the next day at the time you designated for this. Do not close any trades until they are closed by one of your preset stops or take profit limits.

- Repeat the above process and open orders again. You will hardly ever open more than 4 trades each day, with most of them closing during the first day, all of them on the second day almost all of the time. You will have 7 or 8 trades opened (that is the most I've had).

The above has managed to work for me. The system seems to be quit profitable but it required a previously acquired knowledge of the forex market. No new trader could have figured that without considerable training, learning, etc.

Finally, the point you all came to this review for. I do not believe Forex Killer is a scam, neither is it what it advertises. It is definitely not what I expected in terms of the documentation that was provided with it, but I believe that with the above strategy the system has the potential to be very profitable. It is actually, profitable for the people that already have some or a lot of knowledge about forex trading. If you want to try my system do it on a demo account or on a live account with really small lot sizes, remember money management is the corner stone of success in the forex market.

I say it does deliver what it promises in a very shady way. It does not guide traders as they would have expected with a truly lacking, plain, simple instruction booklet that does not tell you anything really useful about how to use this system to trade. But the system is, as I have said, capable of generating consistent profitable signals (although signals would be very difficult to follow accurately with no trading experience).

My recommendation for you is to give it a try if you feel your knowledge on forex is not zero, you have little time for trading and you have realistic financial expectations from the forex market. That said, not thousands a day initially. It also seems to be a great system for busy people, as an example, taking me only a few minutes a day to use. So I hope this review was helpful for the people who bought fxkiller it and don't know how the heck it is used.

I wish you the best of luck in trading and thanks for reading this very long review. Please check my other reviews on automated trading systems (no affiliate links, I promise !) !

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