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.

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