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.

14 comments:

azjeff said...

Goto http://www.forex-tsd.com/forum.php. Enter the elite section. You can join for .01 cents for like 10 days. You will see a few ea's that have been profitable on demo accounts for a long time.

azjeff said...

For commercial ea goto http://www.forexeasystems.com/EA%20Griffin%20Ultimate.htm
Click on live statement. You will see live trade results showing this is a profitable ea.

azjeff said...

For the most profitable EA. Goto http://www.tradeways.org/pallada.php
Now this is not a fully automatic ea but if you liked forex killer this will blow it away. No comparison. I just gave you three.

c0ldfire said...

Hi Daniel,
Thank you so much for ur reviews and time.
I would like you to take a look at those expert advisors and make an additional reviews on your blog of them also located on this link:
http://www.squidoo.com/expertadvisor
Specially "Conquest Expert Advisor"
which seems very expensive around $1000
also "PipCollector v2".
I would like to hear your thoughts about those ones after you test them.
also i would like to ask what's the best manual strategy your using personally or recommend.

Thank you
Best Regards

azjeff said...

I can give you some info about conquest. Not profitable in last 2 months. I tried it on a demo account. If you look at the holy grail backtest which i never go by it was from 2005 to 2006. Also, the website claims it is the most profitable ea yet has no recent live or demo account trade history. Only backtest history. For $1,000 they should have live statement history like Doubleplay does. PipCollector is a decent ea but the best ea from that website is Doubleplay. It has history with the live statement. For best manual strategies there are many. Goto http://www.forex-tsd.com and www.forexfactory.com both of those forums are good. They are free and they have several different manual trading systems that you can review.

azjeff said...

Coldfire for that kind of money goto http://www.mtpredictor.com/index.html and buy their product. You will actually make money with a real product at that website for the money you would spend on conquest.

Daniel said...

Hello azjeff,

Thank you for all your input. I already knew about all the sources you tell me about. But for me, live statements on seller sites are no guarantee of profitability. We all know the forex ea market is not the most ethically rich one.

I would consider an expert's profitability proved if there is a live statement provided by an independent reviewer that confirms the results, for at least 2 years.

You are also neglecting the fact that statements never show open draw down which is a factor I took into account. Unless there is a hard stop there is no way we would ever know.

I say ea creators must prove beyond reasonable doubt and that includes results beyond the ones they personally obtain.

Also hello to c0ldfire,

I have seen both Conquest and PipCollector. I have not personally reviewed any of them but from what I have seen I can tell you Conquest is absolutely overvalued. Pipcollector seems to fall under the shadow of Doubleplay although I am still not a hundred percent sure about any of these two experts profitability.

As a personal strategy I have had success with simple price action based strategies. I never use any indicators as I believe them to be unnecessary redrawings of what the price is already telling you. I use break out patterns, fibonacci and Elliot wave theory. Although I have always regarded day trading as dangerous so I always trade in a week/monthly perspective.

Hope this helps, thanks again for your comments !

c0ldfire said...

Thank you azjeff and Daniel for ur informative replies.

azjeff,
I will be checking the links you provided and take you opinions on consider.
Thanks

daniel,
I know you are still testing doubleplay But i would like your suggestion if i'm going to take a buy decision. i have also read about your review on pointbreak.
so which you recommend more as a commercial EA doubleplay or pointbreak or any other EA whatsoever?
actually i'm more into doubleplay but i also noticed an advanced feature of pointbreak for the full version ($695 or $49/month) which is:
"Additional manual manipulation of Starting Point. (You need this to override the MSP trading rules)."

could you please explain what it means, cause i think it's manual editing for the buy/sell position entry after placement but not sure, am i correct?
cause if this is true it would be a very powerful feature of this EA.

waiting for your kind input.

Thank you :)

azjeff said...

Daniel,

If you knew about all the sources then you would know the results of all the ea's at http://www.forex-tsd.com/forum.php in the elite section are valid because they are run on open accounts by people that have nothing to do with the ea's. They only review the ea's. Thus, your review of the ea's there would be incorrect. As far as the other two ea's and the doubleplay ea my results almost match the results on their statements. Take Doubleplay for example, i trade with ikon royal. Doubleplay statement is with fxdd. Only 3 or 4 pips difference. You should take a more in depth review of those. To say the live results mean nothing would be a disservice to people.

Daniel said...

Azjeff,

I do agree with what you are saying. I do give some validity to forward testing results provided by other people, as much value as I give to my own for that matter.

My trading has also matched Doubleplay's trading for the time being. So I do not say that live statements are inherently wrong or something similar.

What I am saying is that I have never seen a live trading statement that is LONG enough to give prove beyond reasonable doubt of profitability. I have seen trading statements as long as a year, I believe at least two are needed to create enough market diversity.

If you know of an ea somewhere that has a two year live trading record that can be shown to be by an independent reviewer, please post it here, I would be eager to see it and review it myself.

c0oldfire,

My opinion about Pointbreak is quiet clear. After forward testing it for almost two months I came to the conclusion - based on open draw down I saw - , that this expert risks an amount of money that seems too large. Again, it is still a core design flaw not to have a stoploss. My personal opinion is that the expert is vulnerable to a very large draw down given the right market conditions (which will rarely but eventually happen). If you read all my reviews on Pointbreak you will notice my attitude change along the weeks, from optimistic to very pessimistic about the ea.

Doubleplay seems like a good expert to me. It seems to be well balanced. My trading has always matched Hal's to some pips and I also believe him to be a very honest forex programmer. Genuinely concerned about our profitability.

I do believe it is profitable but as of now I can not prove it to you due to the lack of long enough live statements (give me two years !) ;).

Thank you very much for your comments, I expect to hear from you,

c0ldfire said...

Thank you Daniel :)

azjeff said...

hi Daniel,

You still did not review the ea's at http://www.forex-tsd.com/forum.php. If you did you would notice there are several ea's that have been running for over 2 years and New Digital does an independent review of all of them. He tests everyone on demo accounts and runs a few on his own live accounts. He does not sell them. He reviews them.

Daniel said...

Azjeff,

Thank you for the info , I will check that out then !

c0ldfire,

Your welcome !

tahoemnts said...

dear azjeff:
You say "pallada" will blow FKiller away? I chatted with "pallada" and this system requires continual observation for it to work unlike FK.

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