Thursday, December 31, 2009

Ending the Year By Hearing You Out... :o)

Today is the last post of the year 2009. With the end of this year I complete 2 years and 4 months of having this blog and working on automated trading systems and projects. I have to say that this year was the most constructive year I have ever had while trading the forex market. I had many ideas, some good and some bad, I learned a lot about the programming of profitable automated trading systems and I started to publish my research on currency trading magazines.

The blog has also evolved a lot, my vision on expert evaluation is now centered and focus, I have developed video databases, added a lot of content to the newsletter, totally remade my ebook, definitely a lot of changes. I also committed myself to daily posting, something I had definitely thought was almost impossible for me to do, but I now believe to be a good way to stay in tuned on what is happening in the automated trading world around me. Daily posting started in September, and now, more than 120 posts later, I can say that it was a great decision. I feel it has improved my English writing a lot (you be the judges of that !) and it has also helped me develop many ideas about both automated trading and manual trading strategies.

Trading results have also been good this year. All trading systems have behaved like we were expecting from backtesting results. The god's gift ATR continues to be live/back testing consistent as well as the turtle trading system. This new year will be very important for me since it will be the first year I will start as a forex trader. Forex trading became my only source of income near March/June 2009 and now I hope I can keep up with this incredibly odd but satisfying life style for the rest of my life :o).

However, the objective of this post is not to talk about my achievements and hopes for the future (conveniently leaving out all the bad things) but to hear you, my readers, customers, subscribers and fellow traders out. Today, the last day of the year, I want to hear you say ALL the things you think are bad and could be improved about my website, articles, ebook, newsletter, etc. I would like you to tell me what you think is wrong and how you think it could be made any better. I truly want to know any constructive criticism you may have.

Do you think I am a bad writer ? do you think I could improve my content ? What would you like to see included on the blog, ebook, newsletter, etc ? I want to hear you out to start next year with your expectations in mind. There is nothing more important to me than to help my fellow traders out and having a high quality blog content and services is extremely important for this reason. Tell me all the things you would want to have changed, added as well as those things you would like me to remove, improve, etc.

All that said...

!! Have a Happy New Year !!

If you would like to learn more about the content of my website and learn about how you too can be profitable with long term profitable trading systems designed with sound trading tactics 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, December 30, 2009

Forex Expert Advisors : Forex Twister, an Unbiased Review

A few weeks ago a newsletter subscriber asked me to review another forex automated trading system, this expert advisor, called Forex Twister will be the focus of my post today. After going to the expert's website I will analyze the claims made by the authors and the evidence provided in detail in order to tell you if there is enough reliable evidence to backup the claims given. I will also study the statements and trading strategy of the EA in order to give you an idea about its potential for long term profitability. As always, this review is as unbiased as it can be as I get no reward for either positive or negative feedback on this trading system. What you read is what I think, as I have said before, I call them like I see them.

The forex twister website starts with the usual hype regular expert advisor sellers/marketers want you to believe "a trader making thousands with 95% accuracy". A totally misleading, useless phrase that does not help us understand anything about the trading system. Why is the accuracy even a factor ? many traders win less than 50% of the time, yet make a lot more than many automated trading systems that have a 90% accuracy. A 95% accuracy does not mean anything, you need to know your risk to reward ratio in order for that to have any meaning.

What do we have after this ? Some screen shots the author calls "undeniable proof". What a joke. Anyone can make a screen shot that looks like that. I can open up 2 demo accounts, enter 10 longs on one, 10 shorts on the other and then in the end I'll have one nice shot of 10 consecutive wins. That does not mean ANYTHING. Show us a live account with investor access with one year of trading and then we will start talking. The next thing we are presented with is just a regular backtesting report screen shot. Again, we can't even look at the testing period ! Without live testing it is also totally worthless to look at these tests. We don't know the time in which it was done, if it is live/back testing consistent, we cannot actually draw any conclusions about the profitability of the EA with this. Then we have pictures of trades that actually show a respectable risk to reward ratio however when you get the system (as I have read on forums while searching for other reviews) you actually find out that the risk to reward ratio is not 1:3 but actually 10:1, how misleading ! They show you pictures of trades which actually do not correspond to the actual risk to reward ratio of the actual EA.

This is perfectly in line with the results you see in backtests, a low TP of just 10-15 pips is very prone to backtesting one minute interpolation errors which justifies the high profitability of the backtests. Just yet another exploitation of the backtesting faults of metatrader 4. If the sellers of this system really want to show it is profitable then do a 10 year backtest and show live results that proof back/live testing consistency. What this people are doing is, in my opinion, the classic misleading, trash evidence approach so much enjoyed by EA sellers.

In the light of the lack of any reliable evidence to backup their claims and the deliberate effort to conceal information (such as backtesting dates, lot sizes traded, size of TP/SL on trades, etc) this expert advisor is NOT worth buying. If you are interested on reliable expert advisors and how you can achieve long term profitable trading using reliable automated trading solutions with sound trading strategies 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 !

Tuesday, December 29, 2009

Forex Trading Systems : Forex Ranger, an Unbiased Review

Yesterday while looking at my website's keyword log I found out that some people had found my website while searching for "forex ranger" due to this I decided to do a google search to find the system's website and then write a review about it to satisfy those visitors coming in looking for one. Today's post will evaluate the forex ranger trading system and its value for new and experienced traders as a forex trading system. I will examine all the information provided on the website in detail and I will then give my opinion whether this system is worth buying and trading.

First things first, why in the world does this guy say that trades used the system to bank more than a million dollars in 2009 when there is certainly no evidence whatsoever on the website to prove this is true ? This person is speculating in the best case scenario. Speculating about the possible profits a trading system could have had but stating them as real is misleading and unethical. Why isn't the proof shown if it really exists ? You guessed right, it probably simply does not.

The system's value is also probably exaggerated, it certainly looks like a simple Stochastics oscillator coupled with a MACD indicator with the histogram reversed. If you use these couple of indicators you certainly get extremely similar signals. You would probably get the exact same signals if you found the right stochastics and MACD periods. Below there is an image of the Stochastics oscillator (20/6/6) with a MACD (100/48/18) you can see a screenshot of the same period on the forex range website (screenshot of the site ends on the green line). If you think of the MACD as being inverted you will find that the signals match and you would have also entered the long trade pictured there upon a cross of the stochastics %K and %D lines backed up by a positive divergence in the MACD. Maybe the system is not actually based on these indicators but certainly a MACD/Stochastics system gives very similar signals.
Does this system have any merit ? Probably not. Systems like this depend extremely on your money management including your exit strategies. The system does well in trending periods as the ones shown on the site but ranging periods are obviously a completely different matter. Would I buy the forex ranger trading system ? No. Why would I buy any system that gives the same results as a simple stochastics oscillator coupled with a MACD, it just does not make any sense.

My advice is simple, focus more on your money management skills and the way in which you exit the market than on finding perfect entries and you are bound to become profitable in the world of fx automated trading. If you would like to learn about automated trading and how you too can design and program your own long term profitable 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 !

Monday, December 28, 2009

Filtering Everything... A Wrong Approach Towards System Design

This year has been one of the most exciting years in my life. In particular, I think that these year has meant for me a huge leap in the understanding of how automated trading systems work and how long term profitable systems can be designed. Today, I want to write a post about one of the most common mistakes people new to system design make, which limits the profitability of the systems and often makes the achievement of profitable systems impossible. The name of this mistake is filtering.

People who program automated trading systems in forums and as a hobby tend to use this word frequently. You will easily find that this is the first thing people try when a given logic does not give profitable results. Does that EMA cross fail to give you profitable results ? What about a filter to remove all those unwanted losing trades ? Do you have a Bollinger band strategy that fails to profit in trending markets ? What about adding a trending filter to take out all those losing trades ? These approaches couldn't be more wrong. Analysts have known for years that there is no such thing as the "switch" that is, there is no given technical analysis tool that can clearly differentiate between two given market conditions.

What is the regular result of adding filters ? Generally you don't get any significant increase in profitability, you just get a reduction in the number of trades. Reducing the number of trades can be either positive or negative, depending on whether the trades removed are losing or winning trades. Results are rarely positive, and even if they are, they rarely put the system into a much better position.

People fail to realize that there is a price to pay for the profitability of each trading system. This price, called market exposure, is simply the amount of temporary draw down the market demands when unfavorable market conditions are met. The God's gift ATR for example faces long draw down/ break even periods in ranging markets. However it more than makes up for that when the market starts to trend significantly. If you try to filter those ranging markets, you will filter out many profitable trades with them (due to the fact that there is no "switch").

What is the way then to arrive at better systems ? The answer is quiet simple. Follow sound trading principles. Are your loses on unfavorable market conditions larger than your profits when the system is favored ? Then introduce a logic to cut your loses short, instead of trying to filter our all losing trades. Adding a closing logic that quickly takes out losing trades but gives winning trades a chance to follow the trend is one of the easiest ways to improve trading systems, particularly trading systems that are being automated.

The Watukushay No.1 and No.2 experts are very good examples of how the introduction of sound closing strategies that are carefully designed help to greatly increase the profitability of a trading system. If you would like to learn more about these two expert advisors and long term profitable automated trading system design 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, December 27, 2009

Forex Trading Systems : Sniper Forex, an Unbiased Review

A fellow trader emailed me a few days ago in order to ask me about my opinion on the sniper forex trading system. This trading system is not automated but simply a manual trading system. The guy at sniper forex simply sells you the indicators and the rules necessary to trade it. Today's post will be dedicated to the analysis of the sniper forex strategy. Given the fact that the system has a free demo, it becomes pretty easy to analyze the system's potential and uniqueness. At the end of the post I will tell you if I consider this system worth buying and testing. As always, this review is as unbiased as it can be as I get absolutely no reward for either positive or negative feedback about the system.

Well, let us start from the beginning. The sniper forex trading system is composed of a few indicators which you are supposed to follow. The trader is simply supposed to take long or short signals at the appearance of either a red or blue arrow on the screen. The system is of an obvious trend following character and uses mainly indicators which are freely available coded into a template which has them adequately colored and matched to display the signals. So yes, as a matter of fact, anyone who wanted to have their own sniper forex could pull it together from indicators available on the metatrader platform with some modifications. Mathematically and analytically this system offers you nothing which is already available for free.

But Ok, let us focus on the actual benefit you would get, the entry signals and the clear picture you get from the histograms and colored lines. From my analysis of the system, the trend following nature of its trading makes it lose significantly on ranging or consolidating markets. Sure, it would make profit in trending markets but the loses in ranging and consolidating markets are nothing short of excessive. I personally think that you would have a hard time getting over break even during these times.

Of course, it all comes down to money management as I have always said. This, as so many other systems, puts an excess of importance on the entry signals and too few on the money management aspects of trading. It is likely that people will have very different results when trading this depending on their particular money management, how they adjust their lot size, their TP and their SL, if they trail, use a break-even move, etc.

I also believe that there is an over hype of this system with tons and tons of positive testimonials but no one showing an account with a statement and investor access to verify that the system can achieve the profitability targets it claims. There is no reason why I have to think that the testimonials are real, many many times have I seen people post hundreds of fake testimonials on forums, websites, etc. I believe on hard evidence. On the website there are only a few pdfs with the trade result summary of the trades taken by the system but there is in fact no actual evidence that backs them up. There is no reason why we should take the word from a seller. If the system has the profitability this person claims, then he should be able to show us the live accounts with the statements. The same for the people inputting so many testimonials out there.

Also the fact that people in the testimonials never refer to long periods of time (usually only days or a few months) points out that the seller may have got very good testimonials on trending periods (which the system is favored in) and uses them as a way to promote the system. Again, I don't ask for anything else as the minimal to believe in the profitability of any trading system, hard evidence showing profitability. If this guy says that the system has been profitable from 2004 then I would want him to upload his account statements and give investor acces to his account to prove his claims. I can also make a pdf with a bunch of numbers stating that a system is profitable. I am sorry for the lack of trust, but scams are just too common and demanding real evidence is the only solution.

I truly believe that the sniper forex trading system is nothing different from the other trading systems sold out there which put great emphasis on the entry of the systems and too few emphasis on the actual money management (lot size calculation and exit strategy) which is vital for success in trading. Would I buy this system ? Definitely not, there is nothing within it that I could not find out through analysis of the indicators included within metatrader and there is not even enough evidence to point out to it being profitable in the long term. For this reason, I consider the sniper forex system not worth buying.

If you want to learn how you can trade using automated trading systems instead of manual systems and design and program long term profitable strategies 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, December 26, 2009

The Break-even Dilemma

Today I wanted to write a post about an aspect of trading which has always sprung a discussion between traders. This option of money management, the setting of a break even move, has been both praised and bashed by traders as a way to control the inherent risk on trades. Is it good to move your stops to break-even ? is it bad ? This post will try to go through both the advantages and disadvantages of the use of a move to break-even highlighting the importance of this choice in the particular money management strategy used.

So what is a move to break-even ? A move to break-even is when a trader decides to move his SL to a price level which is usually the entry price plus or minus the spread (depending on trade direction) to ensure that if price pulls back the trader will, in a worst case scenario, exit the trade with no loss. The move to break-even counts on price moving a given favorable number of pips before the actual move is done. Usually this move must be in the order of a minimum 10-15 pips depending on the broker.

As you may have already thought, the controversy of using a move to break-even arises when one considers that moving the SL to break-even cuts the "breathing room" from the trade. Traders will argue that many times the move to break-even makes the trades go back to take out the trade and then continue in what would have originally been a winning trade. However, moving to break-even does limit the loses in those trades which move in favor and then move back to move way beyond the break-even price and into the stop loss.

So is using a move to break-even good or bad ? This question is certainly not answered in an easy way. First of all, a very well statistical analysis of your system is needed. What percentage of the time does your system retrace to the SL after taking X profit ? Is this amount significant ? What percentage of the time does your system go to X and then return to levels below the entry only to go to the TP ? Taking a look at the chart of a 10 year backtest of your system may help you answer these questions as on very varied market conditions these are bound to change.

Some systems like the god's gift ATR in which the most profitable trades don't test levels below 70% of the ATR benefit from this approach (which is the first move of a trailing stop) while systems that usually oscillate before arriving at the final profit may not (systems like the turtle trading system). In my experience, the move to break-even is the "lazy" approach towards cutting loses short. It is a far more efficient approach to use an intelligent closing logic that matches your strategy rather than a break-even approach. A closing logic makes sure that trades are closed when there is a reason to do so and trades can usually be closed with a profit rather than with no profit at all.

Finally, the best way to know if a move to break-even is the way to go is simple. Implement it and see if it improves your profit in a 10 year simulation. Adjusting the amount of profit before break-even against the ATR may also be a good idea in order to adjust the moves according to market volatility. When manual trading, remember that moving to break-even should be a regular practice when you are trying to play moves in which there is a high probability of the market evolving against you (trading the news for example) or when your analysis tells you that the probability of the trade going against you is high but a good possibility of profit exists (like trying to trade a retracement on a trend).

If you would like to learn more about designing trading systems that can adapt to changes in market conditions and remain long term 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 !

Friday, December 25, 2009

Merry Christmas ! ... Releasing Watukushay FE (For Everyone)

Before starting today's post I would like to tell all my readers, customers and newsletter subscriber...

!! Merry Christmas !!

As you know, today I am going to release the Watukushay FE expert advisor which is my personal attempt to code a freely available long term profitable system anyone, anywhere can get their hands on and analyze, trade and use for their own long term profitability goals. As I explained before, the idea is to create a free access, supported expert advisor which can be traded on the metatrader 4 platform and achieve profits in the long term.

In order to achieve this I decided to use an RSI based expert advisor with ATR adjusted money management which can adapt to changes in market conditions, preserve capital on unfavorable markets, and generate decent returns under the adequate market conditions. This EA has been programmed with my best intentions in mind with the hope that at least a few people will have the confidence needed to trade this system and achieve profits in the long run. The system can achieve realistic profits with realistic risks.

As part of my support for this system I will start to trade it from tomorrow on a live account which will be added to my public myfxbook portfolio. I have also made the expert's backtests available and the expert file as an executable (ex4). Anyone of you who wants the source is free to leave a comment with an email (please explain what you would like to do or implement on the source for the record) and I will send you the expert's code.

Where can you download this piece of code ? I have created a website at in which you can find a lot of material describing the expert's logic and trading as well as a link to the FTP where you can download the expert plus all the testing statements. This EA is my Christmas gift to all my fellow traders, totally free and in the process of being traded live by me for at least the next 2 years. This EA will also be ported to mql5 once the platform goes out of beta testing.

If you would like to learn more about what the Watukushay project is about as well as how the Watukushay experts were designed, tested and programmed 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, December 24, 2009

Forex Expert Advisors : Forex Transporter an Unbiased Review

A few weeks ago, a fellow trader asked me to review another automated trading system he saw online. This expert advisor, called forex transporter promises to give risk-free returns of more than 800% a year. Today my objective will be to go through the forex transporter website and find out if the claims they make are backed up in a convincing fashion by the evidence they show. As always, I will examine the website and evidence shown and analyze the trading system to see if it fulfills my criteria for sound trading and long term profitability. After that I will give my opinion of whether the forex transporter system is or is not worth buying or testing.

This website starts with some very bold claims, a profit higher than 800% with no risk (as stated on the site). First of all, it is illegal to say that a forex expert advisor is risk free, it is required by people selling any trading system or software to clearly state the risks assumed by a trader. There is no such thing as risk free trading, saying so is nothing short of misleading and put simply, wrong. I understand that people want to sell their systems but doing so by conning people into thinking that a high risk investment is not is unethical to say the least.

After further evaluation of the website we also find some pretty bad surprises. The system uses simple backtesting to "proof" profitability, something which is definitely wrong. More over, the backtesting is very limited with only results shown for the year 2009. Why would they choose to only show the last year when it is clear that backtesting can be done accurately from 2000 ? The reason, I think, is associated with the fact that the forex transporter system uses a progressive money management system.

Certainly you might think that the forex transporter does not use an unsound money management system because the lot size is constant. Big mistake, if you closely examine the graphs and the statements you will notice that the actual profit/loss of trades is increased as the system loses trades. It certainly does not increase lot sizes so it increases the TP and SL in order to arrive at a money management progression without altering the lot size. The result is an equity curve which is typical of martingales or any other type of progressive money management strategy. The so called "profit equalizer" is nothing but an uncontrolled increase in risk as loses progress which will put your account at the risk of a wipe out eventually. It is not a matter of if, just a matter of when. This wipe outs might have happened in other years and this is the paramount reason why they are hiding the complete backtesting results.

Let us also think about the fact that there is no way in which we can trust this backtests. As I have always said, backtests can only be trusted when there is true back/live testing consistency to prove that a system actually trades live as it does in simulation. There are too many tactics to generate good results in backtesting which can be used to show good results. Given this fact, we cannot trust EA sellers to be honest, we MUST have this confirmation. Why isn't there a live test so that we can compare and have reliable proof ? Why would they not trade the system they are trying to sell ? Your right, they probably want to profit from selling you the EA instead of from trading it.

Now let us also go down a walk through honesty lane. Why do people show fake testimonials ? I will never know. If the system is good why in the world do they have the need to invent these fake testimonials ? How do I know they are fake ? Just take a look at the following screen shot. I doubt that "business man with broad shoulders" ever tried the system. Please, do us a favor and don't treat us like we were retarded, we can also go and get royalty free images.
What is forex transporter ? It is a system which does not have any reliable, convincing information to backup its claims. It is a system that uses unsound trading tactics to recover loses, tactics which expose the system to an uncapped market exposure. Because of these reasons, the forex transporter system is NOT worth buying or testing. This system is definitely a good example of the dishonest, unethical behavior of many EA sellers, an excellent example of how things should NOT be done.

If you are fed up with all the hype and unreal claims made by EA sellers and you would like to learn more about the way in which automated trading and trading systems work and how you too can design and trade your own long term profitable trading 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 !

Wednesday, December 23, 2009

Forex Expert Advisors : Forex Sprinter, an Unbiased Review

A few days ago a newsletter subscriber emailed me suggesting an automated trading system for review. The name of this expert advisor is forex sprinter and quiet pleasantly there are absolutely no claims made about its profitability on its web page. Today I am going to focus on the analysis of this expert advisor and the trading strategy and live/back testing evidence provided by the author. After doing my analysis I will then tell you if in my opinion the trading system is or is not worth buying and testing. As always my review is as unbiased as it can be as I receive no reward for either positive or negative comments about the system.

First of all, I would have to congratulate the owner of the forex sprinter website for being clear and concise. However I do feel that there is a lack of information on the website. It is not good to hype people with claims of "risk free" trading, "instant profits", or the like but it is also not good to leave the expert without any comment. I always consider that it is good to give a description about the system and state the risk/profit targets that the EA is able to reach according to the evidence available. It is true that some people will be able to infer these aspects from the statements but it is certainly helpful to have an explanation of the general trading approach to be able to evaluate the soundness of the trading technique used.

That said, it is certainly disappointing to see what the trading system is all about. The system is actually not a true scalper but an EA which uses a fixed TP (which is more than 3 times the average GBP/USD spread). The other trading system exposed on the site is actually a martingale system, a sure way to wipe out an account in the long term. Now, the live trading statement shown on the site is nothing short of what you would expect for a system with an almost 5:1 risk to reward ratio. A long period of profitable trades is easily wiped by a small series of losing trades. The developer of the EA promises to release updated settings to the EA but the fact that the EA does not have anyway to adapt to changing market conditions besides optimization makes me seriously doubt the long term profitability of the EA.

I also would like to know why there are no backtesting statements. Certainly it would be useful to have backtests from the live testing period in order to see if the expert is live/back testing consistent and therefore subject to a deeper backtesting analysis from 2000 which could shine a lot of light on the long term profitability. However the system can be expected not to be long term profitable because of its inherent lack of capacity to adapt to changing market conditions.

The Forex Sprinter expert advisor is definitely a system that has actually no claims by the author and too little evidence to actually draw any conclusions about the expert's profitability. Much longer live testing coupled with backtests that show live/back testing consistency would be necessary to ensure that the expert has a good likeness of being long term profitable. Is this EA worth buying ? No, there is no evidence to proof that it can be a long term profitable system with the present evidence being lacking. The other expert advisor, for which evidence is totally absent will be absolutely not worth buying simply because of the use of martingale money management which, as I have explained in the past, cannot, under any circumstances be long term profitable.

If you would like to learn more about how experts should be tested to ensure long term profitability and how you too can start trading with long term profitable 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 !

Tuesday, December 22, 2009

Forex Expert Advisors : Forex Knight Rider, an Unbiased Review

Yesterday while searching the internet for new expert advisors I found a new trading system which I had not reviewed. This trading system, called Forex Knight Rider will be the focus of today's post. As with the other experts I have reviewed, today I am going to go through the forex knight rider website evaluating the author's claims against the evidence provided on the site. I will then analyze the evidence closely and give you my opinion about the potential of this expert for long term profitability and if it is or if it is not worth buying and testing. Please remember that my reviews are as unbiased as they can be as I get no reward for any positive or negative feedback on the expert advisor. I just call them like I see them.

If you are looking for the regular hyped website with absurd claims and little evidence, then you have found your match with forex knight rider. The EA starts up with some bold claims of making 28K within three months from 50K, that is, a profit higher than 50% in just three months. What is there to back up the claims made by these people ? Actually the claims are only based on backtesting results. The problem with this is that backtesting results coming from EA sellers cannot be trusted because there are too many ways in which backtesting can be exploited to achieve these unrealistic results. This is specially true when you look at the EA trading strategy which involves closing trades within a 4-6 pip range. Closing trades on such a small movement WILL generate some serious problems due to one minute interpolation errors. Since they do not show us any live tests to show back/live testing consistency then we have no other choice but to consider the back tests unreliable. Why they make claims of real profit based on simulation simply eludes me as this is extremely misleading and borderline illegal.

The things we are shown after this just go off the charts of hype and wrong doing of commercial EA sellers. Useless pictures of trades and best of all, some "testimonials" with "live" accounts to which there is no investor access to confirm or any myfxbook access that could also confirm their authenticity. Another reason to believe that these live tests are fake is pretty obvious. See Tony Alberto from Canada ? Well, he is more well known in the internet as "Close-up office portrait of a young man". What a joke ! Why do they treat us like we were retarded ? We can also search for royalty free images and find their fake pictures of their fake testimonials ! Present FTC regulations forbid the use of fake pictures to represent clients so what they are doing IS illegal according to US regulations.
Forex Knight Rider is nothing more than an extremely hyped EA with unethical marketing practices that has absolutely no hard evidence to backup its claims. Another very good example of how things should NOT be done in business. For all the lack of evidence to show any profitability or likehood of long term profitability I consider the forex knight rider NOT worth buying or testing. If you would like to know more about the way in which I evaluate expert advisors and how you too can design and program long term profitable systems with reliable profit and risk 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 !

Monday, December 21, 2009

Jumping the Gun... The Fear of Being Left Out : a Post on Manual Trading Psychology

This past week was very interesting for me in several different ways. Trading my support and resistance manual trading system on such small time frames (one hour, 20 pip renko) has reminded me about several important aspects of manual trading psychology. I certainly know that I have never been exceptional at swing/day trading since I am not used to the constant evaluation of the market and the stress of having to open/close positions almost on a daily basis. However I thought it would be a good opportunity to practice given the interest on my S&R system and my personal interest on the study of my own trading psychology. Of course, those of you who have followed these tests since the beginning now that the original idea was to test the system on the daily/weekly S&R levels as I do with managed live accounts, however the fact that the demo account does not allow me to trade under 0.1 lots catalyzed my decision to trade on a day trader fashion since a lower lot size would be needed for the movements necessary to trade the S&R weekly levels with adequate risk. Certainly I also want to show you how I trade weekly S&R in the long term so I will open a second demo account with a much bigger balance to also show you how this trading is done.

Now, going back to day trading S&R levels, I found this week that not only is it hard for me to make decisions on such low time frames but it is also hard for me to control my psychology because of another fact. I am being watched ! Certainly having the pressure to put up some decent performance is not good for any trader and I do feel somehow obliged to bring positive results to my dear readers. I also know that having this pressure obscures my thinking and this may have the counter effect of making me lose more trades because of emotional decisions made regarding trades. For this reason this is a golden opportunity to further analyze my psyche and write some further insights into the psychology of manual trading.

Today I wanted to write a post about one of the things I noticed about myself this week when manually trading the S&R methodology on the 1 hour and renko 20 pip time frames which reminded me of when I started trading in high school (yes, it has been a while !).

I am what I would call "a gun jumper", I love, absolutely love, to "jump the gun". What does this mean ? This means that I am absolutely horrified by the thought of being left out of a move, specially when I know that the move is necessary to get a profitable result to impress someone (in this case my dear website visitors :o) ). This makes me enter trades too frequently, sometimes against my own fundamental analysis. Of course, I notice now that I realize more when this is happening and I do put a tighter risk criteria on the "emotional" trades, however it happens and it happened this week.

You will notice when you access my trading journal (, username journal, password trading), that there is a trade taken last week labeled as "impulse". This trade was taken by me against the prevalent GBP/USD trend in an effort to accumulate more profit on a possible counter trend move. I however was conscious about the precarious analysis behind my decision and placed a tight SL and moved my stop to break even as soon as it was 10 pips away. The trade was luckily closed with a small profit and reminded me about my defects as a trader.

It had been a long while since I had taken such a bad impulse trade. Against my fundamental analysis and barely in alignment with any technical perspective. Why did I do this ? The first reason would be baby sitting my trades. I have found out that being a full time trader (as I am now) somehow manages to glue me to the screen for long periods of time, even if I do not have to be there. While I watch the market, interpret the news and manage my trades, my psychology starts to play against me. There are a thousand hypothesis going on inside my mind and my first crystal clear analysis starts to blur away in the mist of market movements.

What is the remedy to this problem ? For me it seems to be retrospective. At the time these things happen I certainly cannot control them. However when I analyze the trade I do realize the err of my ways and I do make a decision to restrain myself when I feel the same way in the future. That is exactly the reason why you have to document and analyze all the trades you take. Doing this allows you to analyze the reasons and emotions that made you take a given decision and take action so that the situation does not arise again. I also use positive reinforcement, for each time I go through with a trade as I planned at the beginning and for every time I don't take an emotion based trade I thought about taking I eat something I like, I absolutely love chocolate, so that seems like a good treat for me.

Trading manually is definitely a complex and unique journey that each one of us lives in a different way. My piece of advice is pretty simple, profitability comes from learning and learning comes from analysis so documentation of your actions should be an absolute must in your journey towards manual profitability. I am learning a lot from this experience as day trading S&R is a little bit different than my usual long term S&R trading which usually involves stops in the order of 100-300 pips, not the 10-30 pips I've been trading lately !

If you want to know more about profitable trading, particularly profitable trading using automated trading 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, December 20, 2009

Join me On Twitter ! :-)

Today I had a good idea which I think will put me a lot more in touch with all my website visitors, customers and fellow traders. I have decided that from now on I will use my twitter account as a way to further improve my contact with everyone who has any interest on this website or my projects. For those of you who are not familiarized with it, twitter is a sort of "micro public blogging system" in which people exchange small messages. If you add me to your twitter you will receive my messages and if I add you to mine I will see yours. Think of it as being with 5 million people inside a stadium and being able to choose who you want to listen to.

Twitter brings a great opportunity I had not realized before, it will give me the opportunity to hear your opinions (and you to hear mine) on real time while we interact in the world of forex trading. From now on, those of you who want to hear more about me and my projects can add me to your twitter account. My twitter username is danielfppps :-). What will be published on my twitter account ? I think I will try to focus on publishing the following information which may be interesting for fellow traders. I will :
  • say when new ebook updates are available (including new videos)
  • talk live about the trades I am taking on my S&R trading Journal
  • say my opinion on any fundamentals that may have just been released
  • talk about Watukushay FE trades
I think that this will be a great opportunity to interact and get to know the people who visit my website and care about my opinion. Of course, if you would like me to add anything else to my twitter schedule please leave a comment and I'll make sure I take it into account. Meanwhile I hope that if you are interested you start to tune in so that we can learn more about each other and this great journey that is forex manual/automated trading.

If you would like to learn more about the trading systems I have programmed or how you too can be profitable in the long term with reliable trading systems that will not wipe your account 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, December 19, 2009

Forex Expert Advisors : Forex Sorcerer, an Unbiased Review

Today I have decided to write a review about an automated trading system which was requested by 2 newsletter subscribers about a week ago. The expert advisor I am going to be reviewing today is called forex sorcerer and promises in its website to be an amazing expert advisor able to produce a profit of 49 million dollars every year (yeah, you read right). As always, I am going to evaluate the author's claims against the evidence provided by the authors and in virtue of this I will be able to say if the system is worth buying and testing or NOT. As all other reviews I have written this review is as unbiased as it can be as I get no compensation for either negative or positive feedback on the EA.

First of all, I have to say that the claims made by the authors of forex sorcerer are boldest most absurd claims I have ever read. They say their system can turn 49 million dollars each year ? My God, I simply cannot believe they are SO bold that they care to make that statement. I seriously think this people believe that their customers are desperate, retarded or something of that sort. Who in their right mind would believe that an automated trading system in the forex market can make 49 million dollars each year ? Sure, if you have a 500 million dollars investment it is possible, but NEVER from 500K, much less from 5000 USD.

What evidence do they show to prove this claims ? Absolutely nothing that is worth mentioning. All the evidence the people at forex wizard show is a backtest that is obviously not going to be consistent with live trading since the expert obviosly exploits backtesting faults to achieve their profits. If it is as profitable as they say it is then why don't they show us a two month statement with a 1000% profit ? This is the top of the hype and scam pile, it is absolutely incredible that there are people who believe that they are customers so naive and ignorant as to buy this system. More over, if there are customers who are so naive and ignorant, what type of crook would want to sell them a system that would not deliver the results mentioned and even wipe their accounts ?

For me going through the forex sorcerer website was nothing short of an angering experience. I am amazed at the things people will do for money. How could you show backtests that are obviously not worth anything trying to make them sound like the truth ? Why do you say your system makes 49 million dollars a year if it has NEVER done that ? It has done that in simulation which has many limitations that are obviously being exploited and which will NOT be in check with reality when live trading. There isn't any live testing to backup the backtests and show us that they are worth anything. It is because they are NOT.

Well, sadly this does not surprise me. It seems true that when you think money is everything, you'll do everything for money. If you want to learn about automated trading and how you too can get long term realistic results with realistic profit and risk 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, December 18, 2009

What you Gonna Do When They Come For You ? ... The New FCT Rulings...

A few days ago I was pleasantly surprised by an article on a website written by a fellow EA reviewer at The article was nothing but a small joke about the new FCT rulings and how this will apply to people who sell things online. Of course, as such a topic is extremely important I also had to dedicate a post to informing everyone who comes to my website about the new rulings of the FCT and how they will apply to the domain of online sellers. In particular, how this will apply to the current way in which business is done in the automated trading, EA selling sector.

For those of you who do not know, the FCT or Federal Trade Commission, is the entity in charge of regulating trade, including promotion and advertising in the United States Of America. The FCT is in charge of stating the rules and parameters that sellers must follow when they want to sell products to customers, on TV, the internet, etc. Up until now, the FCT had some pretty soft criteria regarding the regulations that advertisers had to follow in order to promote products. Pretty much all the scamming and coning that was going on was up to a certain point legal. However, I believe that in the light of the many class action law suites against scam products sold both on infomercials and online, the FCT finally realized that it had to take a stand for the customer and not for the scammers out there.

What did they do ? I almost cried when I read the new rulings ! From now on, advertisers are not allowed to do a series of things. First of all, the testimonials they use MUST be testimonials coming from real people whose real picture must be shown and who must have had an uncompensated and real experience with the product. This means that EA sellers will no longer be able to show us all those fake and meaningless testimonials using flick photos and made up texts. They will also NOT be able to show us those videos with actors or all those other crappy tactics they use to shove their products down our wallets.

Another extremely important aspect is that claims must be based on research or customer experience and most importantly, the claims MUST reflect the experience of the average consumer and not a single customer who achieved a certain set of results. Expert Advisor sellers will NOT be able to make those bold and absurd claims, they will have to make claims which are in line with the average customer experience, something which will most likely put 99% out of their business.

The only sad aspect of this rulings is that they pertain only to US products and products sold to US customers. People in other regions of the world still need to have their countries legislation back them up. However I am extremely happy that this EA sellers will start to have to show people reality and not the hype and fiction they have been so fond of up until now. Today the truth caught a break, and it was good.

If you want to learn more about my unbiased points of view, my criteria for EA evaluation and how profitable results in the forex market CAN be achieve with realistic profit and risk 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 !

Thursday, December 17, 2009

Forex Expert Advisors : Fx Genius Robot, an Unbiased Review

After doing some online research today I found an expert advisor which had been suggested to me for review in the past but which I had put aside because at the time I did not have enough information to put up a well informed opinion on the trading system. Today I have finally decided to write a review about the fx genius robot from which I now have enough information to review. This review will focus on the evaluation of the creator's claims against the evidence provided by him, after this I will be able to give my full opinion of the EA and tell you whether or not it is worth buying or purchasing (in my opinion). More over, a friend of mine who bought this system let me analyze it so I was able to checkout its logic and trading mechanism, reason why I have some very interesting insights on this system which I did not have before.

The claims this EA creator makes are nothing short of absurd, turning 100 USD into 170K USD in 51 day is nothing short of a holy grail. It is evident that we have to luck deeply into all the evidence provided since such claims are extremely unlikely to be true given the fact that a system that generated such capital would have a huge market exposure.

When we start to unravel the results on the website we find that the EA is what people would call a "true scalper" that is, an EA that often takes profits in less than a minute and within 2 times the spread of the currency pairs it trades. We also find out that most of the results on the website are from demo, not live accounts. This is a very good reason to be suspicious since demo vs live performance for a true scalper would be extremely different since true scalping often suffers from excessive requotes, slippage, etc.

Now the fascinating part about this expert advisor is the concept in which it is based. Looking at the EA manual and system I find that what the EA does is what we would define as "arbitrage". What the EA does is take the price feed of a "fast" broker and then compare that to the broker in which its trading. When price moves in one direction in the fast broker and fails to move on the "slow" broker, the EA places a trade in that direction and cashes out fast. The EA is able to foresee the future due to an inefficiency caused by the different feeds among different brokers.

Can this mode of trading generate such huge income ? Sure, if it was possible to do this in the long term it would do for sure. However there are many many problems associated with this approach. The first one is that "fast" brokers are generally ECN brokers, and "slow" brokers are generally bucket shops with a dealing desk. The problem is that a bucket shop will not allow you to truly scalp, they will most likely fill you with requotes, slippage, etc before they let your trades go through. An ECN would allow you to scalp but its feeds are the fastest so you wouldn't be able to find a "faster" feed from which you could use the concept. Is there a certain brokerage combination that would generate profitable results in live trading ? Well, you would have to open hundreds of live accounts on different bucket shop/ ECN pairs and find out which one allows you to do this type of true scalping in an endless fashion. Most slow brokers will block accounts that show this behavior during the short term and they even won't let you withdraw the profits you made.

Is such an approach likely to be long term profitable ? I find it highly unlikely since it is based on a purely technical inefficiency of the market (technical in the sense of IT not in the sense of technical analysis). Most likely you will not find a single broker pair that will let you profit from such an arbitrage setup. Sure, on demo you will achieve very profitable results, live trading with regulated brokers will be a totally different story. Of course, even though I find such an approach ingenious from an "idea" kind of way, I believe that trading must be based on sound principles that will with the highest like hood generate a return in the long term. the Fx genius robot is not the case and at 2000 USD, it is too steep of a price to pay for such a an unsound way to profit from the markets. Chances are you will never find any broker pair that fit this trading method.

I would recommend you spend your time searching for more long term profitable trading system, here or on other websites you consider aim for this target. If you would like to learn more about the long term profitable systems I develop and trade 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, December 16, 2009

New Videos Available for Ebook Purchases

For the past 2 months I have been recording videos on the subject of automated trading which have been available to my newsletter subscribers. These videos, with one new video added each week, help fellow traders get confidence and knowledge on the subject of automated trading as well as on all the different expert advisors I use and evaluate. Even though there are a lot of areas covered within the newsletter videos I have intentionally left some areas out which have information which is only included within the ebook.

However, a few days ago it occurred to me that my customers who purchase the ebook should also have access to a series of videos that guide them through the ebook's contents, especially those related to the areas of programming and EA evaluation. My intention with these videos will be to make my ebook easier to understand and to provide a real tutoring guidance towards the successful design and trading of profitable automated trading systems. The videos I will record for this purpose will only be available to customers who have purchased the ebook. Of course, everyone who has purchased it in the past will get access to the videos free of charge.

I will get a new video up on the FTP at least once each week until I get everything said on the ebook covered. I will also include some other material such as basic EA programming and making expert advisors through functional decomposition methodologies available. Of course, you will also have detailed videos on how I made and programmed the Watukushay experts, the trading of the god's gift ATR, the checklist for EA evaluation, etc. I certainly hope that with the addition of these new videos people will get a lot more knowledge and success in automated trading. The videos will be available on the same FTP as the ebook update files so make sure you login to watch the videos (instructions for access will be sent with new purchases, people who have purchased the ebook before please follow the link on the ebook's webpage).

I am glad to see that my ebook is evolving towards a really good realistic and practical guide for profitable trading using automated trading systems. Hopefully though next year I will have many more videos and added sections for the ebook which will bring much more value to it and provide my customers with a stronger tool to start their success in forex automated trading. If you are interested in accessing the videos 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 !

Monday, December 14, 2009

Lessons in Trading Psychology... Removing Intuition

As I told you last time I talked about my little project to help two completely "new to forex" and young people learn how to trade forex, trading psychology and the ability to control ones emotions is vital in order to be successful in this business. However there is no greater enemy and no worse problem in forex trading than trading above one's own emotions and personality traits. The evident reason why it is not easy to see this when your starting to trade is mainly because there is, at the beginning, no "strong" evidence that suggests that your emotional trading is "wrong". As a matter of fact, many new traders start with very good results, doubling or tripling their accounts in little time. However these results are never permanent and with time the market cashes on the uncapped exposure that is "emotional trading". How can we remove this daemon from our trading ? How can we teach new traders to trade with rational analysis instead of red blood emotion ?

This is not easy task. During the years I have made and tried many emotional techniques but I haven't found one that works all the time. Depending on the actual person's traits and their actual commitment to the technique it may be difficult or sometimes even impossible to do. However I have seen that the best approach to defeating yourself when trading is to learn, truly learn why your emotional decisions are not the decisions you should follow.

My approach is quiet simple, I will ask a new trader NOT to restrain itself from any type of trading decision he or she wants to make. You want to buy because the sun is shinning ? Buy. You want to sell because you have a "hunch" that the GBP/USD is going down ? Then sell. The only thing I ask from traders is that they keep both things separate. In one account you will trade emotionally and on another account you will trade rationally. When you take a rational trade you need to log into your journal the exact reasons why you entered the trade, how much you traded, when you entered, when you will exit, etc. All these criteria needs to be crystal clear. On you emotional account, you will do the exact same thing, only that "any" criteria will be valid since it is just an account to trade "whatever".

The very important aspect is that the emotional account will be a live account while the rational account will be a demo account. Then you will truly see all your emotional aspects into play when managing real money while you will have no incentive to be emotional on the other account because it just does not represent real capital. In the short term people may find that their emotional trading is much better than their rational trading. Of course, this success will be limited and it will eventually lead to the wiping of the live account while the demo account will be far from a wipe out, with some draw down in the worst case scenario. When I have done this I let people wipe the live account which is usually a 100 USD micro account which is a small price to pay for the extremely valuable lesson learned.

The only way to defeat your emotions is to realize through experience that your emotions and "hunches" do not allow you to be profitable in the long term and that emotional trading leads to an uncapped market exposure. The only way to truly know this is through experience, there is no shortcut, the experience can be a very meaningful and efficient experience as I mentioned above or it can be a painful experience involving thousands of dollars and even 10 to 20 years. It is really the decision of the trader and whether the trader is alone or learning with the help of an already profitable experienced companion.

My advice, have a plan and analyze things. If you make 100 trades and analyze non of them then it is like if you had made 0. Every time you make a trade go through its life and learn from it. The important thing is to learn from our mistakes, after all, in the words of Oscar Wilde, this is just the name we give to our experiences. If you are interested in algorithmic trading don't think that it will rid you of all emotion, on the contrary, automated trading is emotionally harder than manual trading and involves a different psychological approach. If you would like to learn more about this 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, December 13, 2009

On the Problems Of Automated Trading System Design... Why a Broader Vision is Necessary

I have always been interested in the design of automated trading systems and the creation of long term profitable trading strategies. When I was beginning my journey in this area it became apparent that I was missing a key component to achieve success in designing and progamming strategies that could be profitable in the long term. During my whole learning process I have been able to uncover most of the things that were hindering my approaches to profitable algorithmic trading and I can now say that this has led to the achievement of several of the likely profitable trading systems I have programmed up until now such as the Watukushay expert advisors, the GBP/JPY daily breakout system, the god's gift ATR (partially programmed by me) and other similar expert advisors. Today's post will be dedicated to the explanation of one of the most important truths I have realized through my journey in automated trading, the need for a holistic approach which involves a lot of creativity and observation in order to overcome the short comings one faces when going from theory to practice.

When I first started to program trading systems I quickly realized that the theoretical usage of many indicators and the actual implementation of them in a trading strategy is a completely different matter. Take the stochastic oscillator as an example. There are several ways to trade this indicators, crossovers of the %K and %D indicator lines, crossovers from above 80 or 20 to below 80 or above 20 which indicate sell and buy signals respectively and divergence criteria which are very discretionary and not at all straightforward. If you try to implement any of the first two criteria into a trading system you will find several problems. There is no guidance as when or where to exit trades (except on opposite signals) and there is no indication of how you should set your stops or what lot size to trade. It is just like having one piece of a 1000 piece jigsaw puzzle and trying to figure out the whole picture, it is very hard to get there.

Now what many people try at first (including me) is to setup a system with the entry signals and a fixed TP, SL and lot size. Try this and you will find that with ANY system you will NEVER achieve long term profitable results. This is because you are not looking at the big picture and you are just taking into account the most irrelevant aspect of trades, the entry. Knowing when to exit trades and how to trade is much more important and this is often a fact neglected by people new to automated system design.

If you introduce an adjustable SL, TP and lot size that changes against market conditions you still have a big problem. You are neglecting the characteristics of the specific instrument you are trading. You will find out that a stochastic oscillator based system with the above entry criteria will be very unprofitable even with an adjustable SL, TP and lot size, mainly because you are not evaluating if your entry criteria for the indicator fits the instrument you are trading. Forex currency pairs are very different from each other. Different trading pairs have different characteristics and a deep and careful analysis of indicator behavior against each pair is absolutely necessary to arrive at a long term profitable system. Also there is the fact that most indicators do not work in the market with the criteria they are "supposed to", I have found out that it is almost always the case that, after a deep analysis, the long term profitable results are generated by a "counter-intuitive" or complimentary use of many different aspect of an indicator or group of indicators that make mathematical sense together. You will find out when Watukushay FE is released (on Dec the 24th) that it uses a counter-intutive approach to the RSI indicator to trade the market profitably.

My recommendation is then pretty simple. If you are truly interested in the development of profitable automated trading systems you will need to have a deep understanding of the mathematical meaning of each indicator you want to use and how its movements can lead to the location of inefficiencies on different currency pairs. A system that may work very well on the GBP/USD may not work at all on the USD/CHF because of this very reason. If you would like to have more information on how I design, trade and profit from long term profitable trading 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 !

Saturday, December 12, 2009

The Watukushay For Everyone... My Gift For Christmas :-)

After a little bit more than 5 months of having started the Watukushay EA project I decided to end the year with the release of a little surprise which I decided to call the Watukushay FE automated trading system. As all of you may know, the Watukushay project aims to develop long term profitable expert advisors with the recording of the whole development process within my automated trading ebook. Through this process as well as through the writing of my newsletter and the making of the newsletter videos I have learned a whole lot about expert advisor programming and the making of long term profitable, reliable trading systems.

After going through an endless waiting list of worthless expert advisors out there to review and wondering why there are only a few reliable long term profitable commercial or free experts that have reliable evidence that accounts for their profitability I have decided to step up to the play and release a long term profitable expert advisor coming out of the Watukushay project that will be absolutely free for everyone and that will be supported by me. This EA, called Watukushay FE or Watukushay For Everyone is my attempt to code a simple, free, long term profitable trading system that any person new to the forex market can easily find online and trade with.

The Watukushay FE EA is long term profitable in back testing (which is done in an honest fashion taking into account only values of indicators and price of previously closed bars). As far as the logic goes the Watukushay FE uses traditional indicator trading and has a trading frequency that is similar to that of the other two Watukushay expert advisors. This EA will also be tested and commented as part of my newsletter subscription although this will be an exception in the sense that the statements of this EA will be available to everyone, as well as the expert itself. The EA source code will be available although the process that generated it will still be a part of the Watukushay project and therefore a part of my ebook.

The EA will be released at 1 a.m EST on December 25th as my Christmas gift to traders around the globe (Please remember that Watukushay No.2 plus the ebook update including its development will be released in Dec 15th). Anyone who will be interested in using or trading this system is welcome to check out all the backtesting statements, plus a small manual included in order to help people trade the EA which will be released at the same hour. I think I can say the same thing Richard Denis said when he created the turtle system. The system can be available out there, absolutely for free but only a handful of people who understand it will have the confidence to trade it profitably. Hopefully this will become the standard profitable free EA that everyone will be able to use as a way to generate long term profits in the forex market. It will be released with my best wishes and my sincere intentions to help all fellow traders out there :-).

If you would like to learn more about the Watukushay project and the Watukushay No.1 and No.2 (the launch of this EA plus the ebook update including this EA's development will be released on Dec.15th) 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 !

Friday, December 11, 2009

Manual Trading With S&R... Some Pointers for Manual Traders

Thinking a little bit about manual trading strategies and evaluating the way in which I trade support and resistance levels (S&R) it became apparent to me that there were certain modifications I could give to my system that could make it a little bit less discretionary and a lot easier to trade for people new to the trading of support and resistance levels. After a backtesting evaluation of my trading system on the metatrader 4 visual backtester (the strategy is not automated, I just run the backtester on a blank EA so that I could get a "live trading" simulation), I took several notes regarding the way in which the strategy is best traded and I came out with several pointers that will help people who are interested in the profitable manual trading of this strategy.

One of the first things I realized is that taking strictly positions based on a 1:3 risk to rewards ratio often kept me away from positions that could have been profitable and could have increased my profits significantly, for this reason I believe that the entering of positions can be done from a 1:2 risk to rewards ratio although if possible I will still pick a 1:3 risk to reward ratio.

It is also obvious that bounces may occur from support or resistance levels on lower time frames that may cause a bounce towards the SL of our positions and therefore make us end up with a losing trade. I decided that I will move trades from now to breakeven once they reach the first significant support or resistance level in favor of the trade. This will avoid the taking of loses when the market simply bounces of one of this levels towards the SL before reaching our TP which is likely set at a much higher/lower resistance/support level target.

The last thing I wanted to tell you, which is probably the most important aspect I have discovered about S&R trading which is perfectly in line with sound trading principles is that you should NOT trade breakouts of S&R levels. I have found that bounces are the best to trade and the best trades are bounces from S or R levels that end up with a position in favor of the trend. This way you enter the trend at the end of a retracement and therefore with a much more favorable profit potential. I realized that entering on breakouts is usually a bad idea since price seems to bounce from these levels, sometimes a lot, before continuing the trend. So for example, if the EUR/USD has a resistance level at 1.5150, you will not enter on a breakout of 1.5150 but you will enter on a test of a support level that results from a bounce from that support level.
As the images above show you, you should enter trades on the blue circles, NOT on the red circles. Entering bounces that end up in the direction of the main trend is always the most favorable case. You should definitely avoid entering breakouts as this type of trades generally does NOT offer the best risk to reward ratio and often takes out your SL as price bounces off the support or resistance level. Hopefully this guidelines will help anyone wishing to trade this S&R system, of particular importance is to trade this on Renko charts which offer a crystal clear view of support and resistance levels.

If you are not interested on manual trading systems but in the trading of long term profitable automated trading systems. Especially how you can trade freely available profitable systems or build your own long term profitable 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 !

Thursday, December 10, 2009

The Guru Argument, Oh, the Hypocrisy...

Today I wanted to write about one of the things that makes me the angriest when I am going through what seems to be an endless line up of forex manual and automated trading products. What I want to talk to you about today is what I am going to call from now on "the guru argument". It makes me feel angry because it is the crowning argument of all the hypocrisy that EA sellers show to the public. Within this post I am going to explain to you what the guru argument is and why it is extremely unethical and unnecessary to use it within the sales page of any forex trading product.

The guru argument is pretty simple. The most common form of this verbal diarrhea starts with the author or seller of the forex product saying bad things about the previous people like him. They all say that they were like you, or like me, or like any regular Joe out there and that they were "tired" of buying and going through the thousands of forex products out there. They were "fed up" with all the forex gurus out there promising things that were unachievable and they then came up with a brilliant idea. This idea is usually the product they are trying to sell.

Oh but, wait a second. The idea is not that ! The idea was to become a guru. I have always wondered how this people go on and on about how previous sellers were deceitful and how they were sold many useless products and now they go on and do the exact same thing to their own customers. The guru argument is then simply reduced to the fact that this people make a point by talking bad about something which they are. These people become what they trash. It is ironic and carries a very big deal of hypocrisy. It is sort of saying "don't buy all those magic wands out there that don't work, don't believe all the people out there who trick you with magic wands that do not work, buy MY magic wand".

For one, I believe that the whole "guru argument" has no place in business and that it is simply a tactic used to deceive people. If you really have a good product and you want to sell it then you don't need to trash the people that sold the same thing you sold, you just need to show your product's evidence of profitability and if your product is good enough, it will hold for itself. It is something to compare your product to others in a consistent fashion. Something like A does this but I have this and C does this but I have this, rather than just saying "the gurus" and the "previous sellers were deceitful", etc. When EA sellers are doing comparisons and selling their products they should do so with clear STRICT, ONE TO ONE comparisons and with trading evidence of transparent accounts with investor access and back/live consistent evidence that shows long term profitability, manual trading system sellers should also show us 10 year trading records that show that their systems truly work.

Sadly the business does not seem to be about helping fellow traders become profitable. It is not about teaching people how to fly, it is about selling them the cardboard wings that will get them killed. If you have liked this article and you would like to learn more about the knowledge I have to offer regarding expert advisors and automated trading 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 !

Wednesday, December 9, 2009

Forex Expert Advisors : FXDOS, an Unbiased Review

A few days ago, while searching the internet I found the FXDOS automated trading system company which offers the SPIKE, HANS, UCAD, EUROS and SRAND expert advisors. My objective with today's post will be the review of this trading strategies. As you know, I always evaluate the evidence provided by the authors against the claims made and then give my opinion about the potential of the systems for long term profitability according to my long term profitability trading criteria. As always this review is as unbiased as it can be, I receive nothing for giving either positive or negative feedback about this EA.

To begin with, the FXDOS website has a nice design, nothing fancy, filled with marketing ads or anything similar but a simple website showing the necessary information about the trading systems.

Now the story starts to get a little bit sour when we start to analyze the trading systems and the evidence provided about their profitability. The authors of the experts have the courage to say that the SPIKE EA has had no losing trades in the past 4 years. As always, it is not the same to say trades in simulation than to say trades in real life. As you can see from the website, the experts all have just backtesting evidence with no actual live or forward tests. The funniest thing is that the authors say that they did do forward tests which were consistent with backtests.

YEAH, RIGHT. You cannot just SAY you did something and expect us to believe it. If they actually DID the forward tests that show back/live/forward testing consistency then they SHOULD show us. On top of that, an analysis of the trading strategy of the experts reveals that the EA uses a 10 pip TP. A 10 pip TP means not only that there is an almost certainty of unreliable backtesting due to one minute interpolation errors but it also points out that spreads will be VERY important for the trading system. Probably this system is not even worth evaluating in demo testing because of this simple feature.

Knowing that the EA is so sensitive to spreads makes us require LIVE tests that should confirm back/live testing consistency. Some other important questions also come to mind. If the experts, according to the website, were released months or even years ago, then why isn't there a live test showing results for each one of the experts since they were created ? Why isn't there all the evidence that is needed ? Why don't they show these tests if they have them ? Why would anyone want to hide evidence of profitability ?

The answers to these questions are probably the same as usual. The EA is very sensitive to spreads, has unreliable backtests (because of both spread widening neglecting and backtesting one minute interpolation errors) which are not consistent with live tests and live testing is absent because, you guessed, it contradicts the claims made by the authors. Of course, as always I will be inclined to REDO this whole review if back/live testing consistency of at least 3 months is given with investor access passwords to the live accounts traded (we do NEED to know they are live accounts). Meanwhile, these expert advisors are obviously NOT worth buying or testing.

However there is always the possibility have realistic profit and draw down expectations in the forex automated trading market. If you would like to learn more about how you too can be profitable in the forex market with automated trading strategies 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 !

Tuesday, December 8, 2009

Forex Trading Strategies: Forex Rebellion, an Unbiased Review

As you know, most of my time is dedicated to the review of automated trading systems, however today I am going to take a little bit of time away from that in order to review a manual trading system called forex rebellion. I think it is also important to review manual trading systems because often it is easy for people to fall into all the marketing and hype presented by these sellers. In particular I wanted to review the forex rebellion trading strategy since it is a perfect example of the way in which these forex strategy sellers lure people into buying their trading systems that have a complete lack of evidence and support.

First of all, what would you ask a trader who wanted to manage your trading account ? What track record would someone have to have in order to convince you that they can produce profits with your money ? A year ? Two ? Most serious investment firms won't even bother if your track record is below 10 years. So why is it that people have such a soft criteria when they go out to look for and buy a manual trading strategy ?

Of course, the dream my friends, the dream. Forex Rebellion is a perfect example that shows you how this marketing technique works. The whole website is based on the concept of positive reinforcement. It tells you what you want to hear and then reinforces it with some insufficient evidence of profitability that you will believe because well, you want to believe it. Of course, in the whole process some very important information is not given. Such things as the maximum expected draw down of the strategy, the expected average annual profitability, the number of trades, the expected loses because of swap, spreads, etc.

More over, the website never shows us an actual track record of trades that has any "decent" length. That is, we don't have a track record of at least a few years to actually believe the things this guy is saying. I have known people who, out of luck, have been able to pull 100 and 200% profits during one or two months, that is no problem. The actual problem in forex trading is to do this in the long term and this is what sets a successful trader apart from a "lucky" one. So who in their right mind would buy a system that has tests of 2 or 3 months ? Absolutely no one ! A fund manager would laugh if you told him to hire you out of your three months of experience in trading.

I am sure you all can see that when this is put in perspective it becomes obvious. A trading system with very scarce evidence with no actual evidence of long term profitability is just as good as going to Vegas and spinning the roulette. All the talk and the videos and everything on the web page is simply no substitute for evidence, the evidence is a must and no system without it should be considered. Especially manual trading systems.

Of course, in my opinion, in the light of the complete lack of any reliable information that can backup any of the claims made by the author in the long term I am going to say that this trading system is absolutely NOT worth buying or testing, although, the website is in fact a perfect example of many of the strategies used by people in the "forex product business" to take money away from the people in the market. However, if you came to my website because you are interested in automated trading systems and how they can be traded profitably 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 !

Monday, December 7, 2009

Forex Expert Advsiors : AI Forex Robot, an Unbiased Review

A few days ago two of my newsletter subscribers requested I wrote a review of the AI Forex Robot trading system. Since I had not reviewed this EA before I decided to dedicate today's post to the analysis of this trading strategy. As you know, my analysis focuses on the evaluation of the evidence provided against the claims made by the author. Based on the evidence provided (and the nature of the evidence missing) I will analyze the aiforexrobot trading system and give my opinion about its trading and its potential for long term profitability. As always this review is as unbiased as it can be as I receive no rewards for either positive or negative feedback about this expert advisor.

This expert advisor has without a doubt some of the most outrageous claims in the market. The first thing you see when you arrive at the web page is the promise that the AI forex robot is able to triple your money every month. Sometimes I don't know if these expert advisor sellers are just deeply evil or if they are just extremely ignorant about the nature of their own trading systems. But well, no problem, I won't judge the system before looking at the evidence provided by the author since there is always the possibility that the person may have the proof needed to make such outrageous claims. I assure you, nothing would make me happier.

Sadly the AI forex robot is not the excemption and its webpage is devoid of the necessary information needed to assert that the expert can truly achieve those profitability levels. What evidence is provided by the author ? Backtests. As you know, I am very supportive of backtests when they are done in a responsible manner and when their agreement with live testing is confirmed. However we see nothing close to this on this web page. Dangerously enough, the author of the system gives some very misleading statements about the nature of backtesting. Saying things like "Results from back-testing can be solid gold IF they're proven with more than one simple test, and if they are proven with short and long term strategies, plus small risk vs. large risk settings." is extremely misleading and makes people believe that running multiple backtests of a given strategy that turn out profitable "validates" the backtesting. Nothing could be further from the truth.

If there is a system like the AI forex robot that exploits backtesting to show profitable results, it will always do so, no matter how many tests you run and having a thousand profitable backtesting results will not mean a thing. The ONLY way to accurately validate backtests is with a direct comparison of a backtesting period with a live testing period.

The backtests of the AI forex robot do show us that the EA uses a small TP with a very unfavorable risk to reward ratio which makes the EA obviously a candidate for the exploitation of backtesting interpolation errors. Without a doubt, live testing of this EA will NOT match its backtests. Of course, no live testing evidence to support all the backtesting statements is shown, more over, there are no backtesting statementes from 2000, something would not help very much anyway since the backtests are most probably not even consistent with live testing.

As you can see, the aiforexrobot lacks back/live testing consistency proof and its backtests are most probably a result of one minute interpolation errors. Since profitability CANNOT be proven to the best of our knowledge and there is NO indication that the EA can achieve the profitability claims made by the author this EA is NOT worth buying or testing. Of course, if you would like to learn more about the world of automated trading and how you too can build and trade long term profitable 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 !

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