Each year most of us are very in tune with the latest metatrader 4 automated trading championship. Traders on these contests get hundreds of thousands of dollars out of small initial accounts against demo servers which are modified to show real trading conditions. These includes slippage, spread widening and all the other funny stuff that brokers like to pull on us, the poor retail traders.
Year after year, I have reflected upon the results of the expert advisors and year after year I am more convinced that this contests are badly designed. I think their results are not what most of the people looking for a profitable ea are actually looking for.
First, most of these expert advisors are geared towards making high risk investments in order to win the prize in the short period of time that the contest uses. This fact makes most of these expert advisors far too risky to use for the common retail trader. If I was entering a trading championship I would definitely program one of those expert advisors that can bring up an account size ten times and then margin call the account in a very small time. Sure, there is the probability that the account will margin call in the contest, but since the time frame is so small, the odds are not that against me. For example, a scalper with a 10 pip TP and a 500 pip stop loss is certain to lose everything in the long run, but in the short term it can increase an account's equity significantly.
This is when the second and most important factor comes into play. I believe most of these expert advisors to be spurs of good luck in the middle of the trading history. Just as I explained above, the contest just happened in a period when the ea was profitable, but that period of time is too small to judge the experts real long term profitability.
We have seen this with the winners of previous championships, for example, the Bogie expert advisor which had second place a year back then failed dramatically as market conditions abruptly changed. This expert advisors are not designed to be stable, consistent profit makers, they are designed to be contest winner, so take your time when thinking about purchasing some ea that won in an automated trading championship.
Stay on the sidelines and wait until the ea has a significant amount of live testing before you "jump in" just by thinking, "it won the contest". If you would like to learn more about profitable free and commercial forex expert advisors please consider buying my ebook on automated trading or subscribing to my weekly newsletter to receive updates and check the live and demo accounts I am running with several expert advisors. I hope you enjoyed the article !
Year after year, I have reflected upon the results of the expert advisors and year after year I am more convinced that this contests are badly designed. I think their results are not what most of the people looking for a profitable ea are actually looking for.
First, most of these expert advisors are geared towards making high risk investments in order to win the prize in the short period of time that the contest uses. This fact makes most of these expert advisors far too risky to use for the common retail trader. If I was entering a trading championship I would definitely program one of those expert advisors that can bring up an account size ten times and then margin call the account in a very small time. Sure, there is the probability that the account will margin call in the contest, but since the time frame is so small, the odds are not that against me. For example, a scalper with a 10 pip TP and a 500 pip stop loss is certain to lose everything in the long run, but in the short term it can increase an account's equity significantly.
This is when the second and most important factor comes into play. I believe most of these expert advisors to be spurs of good luck in the middle of the trading history. Just as I explained above, the contest just happened in a period when the ea was profitable, but that period of time is too small to judge the experts real long term profitability.
We have seen this with the winners of previous championships, for example, the Bogie expert advisor which had second place a year back then failed dramatically as market conditions abruptly changed. This expert advisors are not designed to be stable, consistent profit makers, they are designed to be contest winner, so take your time when thinking about purchasing some ea that won in an automated trading championship.
Stay on the sidelines and wait until the ea has a significant amount of live testing before you "jump in" just by thinking, "it won the contest". If you would like to learn more about profitable free and commercial forex expert advisors please consider buying my ebook on automated trading or subscribing to my weekly newsletter to receive updates and check the live and demo accounts I am running with several expert advisors. I hope you enjoyed the article !
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1 comment:
I agree, winning a trading competition and producing long term steady profits are two very different animals.
With high leverage and potential for big profits, the human basic instinct - GREED - kicks in and EA trading competition if perfect food for this!
People have always dreamed of the quick rich and always will...
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