Tuesday, September 22, 2009

Forex Expert Advisors : VipFX an unbiased review

The VipFX expert advisor is yet another automated trading system designed for the mt4 trading platform that claims to give outrageous profits in short time spans with moderate risk levels. My objective with today's post is to evaluate the author's claims in comparison with the evidence he provides and to give my honest unbiased opinion about this trading system taking this into account.

Now this expert advisor is a special case I had not seen in a while. The VipFX author actually makes up a decent website that shows significant amounts of evidence supporting his claims. I would have to say that according to what he says and the evidence he has, there seems to be a complete backup of his claims. He actually has 6 months of trading evidence coupled with live tests that show how the average profit per month is actually superior to 25% and he also has backtests that seem to be consistent with his live testing evidence. Well, everything looks good until you really start to analyze his trading system.

Of course, for people who have been trading the forex market for a longer time, the identity of the trading system this guy is using should seem obvious just because of the look of his equity curve. This guy is trading a Martingale ! Of course, a system that uses incremental money management gets consistent profits by means of an expotential market exposure. It is the sort of system that works perfectly until it does NOT. A perfect example of this is the simple daily system I tested earlier this year which showed a profit of more than 150% during the first six months of trading, that would average more than 20% of trading, however, it is obvious that eventually this money management system will blow up your account. This can take a while ! (even two years!)

It is also worth saying that martingales do NOT have significant draw downs until they come up to or actually wipe out an account. Be extremely careful about systems like this. NEVER trade a martingale. Maybe you think you can just withdraw profits ? Well, Martingales defend from this strategy by wiping out accounts in unpredictable cycles so it may wipe out an account 20 times in 2 months, then once 6 months after that, then 5 times one month. Trust me, martingales CANNOT be traded profitably in the long run (this has been tested time and time again, as I explained with the simple daily system example) so you definitely stay away from them. Of course, this system is NOT worth buying and you should stay away from anything that resembles it.

If you would like to learn more about reliable trading strategies and how you too can use one to become profitable in the long run using automated trading please consider buying my ebook on automated trading or subscribing to my weekly newsletter to receive updates and check the live and demo accounts I am running with several expert advisors. I hope you enjoyed the article !

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