Sunday, January 31, 2010

Forex Manual Trading Systems : Forex Cash Factory, an Unbiased Review

A few days ago, a newsletter subscriber asked me if I could review a manual trading system called "forex cash factory". On today's post I will do an analysis about this system taking into account the evidence provided on the product's website. I will also give my opinion about its usefulness and how much I think it could help manual traders become long term profitable. Finally, after doing all my analysis I will tell you if I believe this product is worth buying or testing or if it is just another product which is filled with promises but fails to deliver any realistic results.

The website starts with nothing but bold claims about the system being able to "pump" tens of thousands of dollars every week out of the market. After this we see that the forex cash factory website is nothing more than a few thousands words of a guy telling us to buy something just because it can make us rich. The webpage is definitely geared towards people who are new to the forex market and are definitely looking for a way to get money quickly.

The author of the forex cash factory fails to give many important descriptions about his system. There is absolutely no mention of the profit or the risk targets of the system, no mention of the money management used when trading, no mention of the characteristics of the strategy, etc. Why would anyone buy a trading system they know nothing about ? The guy fails to explain if his system relies on scalping, swing trading, long term trading, etc. There is simply almost no information abou tthe actual trading system included on the website. The author could have written the webpage without any product because product description is extremely limited.

There is also absolutely no evidence about the profitability of the system or its ability to even produce one USD on the forex market. The thing I find the strangest is that the guy does mention on his website that the system WAS actually tested on a real account for three years before selling it. Why in the world doesn't this guy show this evidence of profitability if it does exist in reality ? Come on ! Who would refrain from posting such evidence if it is obvious that it would increase sales enormously ? No one would ! The fact remains that until the evidence is not posted, it may as well not exist, there is no reason to believe it does.

Then what about all those testimonials ? I can also sit down and makeup whatever testimonial I want, testimonials do not mean anything, specially when a "testimonial" is just a bunch of text there. All the testimonials could have been written by the author, there is no doubt about that. What you should ask for when looking for a trading system, either manual or automated, is not simply a 2000 long sales page telling you how good your life will be after you make the purchase but solid evidence showing that the system has been profitable in the past and has a high like hood of remaining profitable in the future. Why is this evidence never shown for manual trading systems ? Well, mainly because the systems usually only work for one thing, bringing the author sales profits.

In the light of the total lack of even a general description of the system and the absolute lack of any performance record of the system when there is even mentioning that such a record exists (which means that the author is purposefuly hiding it or making that up) I consider the cash factory manual trading system not worth buying and testing. If you want to know more about trading system and how you too can design and trade your own long term profitable automated systems 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 !

Saturday, January 30, 2010

Uploading Files to a VPS... A Simple How To.

I have noticed that several people have found my website while searching for things like "get my mt4 into VPS" or "how to move files to VPS", in order to help people find what they are actually looking for I decided to dedicate today's post to a small tutorial on how to move files from your computer to your Virtual Private Server (VPS). Moving files is a vital task which is absolutely necessary in order for you to use your VPS for forex trading. On the following paragraphs will try to explain all the techniques I have used to get files to my VPS and what the advantages and disadvantages of each one are. So how exactly can you get a file from your home computer to your vps ?

The most easy way to move things from your computer to your VPS is to use your email address. Simply send yourself whatever file you want to be on your server and then open your email from your VPS and download the file. This is a very simple way of getting small files into a VPS but it carries the problem of having to access your email, send yourself the file, go into your VPS, access your email and then get the file from the message you send to your VPS. It also has the additional disadvantage of having an inherent size limitation due to your email account's setup and the added bandwidth use of uploading and then downloading the file.

If you want to send bigger files using email you can always use file sending services such as which lets you send files of up to 100 MB. The website then sends you a link to your email from where you can download the file. This allows you to save you the trouble of accessing your email from your VPS since you can simply copy and paste the link into your VPS's web browser to get your file where you want it.

If however you need to constantly upload files into your VPS, non of these two options will work for you. Most people that actively test or use many trading systems and trading accounts usually need to upload many things from time to time, something which becomes excessively cumbersome when using email. The best solution to this problem is what I use to upload and download files from my VPS and certainly works like a charm. Setup an FTP server. Certainly the task may sound a little bit daunting for the new VPS user but in reality it is a fairly simple thing to do.

In order to setup an FTP server on your VPS just go to the filezilla webpage and download the server to your VPS. Then open up the setup file and install the software (you will need to configure your administrator username and password). After this you just need to go into the Startup Menu item created and click the "Start" button. This will start your VPS. You can also open the Sever Interface where you can create additional users or change your administrator password. Once you do this you need to download the filezilla client from the same webpage and use it on your home computer. From the client you will be able to upload/download files to or from your vps with the ease of dragging and dropping. You'll be able to send or recieve large files or large sets of files and place them easily wherever you want. Simply having an FTP server is the best solution I have been able to find to the problem of downloading/uploading files to or from a VPS.

If you are using your VPS for forex trading and you would like to learn more about automated trading and how you too can design, program and trade 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 !

Friday, January 29, 2010

Forex Expert Advisors: USDBOT an Unbiased Review

After receiving spam after spam email from greedy affiliate market "reviewers" trying to get a profit from the latest new thing out there I decided to dedicate today's post to the review of the focus of much of this recent spam. On today's post I will be reviewing the USDBOT expert advisor, the latest new addition to the world of automated trading systems. I will analyze all the testing data available from the authors website and I will tell you if the evidence they have does backup the claims they make. I will also analyze the soundness of the trading approach and money management of the expert advisor and give my criteria about the long term profitability for this trading system. Finally, I will tell you whether or not I consider the USDBOT expert advisor worth buying and testing.

The USDBOT expert advisor website is just like any other regular expert advisor webpage. The website is filled with very bold claims like multiplying an account several time or making a huge amount of money through automated trading in a very short time frame. The interesting thing about the USDBOT expert advisor website is that they are supposed to give all the required evidence to backup all their claims. You will find that the USDBOT website contains backtesting and live testing on several accounts. However I will tell you why this evidence is totally useless and why it doesn't backup the claims made by the authors but reveals the real way in which they managed to get the results they show.

First of all, the live account are not verified by a third party, neither is the investor access of the accounts given reason why the whole statements may just be made up. Anyone with a text editor can make a statement showing whatever he or she wants, verification is a MUST if we want to confirm that live accounts are indeed live (not demo) and indeed existant (not made up). Now looking closely at the live statements you will notice that the USDBOT risked a HUGE amount of equity on most trades. The EA took trades using a one standard lot size on a 1000 USD account, the risk to reward ratio was very poor (4:1) and the actual equity risked by the EA was 400 USD or 40%. Who in their right mind would risk 40% on a single trade ? two consecutive loses and your account is wiped. The truth is that the risk used on this live tests is outrageous. The length of the live testing period is also a total joke. Are we supposed to believe an expert will bring substantial profits from just two weeks of live testing ?

The backtesting also bring more into the equation. Why is the backtesting period so limited ? It seems that the guys running USDBOT decidede to limit the backtesting period to show only a period were draw down was small, a very limited period indeed. I can show you a backtest of any EA of a few months with a 1000% profit. With the benefit of hindsight it is very easy to just look at the past and pick a period that achieves that profitability. Why isn't there backtesting form Jan 2000 to Jan 2010 ? If the expert is really as profitable as they say then they would not have any problem to show this. The reliability of the shown backtests is also very questionable since they are clearly not consistent with live testing. Their backtesting periods show less than 80 trades for a 9 month period but their "live tests" show more than 20 trades on just 5 days. Clearly a LOT of inconsistency between both statements.

It seems that the people at USDBOT just waited for a period of live testing (or demo as far as we know) in which they had no loses and then run a backtest of a slightly longer period to trick people into thinking that they could achieve these results in the long term. What these guys are doing is unethical. They have no evidence that says that their expert is long term profitable and even more, they do have very strong evidence that their results were achieved with absurd risk levels, most likely just to have something to "show".

The USDBOT website is definitely a good example of how things should NOT be done in the world of automated trading. These guys are tricking people into buying a system which has no reliable proof and will most likely put their account balances at a very high risk. Of course, in the light of the very scarse, purposefully limited and useless evidence, I consider the USDBOT not worth buying or testing. If you are interested in how you too can start to trade automated trading systems profitably with realistic risk and profit 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, January 28, 2010

A New Day for Watukushay FE... A Free Likely Long Term Profitable EA

On December 2009 I released a free expert advisor to provide my fellow traders with a likely long term profitable alternative from commercial expert advisors. My idea was to give everyone out there the chance to be long term profitable in automated trading by using a system which was built upon sound trading principles which they could use without having to pay a single dime. I named this system Watukushay For Everyone. Another objective of developing this EA was to document the whole development process and make it available within my Watukushay project, reason why the EA has the name of the project as part of its name. A month after its release and after a lot of work and research on the trading logic of Watukushay FE today I can say that I have achieved an improvement of the experts original setup in such a way that makes it, in my mind, one of the best free expert advisors available on the internet today.

I released Watukushay FE on December 25th with what I believed was a good profit to risk profile. The EA was able to make (according to simulations) approximately a 20% yearly profit with a 40% maximum draw down using an approximate risk of 5% per trade on the EUR/USD one hour chart. The only thing that I certainly did not like very much about the Watukushay FE expert advisor was the fact that the equity curve seemed to be overly centered over the years 2007 and 2008. The EA was able to adequately preserve capital on 2000-2007 with a very low profitability and then the profitability skyrocketed as we reached the years 2007-2008 something which made me believe that the EA may be in some way "curve fitted" to the "crisis type" market behavior which was characterized by very clear trends on very high volatility.

I however published the EA because I believed that the EA was able to adequately preserve capital on unfavorable market conditions so if it was indeed curve fitted to 2007-2008 market conditions then the EA would not be as profitable until a similar period arrived but it would also be able to preserve capital like it did between 2004-2007 on unfavorable market conditions (for the EA).

Nontheless, I am sort of a perfectionist and I knew that there was a lot more potential to the logic of watukushay FE. I had already done a careful analysis of the mathematics of the RSI indicator to develop the expert advisor but I knew that there was something else I could do to improve profitability. Then I realized that I had tied some variables on the expert together such that they depended on each other and tied the exit and entry criteria together. I decided to make the variables independent and redo all my analysis and coarse optimization process for the expert advisor. The results - which have been described in great detail on the ebook update released yesterday - show you how the Watukushay FE trading system was developed, analyzed and improved.

What came out of this process was an incredibly improved version of Watukushay FE. The new version is able to achieve an average yearly profit of 36% (calculated over initial equity) over 10 years with a maximum draw down of about 16% for a Risk 5 setting. The EA also achieves new equity highs every year, removing my fears of curve-fitting for the previous released version. As you see on the backtesting image shown below, Watukushay FE now has a much better risk/profit profile with a much higher quality equity curve (backtesting showed for Risk=1). Also note that Watukushay FE is still as hard to trade as all other long term profitable systems with draw down/break even periods that can last for several months.
If you would like to trade watukushay FE on your live account, feel free to leave a comment here or on the Watukushay FE website ( and join the 2 year live testing challenge of the EA ! Challenge yourself to achieve long term profitability :o). If you would like to learn more about the coding of Watukushay FE and how I designed, programmed and improved its profitability or if you would like to learn about other Watukushay experts I have programmed and how they too are likely 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 !

Wednesday, January 27, 2010

Trading Psychology... The Need for Confirmation a Trader's Curse

I usually enjoy to watch people trade (specially people new to the business) and see how they manage and execute their trades. It is very interesting since it gives me a unique opportunity to reflect upong the reasons why they take certain actions and sometimes even why I take these actions myself. Today I want to talk to you about a very interesting behavior I have commonly observed, a behavior that is prevalent amongst new traders and which is also common amongst experienced traders; the inevitable need for confirmation. Within this post I will explain what I have observed, I will tell you why you should definitely avoid to fall into this psychological pitfall and I will try to provide some guidelines to avoid it.

So what is the need for confirmation ? As humans, we do not feel comfortable when we are the only ones who follow a certain path. We do not feel comfortable when we are the only ones who support a cause, when we are the only ones who have a certain job, the only ones who start a business, etc. We have a need to avoid "psychological loneliness" in our actions and we feel much more assured and certain about something when there are a lot of people who are also doing the same thing. This is the reason why a person is more likely to start a business if a few people around them are also on the same track, it is about company; it is about herd behavior.

The exact same thing happens when people start to trade. I have often noticed that new traders (at least the ones in my ECT project) need a lot of confirmation in order to enter a trade. They do not know what they are doing very well and they often read forums or websites about what people are saying, if people agree with their general view of the market then they are much more likely to get into a position. If the public disagrees, then they go over the analysis again and again trying to find reasons to support their trade and faults behind other people's opinions. I remember that I often found myself looking within forums and websites after entering a trade, trying to "boost my moral" by finding agreement between my expected outcome and the trades other people had palced. When I started trading I routinely became nervous and confused when people started to contradict my analysis and this even progressed to the point in which I closed trades prematurely due to the psychological effect that other people's analysis had on mine.

I believe that this behavior is naturally human and it is something we have all done at a certain point in our trading careers. But why is this so prejudicial and how can we avoid the "need for confirmation" ?

Going to third parties to confirm trades is prejudicial due to many factors. First of all, why are you going to trust other people's analysis above yours ? Why is theirs better ? Do you have a track record of their trades, aren't most of them in the same or in a worse position than you ? The fact remains that most people who publish market analysis on forums and websites are inexperienced and are not profitable in the markets yet. Many of them however "speak" with a lot of security so people often find their analysis more sound than theirs. It brings a lot of confusion and psychological stress for new traders to expose themselves to the analysis of third parties, I have always found the effect to be completely detrimental to the progress of new traders.

Second, there is the problem that it is a much more inefficient way of learning. People often learn a lot faster when they do all the analysis and execution themselves and learn from the mistakes in their analysis by virtue of a detailed trading journal and analysis over their previous errors. Often people who go through third party analysis will justify their exits/entries by a logic they do not truly understand and not by their personal understanding of the market. It is extremely important for new traders to do the journey by themselves, it certainly takes more time but it is much easier than going the other way around.

But how do you prevent this from happening to you ? How do you run away from the "need" for "psychological company", how do you run from the herd behavior ? Just take your own decisions and take responsability for your actions in trading. As I have already said a few times, start a detailed trading journal, write all your entry and money management analysis (lot sizing and exits) and do not listen to anybody else. Do not go into forums, do not go into websites, follow your knowledge and your skills and learn from your own mistakes. You need to be responsible for your trading and realize that there is no one who will be responsible for your profits or loses besides yourself, your loses are your loses and you'll learn from them. In my experience this is the shortest and most efficient way in which new traders adquire skills in the trading arena.

If you would like to learn more about how you too can become profitable in forex automated trading by designing and using 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, January 26, 2010

Forex Expert Advisors : Forex Neutrino, an Unbiased Review

A few days ago, while doing my weekly search for new automated trading systems, I came across a new system called forex neutrino. The objective of today's post is to review this system. As always, the review will focus on the evaluation of the author's claims against the evidence provided on the website. After analysing the sales page and any information given on it that may point to the way in which the expert advisor works I will also give my opinion on whether or not this system is worth buying and testing. The author of forex neutrino claims that his trading system is able to generate a hundred thousand dollar income with "almost zero" risk, lets see if his trading system is able to live up to his claims.

The first thing that greets you when you enter the forex neutrino website is a huge claim saying that the system is able to generate a 164K income followed by the above mentioned statement which says that forex neutrino is able to generate profits with almost zero risk. Boy, could this guy be more misleading ! First of all, it is extremely misleading to say that you can generate a 164K income without saying the needed capital in order to do so. It speaks only about the hype of the claim and the fact that there is no real background to it.

What is there on the web page to backup these claims of huge profits and zero risk ? Almost absolutely nothing ! After the claims the creator of the system shows a few pictures of trades which could be easily made up by anyone on any trading software. Does this guy think we where born yesterday ? Showing pictures of trades that may have never happened is not going to prove anyone that a system is profitable, those pictures are just, as on most cases, a way to increase the hype of the product being sold.

After that then we see the bottom part of a statement, which can easily be made and some graphs showing us a comparison between forex neutrino and the "typical" automated trading system and manual trading methodology. Where in the world did this information come from ? What is the "typical" manual performance ? The reasearch alone needed to draw that graph must have been huge and the fact that the resource of the information is not even mentioned points to the fact that this is just a made up graph with no real substance behind it.

What bothers me the most from the forex neutrino website is the fact that the author makes some huge claims and tells us a story about his personal success without showing a any god damn piece of evidence. Why isn't there any live testing if this system is so profitable ? Why doesn't the author show his 5 or 6 figure income statement using this trading system ? Why if he became am millionaire using it doesn't he show the proof ? If I had made so much money with an EA I would be thrilled to show the evidence ? Why isn't there a ten year backtest to evaluate past performance ? Why are so many things missing ?

The sad truth is that forex neutrino is yet another piece of highly hyped software with absolutely no proof of profitability or "almost zero risk". Buying this thing is like taking a gamble with your money. Why would you trade your money with a system the author doesn't even care to use ? Why would you open a live account when the guy who made the system doesn't even offer evidence of one opened with his own money ?

Of course, because of the overwhelming lack of any reliable evidence to proof ANY of the absurd claims made by the seller, this EA is NOT worth buying or testing. If the author adds a ten year backtest and a 6 month live test showing back/live testing consistency I'll be more than glad to remake this review. Meanwhile, this is just another hyped, worthless forex product as far as I know.

If you would like to learn more about automated trading systems and how you too can trade with reliable and long term profitable systems 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 !

Monday, January 25, 2010

Trading S&R , a Guide to my Trading Methodology

I have received some requests from people who have been interested in learning more about my manual support and resistance trading system inquiring about the specifics of the system and how it may be traded successfuly. It seems that there is a lot of confusion regarding how I choose my entries and how the system is globally traded. The objective of today's post is to draw some light into the steps I take when trading this S&R method so that other people can start trading this same way successfuly. The method uses incredibly sound trading tactics based solely on price action and I believe this is one of the simplest and most effective ways in which anyone can trade the forex markets.

To begin with, I am going to tell you the steps that I take when I go into trading my S&R trading methodology. By following these steps you'll be able to get a lot more into my thought process and realize why I take the trades that are executed on the demo account (which I comment and signal on twitter). You will see that the steps require a great deal of discretion and that practice is the most important thing to trade my S&R method in a successful manner. One thing which I believe is great about this system is that as one gets experience with it, market behavior starts to show in a much clearer fashion. So what are the steps I take when using this method (my day trading S&R tactic) ?

1. Take an instrument you want to trade

2. Open up a one hour chart and other charts if you want to

3. Based on this information answer the question : Where is the trend going ? It is very important for you to be able to answer this question clearly. The system depends greatly on your ability to know where the market is globally heading. That is, you should be able to follow the trend. If the picture is not clear to you, then do NOT trade. As a wise trader once said "It is always better to lose opportunities than capital". Also do not overanalyze the situation, look at the chart. During the last 20 hours has price gone up ? or down ? If you can clearly say where the trend is likely headed then go to 4.

4. Now that you know where price is going you should locate support and resistance levels. The trick here is that you are going to wait for price to reach a resistance after a new low (in downtrends) or a support after a new high (in uptrends) and when price tests that level you are going to get into the trade in the direction of the trend. You should set your SL at a break of the resistance/support level you entered and the TP at the low or high price reached (which is a support or resistance level).

5. Before placing the trade make sure that you only place it if you can achieve a risk to reward ratio of at least 1:2, most preferably 1:3 and make sure that you trade a lot size such that you risk only 2% of your trading capital. Using the TradingBuddy EA mentioned on a post a few days ago should greatly help you with the accurate money management of trades.

As you see, the system is based on some very simple principles. You have to follow the trend, you have to enter on favorable spots (buy low, sell high) and you should have adequate money management with a very favorable risk to reward ratio. This tactic makes sure that it will be extremely hard for you to blow an account. You need to lose 50 consecutive trades to wipe an account and each trade you win buys you at least 3 loses. Trading this method will make you better at judging price action and will make market action much clearer to your eyes. In a few months you will be great at judging overall price direction and you will feel comfortable trading without any indicators.

However you should understand that this is no holy grail. Often you will not read market direction appropiately or price will reach your SL before continuing in the direction of the trend. This is normal. This method intends to allow you to have a fair share of loses, that is, you can lose 60% of the time and still come out with a profit. The key is to follow the method and learn from your mistakes. A trading journal in which each trade is recorded is VITAL to the success of anyone who wants to become a good manual trader.

If you would like to learn more about money management and the use of automated trading systems to trade the forex market successfully 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, January 24, 2010

Ebook : Automated Trading in the Forex market : A Trader's Guide to Success

Almost three years have passed since I started selling the first version of my automated trading ebook and many things have changed since then, the first ebook release was replaced about a year ago by a totally new remake and now another important change will be happening. After doing a lot of thinking I realized that the material available within my ebook couldn't be totally appreciated without having access to all the content available within my other website, Asirikuy.

The ebook contains a large amount of information regarding automated trading and what needs to be done in order to succeed in this field. It teaches people new to this area how to develop likely long term profitable systems, what to expect from them and how to properly program and design them. The ebook's objective - as its title suggests - is to be the ultimate guideline for traders who wish to achieve success in automated trading. However, after more than a year of selling this ebook version I have realized that not only is this knowledge needed but access to a constant feedback regarding the different system's performance and help in the development of trading systems is actually necessary to make it in this business.

For these reasons it didn't make a lot of sense to continue selling the ebook by itself when there is a huge wealth of material currently available within Asirikuy that perfectly compliments and helps the points made within the ebook. Because of this, the ebook will no longer be available as a separate item but it will be a part of the regular Asirikuy membership. I have decided to take this opportunity to do this as I have just updated the ebook to include some new sections that are only fully meaningful with access to Asirikuy videos, systems, etc.
The ebook has now become the essential guideline to Asirikuy members as it gives people the initial information they need to tackle the journey of long term profitable trading with a good idea of what expectations they should have in mind and how things should be done in order to get to that point with a much higher probability. If you want to see what is inside the ebook you can take a look at the table of contents here. The ebook continues to contain the Watukushay project but many hours of videos are available within Asirikuy dealing with Kutichiy, Teyacanani and Watukushay No.5, system which are not contained within the ebook.

If you would like to get the ebook please consider joining Asirikuy. The price is only 30.12 USD for the first month (since you get access to all the content including the ebook and videos) and then 7.21 USD for each month after that. If you have previously purchased the ebook please download the update by accessing the FTP with the login information that was sent to you with your purchase.

The TradingBuddy, an EA to Assist Manual Trading Methodologies

Trading manually is often a very stressful and difficult thing to do, traders will often find themselves with the need to do several mathematical calculations about risk, risk to reward ratio and position sizing in a matter of minutes or even seconds. Throughout my experience in day trading I have noticed that often people fail to apply appropiate money management because they are too concerned about their entries and fail to adequately analyze the risk they are putting into the trade and the risk to reward ratio related with their decisions. Often these negligence is what leads to loses in the long term.

Looking at the way in which my "pupils" have traded, I can assure you that many of them have failed to adequately manage their accounts because they failed to do these calculations which are absolutely necessary to enter a position. I also cannot say that I have never been "weak" and entered a position without doing all the necessary math, just calculating the risk:reward ratio "visually" and trading a lot size which I guesstimate to be near the percentage of equity I want to risk. I realized that I tend to do this a lot more in day trading than I do when trading my long term methodologies because things tend to happen a lot quicker.

For this reason I decided to build a simple expert advisor which would help me calculate all the necessary values and help me to quickly realize if a trade has the risk characteristics I desire or if it does not fit my money management profile. What the TradingBuddy, as I named the EA, does is pretty simple. You load it on the chart and input the desired TP, SL and EN (entry) levels of the trade you wish to take along with the desired risk percentage you wish to allocate to the position and the position's type (0=Short, 1=Long). The EA will then do the math and display on your screen (on the top left corner), the reward to risk ratio of your trade, the lot size you need to trade to risk a loss of the percentage you input and the entry you would need to make (without moving your SL or TP) to afford a 1:3 risk to reward ratio. This is the main information I require when I place a trade and having this EA do all the calculations at lightning speed has proven to be a wonderful tool.

There are several great advantages of having this information quickly. I get to quickly evaluate if an entry, TP and SL targets allow me to have a good enough risk to reward ratio, it allows me to see if my SL is too tight and I'm being too greedy (risk to reward ratio extremely low) and it also suggests me an entry with a 1:3 risk to reward ratio which has sometimes come in handy. You also get to know the exact lot size you need to trade in order to risk X percentage of your equity, something which is great to have a very precise money management system. You can also change the input values as you want after you get some results until you arrive at a trade which has the desired characteristics you want.

The TradeBuddy has proven to be an invaluable tool for me and the people I am trying to coach in trading as it provides an effective way to have information about a future trade's money management before entering any orders allowing one to quickly gauge the effectiveness of the trade. If you are interested in the TradeBuddy you can download it absolutely for free. Just log into the FTP server of my S&R trading system at, login : journal, password : trading. You will find the EA there.

If you are interested on my work on automated trading systems and how to start your journey towards long term profitability in the forex market using 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 !

Saturday, January 23, 2010

The Road To Financial Freedom... Part No.2...Is this Right for You ?

It is not uncommon for people to persue the dream of "financial freedom" thinking only about the fact that they are tired of a 9 to 5 job and want to have an easy way to earn a living in which work is hardly ever present. On today's post of the road to financial freedom series I will try to give you a good insight into what I think the goals and mindset of a person who wants financial freedom should be and which people should not seek financial freedom because they are either doing it for the wrong reasons or with the wrong perspective in mind.

In what I have seen, there are mainly two types of people looking for financial freedom (trading wise at least). The first are people who are willing to do whatever it takes, work as long as they can, do whatever effort they have to in order to arrive to the dream of profitable trading -manual or automated- and then there are those who simply just don't want to do anything and think of trading as a way in which an income can be achieved without lifting a finger.

Things evolve differently for those two kinds of people. The first kind often struggles a lot in the beginning and have to work about 10 times what they thought they would have to, many with obssesive personalities end up with broken families, health problems, etc, due to the sometimes long hours and inevitable amount of hard work that must go in either manual or automated trading. The fact that they also put a financial burden on their families and take money to trade - almost certainly losing all of it at first- makes things harder for the people around them, specially spouses who sometimes fail to understand the goal to be achieved (mainly because the non-trading partner is usually more rational at this point).

The second kind works almost as hard as the first but in a different area. Their work is not centered on actually learning what they are doing but it is centered in the finding of the "system" that will make them rich without signficant effort. These people often give trading a try for a while and after 1 or 2 years they give up because of the fact that everything they have tried has eventually failed them (or has not achieved the income level they wanted), eventually they find out that their is no "free lunch" and that trading is not the bottomless "gold mine" they read on the sales newspages. These people either quit, or become part of the first group.

Now, there is also a problem associated with the intented amount of money people want to make in trading. Often I hear people talking about a 5-10% consistent monthly profit in forex being a "rational" thing to expect (these people NEVER know someone who has actually been making that kind of money consistently -for a few years-, it is just a dream created by the sales pages). Oh boy, 5% every month would turn 50 USD into one trillion dollars in less than 60 years. The profitable traders I know are often happy with a 1-3% average profit per month, which is very good for most purposes. Take into account that in financial markets, doing better than the S&P 500 is considered to be "beating the market" in the sense that you outperform buy and hold strategies. That is something that very few people in the world are able to do.

Novice trader minds are often "contaminated" with the unrational notion that the forex market is able to give very high profits, thinking that 10-20% per month or more is a rational expectation. The worst thing is that people get into their minds that it is something they can achieve if they work hard. The people who are hard working but believe they can achieve a profit level which is simply unprecedented are the ones who get the worst out of it. They lose and lose money and they struggle and struggle trying to achieve something which is simply not within realistic expectations (taking into account what most profitable traders I know do achieve ). They often get beat up, chewed and spit by the market and in the end they are beaten and defeated. These people usually quit at this point when they realize that they will not get to that million dollars from that 1000 USD account.

My objective with this post is to speak to all of you and tell you that you should give this a very HARD and long look and think about if trading is really what you want to do. Trading is a very intense, time consuming, work intensive way of life. Starting to trade with realistic expectations for success requires good capitalization (at least 2 to 5 times your expected yearly salary if you expect to live from this) and a commitment to work through all the emotions and frustration that will arise from attempting it. Trading is also not your 9 to 5 job so you may have long periods of loses with no paycheck at your door and there will be no one there to pat you in the back and tell you that everything will be ok. As I said on the last post, it is entirely up to you. Your possibilities are limited by your efforts.

For most people out there, forex is not a good opportunity for "financial freedom". Most people are simply undercapitalized, unfamiliar with the whole concept of trading and unaware of how their emotions respond to the trading world. Most people are also unable to deal with the stress of having no paycheck in the mailbox, no "fixed" income and no guarantee of future profits. The extremely large amount of hype and useless things out there don't make it easier for them either. The fact that 90% of new traders fail speaks for itself. If you think forex is not the way to go, then it does not mean you cannot achieve financial freedom, you can always look at a brick and mortar business or an online business which aligns better with your knowledge and personality.

However, if you are truly interested in trading after all that I have said, then you will enjoy the rest of the road to financial freedom series in which I will explain to you the steps I took and all the things I have done (and what I would have liked to do) in order to achieve financial freedom with forex trading. My first step was simple. I wrote in a piece of paper : "I am going to be a profitable forex trader". If you are also interested in my work and would like to know about how profitable trading can be achieved with realistic profit and drawdown expectations on the forex market 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, January 22, 2010

Who are Really the People Who Buy Experts ? A Look Into the EA Customer

We have all been tempted by the riches they promised us. We have all dreamed about that day in which we could just sit and relax on the beach as money was being deposited constantly into our forex account by our expert advisor. We all believed the testimonial, we all thought it was possible at one point. However, who has achieved that ? Where are all the EA customers right now ? Today's post will try to answer these questions and give you my perspective about the expert advisor customers and where most of them (us) are right now.

It has been almost 4 years after expert advisors for metatrader made their first big appearence and almost 2 years after FAP Turbo - the most widely sold expert advisor - made its debut on the world wide web. It now seems obvious that becoming rich quickly from the use of expert advisors is certainly not a reality. For example take FAP Turbo. This EA has sold more than 30,000 copies. If only 20% of the users had managed to invest 1000 USD on the EA and keep it running for two years, their profit must have been around 100K at the moment. (per the claims of the seller) However how many people do you see on the internet who got those 100K ? Do you see anyone ? Is there any FAP turbo client who has managed to achieve those goals ? As I said once, there will not be 30K billionaires in 2020, because the claims are simply not true. These expert advisors are simply not fulfilling their promises, they did not achieve for people what they had promised.

Who got rich ? At 97 USD, the people at FAP Turbo must have got more than 3 million dollars from the sales of the EA. Well, after all someone did get rich with FAP turbo :o). People bought dreams and dreams is what they were sold. Many wiped accounts, many stopped the EA after unfavorable returns. Many changed and changed settings and many more continue to struggle with the EA in order to make it work.

Most people who buy expert advisors are like this. They are people with regular 9 to 5 jobs, trying to get a break and reach some profitability in the forex market. They dream of riches and Caribbean beaches with monthly travels and big houses. Some of them just dream of quitting their job and just having time for their families and loved ones. Most of them still believe that such high profit levels - such as doubling an account consistenly every 6 months - are possible. I have to tell them. Wake up my friends. Just wake up. Nearly four years have passed and the only people who have gotten rich are those selling the trading systems. That is a fact.

Is it impossible ? Can't profits be achieved with profitable trading systems ? A friend of mine reached this point after a long time of struggling with automated trading, dishonest sellers, scams, etc. I told him that it is possible, in my experience, but it is much harder to achieve and profits are much smaller than what expert advisor sellers promise. It is what I have dedicated the last few years of my life to and I can tell you that it can be done, not easily, not quickly but I assure you that sound trading tactics with sound money management do get you there. If you would like to learn more about long term profitable systems and how you too can start your journey in automated trading 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, January 21, 2010

The Testing Time Problem... For How Long Should I Demo Test ?

When people start to get into the world of automated trading systems they soon find out that there is a sort of "general protocol" established by most of the online user community to use forex expert advisors. People are generally told to get an EA, demo it for a certain period of time and then, when if the demo gives satisfactory results, run the expert advisor on a live account with real money. Where did this idea come from ? It came from the notion that regular people have that a minor test of a demo account will most likely mimic trading on a live account later on. Today's post will focus on explaining why this criteria to evaluate profitabilty is wrong and why most of the time it will only lead to the discarding of profitable systems and loses on forex live accounts.

What is wrong with this testing approach ? You take an expert advisor you want to test, run it on a demo account for X weeks, then you are sure it is profitable so you run it in a live account. What ? From where did people get that a profitable or unprofitable period of a few weeks or months on demo is any indicative of the expert's profitability on a live account ? I certainly do not know. A demo test of a few weeks or months is only going to tell you if the expert is profitable under a very narrow window of market conditions, these conditions are bound to change once the market starts to evolve, leaving the actual usefulness of your demo period in the trash.

What if the demo testing period only generates draw down ? Does this mean the expert is unprofitable ? No, it doesn't, many long term profitable systems go through long periods of draw down (even one or two years) before the very profitable periods which generate most equity gains. Then you are bound to discard long term profitable system when using this demo testing small periods because long term profitable systems are always most likely to be within a breakeven/draw down period than within a profitable one. Now what if you have one year of demo testing ? good enough ? No ! Again, forward testing is not the only thing you need to take into account. Some systems with terribly unsound trading techniques can generate a lot of money on periods of even one or two years before wiping everything out. This is the case for some Martingale systems, you can also be using a curve fitted system which then goes out of date and starts to wipe your account.

So is there any amount of time you can have in demo testing which will inevitably ensure you that you will not lose money on a live account ? No ! Long story short, there is no substitute for analysis and sound evaluation of trading systems. No forward testing period, no matter how long, can cover for the tester's ignorance about the system or its potential for long term profitability. How can you be sure then that a system is going to be profitable in the long term ? You cannot ! However you can ensure that there is a high probability for your system suceeding in the future if you ensure that the system uses sound trading techniques, is able to adapt to varying market conditions and performs in a satisfactory manner in long (ten year or more) simulations with consistent results in live testing.

If you would like to learn more about my criteria for the evaluation of long term proftability and how you too can start your journey in profitable automated trading with realistic profit and draw down targets please consider buying my ebook on automated trading or subscribing to my weekly newsletter to receive updates and check the live and demo accounts I am running with several expert advisors. I hope you enjoyed the article !

Wednesday, January 20, 2010

The Basics of My Reviews... Understanding My Point Of View and Objectives

If you arrived to this post then you are interested in my reviews about forex automated trading systems. Before reading any of my reviews on expert advisors or forex systems in general you should understand the motivations behind my reviews and the way in which you should look at them so that you truly understand what they are saying and the reason why I reach the conclusion I get to on each particular review. The objective of this article is to explain all this to you as well as the main differences between my reviews and other reviews you may find online. I wrote this article as a Q/A which is a much simpler and fun way to answer the frequently asked questions I get from people who have read my reviews.

Why do you review expert advisors/systems, etc?

I review them because I consider that many people do not look at trading systems in the right way. Many people do not have a lot of experience in the field and are very prone to fall into buying things that are just going to be unprofitable and cost them money both in the form of the product payment and possibly their investment funds. There was also a time in which I lost money with products and I want to spare people this experience through my analysis of commercial trading systems.

Do you receive any money whatsoever ?

I do not recieve any money from the product sellers. I do not get paid for either positive or negative feedback on any products. As a great man once said, "it is very hard to understand something when your paycheck depends on you not understanding it". For this reason I consider that my reviews must remain unbiased and for this reason you will find no sales or affiliate links on my webpage. I just call them like I see them :o).

Why are your reviews on expert advisors so superficial ? you don't even test most of them !

My reviews are made to mimic the position of a buyer, take into account that this does not mean that they are superficial, I spend in average more than two hours on each expert's website. Many EA reviewers approach this market by simply buying and testing everything that comes out, putting their time, efforts and money on the line. Why would you buy an untested, unreliable system which uses unsound trading techniques ? Why should you put your money on the line ? My philoshopy is simple. The burden of proof is ON THE AUTHOR of the trading system. I have a very strict criteria for long term profitability which must be fulfilled in order for me to consider that a system is worth buying and testing. If the evidence is not there, then I won't buy it. That simple. Why should I put my money and efforts in testing something the author did not even bother to evaluate ?

It is a certain truth that any expert advisor seller can run a 10 year backtest of their EA and run a live test on a 100 USD micro account for one year before launching the EA. Why do 99.99% of expert advisor sellers out there fail to do this ? If their experts are so profitable why don't they provide the evidence ?

Moreover, on top of evaluating the presence of the evidence and if it backs or does not backup the author's claims I also analyze the trading technique used according to the statements and I give my opinion on long term profitability and the likehood of backtesting unreliability depending on the trading technique used. Remember my philosophy : The burden of proof is on the seller, if he/she cannot provide the evidence necessary to consider an EA long term profitable then we shouldn't bother.

That's cool. However I have checked many of your reviews and everything is not worth buying. Isn't there any good commercial EA ?

Your right, as I said on the last post 99.99% of the expert advisor sellers out there fail to provide enough evidence to consider their systems worth buying or testing. The evidence is simple to provide if you truly have a long term profitable system, something they just don't have. However there are a few systems which I have considered at least worth buying and testing. Such systems are tested on my newsletter subscription which include winalot and DTS-1. There are also some others which have come close to fulfilment of the criteria but have failed to provide some part of the evidence. The trade machine expert advisors are a good example of this.

Isn't there just an EA you can tell me to buy so that I can finally be successful and live from automated trading ?

I can definitely tell you a few things. I live from the market and my automated trading systems. There is absolutely no commercial EA out there that will let you achieve those gigantic profit targets you might have heard of. There is no way to just sit at the beach and have the profits just magically go into your forex account. There is no holy grail, no magic EA that will always give you profit. Trading profitable automated trading system is VERY hard. It requires a lot of work and effort. The experts I develop are not magical either, they won't give you those enourmous profits either. That is why I am NOT an EA seller. What I offer is an understanding of automated trading, an understanding of how things work, how you can generate steady profits from automated trading systems and how you can trade automated trading systems successfuly with realistic profit and risk targets. I focus on how YOU can be successful in this field, however it won't be easy and it will require a lot of work and effort from you.

How can I learn all this ?

If you would like to learn more about what I have just mentioned and start your track in learning what I have learned about automated trading systems and how they can be designed, programmed and traded successfuly 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. Remember that many of the live accounts on the newsletter are run by independent testers as part of the "EA challenge" projects were people challenge themselves to trade any of my long term profitable automated trading systems on a VPS for at least the next two years, regardless of the temporary draw down/ profit outcomes.

I believe that the fact that subscribers have committed more than 2000 USD to the testing of my systems, speaks a lot about the confidence that the sound trading techniques used generate. The newsletter is also what I consider an excellent guide to guide you weekly through the system's results and talk to you about the behavior you should expect under current market conditions for each trading system. Confidence and an in-depth understanding of the systems you trade is VITAL for your success in automated trading. I have also put my best effort in the making of the videos for both the newsletter and ebook databases giving many hours of footage on many topics pertaining to automated trading ; from market exposure to system design, etc.


I certainly hope that this FAQ has answered most of the questions you may have had about my website, reviews and my views and motivations regarding automated trading systems, particuarly why I review them and what I expect from commercial expert advisor sellers (which is merely reliable evidence of their claims). Last but not least, if you have any questions which have gone unanswered, please leave a comment here and I'll answer them within 24 hours ! :o) Thanks a lot for your attention ! I hope you enjoy my website !

Tuesday, January 19, 2010

Forex Expert Advisors : Black Swan, an Unbiased Review

Today I am going to fulfill another review request and talk to you a little bit about a forex automated trading system called black swan. Today's post will focus on the review of this expert advisor mainly by evaluating the evidence provided on the website and the claims made by the authors. By analysing the expert's statements and the information provided I will also tell you my opinion about the long term profitability of this trading system and whether or not I it worth buying or not.

By first looking at the website, you will see that the black swan expert advisor seems to offer a novel approach to automated trading by offering its customers a "web bot" technology which is supposed to search on the internet data from many sources to make accurate trading decisions. The people at forex black swan claim that with this technology you will be able to achieve very large profits which will give you "financial freedom" and the ability have the life style you "always wanted".

Is there any merit in the expert's techniques ? Is there anything true about this "web bot" technology ? There are several things I do not understand. If the EA uses a web bot system which dynamically searches the internet then how did they manage to do the backtest from Jan to Nov 2009, how did the webot technology "backtest" on the metatrader 4 strategy tester ? this just does not add up. If the expert really used such an innovative technology it is very likely that it could only be evaluated by live testing. But well, regardless of the fact that this technology does or does not exist, what does the backtest tell us ?

The backtest shown on the black swan website has many inherent problems. To start, the period is very small. Why didn't they do backtests from 2000 to 2009 ? Why is the backtest period limited to 2009 ? This are all questions which cannot be easily answered since doing a longer backtest is just easy to do. There is also the problem that the EA takes a small TP, below 20 pips, which means that interpolation errors in the backtest are likely to be a VERY significant portion of profitability, add to that the fact that the EA uses an almost 10:1 risk to reward ratio (you need to win one time for every ten you lose) and a progressive money management system and you arrive to a system which uses very unsound trading techniques with very questionable results.

My opinion from this backtest is that results are definitely going to be very different in live testing. Probably the loses will be far greater than in the backtest and the progressive money management will grow large holes into the account, to the point of a wipeout. Systems with progressive money management (incrementing lot sizes on loses) will ALWAYS wipe accounts, it is not a matter of if, it is simply a matter of when.

Another important matter is the absence of live testing on the black swan website. Why do this people fail to show live trading results if their system is so accurate ? Why didn't they take the time to put up a few live micro accounts to show us the performance of their system under real market conditions under several brokers ? The number of unanswered questions is simply great and there is no good reason why we should put our money where the creators themselves would not.

The complete lack of live testing evidence as well as the lack of any proof of back/live testing consistency, the absence of a 10 year long backtest and the use of progressive money management are the reason why I consider the black swan trading system NOT worth buying or testing. If you however would like to learn more about system that achieve long term profitability and how you can start your profitable venture in forex trading 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 !

Monday, January 18, 2010

The Indicators Series : The MACD, the Market's Speedometer

Today's post will be a continuation of my indicator series of posts which try to explain the mathematical meaning of different indicators and how they can be used successfully to create sound automated trading strategies. The indicator series aims to make emphasis on the importance of understanding the nature of indicators to really know how they can be used successfully in trading. Success when using indicators does not come from just "blue line crosses red line" but from a true understanding of the underlying relationship between the data displayed and the price charts your looking at. This post will focus on the famous MACD indicator created in the 1970s by Gerald Appel.

So what is the MACD indicator ? The MACD, or "moving average convergence-divergence" indicator is nothing more than an expansion onto the idea of moving averages. The indicator has many componente but originally Gerald Appel designed it to have only two : a main line and a signal line. The main line is the difference between to exponential moving averages and the signal line is an exponential moving average of this difference. The histogram, introduced in the 1980s in mainly the difference between the MACD main line and the signal line. The following is a small summary of the tradigional setup (12,26,9).

MACD main line = 26 period EMA - 12 period EMA
MACD signal line = 9 period EMA of the MACD main line
MACD histogram = main line - signal line

But what does this tell us ? I usually look at the MACD as an expansion of the moving average concept. As I told you on the first post on the indicator series - which discussed moving averages - the difference between two moving averages could be interpreted as a sort of "derivative" of averaged price action : A velocity. This is why I usually think of the MACD as the market's speedometer. The MACD main line tells us about the velocity in which price is changing while the histogram tells us the difference between the main line and the signal line which is a measure of the changes in the main line or also a measure of the acceleration of price action (a sort of second derivative of price action). (on a small note, the MACD in mt4 does not display the signal line, only the main line and histogram, they might have considered the introduction of the signal line redundant as crosses between this line and the main line are signaled by the histogram crossing the zero line).
Traditionally the MACD is traded in different ways with most of them corresponding to different changes in price action. For example, a cross of the main line through the zero line simply means that the difference between the 26 and 12 emas is zero, that is, the moving averages are crossing. If you trade these signals it would be nothing different than trading a traditional EMA cross. You can also trade crosses of the signal and main lines which would mean that there is a change in the "velocity" of price action. That is, price movement in that direction is "slowing down". That would be the same thing as trading the cross of the histogram through the zero line, since the histogram signals the difference between this two lines. Now the best possible signals of the MACD would come from changes in acceleration, which would go before changes in velocity and would be the most early signals of the MACD. However the tops/bottoms of the MACD histogram are impossible to predict since usually several tops/bottoms can form before any meaningful change in velocity (a cross of the histogram through the zero line). An attempt to do this lies in trading the MACD histogram "divergence" signals with price, such trading is incredibly discretionary and not subject to automation.

Truth be told, the MACD, based on moving averages, has some of the same inherent disadvantages of these indicators with the advantage that the "speedometer" feature of the MACD allows for better entries into the market. However developing an automated trading system using a MACD is not that easy. Usually the problem is that the MACD fails under even only mildly volatile markets due to the sharp changes in velocity that the indicator lags behind. The MACD velocity signals (crosses of the histogram through the zero line) would probably be the best and easiest to implement in coding but a lot of effort must be put in using adaptive money management techniques and exits on MACD signals from a MACD with faster settings which may be able to get the system out of losing trades quickly. Definitely exits will be the most important aspect of a MACD based system. A combination of the MACD signals is also not out of the question. Do you have any ideas for an automated trading strategy using the MACD indicator taking into account all the above ? Make sure you share them with us on the comments :o).

If you would like to learn more about my work with automated trading systems and how you too can learn to develop your own systems with long term profitable results 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, January 17, 2010

Forex Expert Advisors : Forex Mutant an Unbiased Review

As a suggestion from a newsletter subscriber today I will dedicate this post to the review of an automated trading system called Forex Mutant. This is a forex expert advisor which says it is able to turn 5000 into more than 60,000 USD "quickly". Today's review will focus on the analysis of the evidence provided on the website against the claims made by the author in order to know if such exceedingly bold claims have any backup or if they are just "made up" based on unsubstantial evidence. After revieweing the evidence and doing an analysis of the website and the system I will give my opinion about the experts likehood for long term profitability and also if it is or it is not worth buying and testing.

As I just said on the first paragrah, the claims made by the forex mutant expert advisor are very bold. Making more than 600% is something very difficult to achieve. It is also particularly misleading that they give no actual reference to the timeframe in which this may be done. It is clear that a system traded with an extremely high risk my be able to multiply capital by several times before wiping an account in a few days or weeks while a long term profitable system may achieve a 600% profit in the long term (10 or 20 years) without ever wiping or coming close to wiping the trading account. What type of system is the forex mutant then ? What claims and evidence is there to backup this higher than 600% profit ? in what time frame is this achieved ?

It is simply ridiculuos how naive these EA sellers think their customers are. The forex mutant system has absolutely no real evidence to backup their claims of a 600% profit, what seems to be their support is nothing more than a "cut" off a backtesting strategy report which we don't even get to see. What is the risk to reward ratio ? What period of time did the backtest take into account ? Does the EA behave the same in live testing and in simulation ? These are all questions which we are unable to achieve due to the fact that there is simply no evidence we can use. There are no live tests we can compare to backtests. In fact, as I just said there is not even a backtesting statement.

The things the authors of this EA call "evidence" are just NOT. A bunch of graphs I can make in metatrader in a few minutes plus some images from a few trades taken which could also easily be made up in excel or taken from a series of random profitable trades is NOT evidence. What is evidence ? A 10 year backtest with a 6 month live test to which we have the investor password or the investor access verified by a third party (like in the case of myfxbook accounts which have this option). The forex mutant is nothing more than another sales pitch of a trading system for which there is absolutely no reliable evidence of profitability. Anyone who has had any experience in forex and who is looking for a profitable system with reliable evidence to prove so will be terribly dissappointed by forex mutant. Of course, the total lack of evidence makes the evaluation of long term profitability impossible, but the fact that all this evidence is missing points to the fact that it is simply absent altogether. As always, if the EA sellers places 10 year long backtesting statements with live results posted and verified by a third party like myfxbook. I will be glad to redo this review.

In the meantime, the overwhelming lack of evidence makes the claims made by the authors of forex mutant totally unsubstantiated and the trading system NOT worth buying or testing.
If you would like to learn more about long term profitable systems which can give reliable results in the long term and how you too can design and program them 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, January 16, 2010

Trading the Full Turtle System... The Ayotl Trading System

For the past year I have been very interested in the development of a trading system that matches all the exact specification of the original turtle trading system developed by Richard Denis in the 80s. I have separately programmed and evaluated both turtle trading systems (no.1 and no.2) in a reliable fashion leading to a publication on the 2010 January issue of currency trader magazine of my research done on the Turtle trading system No.2 and its performance on 7 different currency pairs during the past 10 years of trading. Near last year's end I published a post which stated that I was working on an implementation of the turtle trading system that would allow completely automated trading of both strategies including all correlation and portfolio management rules which formed part of the original turtle system.

As far as I know, there is no precise implementation of the separate trading systems available for mt4 besides my own and there is currently no implementatin of all the portfolio managment and correlation strategies which are supposed to further enhance the profitability of this trading system. Today's post aims to show you what I have been up to for the past few weeks regarding this trading system and what I have achieved... The Ayotl trading system.

As always, there is an etimological reason for the name. Since I want my developments to be able to be distinguished from other people's attempts to develop a turtle trading system expert advisor I decided to give mine the name Ayotl, which simply means turtle shell in Nahuatl, the original language used by the Aztecs in Mexico. A common word which also has its roots in Nahuatl is tomato, which comes from the word tomatl from the same language.

What is the Ayotl trading system exaclty ? It is not only a single expert advisor but a conjunction of three different expert advisors which are used together in order to trade the turtle trading system in a portfolio environment. There is an EA that trades system no.1, another EA that trades system no.2 and another EA which is called the "turtle controller" which simply controls what the other experts are doing and authorizes or denies permission to open new trades. The controller EA takes into account the number of total open trades per currency, total long open trades, total short open trades, total trades opened on heavily correlated instruments, total number of trades opened on uncorrelated instruments, etc. The controller has a myriad of functions and manages all the experts so that they work in unisone, just like an original turtle trader would have done.

Ayotl is the first true automated representation of the whole turtle trading system. The person who wants to use it picks up the instruments and simply decides whether to use system No.1 or No.2 on each one, loads the experts on each different chart, loads the controller on a separate chart (instrument does not matter) and defines the magic numbers used for each one of the separate instances. Then the system is initialized and the controller starts to handle requests and answers to each one of the interfaces. While it does that the EA checks if each request fulfills the necessary criteria to allow for the opening of new trades. The only shortcoming of this approach is that the Ayotl system cannot be backtested due to the fact that it uses several different currency pairs and the interactions between trades taken on different pairs but the separate systems can be tested individually on backtesting achieving the results shown on the Currency Trader Magazine article I mentioned at the beginning.

Without a doubt trading either system no.1 or no.2 yields profitable results in the long term . Manually looking at the probable modifications caused by the portfolio strategy only points out to a diminishment in risk because of the diversification and restrictions caused by correlations, total number of trades, etc. For the past two weeks I have tested the strategy on the 5 minute time frame (only to have fast breakouts and exits to test the programming, clearly the final system will be traded ONLY on daily charts like the original turtle trading system) and have found it to behave just exactly as it is supposed to. After a little bit more testing and the writing of a manual for the system it will be released for use to both ebook customers and newsletter subscribers. Watch my twiter feed on the bottom of the left handed sidebar (or subscribe to the feed) to get the news when the release is coming out.

If you would like to learn more about long term profitable trading systems and how you too can program design and use your own trading systems to achieve reliable profits in the forex market 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, January 15, 2010

The Newsletter... Now Asirikuy :o)

Almost a year and a half ago I began a newsletter subscription service which provided people with a weekly newsletter in which I described my demo and live testing performance every week. Through time, the newsletter evolved to be something much more complex with the addition of FTP access to files, weekly additions of trading videos, third party testing accounts, etc. Today I must say that the traditional newsletter subscription which was accessed through this website does not exist anymore... Now we have something which is way better ! Asirikuy ( !

After a lot of interaction with my customers I discovered that many of my newsletter subscribers did not have a holistic approach towards EA trading and my newsletter was not helping them as much as it could. Some people entered my newsletter with the hopes of just looking at my live results, taking the best performing EA and running it on their live accounts to become profitable. I realized that I wasn't conveying my views on long term profitability to all my subscribers. Some people did not understand the fact that profitable EA trading is not an easy thing to do and much more than simply setting an EA to trade on a VPS, I think that undestanding this is vital to achieve success. However I found out that those customers who purchased my ebook and were in the newsletter for a while soon became familiar and understood the way in which I approached automated trading, something which I hope has greatly helped them achieve success in the forex market using automated trading systems.

However I was still not happy with this approach and I decided to change the whole thing and turn it into a new project. Asirikuy. The Asirikuy website is the culmination of more than 2 years of experience in the field of automated trading systems. It is a website in which I will try to convey people my full vision on automated trading and to help them REALLY become long term profitable in this field of business. I live from the systems I have programmed and trade and I know that automated trading is not merely a matter of "set and forget". Being profitable in automated trading is something difficult which requires commitment and more importantly, an in-depth, real understanding of what you are doing. With Asirikuy I seek to give traders this : a true understanding.

To achieve all these goals, Asirikuy's contents will have all my ebook's contents plus all the previous newsletter contents in a very easy to use website which will help traders get easy access to all the information they need to succeed. After going through the ebook and all the trading material I am very confident that traders will have a very good knowledge about how I believe long term profitability is achieved and how I approach the world of forex automated trading in general. I consider Asirikuy to be the ideal start for anyone who wants to succeed with trading systems in the long term.

Asirikuy's subscription will cost 30.12 USD for the first month (which is due to the fact that you are getting access to all ebook and newsletter content) and then 7.21USD after that (which was the regular price for the newsletter). The new approach allows me to handle everything in the same place and give traders all the knowledge and understanding of the market they need to succeed. If you had previously purchased the ebook you can get access to the subscription for 7.21USD per month without paying the initial 30.12 USD. Just send me an email and I'll give you a link to subscribe for 7.21 USD from the first month.

If you are interested in joining Asirikuy you can go to the website's join page or pay using the paypal or alertpay links shown. Your login and password for asirikuy will be sent to you within 24 hours of your purchase. Thank you very much in advance for all your interest and purchases !

The Micro Account Stimulation Project, A True Commitment to My Fellow Traders :o)

Those of you who are newsletter subscribers may have already read about the micro account stimulation project on the newsletter sent to you on last Sunday. I wanted to dedicate today's post to disclose this project to everyone else so that website visitors as well as ebook customers can learn about it and give any comments or suggestions on the subject. Through this post I will discuss with you what the micro account stimulation project is about, what inspired it and what I expect to get from it through the following years.

So what exactly is this micro account stimulation project (from here called MASP) ? (I really like to give things weird names, right ? ;o) ) A few days ago, while I was doing all my weekly analysis for my weekly newsletter as well as planning for all the trading that would go on next week (both on my managed and personal accounts) I realized that the amount of testing that was going on at the website was not enough to actually test all the systems, projects and ideas that will be going on in 2010. I also realized that I was going to need to open a dozen or more trading accounts and that opening such a large number of micro accounts would not be possible due to the current number of accounts I own on all the different metatrader 4 brokers. Therefore, doing all the testing that I wanted to do for my subscribers on 2010 would become almost impossible for me to do in a reliable fashion, with the brokers I wanted with the quality I wanted, etc.

Then I had a great idea ! :o). What if I give people the money to fund their micro accounts ? This way we'll be able to have a lot of testing information and they'll be able to have funded micro accounts in which they can experience long term profitable systems themselves while we all analyze and see their live trading results. Since the number of subscribers is enough to cover my VPS expenses then why not give the money back to subscribers in a way in which we all can enjoy the tests and results ? Why not build a community with a lot more testing going on ?

The idea of the MASP is exactly this. Once each month, at the end of the month, I will give away 100 USD to one my newsletter subscribers (chosen randomly, feel free to suggest selection mechanisms !!). The only condition is that this 100 USD are used to fund a forex cent account on Alpari US, IBFX, Fxclearing or LiteFX (these are the brokers I know who offer nano lots (one cent per pip with 0.01 lots on the EUR/USD)) and this account is run on a VPS and trades an automated trading system the person chooses amongst different options I give him/her. The account will have to be traded for at least 2 years. After this period of time, the money and any profits will be owned by the subscriber. I am effectively giving away this money so that we can all have a far more varied broker/system/instrument repertoire than what I could obtain by funding micro accounts personally. Add to this the benefit that one subscriber each month will get the experience of running a system "risk free" (in the sense that I gave the money to fund) on a live account. This is a true and effective way of giving back and really helping the profitability of a fellow forex trader. Truly helping someone become profitable in automated trading for the long haul.

Of course, nothing prevents people from taking the 100 USD and running away with them and never opening the cent account or doing the tests. However I will try it for the first few months and see if the idea works. My opinion is that my subscribers are honest people who really want to be profitable with forex automated trading and they will welcome the chance to participate on the tests and open the live account with the money I give them. When a person is chosen I will obviously send him/her an email to ask them if they agree with the conditions and would be willing to carry on the tests, if they don't have the VPS or would not like to make the commitment to trade the account with the selected EA for the next two years then I will pass the offer onto another subscriber. If the idea goes well I will increment the number of accounts funded each month as the number of subscribers increase, hopefully by the end of 2010 I will be able to give away 300 or 400 USD every month :o) (hopefully if more people start to see the value on all the services offered with the newsltter and decide to join)

So what do you think about the MASP ? Do you think it is a good idea ? Do you think it contributes to people becoming long term profitable using automated trading systems ? Please leave any comments you may have abou this, I am really interested in hearing out your opinions ! However if you would like to learn more about all the systems I have programmed as well as how you too can become long term profitable using reliable 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 !

Thursday, January 14, 2010

Forex Expert Advisors : Forex Juggernaut an Unbiased Review

A few days ago, a newsletter subscriber asked me if I could review a new automated trading system out there known as forex juggernaut. Today's post will be focues on the review of this expert advisor. As always, my review will evaluate the evidence provided on the website against the author's claims. Then, by analyzing the statements provided I will be able to use my criteria and experience to evaluate whether or not is likely to be long term profitable. After all this analysis I'll be able to say if the expert is or is definitely NOT wroth buying and testing.

The forex juggernaut website starts with a really bold claim which states that the expert is able to "CRUSH The Greedy Forex GURU HEAVYWEIGHTS & Swipe $42,533.96 Using 100% 'Smash & Grab' Automated 'DAILY' Expert Advisor!". The way in which they then backup this claim is absolutely and totally meaningless. First of all, as I have said many times before. Results in real life and results in simulation are TOTALLY different things which CANNOT simply be replaced without distinction. It is very different to say "the system made X in simulation" than to say that the expert made X in real trading. These people are simply doing something unethical by portraying simulations as if they were live results on their claims. It is simply not the same and even suggesting that the expert is able to do something in simulation in real life without specifying clearly that the claims are based on simulations is dishonest.

It also irritates me that they call their expert advisor "risk free", it is absolutely illegal to call any forex trading system risk free since there is of course an inherent risk in any trading, specially in the forex market which is one of the riskiest markets in the world to trade. Why in the world do they call it risk free when there is CLEARLY and UNDENIABLY a LARGE risk involved escapes my reasoning.

The evidence that follows and the rest of the forex juggernaut website is nothing short of an attempt to lure inocent new traders into buying something for which there is no support. The only evidence available is a 2 year backtest. Why not run a ten year backtest ? Why isn't there live trading so that we can tell if the backtests are accurate ? The forex juggernaut's backtest could simply be a consequence of the exploitation of backtesting faults, the use of hindsight or a combination of this. The fact that it has an unfavorable, almost 10:1 risk to reward ratio further supports this hypothesis with systems with a much larger SL than TP favoring the TP due to backtesting faults. Remember that we ALWAYS need live testing results in order to validate results obtained through backtesting. It is absolutely NOT enough to have a backtesting because there are just too many ways in which backtesting can be manipulated. Backtesting is only an indicative of what would have been true past performance if live testing shows to be consistent with the live tests.

Why didn't the people at forex juggernaut put 100 USD from their "massive profits" to test the EA on a micro account ? Why would you put your money where they failed to put THEIRS ? Why would you ever trust to trade a product the creator him/herself does not actually trust enough to commit his/her money to ? Of course, the fact that there is absolutely no evidence when the evidence that needs to be provided can be so obviously obtained hints to the fact that this product was simply designed to produce profitable results in backtesting and fails to profit in real live trading conditions. As always, the burden of proof is on THEIR accounts, NOT on yours. I would also like to know where the "proven track record" they talk about on the web page is. Clearly until they show us, it seems to be within their imaginations.

Because of the overwhelming lack of evidence and obvious limitation of backtesting periods and lack of live testing this expert is absolutely NOT worth buying or testing. If you would like to know more about experts that can offer you realistic profitable results in automated trading with realistic risk targets and sound trading techniques 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 !

Daniel Fernandez's Expert Author Email Alerts
Sign up to receive email alerts of Daniel Fernandez’s latest articles from!

Email Address: