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 !

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