Forex Expert Advisors : StealPips, an Unbiased Review

During the past few days I have received both spam and review requests from Asirikuy members for an expert advisor which has just been released. This new trading system called Steal Pips, promises to deliver consistent long term profits with a "price action" based trading strategy. On today's post I will review this trading system; as always I will look into the evidence provided by the authors as well as the claims made on the website to see if the Steal Pips expert advisor has reliable evidence to backup its claims or if it's merely another over-hyped worthless system. Based on the evidence shown I will also evaluate the trading tactics used by the Steal Pips expert advisor and I will tell you if the system ir or is not worth buying and testing.

The Steal Pips website begins with some claims of "long term profitability" followed by a "live statement" which is supposed to show verified trading results. I have to say that this guy, which seems to be the same creator of the USDBOT (or at least using very similar marketing tactics) treats us like if we didn't know anything about forex trading. What in the world are we supposed to conclude from an account statement which is only 2 weeks long which is not verified by a third-party and which risks 10% of the account per trade ? Yes, that's right, if you look into the statement, the profits are achieved on a VERY high risk. Would anyone with any sense of sound risk management risk that much ? Absolutely NOT ! It is obvious to me that these results were obtained on a demo account (there is no proof of it being a live account, no investor access, etc) with the simple intention of showing high gains when in reality trying to achieve such results is bound to place the trader within reach of an account wipeout. Showing this result is not only insulting to people's intelligence, it is also misleading and unethical in the sense that it makes people believe they can achieve a certain result in a "long term manner" when in reality these results are the result of a mere 2 weeks of trading using an abnormal and unsound level of risk.

The when we head down the website we find some backtesting statements which show us more about this system's trading tactics. The backtests shown reveal the use of progressive money management, doubling the lot size used after a loss (a Martingale system). On a single year backtest on the USD/CAD, these progressions reached their fourth level meaning that starting with a 2% risk, the person would have been risking 16% on a single trade. If only two more consecutive loses had been reached, the owner would have been risking more than 60% of the account ! Then we also see that the backtests are limited to a period smaller than 2 years, what are we supposed to conclude from this ? Obviously 10 year backtests are not shown because the Martingale probably blows up the account on some years and the author does not want these results to be shown for obvious reasons.
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I have to say that the StealPips expert advisor is a strong disappointment. Not only does it expose incomplete, unverified and extremely limited evidence of profitability but this evidence also reveals a system which is inherentely VERY risky, a system which will certainly put anyone who trades it on the brink of an account wipeout. I believe that the owner- if he is really a trader- knows that these tactics are extremely risky and that they put people's equity at a great risk. Then why does this person sell such a system ? I find it unethical and simply disgusting for someone to try to sell a product merely on the concept of "hype" without any regard for the profitability his customers will truly have in the long term.

Due to the fact that the Steal Pips system uses Martingale money management (which eventually causes a wipeout) , and the facts that 10 year backtests are not shown and that "live" testing is extremely limited, uses a lot of risk and is not verified I consider the Steal Pips system definitely NOT worth buying and testing. In the future I would encourage the author of this EA to take a deep look into what he is selling and consider the real risk his customers are being exposed to when buying his products. A person selling a product has a responsability to educate people about the risks of what he or she is selling NOT a right to take advantage of anyone's ignorance.

If you would like to learn more about what I have learned in my journey through automated trading and what I consider the best and most reliable road towards the building of wealth using trading systems made to achieve long term profitability with sound trading tactics and controlled risk please consider buying my ebook on automated trading or joining Asirikuy to receive all ebook purchase benefits, weekly updates, check the live accounts I am running with several expert advisors and get in the road towards long term success in the forex market using automated trading systems. I hope you enjoyed the article !

Reversing Strategies... It Almost Never Works !

It is curious how many times during the past few years I have read posts from people in forums or people in other websites asking for a "strongly losing" trading system. It seems that many new traders have thought that given the fact that building a long term profitable system is so difficult it might as well be easier to find a system which is "long term unprofitable" and reverse the logic to get the valuable profitable results. Within this post I will tell you the reasons why this logic is inherently faulted and why reversing a trading system's logic almost never leads to a profitable system. You will see why a logic reversal does NOT imply that all trades are triggered in the opposite direction and why it leads, 99% of the time, to another unprofitable trading system.

To understand what happens when you reverse a system, it is vital to understand trading to a good extent. When you have a logic that buys at A with TP at B and SL at C and the SL is hit, then many people tend to think that reversing the logic to sell at A, with TP at C and SL at B will get them a profitable trade. This assumption is wrong. Why ? The problem is that when you buy at A you are buying at an asking price so selling at A won't happen at the same time because a short trade must be entered on a Bid price which will reach A at a different time (or not at all). The same applies for the SL and the TP. The fact that B was reached as a Bid price does not imply that it will be reached as an Ask price. So effectively reversing the logic can cause the system NOT to reach the same SL and TP values, causing the effect of a reversal to be an overall change in logic which may not correspond to a positive change in profitability.

However the Ask/Bid differences only amount to be a part of the problem. The second part, which is the most overlooked by many traders when they are presented with the "long term unprofitable system" (a system with a 10 year down slopping equity curve) is that the losing character of many of these systems which have "smooth losing curves" is caused by the spread. For example, a system may be losing globally because its TP and SL are too close to the market spread and therefore the system loses money independently of the trading logic (something which many coders which attempt to code scalping systems fail to understand), reversing the logic does not cause any improvements in profitability (because the spread is the same on both entries).

Even if most reversals do not have any positive effect, it is true that the reversal of a long term profitable trading logic will generate a "long term unprofitable" system, however, such systems must be geared so that the above mentioned problems are not important. What people tend not to realize is that coding a "long term unprofitable" system which is NOT so because of the spread and which upon a reversal will not be significantly affected in an unprofitable manner by Bid/Ask differences is JUST as hard as coding a long term profitable system in the first place. Many times people believe they have such a system but they fail to realize that backtesting of a system to see if its equity curve is "smoothly losing" must be done in six month increments (rather than in a straight ten year test) due to the fact that the lowering of equity would cause profitable periods later on in testing to appear insignificant, when the logic reverses, these periods show to be extremely losing. The lot sizing characteristics of a trading system which are made to lower loses and increase profits may indeed make the finding of such a reversable system MUCH more difficult.

I strongly believe that the failure most programmers and traders face when trying to code long term profitable automated systems is mainly because they are NOT approaching the problem in the right way. They almost always fail to understand the indicators they are using, they fail to add adaptability to their systems, adequate money management, etc. The solution is not to attempt desperate things, such as the finding of systems with 10 year smooth losing equity curves but to build an understanding of automated trading and what has to be done to generate long term profitable systems using sound strategies, this of course, comes only as a consequence of gaining an understanding about trading which requires a lot of effort and study.

If you would like to learn more about my experience with automated trading systems and how you too can design and program your own long term profitable trading systems with sound trading tactics please consider buying my ebook on automated trading or joining Asirikuy to receive all ebook purchase benefits, weekly updates, check the live accounts I am running with several expert advisors and get in the road towards long term success in the forex market using automated trading systems. I hope you enjoyed the article !

Why Zulu Trade is a Death Trap for Traders

One of the most interesting websites which has been released within the last few years is - without a doubt- Zulutrade. This enterprise which seeks to hook up signal providers with traders worldwide in an effort to provide seemingless account management has gathered significant interest from both new and experienced traders alike. I have to confess that the first time I saw the Zulutrade website I thought it was a terrific idea, it is seems extremely good to have the possibility to have a proffesional manage your account and trade it efficiently when you are unable to do so. However upon a close analysis of this website for a little bit more than a year I realized that Zulu trade is nothing more than a death trap for traders. Within the next few paragraphs I will discuss my views about Zulutrade and why I believe it is an absolute abomination, a monster created as a biproduct of the urge people have to get quick profits and the urge other people have to take advantage.

So what is so bad about Zulutrade ? The idea - as I said before - is not bad at all. You put your money into a forex account and hook it up with a reliable signal provider which executes trades on your platform and brings to you good performance. Nothing wrong with that. The terrible dark secret of Zulutrade only comes out when you realize who the signal providers are, the insentives they have to do business and the way Zulutrade conducts its business in general.

How does Zulutrade do its business ? Although Zulutrade advertices their service as "free", nothing could be further from the truth. In fact, the company charges you a 1 pip comission per traded lot which is effectively going to hinder the profit of any profitable trading strategy. Add to that the fact that signal providers in Zulutrade also win in a trade by trade basis and you get a very strong insentive to trade as frequently as possible. Then we also have some very dark aspects of signal providers and their performance. Zulutrade allows its providers to execute their strategies on demo accounts with infinite capital, effectively making them avoid margin calls as long as they do not close positions in open draw down. What you get is very misleading performance which effectively makes it almost impossible to evaluate the potential of any of the trading strategies presented.

Then we have the problem of track record. Your money is not being managed by a proffesional trader, it is managed by a trader who possibly knows as much or even less about forex trading than you, without a verified track record and without any type of certification. It is actually illegal in the US for any person to manage either more than 15 forex accounts or more than 400K USD (whichever comes first) without being a registered Commodity Trading Advisor (CTA). Are any of the people managing accounts in Zulutrade CTAs ? No, they actually are not, reason why Zulutrade could also be in direct violation of NFA regulations in practice, although they must have found a loophole to allow them to conduct their business as it is. The fact is that the oldest accounts at Zulutrade have less than a year of live trading results, something which is a gigantic RED FLAG. Why would you trust your money to someone who does not have a consistent and long record of profitability ?

It is also worth mentioning that Zulutrade has all intentions to make all its signal providers appear as profitable as it can, because it is a win-win situation for them. If you trade with ANY signal provider, they will get paid comission, either if you win or if you lose. So they actually do not have any reason to show you an honest and reliable track record, something which would be very different if their comission depended on actual account profitability. Add to that the fact that signals are also bound to be executed with a certain delay and your profitability is even MORE hindered.

Do I know people who have used Zulutrade ? Yes, actually several of them. Three people I met who have used Zulutrade got a margin call and 2 others are within a deep draw down. None of them has made something even close to what is shown on the signal providers' performance pages, something which speaks a lot about the reliability of Zulutrade. In the end, Zulutrade is nothing more than a company which hypes its own signal providers who are traders without any certification or track record (which is shown and third party verified), traders are stimulated to enter a lot of positions and they are not stimulated to generate profits since their comissions depend on the volume traded NOT on the profits made.

If the people at Zulutrade were HONEST and they wanted to create a true reliable signal, managed account service, they would only collect comission from PROFITS and NOT on the amount of volume traded. It would be MUCH better for the customers since only good signal providers would be stimulated to stay and trading frequency would NOT be an issue which affected their overall profitability. Right now however- Zulutrade is a DEATH TRAP for traders- particularly new and inexperiencied ones which may be looking for an easy way to generate high profitability in forex trading.

If you would like to learn more about my experience with forex trading and how you too can design and program your own systems to achieve long term profitability in the forex market with sound trading tactics please consider buying my ebook on automated trading or joining Asirikuy to receive all ebook purchase benefits, weekly updates, check the live accounts I am running with several expert advisors and get in the road towards long term success in the forex market using automated trading systems. I hope you enjoyed the article !

Forex Expert Advisors : Forex Quake, an Unbiased Review

To end the review of all the recently released automated trading systems I am going to review a new expert advisor called Forex Quake. This trading system claims to be able to produce thousand of dollars in profit with an accuracy higher than 95%. Within this review you will find my analysis of the evidence provided by the author as well as my perspectives about whether or not this evidence is enough to backup the author's claims. I will also analyze the trading system's tactics according to the evidence and in the end I will give you my veredict about whether or not this system is worth buying and testing. Is the Forex Quake the "real deal" or is it just another over-hyped untested trading system which has a lot of marketing behind it but no real evidence to backup its claims ? We'll find out !

The forex quake expert advisor starts its website with a pretty misleading claim of saying that it can make thousands of dollars with 95+ accuracy. This does NOT mean anything. The winning percentage of a trading systems is totally meaningless since the actual risk to reward ratio is needed to calculate if the EA is or is NOT profitable. A trading system can have a winning percentage of 99% and yet be a loser system since the 1% of trades the system loses can account to a lot more than the 99% it profits from, depending on how unfavorable the risk to reward ratio is. Claims of a +95% accuracy only hint to the fact that this trading system uses a very unfavorable risk to reward ratio something which is particularly common for systems which claim to have high accuracies. The claim of making thousands of dollars is also meaningless since no starting capital is mentioned. Can it make thousands of dollars from millions ? from singles ? It is ridiculuous that a starting capital is not mentioned since there is simply no meaning to a simple claim of profit without it being represented as a percentage of a given amount of initial equity.

Then the trading system starts to go further down hill. The "undeniable" evidence of profitability is nothing more than a mere backtesting chart which shows us already the dangers of this system. Added to the fact that the backtesting graph is not accompanied by a statement to know its extent, max draw down, modeling quality, etc, we have the fact that the EA shows "volume spikes" after loses, a sign of a progressive money management system which hints that the EA uses a Martingale or a similar trading tactic to trade.

I am surprised at the fact that the author of forex quake does NOT show ANY reliable evidence of profitability. There are NO ten year backtests or even a backtest with a statement for any given time period, there is NO live testing, NO forward testing and only a bunch of graphs with hand picked, or possibly manually made-in-hindsight trades which tell us NOTHING about this trading system. The creator of this system must start to take his customers a little bit more seriously. This guy is making claims of profitability without the smallest amount of evidence, wrapping people around a story which simply has no actual proven basis in real life. The story says that the guy made a lot of profit using this sytem, then why doesn't this guy show the LIVE accounts statements to prove it ? Why is all this evidence which is supposed to "exist" hidden ?

Of course, due to the enormous lack of evidence, the lack of 10 year backtest (let alone any backtesting statement) and the lack of any live testing evidence (which should be investor access verified if available) I consider this trading system NOT worth buying and testing. The fact that the only backtesting graph hints to the use of progressive money management also points to the account-wiping power this system could have in real live trading. If this sellers provides 10 year backtests with live trading statements of at least 3 months verified through investor access I will rewrite this review to include the new evidence. Meanwhile, this is just another VERY over hyped trading system which has NO reliable evidence of profitability. The evidence pointed out as "undeniable" is a JOKE as it is unverifiable, misleading and lacking. Instead of showing this, the author should show some truly RELIABLE and TRUST WORTHY evidence such as a live account with investor access.

If you would like to learn more about what I have learned from years of experience in automated trading and how you too can invest in the long term using forex expert advisors with sound and realistic risk/profit targets please consider buying my ebook on automated trading or joining Asirikuy to receive all ebook purchase benefits, weekly updates, check the live accounts I am running with several expert advisors and get in the road towards long term success in the forex market using automated trading systems. I hope you enjoyed the article !

Forex Expert Advisors : Forex Brilliance an Unbiased Review

Continuing with the last few days of new expert advisor reviews, today will be the turn for a new trading system which "mimicks the way the human brain works" called Forex Brilliance. Within this post I will do my best effort to review this new trading system in the light of the evidence of profitability provided by the authors and the claims they make about the system. By analysing the trading methods of the EA based on the evidence provided on the forex brilliance website I will also be able to tell you my opinion about its likehood of being long term profitable and whether or not I consider it worth buying and testing. In the end you will know if the authors of this trading system are really able to provide enough proof to backup their claims and make the forex brilliance EA worth buying or if they are simply selling another over-hyped most likely useless trading system.

I think it is worth mentioning that the claims of these sellers are specially bold in the sense that they say that their expert trades "like the human brain" but with "no emotions". I have to say that it is extremely unlikely that any metatrader expert advisor with the present level of development will be able to achieve such claims, due to the enourmous complexity and obviously computationally superior capabilities of the human brain. However, I understand that this may simply be a marketing tactic to make people feel that the expert "trades like a proffesional" using the best attributes of analysis used my seasoned traders.

Now we have to pay special attention to the evidence provided by the authors about the trading system's profitability. The first evidence shown is completely useless since it is merely a picture of some hand picked trades and gives us no idea about the expert's overall performance other than the fact that its risk to reward ratio appears to be about 1-2:1 which of course is not relevant information unless a very large sample of trades can be observed.

Then we get to what appears to be the core of the evidence shown by the people selling forex brilliance, backtesting statements of several pairs from 2004-2009 showing very good profitability. Be very careful with these backtests. There are many ways in which backtesting can be manipulated to generate extremely profitable results including exploitation of 1 minute interpolation errors, hindsight, curve fitting, etc. It is very important here to note the COMPLETE absence of any live trading results. This is extremely important since it reflects the fact that the authors of the trading system did not trust the system enough to invest their OWN money. I remind my dear readers again that the burden of proof is on the authors NOT on your live accounts.

The fact is that the forex brilliance trading systems seems to be nothing more than yet another over hyped trading system with little real evidence to backup their claims. The fact that they show backtests tells us nothing without the inclussion of live tests with investor access to verify live/back testing consistency. As far as we know, the backtests can be terribly manipulated and bear no indication about the expert's future profitability. So it is pretty simple, until the people at forex brilliance do not add at least 3 months of third party investor access verified live testing results with a backtest of the same period of time to evaluate consistency this trading system has NO evidence to backup its claims of REAL profitability and therefore I consider it NOT worth buying an testing.

As always, I fail to understand why the authors of expert advisors invest thousands of dollars in marketing and yet they fail to invest a few hundred on live accounts which would truly help them backup their claims. However, if they are lying, then why invest in something which is bad for their business ? To add insult to injury, they do mention having tested this EA on their live accounts so why isn't this evidence shown ? I think we all now how much truth there really is to their story.

If you are interested in truly learning about automated trading and how it can become a realistic long term investment strategy using reliable trading systems based on sound trading tactics please consider buying my ebook on automated trading or joining Asirikuy to receive all ebook purchase benefits, weekly updates, check the live accounts I am running with several expert advisors and get in the road towards long term success in the forex market using automated trading systems. I hope you enjoyed the article !

Forex Expert Advisors : Forex Magic Bullet an Unbiased Review

After the last two days of expert advisor reviews today is the turn for another new trading system called forex magic bullet. This trading system claims to be a solution bringing low risk and sustained, consistent profits to forex trades. On today's post I will focus on the review of this expert advisor. I will review all the contents on the website and most importantly I will evaluate the validity of the claims made by the author against the evidence provided on the website. Also through this evidence I will evaluate the trading system's tactics and I will give you my opinion about its potential for long term profitability. As with all other reviews I will also give you my opinion about whether or not this EA is worth buying and testing.

I have to confess that I particularly hate websites which start in such a misleading way as the forex magic bullet's website. The first sentence we see on the site tells us that the EA can make X amount of money in X time with NO mentioning of the initial capital required to do this. It is always extremely misleading to talk about profits without mentioning the required investments since people may think that very little capital requirements are needed to achieve the profit targets mentioned. There is no point to putting these claims up as they are simply not saying anything about the trading system's profitability. It is also very worth mentioning that the claims made on this sentence are NOT backed up by real live trading meaning that the claim is unfounded and has actually absolutely no reason to be there.

The website of the forex magic bullet expert advisor is simply filled with hype and little evidence of profitability. There is no ten year backtest and no live tests to backup the claims made by the author. The "proof" of profitability shown is simply not reliable. We have many pictures of trades which could be either hand picked from a globally unprofitable system (which is bound to have some profitable periods) or simply made on the metatrader 4 platform by using objects. It is clear that this evidence which has NO basis in live trading CANNOT be trusted. The statement snapshots shown are also merely sections of backtesting results which are obviously hand picked.

It is quite insulting that this expert advisor sellers, knowing by now that 10 year backtests are so easily obtainable and that a live test can be run on a cent account from just 100 USD is currently not showing us ANY reliable evidence of profitability. There is simply NOTHING on the forex magib bullet's website to backup the authors claims of sustained profitability and consisntet profits with low risk. It is obvious that the creator of this EA is willingfully not showing ten year backtests or live testing results of the forex magic bullet trading system. If the trading system is so profitable ? Why is there so little evidence ? It is simple, either you are honest or you are not.

In the light of the very scarce and unreliable evidence of profitability and mainly due to the lack of 10 year backtests and investor-acess verified live testing results, this expert advisor is NOT worth buying or testing. If this evidence of profitability is added in the future I will be glad to redo this review, meanwhile this is only another one of the extremely hyped trading systems with NO reliable evidence to backup its claims.

If you would like to learn more about automated trading systems and how systems can be built with reliable sound trading tactics and long term profitability in mind please consider buying my ebook on automated trading or joining Asirikuy to receive all ebook purchase benefits, weekly updates, check the live accounts I am running with several expert advisors and get in the road towards long term success in the forex market using automated trading systems. I hope you enjoyed the article !

Forex Expert Advisors : FX-Pitbull an Unbiased Review

On today's review I am going to focus on another one of the recently released forex expert advisors. This trading system called FX-Pitbull claims to have been profitable since the year 2000 with a "universal" and reliable trading approach based on trend following. Within the following paragraphs I will analyze this trading system and the evidence provided to see if the EA has any merit for long term profitability. I will look at the back and live testing statements provided by the author and I'll do a close valuation of the system's logic, its soundness and its possibilities of being reliable and long term profitable. At the end of the review I will give my criteria about whether or not this EA is worth buying and testing.

The FX-Pitbull trading system seems to be pretty special at first glance. It was definitely not made by a seasoned marketer because it lacks all the usual story and hype of the regular expert advisor. This makes it a lot easier to pinpoint the evidence and discuss the trading system. The claims made by the author of the FX-Pitbull expert advisor are pretty straightforward, he says that the EA was profitable since 2000 and that it uses a reliable trend following approach which makes it "universal".

We also find a good amount of evidence which points out to the fact that the creator wanted to prove long term profitability. We find 10 year backtests and live updated, investor-access verified demo accounts through myfxbook widgets. However a close analysis of this evidence provided points out to several problems within the FX-Pitbull trading system. First of all, the backtests are run on the 5 minute charts. What is the problem ? The problem is that a 5 minute backtest only has 20 reference points per bar, making its effective modeling quality NOT higher than 50%. What this means is that backtests on 5 minute charts are almost useless as a way to provide proof of profitability or realistic profit/risk targets. In fact, the first time frame which is able to achieve "true" 90% modeling quality is the one hour time frame, reason why systems developed on lower time frames simply cannot be trusted to be reliably simulated.

Then I also find an important problem with the trading tactic used which is also reflected on the equity curve of the backtest. This EA seems to use a linear lot size increase or D'Alembert type money management, which although less risky than a full Martingale approach, will also bring an account into a wipeout eventually. As I have said several times, increasing lot sizes with loses is NEVER a realiable approach, we have seen other systems with this lot size calculation type fail, such as the Sidewinder family of commercial trading systems.

Then the demo account also has its fare share of problems. I wonder why was the EA not run on a live account ? Since most of the profitable trades of the EA are in the order of 10-20 pips it is possible that profits could be hindered by requotes and spread widening. It is also important to realize that the EA, trading on the 5 minute chart, is easily exposed to a fair amount of broker dependency since the 5 minute bars will be terribly different from one broker to another, adding more to the uncertainty about the experts performance.

It is very worth mentioning that the creator of this EA has done an effort greater than most comercial experts, the presence of 10 year backtests and a myfxbook verified demo account prove this to be the case. However we cannot avoid the fact that the EA uses an incremental money management technique and that the unreliability of the backtests could be pointing out to an underestimation of consecutive loses. Add 3 or 4 consecutive loses to the D'Alembert progression and you are starting to risk 20-30% of your account per trade. The fact that there are still no live account results also points out to important differences which could be present betwene both account types. The fact that this system uses progressive money management makes the live/demo results particularly dangerous in the sense that the system may appear VERY profitable before a progressive run which leads to a deep draw down, so BEWARE.

Due to the fact that this EA does not have realiable 10 year backtests to estimate its long term profitability and the fact that it uses progressive money management which is always a VERY unsound trading technique (please don't post comment on this subject as it this has proven to be the case on ALL ocassions, for both D'Alemberts and Martingales), I consider this trading system NOT worth buying or testing. I would encourage the developer of this trading system to remove the progressive money management and refine the system's exit logic. Making it trade on the one hour, instead of the 5 minute charts would also provide a good chance at reliable simulations which could lead to a good estimation of long term profitability.

If you would like to learn more about what I have learned about automated trading and how you too can code systems based on reliable trading tactics with sound money management principles please consider buying my ebook on automated trading or joining Asirikuy to receive all ebook purchase benefits, weekly updates, check the live accounts I am running with several expert advisors and get in the road towards long term success in the forex market using automated trading systems. I hope you enjoyed the article !

Forex Expert Advisors : Forex Black Panther, an Unbiased Review

This week we had the release of several new expert advisors, reason why for the next few days I will be revieweing all of them within this blog. The first, which I will review today, is an EA I found through some SPAM which got into my inbox, an expert advisor called forex black panther. Within the next few paragraphs you will find my analysis about this trading system, particularly I will focus on the evaluation of the evidence provided by the author and if it is able to backup the claims made on the website. As always, I will also take a look at the expert's trading tactics and I will give you my opinion about the expert's chance of being long term profitable. After doing all this analysis I will then tell you if I consider the forex black panther trading system worth or not worth buying and testing.

First of all, I have to say that the claims made by this guy are pretty bold. The first information we find on the website says that the trading system is able to triple an account in three months and that there is "proof" to show us how this is done. When we scroll down to see the so called "proof" of profitability we find what appears to be a trading statement showing us some results. Is this test live, demo ? You CANNOT know, simply because the account has NO investor access. Remember that commercial EA sellers CANNOT be trusted, if there is NO third party confirmation (like through myfxbook) or an investor access password with account number provided then the results are as good as useless. Anyone can open up notepad and write a statement like the one shown in html without any problems. Why does this guy think that we will just belive that it is real when in reality EA sellers have shown time and time again that they are willing to manipulate and lie about their trading statements and their live/demo character ?

Moreover, we find that this account statement is strangely limited to the first days of February. If this account statement is indeed real, then why isn't it updated LIVE ? Why isn't this done ? It is actually extremely supicious that you would limit the results of a profitable trading system this way. The most probable explanation, if the statement is real, is that the forex black panther did not perform quite well during February which had quite complicated market conditions. So this guy has a lot to explain. Why is the test limited ? Why isn't it live updated and why isn't investor access or third party verification provided ?

Then things actually get a lot more convoluted. The creator of this EA shows backtesting results, which are limited to the past 2 years of testing. Why would the black panther have to limit its testing if it is so profitable ? It is obvious that 10 year backtests can be shown. Why don't we see them on the website ? Then we have something VERY interesting. The author of the EA provides us with backtesting statements of 2010, so we can actually perform a back/"live" testing consistency analysis of a few months of trading. What we get is that the system shows VERY important differences between back and live testing. For example, on January 2010, the "live test" shows just 5 trades, when the backtest shows more than 15. However there are several additional discrepancies between both results. Therefore, profitability is bound to be MUCH LOWER in live testing when compared with backtesting, something which may inevitably increase the draw downs.

Then this guy hangs himself with his own story. He talks about managing thousands, even millions of dollars for a hedge fund using his system. He shows some "evidence" which is actually NOT reliable since it is merely a screenshot of a made html or the screenshot at the end of a demo test. In fact, you could simply open up 10 demo accounts, make opposite trades with very large lot sizes on them and get a demo account which goes from 10K to 100K in a few hours, that is no problem. I believe that this guy should show some respect for his website visitors, if he traded with hedge funds with his system then SHOW US THE STATEMENTS. Why would a person not show statements with third-party confirmation if they indeed traded with a hedge fund ? Why not reveal the name of the hedge fund ? This story is just pure BS. The reality shown by the evidence is much simpler. A guy runs several demo tests or codes some html to show those screenshots, then runs a very limited demo/live test to get some profitability to show.

Can the EA prove that it can triple an account in three months ? If the author provided investor access to the live account then the answer could be yes, for those three months (which is NOT every three months). However, the fact that there is NO back/live testing consistency points to the fact that the profitability of the EA is greatly overestimated and that possibly future results with that risk level will lead to account wipeouts (maybe that happened in February ?). The author should also provide a LIVE UPDATED, live account test to show us the EA is trading in real time something which will prevent fraud to a big extent, of course, providing a myfxbook widget with confirmation would be ideal.

However, in the light of the lack of live/back testing consistency, I am inclined to consider this trading system useless since there is no way in which we can reliably evaluate the system's performance in the past and very extensive live testing would be required to test the system under variable market conditions (to confirm its adaptability). In my mind, the creator of this EA should provide a live updated live test, 10 year backtesting statements and at least a 6 month period of live testing to do a fuller live/back testing consistency analysis. Meanwhile, in the light that the evidence shown cannot be trusted (because of the obvious limitation and lack of verification of the live test and the obvious and intentional limitation of the backtests) and because -even if trusted- the evidence points out to a lack of back/live testing consistency and long term profitability I consider this trading system NOT worth buying and testing.

If you would like to learn more about the systems I have coded or how you can learn how to design and code your OWN systems based on sound trading tactics to achieve long term profitability in forex trading please consider buying my ebook on automated trading or joining Asirikuy to receive all ebook purchase benefits, weekly updates, check the live accounts I am running with several expert advisors and get in the road towards long term success in the forex market using automated trading systems. I hope you enjoyed the article !

Introducing Teyacanani, My Best Trading System so Far :o)

Today is a special day :o). After a few months of very strong development efforts I am finally close to finishing my last trading system, system No.4 on the Watukushay Series, called Teyacanani. I have to say that this trading system's simulation results have been the best I have had so far for a system on the Watukushay series. The expert advisor was coded with backtesting reliability in mind and shows 10 year profitable backtests (as all the other systems within the Watukushay Project). On today's post I want to talk to you a little bit about this expert advisor, its story and what I wanted to achieve with its development. I will show you some sample trades and backtesting graphs to help you see the large versatility and power of the extremely simple tactic used by this trading system.

The story of this trading system begins with the development of Watukushay No.2. This expert advisor which took a long time to develop was my first attempt at making a trading system based solely on candlestick patterns. Watukushay No.2 surprised me with its initial backtesting results and continued to surprise me and all Asirikuy members with its very impressive live testing results managing to profit greatly from the difficult market conditions we saw on this year's second month. However I still felt that I could do better and this is when Teyacanani came into play.

I decided that I wanted to develop a trading system which was more profitable and versatile than Watukushay No.2. I wanted to develop an expert advisor we could use to trade many more instruments besides the EUR/USD and GBP/USD which are the instruments traded by Watukushay No.2. With Teyacanani I wanted to achieve portfolio trading in a much more profitable fashion than what was achieved with Kutichiy which - although profitable for several instruments - failed to achieve very good profitability figures on instruments outside the EUR/USD (in simulations).

After doing tons of analysis on several currency pairs and testing several ideas I finally came up with an extremely simple idea which was based on candlestick patterns on the one hour charts and which was able to give profitable results on several currency pairs, reaching similar profit/risk targets on most instruments tested. Teyacanani is very good at following trends and it has an internal closing mechanism which avoids hitting the stop loss on almost every trade. Of course, not all trades are like the one shown below but this trade shows you the actual potential of Teyacanani at capturing long market movements.
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Surprisingly, although the logic of Teyacanani is a ton simpler than the logic of Watukushay No.2, it is able to achieve higher profits and lower risk targets. This expert advisor has shown very profitable ten year backtests on the EUR/USD, GBP/USD and USD/CHF. You can see on the image below the equity curves achieved from ten year backtests (Jan-01-2000, Jan-01-2010, 100K initial balance) of the EUR/USD and GBP/USD (these backtests were run with minimal risk, higher yearly compound profits are achievable by increasing risk).
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I strongly believe than Teycanani hits the nail in the head with its approach and I am hoping to find 10 year backtesting profitable results for at least 6-10 different currency pairs. This system will be released to all Asirikuy members in April and if everything goes well I will launch this system coupled with two live accounts to start testing the strategy on two different currency pairs simultaneously. I am very excited about Teyacanani since it is the first trading system I have coded which has gone beyond what Watukushay No.2 was able to do :o) This trading system will be a very important part of our trading arsenal and if back/live testing consistent it may become Asirikuy's most profitable trading system !

And for those of you who are curious... Teyacanani is a word in Nahuatl, the ancient language of the Aztecs in Mexico which means "leader". :o)

If you would like to learn more about the Watukushay Project or the systems I have coded and tested and how you too can learn how to approach automated trading in a sound way aimed at long term profitability please consider buying my ebook on automated trading or joining Asirikuy to receive all ebook purchase benefits, weekly updates, check the live accounts I am running with several expert advisors and get in the road towards long term success in the forex market using automated trading systems. I hope you enjoyed the article !

Support and Resistance, Predictable A Priori ?

As you know, I have always found support and resistance trading to be one of the most reliable and simple ways to achieve long term profitability in trading in general. It is not a secret that this tactic is used by some of the most successful traders out there, making profits in virtue of its evident simplicity and elegant way of portraying market behavior. Through most of my posts talking about support and resistance I have always talked about how we can tell future S&R levels based on what previous levels were in the past. However, a very interesting question arises when we look at some of the tactics used in trading. For example, Fibonacci lines attempt to predict the position of S&R levels within trend retracements without any knowledge of previous market behavior, assuming that the market tends to "magically" stop around these lines. The Murray math lines follow a similar premise. Is there any truth to these claims ? Is it true that we can in fact predict S&R levels based on these "magic lines ?

It is clear that S&R levels can be infered from the past by looking at previous price action. For example, if 1.5000 was an important support level in the past on the EUR/USD then this level is also bound to be important in the future. There is nothing mysterious about this assumption since price levels where price has stumbled in the past will be places where it will stumble in the future. This simply plays on the assumption that the levels were important for a reason and they will be important in the future again for similar reasons.

However, certain trading techniques attempt to predict the extent of market movements without any knowledge about the currency pair's trading past. For example, Fibonacci theory suggests that price is bound to retrace only up to meaningful Fibonacci levels (levels which comply with the golden ratio) which are 23.6%, 38.2%, 50%, etc. Is it true that price has a statistical tendency to retrace to these levels ? Moreover, does price have a tendency to retrace to ANY particular level in forex trading ?
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The most common scenario we find is that price does NOT have any statistical tendency to retrace to specific Fibonacci levels. In fact, price rarely reaches any of these levels to "the pip" and retraces. What often happens is what you see on the image above. Price reaches the Fibonacci levels and retraces either between them or around them but almost never exactly on them. The fact that people who use Fibonacci say that it works so well is simply because instruments have a tendency to avoid extreme retracements of +70% on trends and many S&R levels are bound to be found between a 0 and a 70% retracement. Indeed, if you draw a lot of lines on a chart, price is bound to retrace from some of them making you think that you have "nailed" some fundamental aspect of market behavior.

In reality, what happens is that technical tools like Fibonacci lines and Murray Math plot levels which are bound to coincide with historically predictable support and resistance levels, being very close to them (giving the appearance of significance). Therefore, there is almost no validity to using these techniques when using historically valid S&R levels proves to be a much more straightforward and reliable way to pinpoint support and resistance levels. Therefore, it is not true that Fibonacci techniques or Murray Math are able to accurately predict S&R levels a priori, they rarely predict them to the pip and often they simply match levels or are "close to levels" which are much better determined through an analysis of the past S&R values of the traded instrument.

If you would like to learn more about my automated trading systems and how you too can learn to design, program and use your own long term profitable trading systems please consider buying my ebook on automated trading or joining Asirikuy to receive all ebook purchase benefits, weekly updates, check the live accounts I am running with several expert advisors and get in the road towards long term success in the forex market using automated trading systems. I hope you enjoyed the article !

Forex Trading and Gambling... One and the Same

I often find it curious that people tend to react very negatively when forex trading is compared to gambling. Every time I talk to a proffesional trader about this matter we end up discussing how only "new traders" gamble and proffesionals do not gamble but "trade". What is so different between forex trading and gambling ? Through the following few paragraphs I will tell you my views on the subject and why I believe that forex trading is a form of gambling. I will also tell you how they are different and what the difference between investing in forex and going to Vegas really is. At the end of this article I hope you will understand my points of view and why forex cannot be considered anything but a type of gambling.

So what is gambling anyway ? Gambling is simply the act of betting on the outcome of a given event without any true certainty about its result. Sounds familiar ? Forex trading is merely the betting of a certain amount of money on the outcome of price movement without any absolute knowledge of where price will head. Therefore, in accordance to the definition of gambling, forex trading and any other form of speculative investing is merely gambling. But if it is gambling by definition then why do proffesional traders find this comparison offensive ?

The problem arises because people often relate gambling with casinos and in casinos you are gambling on a game which has an outcome which will be statistically unfavorable to you in the long term. Casinos make money because they are NOT gambling, they know that the outcome of a large sample of events will always be in favor of the house. In practice, a player in a casino floor may feel like he or she is "gambling" (which is true for small samples which can effectively be totally random) but statistics do favor the casinos within a large number of events. What this means is that if someone plays in a casino for an infinite period of time, the casino will end up with all the money. The casino always wins since it has a statistical edge on all the games played.

Many traders are offended by the comparison because they believe that people are telling them that they trade like they would play in a casino, to inevitably lose money in the long run, which is why new traders are so often compared with casino floor players.

In reality, forex trading is gambling, but it is a "game" in which the odds are not set against you in a mandatory way. Forex trading resembles sports betting a lot more. In sports, a bet is made for a time with a lot of information which can be used to determine the winner with statistical significance. For example, if a horse has won the past 10 races, then it is bound to also win the next rase. Betting for this horse will give you a statistically higher chance of winning than betting against other horses. However, the outcome is never known so it might happen that your horse loses. However, within a large given number of events, you can be an overall winner if you know enough about the facts that affect the outcome of the events.

Forex trading is very similar, if you know enough about the facts which determine the outcome of price movements then you can statistically profit from the market even though you may lose in several events due to the true outcome of any event being unknown. The more educated gamblers make money while the less educated gamblers which have no capacity to determine the probabilities of certain price movements against others end up losing their money. Since every dollar is sold for every dollar bought, the best gamblers get in and out with money when the others get in and out to give their money.

So in the end the matter is pretty simple. If you trade like you would gamble in Vegas, without any edge, you will lose, however if you gamble with intelligence and with analysis over the outcome of events you will, in the end, become a profitable trader.

If you would like to learn more about the systems I use to trade in the forex market for a living and how you too can design and trade your own automated long term profitable systems please consider buying my ebook on automated trading or joining Asirikuy to receive all ebook purchase benefits, weekly updates, check the live accounts I am running with several expert advisors and get in the road towards long term success in the forex market using automated trading systems. I hope you enjoyed the article !

Forex Expert Advisors : Forex Robovore, an Unbiased Review

Yesterday an Asirikuy member sent me an email requesting my opinion about a new automated trading system called Forex Robovore. This trading system is interesting since it seems to follow a different line of thought when compared to most of the other automated trading systems available on the internet. On today's review I will focus on the claims made by the author on the Forex Robovore's website as well as the validity and support the evidence on the website gives to said claims. In the end I will be able to tell you if what the creator says about the system is supported by the evidence given or if it is simply not the case. With this evidence in mind I will also be able to give you my opinion about the long term profitability of this trading system and whether or not it is worth buying and testing.

First of all, it is clear that the Forex Robovore trading system has a different philosphy when compared with the other systems available online. The Forex Robovore system aims to have a very favorable risk to reward ratio of 1:2 to 1:4, giving us the impression that it was designed to take advantage of trend following moves. The trading system's sale page even includes a report which tells you why expert advisor scalpers are bound to fail in the long run in forex trading. I must say that I appreciate the fact that the creator of Forex Robovore is taking the time to explain that his system uses a different logic, it is also worth noting that the expert uses sound risk management in the sense that only a small percentage of capital is risked per trade.

However these are just words. The important thing is to know if the creator of the Forex Robovore trading system is able to show evidence to substantiate his claims. This is when we start to see the many holes in the evidence provided and how this trading system does not stand in a better place than most of the "other expert advisors" it so strongly talks about. First of all, we find that there are NO ten year backtesting results, showing us that the creator fails to carry out this readily available and easy to perform simulations. On the other hand, the creator says that backtesting can be done by downloading data from the metaquotes server. Therefore it is obvious that the author knows that these backtests can be carried out but yet FAILS to show these backtests on his website. Why ? The most common reason for this is the LACK of long term profitability of the trading system, the lack of profitable 10 year simulations.

Moreover, unverified live testing results of about 4 months are shown as evidence of profitability. I would have to say that four months are a rather small period of time to show as the only available evidence. It is also worth noting that the live results are UNVERIFIED and can be forged. It is VITAL to have live testing results which are confirmed by INVESTOR ACCESS to the trading account. The author says on the FAQ that you can tell a real live test by the configuration of the html file but this is WRONG, this CAN BE FORGED and investor access is the ONLY way to verify that a live trading record is REAL. Why isn't investor access given ? Are accounts not live but demo accounts ? Have the results been manipulated ? I see no other reason why an EA creator would refuse to post results on myfxbook which can independently and reliably verify investor access and trading privileges.

Overall it is sad to say that although the intentions of the Forex Robovore system creator seem to be to create a system with sound money management and trading strategies the trading system is not able to walk the walk. It seems that the website merely uses this "difference" with other trading systems as a marketing pitch without any evidence of the system truly being long term profitable. Because of the complete lack of 10 year backtests and the absence of verification of the live trading results I have to say that the Forex Robovore trading system is NOT able to backup its claims and it is therefore NOT worth buying or testing. If the creator of this trading system provides 10 year backtests with live/back testing consistency tests with the current period of live testing, as well as live account verification through investor access, I will be more than happy to redo this review.

If you would like to know more about what I have learned about automated trading systems and how you too can design and develop trading systems to trade profitably in the forex market please consider buying my ebook on automated trading or joining Asirikuy to receive all ebook purchase benefits, weekly updates, check the live accounts I am running with several expert advisors and get in the road towards long term success in the forex market using automated trading systems. I hope you enjoyed the article !

Calculating Support and Resistance, My First Solution

Yesterday I wrote a post about the mathematical definition of support and resistance levels and why it is so hard to accurately define these levels in a way a computer can understand. We talked about several of the problems which affect this definition mainly the fact that most of the currently used approaches do not have any way of discriminating between the importance of different levels, something which has a devastating effect over system profitability. At the end of yesterday's post I also highlighted that there are mainly three steps that have to be taken into account to successfuly tackle the problem of mathematically defining support and resistance levels for forex trading :

• Defining the S&R levels
• Eliminating unimportant levels
• Defining S&R zones

On today's post I am going to tell you how I intend to solve each one of these issues and how I believe this will lead to a reliable definition of S&R levels.

The first problem seems to be the one people have worked the most on. As I said on yesterday's post there are several ways of defining these S&R levels but the technique I find the most reliable involves the use of the fractal indicator. Since fractals signal reversals, they are useful in determing the global position of S&R levels. This concept is not new and it is a quite typical way of defining support and resistance in a mechanical fashion.

Now the next problems are a little bit harder to solve. How do we discriminate between the importance of levels and define their zones ? From the definition of support and resistance levels it becomes quite clear that the importance of a support or resistance level is given by the number of times this level has been tested (either as support or resistance). Therefore, if we save an array containing all fractals and we then assign each fractal a frequency value depending on the number of times this exact level was tested then we will have a reliable indication of which levels are "strong" and which levels are "weak". Staying only with the strong levels will definitely allow us to trade S&R strategies in a much more reliable fashion.

Of course, several of you may be thinking that I won't be able to succeed with this tactic given the fact that fractals are bound to be many times similar but almost never identical. For example a level around 1.5343 on the EUR/USD could be tested 3 times to give fractals at 1.5341, 1.5343 and 1.5345, within my definition, these three levels would be discarded since they are all different and therefore "insignificant". The solution to this problem is the addition of a "tolerance" zone around each fractal to group them according to the zones they cover. For example, two fractals will be considered as belonging to the same support or resistance zone if their values are within X distance of each other. How do we define this distance ? Volatility seems to be the best candidate since this is the main factor which affects the width of S&R zones. We can define X as a given percentage (for example 10%) of the standard deviation of price within the last Y number of periods.

Then we have the problem of having only a "huge" important price level given that all fractals are bound to be close to another one. We need to define a "center fractal" for each level which will be defined as a fractal which has more than Y fractals within its tolerance zone. This takes care of the importance problem and level definition at the same time.

This simple grouping of fractals will let us define the important S&R zones and simulatenously the width of these zones which of course will be limited to +/- X% of the standard deviation (however they can still be smaller than this). The steps this S&R indicator would need to do are highlighted below :

• Calculate all fractal levels
• Calculate each fractals population within its tolerance zone
• Assign "level status" to fractals with the highest populations
• Determine the highest and lowest fractal within each central fractal population zone

In the end this indicator will give us each important S&R zone coupled with its width, a criteria which is bound to be extremely useful for the making of long term profitable systems based on S&R trading. I will start developing this indicator soon and hopefully you'll be able to see some graphical results within the next few weeks. Do you have any suggestions to improve this technique ? Leave a comment and I'll be glad to discuss it with you. :o)

If you would like to learn more about the automated trading systems I have coded and how they were developed step by step please consider buying my ebook on automated trading or joining Asirikuy to receive all ebook purchase benefits, weekly updates, check the live accounts I am running with several expert advisors and get in the road towards long term success in the forex market using automated trading systems. I hope you enjoyed the article !

Defining Support & Resistance Levels Mathematically, A True Challenge for Automated Systems

I have always said that there is a lot of importance and potential in the trading of support and resistance levels in trading in general, and particuarly in forex trading. However it is true that the creation of long term profitable systems for automated trading based on the definition of S&R (support and resistance) levels has been difficult up until now due to the inherent problems of defining these levels mathematically. On today's post I want to talk about some of the approaches used to define these levels and the short commings each one of them has. On tomorrow's post I will talk about what I think is the solution to the problem, a concept which may lead to the development of an automated system based on S&R levels which is able to gauge S&R level importance and trade the many techniques which can be derived from these levels in a profitable fashion.

So what is so difficult about the definition of support and resistance levels ? Theoretically a support or resistance level is an area (not a specific price value !) in which price finds a natural difficulty to continue to move in its previously acquired direction. So for example, if the EUR/USD is in an uptrend and there is a resistance level at the 1.3500 zone, price will get to this level and then it will bounce from it or consolidate around it until it either continues its previous trend or tests a lower support level.

Notice how many of the definitions of support and resistance are vague. What is a zone exactly ? how large must these zone be ? What parameters determine its size ? How could we know this level exists before price reaches it ?

The fact is that these questions have no straightforward answer. There is no rules for the size of the S&R zone, nor is there a way to accurately determine the levels before they happen. The previous attempts at coding automated trading system using S&R levels have tried to infere future S&R levels by taking information about previous levels in the past. The reality seems to be that a previously found support or resistance level will behave as either support or resistance in the future depending on from where it is attacked by price.

So the problem seems to be to find S&R levels in the past somehow and then use them in the future. If price faulters around a support or resistance level, then an intuitive way to define them is through the high/low criteria. A resistance is reached on the high of a candle followed by a candle of opposite direction and a support level is reached on the opposite situation. Another way to define these levels would be to use the fractal indicator. Since fractals determine patterns which signal reversals then the high or low of a fractal may indicate a resistance or support level.

The problems inherent to these very common approaches and other similar approaches is evident. All Support and Resistance levels are given and absolutely no importance is given to some over others. Another problem is that several fractals or high/lows may happen on similar levels but interpreted as different S&R levels when in reality they represent the same support or resistance zone. Since there is no discriminations between the S&R levels defined, these techniques of defining S&R almost always fail since they trigger trades on "not so important" price levels which make the strategies lack a positive mathematical expectancy.

So the steps to define S&R levels in a reliable fashion seem to be the following :

• Define all S&R levels
• Discriminate important from unimportant levels
• Define Zones of S&R
  

On tomorrows post I will talk about how I intend to tackle each one of these problems and how I believe this will lead to the definition of reliable automated trading techniques based on S&R trading. If you would like to learn more about what I have done with automated trading and how you too can learn how to design and trade autoamted trading systems profitably please consider buying my ebook on automated trading or joining Asirikuy to receive all ebook purchase benefits, weekly updates, check the live accounts I am running with several expert advisors and get in the road towards long term success in the forex market using automated trading systems. I hope you enjoyed the article !

Forex Expert Advisors : Forex Spectrum, an Unbiased Review

A new expert advisor which claims to be something "never seen before" in the forex automated trading industry has just been released. This trading system, which was brought to my attention by an Asirikuy member, will be the subject of today's post. The trading system is named Forex Spectrum and the author claims that it is able to give more than 600% profit with "virtually no risk". On today's review I will analyze these claims against the evidence provided on the website and I'll give my opinion about whether or not the forex spectrum trading system is or is not worth buying and testing. My review will show you if the claims shown on the website can be taken as valid and if the "undisputable evidence" shown is in fact evidence of the claims made. Will the forex spectrum expert advisor pass the test ? You'll see within the next few paragraphs.

I have to say that I believe that it is always unethical to call anything forex related risk-free, making claims such as "with virtually no risk" makes people believe that they can achieve those profit levels without any market exposure something which is definitely misleading. People should take into account that forex always carries a high degree of risk, a fact that point out that there will always be some capital loses (sooner or later), which may or may not lead to profitable periods depending on the trading system's capabilities.

The claim made of a 600+% profit in a short time with almost no risk is one of the boldest I have ever seen (after the claim of 1000 USD to more than 3 million made by an EA a year ago) and not surprisingly there is absolutely no reliable evidence to backup this claim on the website. This expert advisor seller does not show 10 year backtest or live testing results which can stand behind what he is saying. What is the so called "indisuputable" evidence ? No more than a few trades shown on charts which could easily be made or hand picked from any trading strategy. These images say NOTHING about the likehood this trading system has of being long term profitable.

We also have some images of "statement shots" which could have been easily taken from any backtest and hand-picked to show a desired scenario. Why does the creator of forex spectrum NOT show 10 year backtesting and live testing results when they are SO easily available ? There is an EVIDENT hiding of easily obtainable evidence which would indeed backup the author's claims if they were coherent with reality, however the author does not show this evidence, obviously the simplest reason why the evidence is not shown is because it does NOT show any evidence of long term profitability.

I personally despise the hypocrisy of the sales pitch "this is not about money"- the author expresses- when it is evidently ONLY about money since the author seems to have no regard whatsoever for the future of people's capital, selling them a system which has no evidence of profitability using bold claims and cheap marketing tactics. To sum it up, the overwhelming lack of evidence makes the forex spectrum expert advisor NOT worth buying or testing. The author would need to provide 10 year backtests coupled with a period of at least 3 months of live testing and a backtest of this same period to show back/live testing consistency, once this evidence is provided I will be glad to rewrite this review.

If you would like to learn more about my work in automated trading and how you too can start to develop and use automated trading systems with sound trading tactics please consider buying my ebook on automated trading or joining Asirikuy to receive all ebook purchase benefits, weekly updates, check the live accounts I am running with several expert advisors and get in the road towards long term success in the forex market using automated trading systems. I hope you enjoyed the article !

Forex Expert Advisors : Forex Torpedo an Unbiased Review

I want to dedicate today's post to the review of a new trading system which was requested by an Asirikuy member. This new trading system called Forex torpedo claims to be able to turn $2000 into more than $92,000 in a short period of time. As always this review will focus on the claims made by the author comparing them with the results and evidence found on the website. After doing a comparison I will be able to tell if the author's claims are adequately backed up or if they are simply made up from insufficient evidence.I will also give my views about the long term profitability of the trading system and whether or not it is worth buying and testing.

As I said on the first paragraph the forex torpedo trading system has some pretty bold claims. It is very difficult to believe that any trading system would be able to turn $2000 into $92,000 in a year without either some extraordinarily high risk or through the use of simulations which are not accurate. Therefore it becomes vital to offer indisputable evidence when a trading system is said to have such high profit targets. It is extremely important to have live testing results with investor access or confirmed to have investor access by a reliable third party like myfxbook.

An analysis of the evidence provided on the website shows us that only back testing results are given. It is obvious that back testing results cannot be trusted without any live testing evidence due to the fact that they could have been made with hindsight or could have exploited any number of back testing faults. The absence of any live testing evidence which is verified by third parties tells us that the author of the trading system has some special reason not to show live testing results. It is evident that the author could have traded with $100 on a live micro account and have at least a few months of trading results. Why did the author avoid these testing ?

Furthermore back tests are awfully limited with only a year of results when they could've shown at least 10 years of back testing. Why are all these years missing ? Why would the author not show us the simulation results when he or she claims that the expert advisor is able to adapt to changes in market conditions ? It is evident that the author is partially hiding the trading system results, something which arises a lot of doubts regarding the expert's profitability.

Since verified live testing results are not shown it is very difficult to know how the expert really trades. From the information given on images and limited partial statements shown -which are not verified- we would conclude that the system uses trend following to get into trades. However I am very skeptic about the trading system's adaptability given the fact that the lot size traded is constant. Again, the overall lack of any evidence which can be analyzed to give us information about how the system would trade in real life, makes the posible analysis very limited.

Overall, the forex torpedo trading system seems to be nothing more than an over-hyped trading system with a lot of obviously intentionally lacking evidence. Again, it seems absurd to me that 10 year backtests plus a few months of third party verified live testing results are not shown when these results can be easily obtained for almost any trading system. Due to this huge lack of evidence I consider this trading system NOT worth buying or testing. If the author provides the 10 year backtests and at least 3 months of live testing (with a backtesting of the same period) to perform a back/live testing consistency analysis I will rewrite this review to take this new evidence into consideration. Meanwhile, I think that there must be very good reasons why no 10 year backtests or live trading results are shown. Remember that the burden of proof is always on the author NOT on your live accounts.

If you would like to learn more about the trading systems I have developed which have ten year backtests and live testing evidence and how you too can come up with your own long term profitable systems with reliable evidence of profitability please consider buying my ebook on automated trading or joining Asirikuy to receive all ebook purchase benefits, weekly updates, check the live accounts I am running with several expert advisors and get in the road towards long term success in the forex market using automated trading systems. I hope you enjoyed the article !

The Risk to Reward and the Number of Loses

You may have seen on most of my automated trading system reviews and my system design blog posts that I usually put a lot of emphasis on the risk to reward ratio of trading strategies. The average risk to reward ratio which is simply a number comparing the average loss with the average profitable trade of a trading strategy gives us some very important information about a trading strategy. Perhaps some of the most important aspects of the risk to reward ratio are overlooked by most traders which usually leads to the comfortable use of systems with extremely unfavorable risk to reward ratios. Through this post I will try to explain the many problems of using a system with a very bad risk to reward ratio and why you should get away from this type of trading strategies.

But, what is a bad risk to reward ratio ? I usually define this as a ratio which is very tilted towards the risk side. Trading systems which risk much more in average than what they make per trade are said to have a bad risk to reward ratio. For example, a system which makes 10 USD per trade in average but loses 100 USD on every loss has a very bad risk to reward ratio of 10:1, that is, the average risk is ten times bigger than the average reward.

So what is the problem ? Many people think that a strategy can be successful, even if the risk to reward ratio is terribly bad, if there is simply a very high winning percentage. Of course, a strategy with a risk to reward ratio of 10:1 requires to win at least 95% of trades to be successful, any further loses will cause the strategy to cause overall loses. However it is true that mathematically a strategy could in theory be profitable if it has a bad risk to reward ratio and a very high winning percentage.

However, the problems start to come when we think about the estimation of the winning percentage. How can we reliable calculate the winning percentage of a trading strategy in a market which has no centralized exchange and which is bound to show different trading results on every broker ? Is there any reason to believe that the maximum number of consecutive loses in the past is the worst possible case ?

The fact is that the winning percentage cannot be accurately determined for any given trading system and the fact is that a difference of even +/- 15% may as well be possible not only due to broker differences but because of other aspects of the market like re-quotes and spread widening which are not shown within simulations or paper trading accounts. This is talking about the historically estimated winning percentage. However the future winning percentage may as well be within +/- 20% of the estimated historical value, given the fact that future market conditions are bound to show us a new worst-case scenario, something which usually involves a decrease in the winning percentage.

Now add to this the fact that most trading systems with unfavorable risk to reward ratios use very small take profits and you get an incredible augmentation of live vs simulation and paper trading results which may account for a great overestimation of the winning percentage.

When it comes to live trading, it is obvious that systems with favorable risk to reward ratios hold a much better chance at facing more unfavorable market conditions since an increase in the number of consecutive loses is bound to only cause a modest increase in the maximum draw down. On the contrary, systems with unfavorable risk to reward ratios, will show a very BIG difference in profitability with only a very small increase in their number of consecutive loses (or closely located loses for that matter).

This is the main reason why I do not develop or trade systems with risk to reward ratios higher than 2:1. It is evident to me that these systems have a smaller chance at surviving to future changes in market conditions and a bigger chance of having an overestimated profitability due to the inaccuracy of the determination of the winning percentage and the number of consecutive loses. through paper trading or simulations. The fact that these systems are INCREDIBLY vulnerable to even a small increase in the number of consecutive loses (which may easily be caused by a mere change of broker or the introduction of spread widening and re-quotes) makes the simulations of their performance very lacking at best.

If you would like to learn more about the systems I have developed and how you too can design and trade your own systems with favorable risk to reward ratios please consider buying my ebook on automated trading or joining Asirikuy to receive all ebook purchase benefits, weekly updates, check the live accounts I am running with several expert advisors and get in the road towards long term success in the forex market using automated trading systems. I hope you enjoyed the article !

The Asirikuy Forum... Making Asirikuy a True Community

If you have read my blog frequently then you are aware of the fact that I have never liked the way in which automated trading forums work. I have outlined their problems several times in the past which are mainly summarized as a "cyclic development syndrome" in which systems are developed without any significant evolution towards long term profitability. This problem has many causes which range from the lack of knowledge about the requirements for a system to be likely long term profitable to the inherent difficulty in the development of sound trading strategies. The over-development of entry criteria and the use of unsound trading tactics are amongst the main consequences of the traditional "automated trading forum" approach.

However after several Asirikuy members suggested the creation of a forum to me (and after I refused several times) I decied to ask myself a simple question. Can the asirikuy community do any better ? Can you create a forum in which the possibility to develop long term profitable systems in a community environment becomes real ? The creation of such a forum demands the overcoming of all the problems which have been evident on automated trading forums in the past.

How could you overcome all these issues ? My first thought has always been that the lack of direction and knowledge is the main reason why forums fail to develop sound trading systems. The problems that arise from these two are almost endless. You always have the use of backtests with limited quality or with the obvious exploitation of backtesting faults coupled with the suggestion of unsound trading techniques - such as Martingales - to improve trading systems which have exit-related problems (which are never addressed due to the over development of entries found in forums). There is a lack of systematic evaluation and the lack of any judgement over the quality of the trading system ideas proposed.

I plan to solve all these problems on the Asirikuy community forum. How ? We will have very directed and efficient development. I will receive all system ideas and I will strongly moderate the development forum so that asirikuy members are able to learn and development can stay away from trading ideas which won't work and implementations which are detrimental to long term profitability. This does not mean that we will only develop "what I want" but we will develop what "can work". I am convinced that if development is centered around systems which can be backtested reliably, which use adaptive techniques and which use sound money management it will only be a matter of time before we get our first community developed long term profitable systems.

On top of serving as a center for development, the asirikuy forum will also deal with questions people have about the material available on the website, backtesting, programming, system design, etc. The Asirikuy forum will become another key knowledge base so that people can exchange ideas and grow their knowledge about automated trading system development.

One of the main objectives of the Asirikuy Forum will be to make Asirikuy a lot more like an online community. Having the ability to know and interact with the different members will help us create that community-feeling which I have always wanted Asirikuy to have. By working together and building content in a community type environment I am hopeful that we will be able to make Asirikuy much more than what it already is today. We will have a community with a high knowledge-standard in automated trading which will be committed to the development of trading systems, not be sold, but to be traded for our long term capitalization.

If you would like to learn more about the forum or about the trading systems we are currently trading at Asirikuy please consider buying my ebook on automated trading or joining Asirikuy to receive all ebook purchase benefits, weekly updates, check the live accounts I am running with several expert advisors and get in the road towards long term success in the forex market using automated trading systems. I hope you enjoyed the article !

Complexity Vs Understanding... The Battle in Automated Trading

We often find that in the world of trading there is a constant battle between system developpers which argue for simple and complex system. It is quiet easy to think that the forex market -being extremely complex- would need a very complex system to achieve sustained profitability but such assumptions have proven to be wrong several times as systems which are exceedingly complex have proved to have their own pitfalls. On today's post I am going to talk about the level of complexity of automated trading systems and which approach I have found to be best. In particular, I am going to show you some of the pitfalls of added complexity and the advantages of simple trading strategies. In the end you will see that it is simply a matter of having an undestanding of how the market behaves.

So what do I mean by complexity ? The matter is pretty simple. What has more probabilities of being able to work in the market to achieve long term profits : a system which uses a simple indicator signal with adaptive money management or a system which has neural networks, takes fundamental data into account and analyzes the feed from 5 time frames and 12 indicators simultaneously ? The answer for many people seems to be "obviously the second one", however most of the time this is NOT the case. It is also true that simple systems can also fail so the answer is not a straightforward as many would like.

The fact is that the success or failure of a system depends merely on its ability to profit from a tradable market inefficiency. It has to have a positive mathematical expectancy. This can be achieved both with simple and complex systems, however - like in mechanical engineering - trading systems which are more complex are harder to make and more prone to failure (due to their higher complexity). Systems which do a higher number of computations and analysis do not necessarily reach better results and as a matter of fact, the failure of these complex systems is often very hard to predict and very hard to correct.

People often believe that adaptive behavior against market conditions is "very hard" to achieve, but when you understand the underlying properties of the market that change along different market conditions you can make a trading systems adaptive with less than 20 lines of code (often with even less). This shows that it is not a matter of making a computer do neural network analysis or other computationally intensive analysis, it is a matter of understading what you are doing.

Then the argument is reduced to robustness and simplicity. Why would you make an extremely complex system which is much more prone to failure when you can make a very simple system which is much more robust and bound to reach the same or even better results ? I have often found that the failure to reach simple trading systems is often a consequence of the lack of knowledge of the designer. The fact that few people do not understand how to exploit tradable market inefficiencies and how the market changes when market conditions change makes them resort to added complexity, often with disastrous results, such as excessive curve fitting.

However it is also true that people who aren't familiar with the world of automated trading and the algorithmic trading systems which have been developed over the past decades are often captivated by fancy words such as "genetic algorithm", "neural network", etc. These words do not mean anything, since what determines profitability is the ability to exploit a tradable market ineffiency and having added complexity simply does not guarantee this. Through all my experience in automated trading I have always decided to go with the simplest approach. I program the simplest trading systems I can which give me the results I desire, something which ends with the development of robust and adaptive, yet simple trading systems which I fully understand and trust. So as you see, it is not a matter of how complex the system is, it is a matter of how sound the logic behind the system is.

If you would like to learn more about my automated trading systems and the way in which they use simple logic to adapt to changes in market conditions please consider buying my ebook on automated trading or joining Asirikuy to receive all ebook purchase benefits, weekly updates, check the live accounts I am running with several expert advisors and get in the road towards long term success in the forex market using automated trading systems. I hope you enjoyed the article !

Volume in Forex... Does it Mean Anything ?

Generally speaking, in forex trading we only have one source of information to make trading decisions : price. In the foreign exchange market, due to the lack of a centralized exchange, we lack one of the most useful pieces of information available on the futures and stock markets, volume. This additional data tells us exactly the amount of money (or volume) moved by buyers and sellers which caused any given movement in price within the market at any given time, something which is basic to understand price formations, validate patterns and trade with generally more accuracy. But what is that volume indicator that shows in your trading platform then ? On today's post I will address this question and I will discuss the inherent limitations and uses of "volume" in forex trading.

First of all, it is important to understand why there cannot be a "true volume" indicator in forex trading, why it isn't possible to know how much money goes through the market at any given time. Simply put, the market is just too large and has too many exchanges. For any given forex broker to have a true volume indicator, it would need to have feeds from every bank in the world which exchanges one currency for another, detailing the size of each transaction. This is not practical and probably not possible today. In fact, the only way in which we could have accurate volume information would be if forex was traded in a centralized exchange, something which will likely not happen due to the flexibility independent feeds give to inter-bank negotiations.

But what is that indicator you see on your trading platform ? For example, there is an indicator named "Volume" in Metatrader 4 which displays what appears to be volume information. Is this indicator displaying volume ? How does it calculate it ? The truth is that what the indicator displays is NOT true volume but a simple measure of the number of ticks received for a given time period. For example, a volume of 20 means that during that given time period the platform received 20 ticks.

Is the number of ticks directly proportional to volume ? Yes and no. It does give an idea about the amount of "activity" in the market but it does not give you any idea about the amount of money going through the banks. Since the amount of money is not proportional to the number of ticks. For example if the amount of money exchanged is very large but the number of transactions is small you might have a large candle with a small "volume" (measured as number of ticks) but the real volume would be large. Therefore, the "Volume" indicator is not a true measure of market volume.

Is it completely useless then ? No, as I say, it is a measure of market activity, a measure of the "amount of transaction" more than the "volume of the transactions". It still can be used on some analysis in which knowing market activity is important but it cannot be used to validate patterns and do volume analysis like on the stock and futures markets, simply because it is not the same variable. We could use the volume indicator as a way to determine market volatility and to predict the time of the day in which price will fluctuate to a larger extent, however using this indicator to determine the validity of moves is simply wrong since it does not correspond to true volume and moves which apparently happen on "low volume" may in fact be large volume moves which happen on a few transactions. Therefore, the "Volume" indicator is more like a "liquidity" indicator, allowing us to locate periods where large amounts of buyers and sellers were available.

Another important problem is that since the "Volume" indicator depends on the number of ticks, it is very broker dependant, therefore the building of automated trading systems based on this indicator is bound to give very large broker dependency unless measures are taken to normalize the volume indicator, something which also does not completely guarantee that this problem will be eliminated (although it is bound to be reduced).

If you would like to learn more about what I have learned about automated trading and how you too can reach your long term profitability goals using automated trading systems please consider buying my ebook on automated trading or joining Asirikuy to receive all ebook purchase benefits, weekly updates, check the live accounts I am running with several expert advisors and get in the road towards long term success in the forex market using automated trading systems. I hope you enjoyed the article !