A few days ago a visitor left a message on the website's chat telling me to redo my review of the DNAFx Trading system in virtue of its new back/live testing evidence which, according to the person who sent the message, is enough to consider changing my past opinion about this trading system. On today's post I am going to do a second review of the DNAFx trading expert advisor in virtue of its new trading evidence which I consider does grant it the possibility to change my previous opinion. Within the following paragraphs you will learn more about my views regarding the new evidence for this trading system as well as if the evidence presented is enough to consider the trading system worth buying and testing. I will also give my opinion about the system's like hood of long term profitability and the reliability of the evidence presented.
Within my previous review of this trading system I had said it was not worth buying or testing in virtue of the complete lack of live trading evidence and the unreliability and unverifiable character of the back testing evidence shown. Now, I have to say that the people behind DNAFx trading have done a good effort and have presented us with a live account linked to a myfxbook widget (showing third party investor access verification) for their expert advisor showing almost 5 months of live testing data. This period of live testing reveals that the trading mechanism of the expert advisor is what they describe with several very profitable trades (which seem to be breakout trades) and a larger yet much smaller number of loses which are typical of breakout systems between profitable periods.
Regarding the system's trading tactic I would have to say that from the live testing statement, the technique used seems to be sound and to follow the two of the most important premises of trading "let your profits run" and "the trend is your friend". The introduction of third party verified live tests which are updated frequently is a true compromise with their own trading system, definitely showing that they want to prove their system's capabilities fully.
However, the system's current profit of +50% with a draw down near 10% does show that the draw down/profit targets deducted from backtests are not accurate possibly due to the fact that backtests are run within the 15 minute timeframe a very inaccurate time frame to run backtests due to the small number of reference points when compared with larger time frames. As a matter of fact, the largest true modeling quality achievable with this timeframe is more around 60-70%. Of course, these problems can be made even worse depending on the trading strategy used reason why the profits seen in backtests are very overestimated, something which is obvious when you consider an 11000% profit with a mere 18% draw down.
I would say that the only thing that the people at DNAFX trading are missing to make a full evaluation of their system is back/live testing consistency analysis, that is, they need to provide a backtest of their live trading period to show if trades match and if simulations provide realistic expectations. Please understand that I am only interested in systems which are able to show the HIGHEST like hood of being profitable for the next 10-20 years and for this robustness through several market conditions MUST be proven, the only way to do this (besides 10 years of live testing) is with 10 year backtests coupled with back/live testing consistency analysis. If this information is not given then the likehood of long term profitability remains low.
Up until now, the people at DNAFX trading have been able to show that their system a) uses the trading tactic they say and b) has been profitable for the past 5 months. However they still lack a validation of their backtesting results meaning that there is actually no way in which we can currently evaluate if the system is able to adapt and survive changes in market conditions. The only thing missing is a backtest of the past 5 months so that live/back testing consistency can be evaluated. If backtesting consistency with live tests is not present, which I suspect would be the case due to the profit/risk figures of the backtest, use of 15 minute time frame, etc, then a live test of a few years would be needed to show the systems adaptability. If back/live testing consistency is present, then this system would have enough evidence to be considered worth buying and testing.
I would have to say that this system still does not satisfy my criteria for long term profitability in the sense that there is no backtest we can compare with live trading (tests within the same period). However these people are very close to providing all evidence necessary to consider the system to have high like hood of long term profitability. Please understand that there is a high responsability for me in recommending any trading system and I cannot recommend in good conscious a system which, even though showing live trading results, does not show conclusive evidence about the validity of the backtests and therefore the possibilities of the system to be long term profitable. (Remember that I am looking for LONG term profitable system, not systems that can merely provide proof of a 6 month testing period)
If anyone from DNAFx Trading is reading this, please provide a backtest of the same period as the live tests so that I can do a live/back testing consistency analysis and evaluate if the system does or does not provide evidence of LONG term profitability. Since this system is only missing this small (but absolutey VITAL) piece of evidence I will email the creators so that they can email me the tests or post them on their website. Meanwhile, I would have to say that I do not consider this system worth buying or testing until this evidence is provided due to the fact that the validity of the backtests (which allow us to evaluate LONG term performance) is missing.
If you would like to learn more about automated trading and how you too can design and trade your own long term profitable systems based in 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 !
Within my previous review of this trading system I had said it was not worth buying or testing in virtue of the complete lack of live trading evidence and the unreliability and unverifiable character of the back testing evidence shown. Now, I have to say that the people behind DNAFx trading have done a good effort and have presented us with a live account linked to a myfxbook widget (showing third party investor access verification) for their expert advisor showing almost 5 months of live testing data. This period of live testing reveals that the trading mechanism of the expert advisor is what they describe with several very profitable trades (which seem to be breakout trades) and a larger yet much smaller number of loses which are typical of breakout systems between profitable periods.
Regarding the system's trading tactic I would have to say that from the live testing statement, the technique used seems to be sound and to follow the two of the most important premises of trading "let your profits run" and "the trend is your friend". The introduction of third party verified live tests which are updated frequently is a true compromise with their own trading system, definitely showing that they want to prove their system's capabilities fully.
However, the system's current profit of +50% with a draw down near 10% does show that the draw down/profit targets deducted from backtests are not accurate possibly due to the fact that backtests are run within the 15 minute timeframe a very inaccurate time frame to run backtests due to the small number of reference points when compared with larger time frames. As a matter of fact, the largest true modeling quality achievable with this timeframe is more around 60-70%. Of course, these problems can be made even worse depending on the trading strategy used reason why the profits seen in backtests are very overestimated, something which is obvious when you consider an 11000% profit with a mere 18% draw down.
I would say that the only thing that the people at DNAFX trading are missing to make a full evaluation of their system is back/live testing consistency analysis, that is, they need to provide a backtest of their live trading period to show if trades match and if simulations provide realistic expectations. Please understand that I am only interested in systems which are able to show the HIGHEST like hood of being profitable for the next 10-20 years and for this robustness through several market conditions MUST be proven, the only way to do this (besides 10 years of live testing) is with 10 year backtests coupled with back/live testing consistency analysis. If this information is not given then the likehood of long term profitability remains low.
Up until now, the people at DNAFX trading have been able to show that their system a) uses the trading tactic they say and b) has been profitable for the past 5 months. However they still lack a validation of their backtesting results meaning that there is actually no way in which we can currently evaluate if the system is able to adapt and survive changes in market conditions. The only thing missing is a backtest of the past 5 months so that live/back testing consistency can be evaluated. If backtesting consistency with live tests is not present, which I suspect would be the case due to the profit/risk figures of the backtest, use of 15 minute time frame, etc, then a live test of a few years would be needed to show the systems adaptability. If back/live testing consistency is present, then this system would have enough evidence to be considered worth buying and testing.
I would have to say that this system still does not satisfy my criteria for long term profitability in the sense that there is no backtest we can compare with live trading (tests within the same period). However these people are very close to providing all evidence necessary to consider the system to have high like hood of long term profitability. Please understand that there is a high responsability for me in recommending any trading system and I cannot recommend in good conscious a system which, even though showing live trading results, does not show conclusive evidence about the validity of the backtests and therefore the possibilities of the system to be long term profitable. (Remember that I am looking for LONG term profitable system, not systems that can merely provide proof of a 6 month testing period)
If anyone from DNAFx Trading is reading this, please provide a backtest of the same period as the live tests so that I can do a live/back testing consistency analysis and evaluate if the system does or does not provide evidence of LONG term profitability. Since this system is only missing this small (but absolutey VITAL) piece of evidence I will email the creators so that they can email me the tests or post them on their website. Meanwhile, I would have to say that I do not consider this system worth buying or testing until this evidence is provided due to the fact that the validity of the backtests (which allow us to evaluate LONG term performance) is missing.
If you would like to learn more about automated trading and how you too can design and trade your own long term profitable systems based in 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 !
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Here is a copy of the email I just sent to the people at DNAFxtrading :
Hello DNAFxtrading support,
My name is Daniel Fernandez and I am an expert advisor reviewer. I wrote a review about your trading system several months ago and now I have rewritten my review to take into account your new evidence of live third-party verified tests (http://fxreviews.blogspot.com/2010/04/forex-expert-advisors-dnafx-trading.html), however I am still unable to validate your backtests due to the fact that there are no backtesting results which match your live testing period. The objective of this email is to request you send me (or better yet, post on your website) a backtest of the same live testing period so that the presence or absence of live/back testing consistency and therefore the likehood of your system's long term profitability can be established. I also wanted to inform you that your live test stopped updating on April 4th so you might want to check that out (sometimes mt4 publisher freezes for some reason). Thank you very much in advance for the information and reply,
Best Regards,
Daniel Fernandez
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