Wednesday, April 28, 2010

Forex Expert Advisors : Forex Pip Stack, an Unbiased Review

Today I will write a review about on of the most recently released trading systems available online. This trading system called Forex Pip Stack promises to deliver amazing results in virtue of the use of several different trading techniques including hedging, swing trading and scalp trading. Through the following paragraphs I will discuss the evidence of profitability available within the expert's webpage, comparing it with the claims made by the authors. I will also analyze this evidence in depth and provide you with reasons why this evidence is or is not reliable and why the expert has or doesn't have potential for long term profitability. Finally I will give you my honest and unbiased opinion of whether or not this trading system is worth buying and testing.

The forex pip stack website begins with claims made about the system being developped by a select group of "top traders". I tend to believe that this is simply not true due to the simple fact that the traders do not use their reputations to sell the products. I believe that this is a simple matter of common sense, if you were going to sell a product developed by you and you were a profitable trader without a doubt you would use your track record to try to sell your products more effectively or at least give your name so that people would trust your system development. This is one of the things I talked about a few weeks ago when I discussed the things EA sellers should improve, knowing the real name of the system's creator is vital to know if the person you are dealing with has any actual experience and expertise in forex trading.

However the most important thing is not the lies around which these sellers may base their story as this could be thought of as a simple marketing tactic but the actual evidence shown about the system's profitability. Sadly and not surprisingly the trading evidence provided by the creators of the Forex Pip Stack system is simply a bunch of backtesting results, some of them going back to 2000. However these backtesting results have several problems which become evident when you look at the profit figures achieved. What are these problems ? There seems to be an obvious exploitation of backtesting faults but we cannot pin-point them out correctly due to the fact that statements are not gives. Probably the problems arise from the use of a low time frame (which has a lower number of reference points and therefore a true modeling quality lower than 90%) and the use of very low TP values which may make the contribution of one minute interpolation errors very important. Certainly the backtesting equity curves are typical of systems that exploit such errors with very unrealistic profit targets and very limited draw downs.

Given the fact that we can also not discard hindsight or the use of other deceitful tactics in backtesting results, the actual confirmation of back/live testing consistency over an extended period of time also becomes of tremendous importance. The Forex Pip Stack website LACKS any live trading evidence with only a very recently started "forward test" which currently only has one trade. The fact that this forward test does not have investor access or third party verification through myfxbook further shows the unwillingness of the authors to provide reliable evidence of performance.

Certainly it could be said that we simply don't have any idea about the Forex Pip Stack's profitability, the backtests presented are with a very high likehood entirely unreliable and there is a complete absence of any actual investor-access verified live or forward testing record that shows us whether or not the system is able to match its live to its backtesting performance. For all these reasons I consider the Forex Pip Stack expert advisor NOT worth buying or testing. Of course, I would absolutely rewrite this review if the author presents at least a 6 month live test (investor access verified) with 50-100 trades with a direct comparison with backtest of that same period. Why do I feel this won't happen ?

If you would like to learn more about automated trading and how you too can develop your own systems based on a true knowledge and understanding of 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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