The Simple Daily System : Profitable or Deadly Trap ?

Recently several people have asked me about the simple daily system and the testing that has been going on with this expert advisor. As you may know, the simple daily system has been tested for almost 10 months now and has, up until now, made a profit of more than 100% on the EUR/USD on a demo account. Now, most people believe this amount of information would be enough to call the simple daily system profitable and start testing it on live accounts but I have a different opinion.

During the past two years of testing, evaluating, reviewing and programming expert advisors, I have developed a whole new evaluation and testing concept which really puts back and forward testing into perspective and shows you what a profitable trading system really performs like. Most people intuitively overestimate the potential of back, forward and live testing to evaluate a trading strategy and in doing so most of them end up wiping their accounts with strategies like the simple daily system.

While I was writing the latest version of my automated trading ebook, I decided that I needed to come up with a criteria to evaluate which strategy was profitable and which one was not, a criteria that would easily discard unprofitable strategies and leave only the long term, reliable trading strategies. In doing so, I totally reevaluated the simple daily system trading strategy. I finally was able to condense all the requirements a profitable trading system should fulfill into a checklist and I saw if the simple daily system could fit into it. The fact is that the system failed some key points on the list.

Why is the simple daily system NOT long term profitable even if there is almost a year long forward test that is in fact very profitable ? Well, the thing is that the simple daily system is the kind of system that can perform extremely well for even a year or two, then wipe your account. you can see this when you take a look at the logic and backtest the system from 1999 (bear in mind that forward testing has shown us that this expert trades almost the same in forward and backtesting). When you backtest the system you get about 7 account wipeouts using the same risk parameters as those used on the forward testing trading account. That said, if you started to test the expert at the right time, you could get even a 200% profit.

This type of systems are deadly traps ! There are many EA sellers out there who will take the system, live test it for a few months, even a year, and get incredible results. Then they get an account wipeout so they just restart the process. Interesting ! This means that you can get systems that perform very good in live testing that will wipe your account ? Yes ! This is all a consequence of market exposure and the experts logic which is inherentely flawd. So yes, the simple daily system is a deadly trap, not a profitable system and should not be traded on any live accounts unless you realize that you are taking an astronomical risk with it.

If you would like to learn more how I evaluate expert advisors and how you can design and trade with long term profitable trading systems please consider buying my ebook on automated trading or subscribing to my weekly newsletter to receive updates and check the live and demo accounts I am running with several expert advisors. I hope you enjoyed this article !

The Simple Daily System (Likely Profitable) Forex Free Expert Advisor

Three months ago, I wrote a post about the Simple Daily System expert advisor. This free system was doing very good at that time proving to be a profitable and reliable trading system. Now, after four months of forward testing, there are several things I would like to share with you about this free automated trading system.

The SDS ea went smoothly through the rangy period at the end of 2008 and gracefully entered 2009 with profits above 50%. After four months of forward testing, the expert currently stands at a very profitable more than 70% capital increase with a low maximum draw down. (Below the forward testing equity graph of this expert from November 2008 to February 2009)
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The simple daily system is a clear example of a high quality expert advisor that can be traded for free. It is excellent at following and capturing profits from daily trends (captured more than 1000 pips on an uptrend at the end of 2008). and staying on the sidelines on ranging markets. Needless to say, the simple daily system now qualifies as a likely profitable expert advisor for me and will be considered profitable after it succeeds at 6 months of live trading with profitable results. A live account will be tested from the first week of March.

If you would like to learn more about the Simple Daily System's results and settings please consider buying my ebook on automated trading or subscribing to my weekly newsletter to receive updates and check the live and demo accounts I am running with several expert advisors. I hope you enjoyed the article !

The SDS or Simple Daily System, A Free Worth Testing Expert Advisor

Readers of my newsletter have known about this trading system for a little bit more than a month. The SDS or Simple Daily System was created conjunctively at forex-tsd.com . I, in particular, have been using a version of this ea programmed by a person whose online alias is Derek.

The expert advisor is programmed to follow long term trends based in part on the PSAR market indicator. What I like a lot about this expert advisor is the fact that it uses a money management technique referred to as D'Alembert money management. This tecnique simply increases lot sizes linearly with loses in order to ensure faster equity recoveries. It is ideal for expert advisors that rarely suffer from large streaks of consecutive loses but are likely to have several win, loss, win, loss sequences and several profitable trades.

Almost every expert advisor may be extremely improved by additions of proper money management and this is a great example of this. Without this system, the SDS ea would be a practical loser since it's winning trades do not overcome it's loses by great numbers and even sometimes fall behind as per backtesting. However, introduction of this money management greatly increases the odds of this expert making substantial profits.

You should also take into account that people at forex-tsd.com often overtrade their systems. Most of them have tested this expert on several currency pairs at the same time when this is a sure way of losing with this system as you risk about 25% equity draw down for each 5% of consistent monthly profit you want to make.

I have forward tested this expert (EUR/USD daily) for the past month and up until now, it has fulfilled my expectations. The current rangy EUR/USD market is sure to let us know whether this expert will or will not be considered likely profitable. If you want to take a look at the trading statements or learn more about this and other free and commercial expert advisors I have reviewed please consider buying my ebook on automated trading or subscribing to my weekly newsletter to receive updates and check the live and demo accounts I am running with several expert advisors. I hope you enjoyed the article !