Forex Expert Advisors Forex Supremacy an unbiased review

I have to say that I definitely enjoy the fact that several people have taken the time to email me or leave messages on the chat about new commercial systems they have come across which they want me to review. I am absolutely flattered about my opinion being so valued and taken into account. Now, of course, in order to satisfy the demands of my readers I have decided to write a review about a system somebody asked me to review recently called Forex Supremacy.

Of course, I always start every review with a clean slate and no preconceptions about a system so that I can evaluate them as unbiased and independently as possible. The Forex Supremacy Automated trading system is no different than most other experts out there website wise with the same marketing scheme we have become so accostumed to. The website uses the "personal story approach" which sets the creator of the system at a bad time, in a situation similar to many potential buyers, time in which he "sees the light" and decides to create his automated trading system. Now, of course, he wants to share this system from us to "help us" in the world of forex automated trading.

I mean, I have nothing against websites doing marketing and telling stories, for me this is perfectly fine. What I simply cannot stand is the absence of evidence to support wild claims. For example, the forex supremacy website claims " My Automatic System WILL Grow Your Trading Account By 23.70% EVERY Single Week". There is abslutely no proof on the website that leads one to believe that the system has such a capability, there are no forward or live testing statements of a significant period of time (one or two years) which can effectively show how the expert trades, the risk level taken, etc.

I have to say that this people are very bold to throw all these figures at us without any proof. I mean, what are all those charts about ? Sure, I know that showing sample trades is a way to show the way a system works and how it can or cannot be profitable but without trading statements that go with them they just dont mean a thing. What can you possibly infere from a few charts ? Absolutely nothing significative, evenmore, the charts could just be made up placing a few arrows and lines. Where are the real trades ? Where are the statements ? If your system can produce 23% or so every week, why dont you show us 5 months of this happening ?

Well my friends, the truth is pretty obvious here. There is no evidence because this system is probably just a trading system with an exceedingly high market exposure that risks a lot of money, that is unable to profit consistently and that is just being sold to you at the expense of your lack of education on the matter. If I am wrong (which I wish I was) the creator would be glad to provide us with live trading statements with investor access that we can use to check his performance and see that his system does perform the way he says.

Until then, this system is of course NOT worth buying and again, this people are really bold faced to try to sell things which they probably know can have serious consequences on peoples finances. I mean, I guess they only sleep at night because they sleep on a pile of money.

If you would like to learn more about how to truly trade long term profitable trading systems and how to evaluate systems so that you dont fall into any experst which are NOT going to work 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 !

How we Have Been Fooled An Evaluation of Traditional Indicator Setups

One of the first things you learn when you go into the field of technical analysis is that there are a series of well-defined setups that were used by the fathers of the field to extract profits from the financial markets. It is very hard not to ask if there is really any merit to any of these methods - usually developed around stocks - in forex trading. I had always wondered if there was actually any real profit potential behind the old advice "buy when the RSI is below 30 and sell when it is above 70" or similar indicator based suggestions. On todays post I will talk to you about the potential of entries based on the "standard" traditional indicator setups and if we can really develop profitable systems based on this kind of trading. You will see that traditional indicator rules do not work very well in forex trading and that a deep mathematical understanding of the indicators is necessary to design setups that really work.

I bet you have also wondered if you gain any statistically meaningful advantage by following the textbook advice regarding indicator usage. I certainly believed when I started trading that the traditional indicator setups were the key to achieve profitability. I traded for a few months by using the Stochastic oscillator exactly as the traditional rules indicate (buy when below 20, sell when above 80) but I failed to use this technique successfully for many reasons. The first and most important is that entries do not determine a systems profitability, merely its potential and - not surprisingly - the money management I was using (lot sizing plus exit criteria) did not make up a long term profitable system.

Many years after this happened I continue to wonder, is there any merit to these traditional indicator entries ? Given that now I have the tools to evaluate the mathematical expectancy (please read this article to learn more about my definition and use of mathematical expectancy on entries) of these entries and therefore their potential for the development of a long term profitable system, I decided to do this analysis with 10 traditional indicators and their usual setups. The results confirmed what I had suspected for a long time, there is no merit to traditional indicator setups in forex trading, at least on the forex majors (which are the pairs I evaluated).

Evaluating the mathematical expectancy over 10 to 100 periods on the one hour to daily charts (to get accurate results) showed that these entries have a negative mathematical expectancy, pointing out that there is no merit in the development of long term profitable systems following these trading tactics. The mathematical expectancy increases as you reach higher time frames but almost no indicators have any positive results whatsoever. Perhaps the only one that reaches positive results on some time frames and periods is the Stochastic Oscillator but the positive edge is minimal and overall it would prove to be terribly hard to develop a long term profitable system based on the "traditional use" of this indicator.

In the end I believe this is the exact reason why people always explain how to use these indicators without ever giving you any guidance about the potential of these entries in concrete terms. It turns out that the traditional setups of these indicators do not work very well and therefore anyone building entries based on these traditional notions is bound to end up with - in the best case - a long term profitable system with extremely poor qualities.

It should be clear however that this does not mean that these indicators are useless since through adequate interpretation of the calculations done over price it is possible to design trading strategies that uses them in an effective and powerful fashion (as Watukushay FE so clearly shows). What I am trying to say here is that the development of profitable systems in forex trading using the "traditional trading setups" for most indicators is likely to fail since the potential of these entries - evaluated through their mathematical expectancy - is negative.

So next time you read a textbook telling you that the RSI, Stochastic Oscillator or MACD is used in A or B way, think twice before you start trading or even designing a system based on this knowledge. Mathematical expectancy analysis of entries as well as a true understanding of the underlying calculations made by the indicators are vital to design and trade effective strategies. During the next few weeks I will make up a video on Asirikuy showing all these analysis and how some simple modifications based on sound analysis can dramatically affect the mathematical expectancy of a given entry logic.

If you would like to learn more about automated trading and how you too can design systems with realistic profit and draw down 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 !

Ebook Update Instructions

If you have purchased my automated trading ebook before and would now like to update to the latest version please follow these instructions :

• Open the original pdf of the ebook and go to the last page. Take note of the first 4 words of the third line of the last paragraph and write them down (without spaces between them and all in low caps) this will be your login password to update.
  
• Download the Filezilla free FTP client (filezilla-project.org)
• Please fill the dialogues on the top of the screen with the following information : Host : fxreviews.exavault.com, Username : ebook, Password : (the password you wrote down before goes here) and Port : 21.
• The program should now open a connection to the ftp and the ebook compressed zip file should appear in the right hand side browser
• Drag and drop the ebook to whatever directory you want on your computer (which is shown on the file browser at the left side of your screen)

Hopefully you will be able to download the ebook. Please make sure you try at least 5 times during a 5 hour span to make sure you can connect (settings the ftp connection mode to active on filezilla may also help if you experience any problems). If you still cannot get the ebook please send me an email and Ill send it to you using yousendit.com. Again, I would like to thank you all very much for all your purchases and your trust ! I hope this ebook is even more useful and filled with information than the first !

Is Your Money Safe Think Again The GallantFX Hacked Case

One of the most important things in forex trading is the safety of our deposits and the trust we have in our broker. We tend to believe that all brokers have very tight security measures that will protect our capital from being stolen or our trading affected but most of us dont really have any idea about the security measures taken by our broker or if these measures are enough to protect our deposits and trading information from hackers out there. This problem becomes bigger when people start to use very lightly regulated brokers that trade outside US-UK regulation that often do not comply with the minimal security precautions needed to avoid a very bad event taking place. Today I want to talk to you about such a case in which the GallantFX broker was hacked and its internal information exposed to an unauthorized third party. I want to show you what happened, what was at risk and what is now at risk for the people using this broker. My objective with this post is to warn you about the need for a good broker with a good trusted security system and how it can affect you if you fail to do so.

What happened with Gallant FX ? On May 30/2010 several people on the internet posted images and messages pertaining to the fact that they were observing the picture showed below within their Virtual Private Servers and the GallantFX main website (both gallantfx and gallatnvps.com domains got hacked). The websites and VPS browser requests read "hacked by Aseroh" and later displayed the admin entry login screen of the Joomla control panel. Some users confirmed that they could access the content manager by using the default administrator username and password something that exposed the websites html content to manipulation by anyone. I checked this myself that day and found it to be true.
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I have to tell you that I was shocked when I read about this on several websites. It was the first time ever that I had seen a forex broker fall prey to the attack of what appears to be a hacker who targets Joomla exploits. The hacker made it clear on the VPS that he had gained root access to the servers, meaning that he could manipulate anything he wanted within the network. However people noticed that their accounts were intact as well as their VPS contents. So no harm done right ? Wrong ! The fact that this broker was exposed to this hacking means that it was vulnerable to the implantation of third party applications that could be used for a WIDE variety of things. From logging trading activity to wiping all accounts during a certain date to whatever other creative evil use you want it to have.

The fact is that this breach of security exposed all the contents of peoples VPS severs and by extension, their trading platform passwords, expert advisors, etc. Nobody knows if there is not a guy out there with thousands of forex account passwords waiting to use them in a single day or if there is a secret bot within GallantFX right now waiting for that little event that will trigger a very nasty destructive frency. The fact is : Who knows. For this reason I consider right now that everyone running on this broker should definitely change to a different broker, merely because of the security breach they had which is simply unacceptable for any company dealing with sensitive financial data.

This event makes us reflect upon the importance of our brokers security and the fact that brokers should use non-standard solutions for content management instead of a free widely used and well-known content management system like joomla. Not because Joomla is bad but because it is under constant study by hackers world-wide and vulnerabilities are easily exploited by a wide sector of this community. Using a third party propietary solution is a good line of defense since hacker attacks would take considerably more study due to the custom character of the solution used.

What this shows is that low budget brokers have low budget solutions to their content management, web hosting and probably VPS offerings so I would advice you to think twice before using a broker that you consider extremely new or not very well known. Using brokers that have a good reputation and adequate regulation that forces them to comply with some basic internet security standards should be a basic thing we should look for. All NFA and UK regulated brokers have to abide by these standards while some brokers like FXDD (malta) comply with these regulations on their own accord, outside NFA ruling. Whatever the case, I advice you to research your brokers security so that you can rest assured that an event like the one happening at GallantFX will be extremely unlikely.

If you would like to read more about automated trading and how you too can create likely long term profitable 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 !

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 authors claims. I will also analyze the trading systems 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 ? Well 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 doesnt 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 Mutant an Unbiased Review

As a suggestion from a newsletter subscriber today I will dedicate this post to the review of an automated trading system called Forex Mutant. This is a forex expert advisor which says it is able to turn 5000 into more than 60,000 USD "quickly". Todays review will focus on the analysis of the evidence provided on the website against the claims made by the author in order to know if such exceedingly bold claims have any backup or if they are just "made up" based on unsubstantial evidence. After revieweing the evidence and doing an analysis of the website and the system I will give my opinion about the experts likehood for long term profitability and also if it is or it is not worth buying and testing.

As I just said on the first paragrah, the claims made by the forex mutant expert advisor are very bold. Making more than 600% is something very difficult to achieve. It is also particularly misleading that they give no actual reference to the timeframe in which this may be done. It is clear that a system traded with an extremely high risk my be able to multiply capital by several times before wiping an account in a few days or weeks while a long term profitable system may achieve a 600% profit in the long term (10 or 20 years) without ever wiping or coming close to wiping the trading account. What type of system is the forex mutant then ? What claims and evidence is there to backup this higher than 600% profit ? in what time frame is this achieved ?

It is simply ridiculuos how naive these EA sellers think their customers are. The forex mutant system has absolutely no real evidence to backup their claims of a 600% profit, what seems to be their support is nothing more than a "cut" off a backtesting strategy report which we dont even get to see. What is the risk to reward ratio ? What period of time did the backtest take into account ? Does the EA behave the same in live testing and in simulation ? These are all questions which we are unable to achieve due to the fact that there is simply no evidence we can use. There are no live tests we can compare to backtests. In fact, as I just said there is not even a backtesting statement.

The things the authors of this EA call "evidence" are just NOT. A bunch of graphs I can make in metatrader in a few minutes plus some images from a few trades taken which could also easily be made up in excel or taken from a series of random profitable trades is NOT evidence. What is evidence ? A 10 year backtest with a 6 month live test to which we have the investor password or the investor access verified by a third party (like in the case of myfxbook accounts which have this option). The forex mutant is nothing more than another sales pitch of a trading system for which there is absolutely no reliable evidence of profitability. Anyone who has had any experience in forex and who is looking for a profitable system with reliable evidence to prove so will be terribly dissappointed by forex mutant. Of course, the total lack of evidence makes the evaluation of long term profitability impossible, but the fact that all this evidence is missing points to the fact that it is simply absent altogether. As always, if the EA sellers places 10 year long backtesting statements with live results posted and verified by a third party like myfxbook. I will be glad to redo this review.

In the meantime, the overwhelming lack of evidence makes the claims made by the authors of forex mutant totally unsubstantiated and the trading system NOT worth buying or testing.
If you would like to learn more about long term profitable systems which can give reliable results in the long term and how you too can design and program them 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 !

Forex Expert Advisor Programming Knowledge Course

Throughout the whole time I have worked on forex expert advisors. I have seen that most of the traders that want to be successful with automated trading systems have no knowledge whatsoever about expert advisors, expert advisors programming and what and what cannot succeed in the world of forex automated trading. I believe that in order to be truly successful in automated trading one must not only know a lot about forex trading but one must also know a lot about how automated systems work, what indicators do, what they mean, what they represent and what the limitations and advantages of different trading strategies are.

With this in mind, I have decided to start a personalized course which seeks to teach any individual willing to truly learn the ins and outs of automated trading many of the things I know about manual and automated trading systems. The course is suite to different types of traders (since I design it individually) from beginning traders who want to learn about the market and automated trading systemss to advanced manual traders who wish to automate their current trading strategies themselves. The course may cover any of the following topics, as requested by the person who wants to take the class.(these are all I can think of right now but make sure you leave a comment if you would like to know if I can teach any other content)

- Introduction to forex trading and the forex market
- Mathematical base and meaning of different indicators
- Manual profitable trading systems
- Money management strategies (what works and what does not,)
- Automated system characteristics
- Profitable automated trading strategies
- Manual vs Automated trading, what can and what cannot be translated
- Programming automated trading systems (mql4)
- Debugging and optimizing an expert advisor
- Back testing vs Demo vs Live testing an expert advisor

The course will be given in 10 hours (programmed as per the individuals request) and has a cost of 200 USD payed via paypal or wire transfer (this is extremely cheap when compared with most seminars which arent even individual). The course will take place on Sundays or Tuesdays (2 hours per week for 5 weeks) and will be given via skype. Since this takes up my time and the course is indiviual, I will only be able to take a few people each month. If you are interested please send me an email to ekans_@hotmail.com . Please include your available hours on Sunday and Tuesday, local time and current level of experience in the forex market and what you will be expecting from the class. I will then answer your email and send you an invoice so that you can issue your payment and start the automated trading class. Thank you very much for your attention !

New CFTC Rules What They Mean and What They Try to Achieve

During the past few days one of the most important news in the forex market has been the introduction of some new regulations by the CFTC which will become effective before November the first. These new regulations include a lot of modifications to the way in which forex trading is currently done, particularly regarding leverage and broker regulations. On the next few paragraphs I will discuss with you what these new rules mean, the restrictions they pose on US traders and the potential effect they may have in the short and longer term for people trading from US territory.

So what is the CFTC ? The Commodity Futures Trading Commission is an agency which is responsible for the regulation of certain trading bodies within the US. The CFTC deals with the regulation of all non-bank foreign exchange trading entities, something which includes non-bank forex brokers such as FXCM, Forex.com and IBFX. The CFTC had been thinking about restructuring regulations pertaining to these forex brokers for the past year, particularly because they considered the market to be extremely dangerous for retail traders as a very large number of them lose their investment, something which is evidently detrimental for the community in general. The CFTC was also worried about broker funding requirements and other such rules that were just too "loose" and showed a lack of protection for the safety of traders capital.

Regarding brokers and the protection of retail traders, the CFTC decided to reduce leverage from the previous 1:100 level to a maximum level of 1:50 for majors and 1:20 for minors. This means that if you previously needed only 10 USD to open a 0.01 lot position now you will need 20 USD. Personally I believe that this level is sound and allows most people who use scalping or such other "fast positioning" trading techniques to remain profitable while it also protects new traders from taking extremely large positions and wiping their accounts. From my personal perspective this change in leverage is not that important as my systems can work with levels of leverage as low as 1:5 without having to increase capital requirements. This is due to the fact that small amounts of equity are risked over large movements so small lot sizes are always used.

Many people think this change in leverage is unfair and that it is unjustified as the government has "no business" in controlling how people wish to invest their money or how they handle those investments. The truth however is that when so many "little guys" are losing their money in a manner that is easily preventable it makes sense to change this so that these guys are protected more. Certainly the government does not try here to "protect people from their stupidity" but they just act according to the facts. If 90% of the cars on the street caused people serious injury the government would certainly do something about it, this is also true about forex trading.

There are also some other provisions of the CFTC rules that are good and some others that should cause warning to traders -especially US traders - who trade strategies that require these high levels of leverage or the use of other non-compliant features (such as hedging or lack of FIFO). The CFTC has increased the minimum necessary capital for brokers to start at 10 million dollars (a sound decision) but it has also left an ambiguous road related to whether or not US traders can open accounts in off-shore brokers. If you take the regulations literally - which is the only way to take them I guess - then US traders will not be able to open up accounts with brokers anywhere else except on US soil since the government only considers CFTC regulated brokers legal for US citizens from now on.

This means that if you are currently living in the US you will probably be restricted in the future to trade only on brokers that have no hedging, obey the FIFO rule and are restricted to a 1:50 leverage. This does not mean that profiting will become impossible, since certainly there are many strategies that can be successful using these rules but it will certainly mean that many traders who rely on strategies that do not obey these rules will have some trouble finding a way in which to get their profit. Traders using off-shore brokers (which would probably be the less-ideal brokers since the larger ones will probably stop receiving US citizens due to these regulations) will probably face account freezing and civil prosecution if they reach certain transaction volumes or if the rules are enforced very strongly.

To people trading Asirikuy systems or Watukushay FE, there is no need to worry, as I said before the systems currently trade with very small lot size relative to account size and for this reason they are safe to use under these new CFTC regulations. I personally believe that current CFTC regulations do have the larger amount of new retail traders in mind and that the people who will benefit from these changes are much larger than those that will be unable to profit or those who will lose their ability to live from trading. In the end - although these regulations may make trading harder for some - it is very achievable to profit under these rules (and probably mush harsher ones) using longer term systems as the ones we trade at Asirikuy.

Do you have any opinion about the new regulations ? How do they affect your trading ? Would you be concerned if you lost your ability to trade on non-NFA brokers ? Please leave a comment with your opinion so that we can further discuss this very important matter :o)

If you would like to learn more about mechanical trading and how you too can use likely long term profitable systems that need low leverage please consider joining Asirikuy.com, a website filled with educational videos, trading systems, development and a sound, honest and transparent approach automated trading in general . I hope you enjoyed this article ! :o)

Technical Analysis and Its Applications

Many people think that only traders apply technical analysis in trading and long term investors apply more on fundamental analysis. In this article I will go into the details of the application of technical analysis and show you how it can benefit not only the traders but also long term investors.

Firstly, I would like to clarify that technical analysis can be used for short term, medium term and long term analysis and not short term only. For example, with the help of moving averages we can tell whether the security is gaining a support in the short term, medium term or long term.

For short term analysis, we may use 5 days, 10 days or 20 days moving averages on the chart. If price is above these short term averages, we can say that the security is short term bullish. On the other hand, we may also use 200 day moving average for a longer term analysis. If the securitys price is above the 200 day moving average, it is considered long term bullish; If below the 200 day moving average, it would be long term bearish, and we may advice the long term investors to sell their holdings in their portfolio.

Top Down Approach

We may also use technical analysis the way we use fundamental analysis in a top down manner. First we analyse the chart of the market index (such as KLCI) to get the overall view of the market. Then we analyse the sector index such as plantation sector index, finance sector index, and conduct comparative analysis between the company and the sector index or the KLCI index. After we get the overall view of the market and the sector, we can then analyse individual stock, their support and resistance, momentum and the trendline analysis.

Leading Indicator

According to John Murphy, Technical analysis serve as a leading indicator for the economic and business condition in the market. Charles Dow also shared the same view whereby the original intention of his Dow theory was to forecast the business activity at his time.

Technical analysis is built on the assumption that "history repeats itself", by knowing the pattern of the historical data, we can forecast into the future price trend. For people who are familiar with cycle analysis and planetary cycles, you will know that these knowledge will help you forecast years ahead which is extremely useful to any long term investors.

Assist in Price Entry and Exit

Technical analysis is a very useful tool for timing the entry and exit of the market. For example, in a trending market, we may use a simple moving average to help us or to give us signal to buy and sell securities. In a horizontal or sideways market, we may use a stochastic or RSI for the timing of entry and exit. How to execute these trades I will discuss later in my Youtube videos. 

Support and Resistance

Using trendlines and moving averages we can determine the support and resistance zones for a particular security. The support and resistance levels are important in setting your stop loss. Not only traders need stop loss, long term investors are advice to use stop loss too such as the 200 day moving average is generally used for the stop loss for a long term investor.

Momentum

There are many momentum indicators that we can apply from any charting software to give you an idea whether a particular security is still trending, and if it does, how bullish is it? Is it overbullish that it is about to reverse soon? All these information can be answered by studying the momentum indicators like the stochastic and the RSI, or some even more sophisticated momentum indicator like the Average Directional Index (ADX). However, momentum indicators are more for short term application rather than long term.

Finally, I would like to share with you one little story about the Great Depression. In 1929, Irving Fisher, the greatest economist at that time proclaimed that the stock market was in a "permanently plateu". Days later the Dow Jones Industrial Average (DJIA) plunged drastically. Over a period of three years, DJIA fell from 381 points to a low of 41 points in 1932.

This is because during the peak of the economic activity, we see all the rosy pictures and data, based on the rosy data, analysts kept raising target prices for stocks. However, in technical analysis perspective, the market was due for a correction as it was way overbought prior to the crash. In other words, we can say that the stock market reflects the economic condition months ahead, if we can use technical analysis to forecast the stock market, we can really predict the economic condition in the market.

Forex Expert Advisors Forex Phantom an unbiased Review

I have to say that I have actually been looking forward to writting this post for a while. Today I will focus on the review of the Forex Phantom expert advisor which has some very special claims we will evaluate about the evidence provided by the experts creators. I believe this expert is special because it clearly states "no more BS, no more hype, no more fake screen names or actors, fully legal & legit", of course, as soon as I see a statement like this I want to look more into the expert to see if it can truly live up to such wonderful claims.

It turns out to be however, that this expert just does not. For starters, the forex phantom creators just give us a relatively short backtest as trading evidence. They backup their claims about pulling six figures from the market by just showing us that on a simulatiob ? Hey ! Please, do not confuse facts and fiction, you have never pulled six figures from the market ! That just happened in a simulation, NOT in real life. So here it is, the BS, just in fron of our faces. I though this was supposed to be a non BS site ? Well, guess what ? Forex phantom is as full of it as many other experts out there and I find it really amazing that they even have the balls to say they are not. If you say you an pull six figures from the market in such a short time why arent you showing us some live testings showing how good your backtests correlate with your live tests ?

They are certainly not doing it because probably this two things have nothing to do with each other ! Of course, would you thing that a trading system would produce such incredibly large amounts of profit in such a short time ? Also, why is their backtesting information so limited ? Why isnt their a backtesting from at least 2000 if the system is really long term profitable ? Truth be told, the system probably wiped out account on the years before, showed incredible draw down levels or did not produce any profits at all, but well, I guess we will never know.

I wonder how this people can be so bold faced and say that their system is proven, no hype and no BS when that is probably all that their is on their webpage ? This system does not show any reliable proof to backup their claims, there are no backtests from 200 and no live tests t compare the backtests to to say if they are reliable or not. So guess what ? This system, in my opinion, is totally NOT worth buying and not even worth the calories it takes to use the mouse to scroll down the screen. Of course, I would be glad to change my whole review if evidence of long term backtests and live tests we can compare to backtests with investor access are given. Why do I have the feeling I will never get them ?

If you would like to learn more about why commercial automated trading systems do not work most of the time and what free long term profitable trading systems DO work and can make you a profit with realistic profit and draw down goals in the forex market 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 !

Neural Networks in Metatrader 4 using FANN

Through the past few years I have noticed that more and more people have become interested in the use of neural networks in the development of forex automated trading systems. Most people seem to believe, even if they dont fully understand them, that neural networks are the ultimate tool to profit from the market. My objective with this post is to describe the latest development in the implementation of neural networks in metatrader 4 as well as to give a description about what neural networks are and their inherent limitations.

Most people believe that neural networks give the computer a "brain" or a constantly updated "artificial intelligence" that will give any program a human like capability to trade and adapt to different market conditions. There is nothing further away from the truth. Although a neural network does try to simulate to a certain extent the way in which biological neural networks communicate, it does not work the same way. Neural networks are formed by a series of computer processes (neurons) that work in tandem to achieve a certain result. Usually, the "importance" or weight of each neurons process is changed via an optimization with a fitting set and then the neural network is set free in the true working environment.

In trading this can mean several things. For example, a neural network can be used to say if we should enter a trade long or short with a 50 pip stop loss and take profit based on price movements. A fitting set of X years is fed to the neural network which analyses all possible trades on different price movement conditions and determines which ones are the ones that generate profit. After this, we trade the neural network on the real market and it filters trades according to what it "learned". Note, that the learning and execution processes are totally separate so no true dynamic adaptation ever happens.

Neural networks, as a matter of fact, have not been very successful at forecasting prices since they tend to over optimize themselves to a given set of market conditions, therefore failing afterwards. However it has been found that neural networks are very good at filtering signals from classic trading systems so you could feed a neural network all the positions a strategy took for the past X years and the network could then filter unprofitable results in the future with some success. It is not artificial intelligence but rather a way of doing "intelligent optimization" of a trading system.

All these implementations had been quiet difficult to make in metatrader 4, previously needing a lot of external coding in the form of dlls. Quiet frequently, most of these efforts were limited to a few individuals with no access to other programmers who did not have a ready to go way to program and play with a neural network using the mt4 trading platform. Gladly, I found an article about the implementation of FANN (Fast Artificial Neural Network Library) on mt4. The article talks about the implementation of all the FANN functions and the porting of the functions into the mql4 environment. There is also an example included in which a MACD strategy is optimized using a neural network approach.

Without a doubt, this opens up a huge door for the use of an opensource neural network program in automated trading. I will for sure play a little bit with it and certainly try it for the optimization of certain trading strategies (Maybe we could reduce the draw down periods of some long term profitable strategies by using this type of approach ?). I do hope you read the above article which explains all the aspects of the FANN implementation as well as some ideas on how FANN can be used in automated trading.

If you would like to learn more about the long term profitable trading systems I use as well as how you too can design and program your own 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 the article !

Forex Expert Advisors Forex Lexus an unbiased review

Another system that was suggested for me to review a few days ago is the Forex Lexus expert advisor. Todays post will be dedicated to the review of this expert advisor based on the information given by the experts creator. I have to say that this expert is totally strange as it deviates from what I am used to review.

When you arrive at the experts website, the web page seems to be pretty badly rendered and structures. There is also absolutely no intent to hype the customer, to give him false claims or anything of this sort at all. I have to say that I appreciate the authors intent to make clean, clear cut website where you go straight to the evidence with no crap to read beforehand.

I have to say that despite the authors intent with the website and his seemingly good intentions, the expert advisor fails to deliver any significant evidence to prove it is profitable. First things first, the author provides live account statements which dont have any trades at all, so it is very hard to evaluate the expert in this way (well, I guess he just set it up so we should give the author some time to deliver the evidence). Now, the author shows some backtesting and then says that it is not suitable for year long backtests because it requires optimization every certain amount of days. Well, I have to say that in my experience I have never seen one single long term profitable trading system that requires optimization. The expert should be able to do this by himself so that the amount of lag due to the optimization to market conditions remains minimal. If the system cannot be backtested for the past ten years, analyzed and then confronted against live results, then there is not anything else to say about its trading.

After looking at the website and going through the evidence provided by the author I would have to say that this system is NOT worth buying since there is no way in which we can confirm that the system can be long term profitable. The system also runs the risk of having periods of very high draw down if market conditions shift too quickly and repeatedly (while systems that have adjustable logic, by ATR values for example, will most likely endure the markets much better). Again, I have never ever seen a long term profitable system that ahs to be optimized every 30-45 days.

If you would like to learn more about automated trading and how there are actually free long term profitable systems you can profit from 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 !

Forex Expert Advisors Forex Conquest an Unbiased Review

Todays post will be dedicated again to the review an evaluation of a commercial automated trading system. This forex system, named forex conquest, claims to be able to turn 900 into 2000USD in two weeks, or make 43,240 USD in five months or almost 150K USD in less than a year. We will now see if this EA lives up to the test and is able to provide convincing evidence of these claims as well as demonstrate its potential for long term profitability. As always, my review will aim to evaluate the claims provided by the author against the evidence on the website. I will then do my own analysis on the trading strategy of the EA an give my opinion about the experts long term profitability.

To start, the claims of this EA are nothing short of bold. The author of forex conquest claims it can turn 900 to 2000 USD in two weeks, this is a profit above 100% which in two weeks would only make me think one thing, a very high market exposure. However, things are a little bit different. Because this EA NEVER TURNED 900 to 2000 USD or 3000 USD to 150 K USD. This is one of the great deal of EA sellers that treat a simulation like if it was the real thing. Let me ask you. Does flying a cesna on flight simulator means I have flown an airplane ? This is how truthful it is to say that an EA has actually made a profit it never made. Making money in a simulation is to making money in real life as flying a cesna in flight simulatior is to flying a real airplane. Making in simulation and making live are two totally different things. To say the least, the author should provide us with the backtesting statements so that we can at least have a slight idea of what the system is all about.

There is not much in the forex conquest website. A bunch of hype and some screenshots and numbers which are totally meaningless. Where are the statements ? where is the backtesting, the live testing, the forward testing ? Where is everything ? This guy is selling a dream, he is not selling a trading system. Who would buy something that has absolutely no real evidence of profitability. This EA is way behind most experts in that it does not even provide enough material for me to even evaluate the trading strategy. The only statement on the website is pretty puzzling since it shows several trades without a stoploss or any other means of risk protection. Does it have an internal closing mechanism ? does it never close loses ? This are questions that cannot be answered because there is simply an absence of evidence.

As you may have infered from the second paragraph, this expert advisor is NOT worth buying or testing. There is not enough, really hardly any, evidence of profitability provided by the creator of the EA. The author would have to put up live testing statements and backtesting statements from 1999 so that we may have a real idea about the EA. If the author does Ill be glad to rewrite this review to include deeper analysis. Of course, there are long term profitable systems that you can use from today, if you want to learn more about these systems and how they achieve realistic profit/risk targets please consider buying my ebook on automated trading or subscribing to my weekly newsletter to receive updates and check the live and demo accounts I am running with several expert advisors. I hope you enjoyed the article !

Forex Expert Advisor

As many of you may already know, an expert advisor is an automated trading tool which makes all relevant trading decisions in the forex or any other trading market based on some technically driven trading rules.

In the forex market, expert advisors are usually programmed using the Metaquotes language in the Metatrader program. Metatrader can be obtained free of charge and used to test drive expert advisors in a demo account.

Testing expert advisors in a demo account is denominated "forward testing". The results are dependent on the amount of time the demo account is ran and as such, this approach is long. Taking years to obtain relevant results from the market.

Since expert advisors are a relatively new technology, the existence of this long forward tests is not common. People usually rely either on backtesting of expert advisors (which can be very unreliable depending on the software used and the testing data and condition), which involves testing the expert advisor with limited past market data, or very limited forward testing results usually ranging from one month to a year.

Non of these approaches makes an expert advisor or EA realiable or ensures that you will be making any profit in the future. An EA can have very positive forward testing for four months and then massive draw downs for, say, a year. This is because the EA has to be tested in a very wide range of market conditions. This conditions are thought to be cyclic and may require years or decades to be established. Thus, an expert advisor may need years to complete was is believed to be a "market cycle" and prove profitable. This however, is based on the hypothesis that the market is perfectly cyclic which is not entirely true as the market tends to change dramatically to unprecedented conditions from time to time.

So as you can see, there is not much hope in describing the performance of an expert advisor in such a way that it may serve as a criteria for profit making. This does not mean that there cannot be a profitable expert advisor, it just means that this EA cannot be known easily.

What I know, for certain, is that a profitable EA will mimic the decisions made by the bulk trading community a priori. This EA should in fact, decide what everybody decides. An EA should do what the majority of people are doing. The problem is that peoples trades are based on a wide variety of things, including things which the expert advisor does not know. This puts the EA on a disadvantage as it cannot base its decisions on the news until they are reflected on the price, which puts it after the move, not before it.

Hence my friends, the only sane way to profit from expert advisors is to follow the next simple rules for picking and using them.

- An expert advisor should show positive results in forward testing (as I have stated before this is necessary but not sufficient for an ea to be considered profitable)

- An expert advisor should nor promise more than 20% profit with a 5% risk. (Any promess beyond this causes serious doubt as by the limits of its nature, an ea cannot maintain such wins without loosing eventually almost or all its profits)

- An expert advisor should NEVER risk more than 5% of an account per trade. (this is basic risk management, a necessary tool for survival in the forex market)

- An expert advisor should ALWAYS include a stoploss. Preferably a stoploss shorter than 100 pips. Having no stoploss is a recipe for disaster. An EA does not know extreme market conditions and any sudden movement due to rare events could wipe your account.

- An expert advisor should NEVER trade by itself. Having only one expert advisor is unwise, if you are going to use them, use as many as 4 or 5 which meet the above shown criteria. Remember, dont put all your eggs in the same basket. Also try to use different types, for different currencies and market conditions.

- An expert advisor SHOULD require no human intervention. It should be able to trade by itself. If you need to change anything, then why bother calling it automated trading ? The expert advisor should not require any expert assistance.

- Ideally, an expert advisor should be updated regularly by its creator in an attempt to adapt to market conditions and increase profits.

This guidelines (which will be updated from time to time) are the base of my criteria for picking an using expert advisors. Stick to them an you will have a much better chance of succeeding in forex automated trading. Dont follow them and you will have almost no chance.

I will write a new post for each expert advisor I will start testing on this blog.

Forex Expert Advisors Forex Poison an unbiased review

After yesterdays review I believe today will be forex poisons turn. As I said yesterday, a website visitor pointed me in the direction of this expert advisor and asked my opinion about it. In order to help that person and all my other website visitors to better know this trading system I decided to write a review about it after a very careful study of all the evidence shown on their website.

First of all, I would have to say that the forex poison case is rather peculiar because there is in fact a lot of information about the system on the selling webpage so there is a lot of information we can use to evaluate the actual trading of the expert advisor. The first thing we are shown is actually a collection of two "live statements" which apparently show the expert trading since May, 2009. I have to say that sadly we have no way of proving that these statements are real and not made up because we have no investor access to the accounts, therefore lets pretend the seller is honest and analyze the experts trading.

The experts trading is quiet strange, although I could still notice several interesting aspects of it. To start, the expert has an unfavorable risk to reward ratio of about 5:1 in most cases although it can be worse depending on the trade since apparently the TP value is not assigned at the beginning of the trade but is generated as the trade progresses in some way. I say this because there are some trades that go to the SL and close without ever reaching the TP. There is also a considerable change in lot sizes during the past month which is something very curious because there is an almost 10 fold increase in risk. I mean, if one of the last trades would have ended up in a loss it would have wiped out a very good chunk of the profits. My best guess is that traded lot sizes were increased to try to make the system look more profitable if it has a winning streak, which is something I have seen done in the past to have better results to show.

However the most interesting part comes when we look at the rest of the information on the website. We see backtesting results at 90% modeling quality with NO loses. Hey, this just SCREAMS one minute interpolation errors or in another way, it could mean that there was a total absence of a stoploss in the tests. Also, why is the backtesting so reduces ? Why isnt the backtest the same as the live testing period to show consistency ? Why isnt the backtest from 1999 if the expert can adapt to any market condition ?

Obviously, if the expert has huge one minute interpolation errors because of its logic there is no point in showing backtests from 1999 because they would just be meaningless. This of course, leaves us with almost no tools to evaluate the EA since forward and backtesting cannot be related. However, I could say that the actual risk to reward strategy and the large lot sizes traded do put the trader in a place where is market exposure is likely very large. That said, this means that, in my opinion, I think the expert is prone to wipe your account because of its market exposure, and I have no convincing evidence to think otherwise.

Also, making the claim that an expert can trade profitably under any market condition is just outrageous. There is no way they could prove this since they dont know how the market has evolved and they cannot even rely in consistent backtest to prove that at least the expert would have performed well in the market conditions spanning from 1999. That said, I think this EA is not worth buying or testing because the EA has a significant market exposure which puts very significant amounts of equity at risk. Even if the increase in lot sizes is not artificial but due to the experts logic I would never trade an expert that made such a jump in risk. The creators should also consider posting investor access passwords to verify the live accounts are real. I really want to see if those live accounts will stay there or if theyll remove them if the EA crashes (which in my opinion is obvious due to the market exposure of the system).

If you would like to learn more about evaluating systems and trading 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 !

Doubleplay Live Trading Stopped !

This week I traded Doubleplay v 4.0 live. The results were what I would have expected for doubleplay. Hitting one stoploss and managing to get 3 small wins which amount to a small loss for my mini account (about 4 dollars). This of course, due to the fact that EUR/USD was ranging the whole time which I have found out through experience, is not a suitable scenario for Doubleplay.

The reason I have stopped Doubleplays live trading is not because of the experts performance but because of a flaw (I think) I found . Doubleplay started to open trades as soon as it closed another one. This should not happen as the dl function should delay further order openings for at least an hour. This according to the value at which dl is set, 3600.

I have emailed Hal and I hope he can tell me if there is something wrong with the coding of my personal ea or if this is a change made between v 3.5 and v 4.0. I hope I can resume live trading next week !

Forex Expert Advisors Forex Money Train an Unbiased Review

One of the latest expert advisors released is this system called Forex Money Train. This system claims to give people the ability to get significant profits from the forex market and achieve financial freedom in a short period of time. The system claims large sums of profit like 20-30K per trade and promises traders to win with a 90% of profitable trades. On todays review I will examine the Forex Money Trade expert advisor, I will go through all the evidence presented on the systems website and I will take a look at the systems trading tactic. In the end I will put together all the available evidence and I will tell you if the system is able to backup its claims of profitability and if it is or it is not - in my opinion - worth buying and testing.

The Forex Money Train website starts like many other automated trading sites with promises of financial freedom, high winning percentages and market adaptability. However, when it comes to show trading evidence of these claims, the Forex Money Train not only falls short, but actually fails to deliver any reliable evidence of profitability.

The first and only evidence shown on the website is a snapshot of two "live trading" account which are both old, short and unverified. It is incredible that an EA seller expects to be able to sell a system with statements that are more than 6 months old, less than one month long, abruptly stopped and absolutely unverified. What information do you get from this testing evidence ? What I see is a system that was briefly tested on what probably was a demo account and then stopped as soon as some big unprofitable results started to show. The statements shown are a complete joke with less than a week of trading length and no continued updating.

Besides the fact that the statements shown are short and old, they are also unverified. Since there is absolutely no investor access information we cannot tell if the statements are indeed real or if they are manipulated, created from nothing or simply the consequence of trading on a demo account. For any serious EA seller, the absolute verification of the live trading statements is absolutely VITAL to ensure that the system has a high like hood of long term profitability.

On top of this lack of reliable live or demo testing evidence we also have that the backtesting results of the system are not presented. Why isnt any backtesting shown ? When EA sellers do not show any backtesting statements, it becomes obvious that their expert advisor is not able to perform accurately under a wide variety of different market conditions. When this unwillingness to show backtests is coupled with a total absence of live-updated live investor-access verified accounts then we are talking about a seller than simply wants to sell his EA without having to give any serious proof of long term profitability.

The so called "proof" of trades is also a mere joke. It is very easy to hand-pick trades of any strategy to make it appear as the best strategy ever when in reality it loses equity in the long term. Due to the complete lack of ANY reliable evidence, the old, short and unverified live tests and the total lack of backtests, I consider this trading system NOT worth buying and testing. If the seller wants me to change my review he should provide 10 year backtests and 6 months of investor-access live results coupled with 6 months of backtesting statements of this same period to show consistency. Until then, the Forex Money Train falls into the pile along with the thousands of experts that are now part of the overhyped EA graveyard.

If you would like to gain an education around automated trading and truly understand how to develop and use 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 !

Doubleplay v 4 5 Expert Advisor A new Beginning

A few weeks ago, the new version of Doubleplay, which is version 4.5, was made available for download to all Doubleplay customers. I received the new program with both excitement and a little bit of concern as Doubleplays money managment system was changed for a supposedly better one.

Backtesting results of the new version, available at halcyonfx.com (which is the developers website), show the expert advisor being tested on the GBP/JPY pair for a period of 2 years. This backtests somehow increased my concerns. Even though the equity curve does seem much cleaner than before, with I have to say, increased profitability, there is an obscure risk factor surrounding this new money management system.

The system basically builds up position size as losses are incremented, which clearly makes recovery from losses much faster. But I cannot help to ask myself, what if the expert suffers too many continuous losses ? Will the expert drive the account to a margin call ?

The tests did show this troublesome issue to some extent, on all of the test, Doubleplay did experience periods of sharp draw down, that, although not available in the presented data, amount to almost 50% of the account by visual inspection. The ea did recover all losses and drew a nice equity curve on all of the graphs but... What if the market conditions had been worse ? Is the expert going to cause a margin call ?

I have never considered an expert with such a high level of draw down acceptable, so I should not consider Doubleplay v 4.5 as one merely because of this fact. I must say, I have run Doubleplay v4.5 on a live account since March the 17th and it does show me a clean advance with a gain of almost 5% on my account until now.

But what about those dark market times ? The ea seems to kind of protect itself by limiting the scaling of positions sizes with a top, but this does not keep me from worrying about such a high draw down in bad market conditions. I would have to say, there are other options, better options, out there right now. As always, time will tell if the expert has a high enough win:loss ratio as to keep our accounts safe from a kill. Dont forget to check out my ebook that explains expert advisors and reviews several commercial experts !

Dont Fool Yourself Why Renko Fixed Range Charts Cannot be Backtested Accurately with MT4 or MT5

Definitely most traders will agree with me in that renko charts (also known as fixed range charts) are one of the best tools for trading, eliminating most of the "noise" around the market and giving us a very clean picture of pivots and support and resistance levels. Renko charts "even out the blur" by displaying a new bar only when a movement of a fixed set of pips has happened. As you may see on the image shown below - an example of a renko chart - price action becomes easier to understand and overall trading becomes easier. Given the fact that fixed range charts are good for trading it then becomes obvious to ask the question : can we build and back test expert advisors for the MT4 and MT5 trading platforms that use renko/fixed range charts ? The answer to the first part of the question is yes but - very sadly - the second answer is a resounding NO. On todays post I will share with you my conclusions around this subject and why it is NOT possible to build 10 year accurate backtests of this type of charts using metatrader 4 or 5. I will also point out why results may be EXTREMELY misleading and how they may point out to a much higher profitability level than what is actually achieved.

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First of all, let us talk a little bit about how we generate renko/fixed range charts on metatrader 4. We usually use one minute charts of downloaded metaquotes data and then apply a script to generate the fixed range chart we want to see. We effectively generate a history file with all the information necessary to display these new charts. Now, some people have ventured into using this data to run backtests and their results have often been pretty fantastic, however they NEGLECT to take into account some VITAL aspects of this conversion that make backtesting and especially the backtesting of scalping systems ABSOLUTELY useless.

The main problem with the backtesting of system on fixed range charts using this generated data from metaquotes one minute information is that tick data is not available. Because of this we get into a problem regarding the splitting of the bars and the actual "volume" within each one of them since the formation of fixed range bars happens "in between" one minute candles. The result is that we dont know when a new bar gets formed and the overall tick distribution becomes impossible to know. The image below shows you in a more graphical way what the problem exactly is. The end result is that a renko bar may have been formed before or after certain movements and therefore the whole movement of price and the exact formation of the fixed range bars is NOT accurate.
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This effectively leads to a massive increase of the errors generated by mass interpolation and it acquires a fairly important tone when using fixed range bars in the order of 1-10 pips. This problem of generation and tick distribution can be SO large that actual simulations are absolutely unreliable to the point where backtesting results may give extremely profitable results (a few hundred dollars to billions in a few years) of a system that in reality is a simple loser. Scalpers are extremely vulnerable to this since the actual formation of the bars is not known and therefore the actual "small movements" that determine their profitability and the timing of their signals is TOTALLY different.
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It is also worth understanding here that the problems with fixed range bars are FAR worse than those of a scalper within a time based chart since the actual distribution of ticks is actually known in time based charts and therefore the distribution of them between bars holds at least some similarity with reality while those of a renko chart are merely made up since no tick data to do an adequate "splitting" of the information is available. The shape of renko charts changes with one minute interpolation while this doesnt happen with time charts. However backtesting of scalpers is unreliable in either case not only due to one minute interpolation problems - which may greatly overestimate profitability - but due to the lack of execution problems and spread information.

To sum it up, even though the generation of fixed range/renko charts is possible in metatrader 4 and 5, the actual use of these charts for automated trading is not possible since the actual usage of accurate simulations to get draw down and profit targets for these systems is not possible since no tick data to do an adequate tick distribution splitting is available. For this reason if you see any system that has a modeling quality of (n/a) and the owner says the backtest was done on fixed range/renko charts you already know why this systems results are NOT reliable and why there is a GREAT chance that results are highly overestimating profitability and underestimating losses (to the point where real trading would show opposite results). Especially systems that use small renko bars and scalping techniques are bound to give astronomical results that are obviously not achieved in real trading.

Of course, renko bars are a great tool and it would be absolutely great to be able to do simulations with their data. However, until metaquotes decides to include tick data or we find a source of tick data that goes back to 2000 our chances of doing accurate simulations on this type of charts and therefore the development of systems with accurate profit and risk targets will not be possible.

If you would like to know more about automated trading and how you too can learn to code your own adaptive and likely long term profitable systems based on accurate simulations 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 !

KLCI Historical Price Chart 1981 2012

Legendary investment guru, W.D. Gann once said: "Each decade or 10-year cycle, which is 1/10th of 100 years, marks an important campaign. The digits from 1-9 are important. All you have learn is to count the digit on your fingers in order to ascertain what kind of a year the market is in."

So I did a research on our KLCI prices for the past 32 years to see if there are any repetitive chart patterns and I discovered that:

1.      the years ending with 3, 6, 9 are usually bull years.
2.      among these 3 years, year ending with 9 has the biggest gain in history with 30% -175% gain, followed by 3 with 30% - 100% gain, and 6 with 18% - 22% gain. 
3.       years ending with 1 and 5 are the worst performing years with year end closing price below or equal to the beginning price. 

          4. years ending with 7 and 8 tend to have stock crashes with the exception of 1988.     

     Although the charts are only applicable to the KLCI component stocks, but these findings are amazing! Most people think that market is random, you cant predict the market, however, the research shows that history does repeats itself and market is made up of crowd psychology, human behaves repetitively to certain external stimuli. In addition, in cycle analysis, it is believed that the "Natures Law" or the "Secrets of the Universe" are affecting human emotion which in turns affect the financial markets. At least this is what Elliott and Gann had proposed in their books. Gann seldom revealed his secrets in trading as he thought that "people are not ready yet!" Gann had his unconventional ways to forecast the financial markets that I will not elaborate further (but I may in the future if people are more ready). 

       Since It is always good to use both fundamental and technical analysis in stock analysis,  lets look at this findings objectively. For example, if 2013 is a bull year, then it must be supported by the fundamentals. The EU economy is weak with austerity measures, the US is recovering but unemployment remain high, international fund managers most likely will consider emerging markets to invest, especially the South East Asia nations like Indonesia, Thailand, Phillipines and Malaysia due to their vibrant economies that are undergoing  structural change. As standard of living is rising for these emerging markets, these economies have rising domestic consumption, improving infrastructures such as the construction of Mass Rapid Transit in Kuala Lumpur and Jakarta, and moreover, all of these emerging countries have pro-business / pro-investment governments to attract FDI into their countries. 

     On the other hand, we must not forget history shows that with the influx of FDI, or foreigners purchasing our properties and shares, these emerging economies are subjected to the risk of hot money being pulling out if there is any negative news. 

      I do see some similarity between now and the 90s. Knowing what had happened before, it is important not to let the history repeats itself. These economies must do some precautionary measures such as cutting budget deficits, curbing asset bubble, and of course, lets build a more efficient government together!  

  

      Below are the historical charts:

   

Free Expert Advisor Portfolio Week 8 Up and Running !

This week has been a very bumpy one for the free expert advisor portfolio 2. As I have also had some time, I have paid close attention to almost all of its trades, understanding what it has for it and what it has against it.

This week saw a major surge in profit with a gain up to 15,000 which stands at the 50% profit line. Then it dropped (as I would have expected) to more discrete levels at 13,000 which is a modest profit of 30%.

Up until now, the portfolio has showed us it can deliver a 15% average monthly profit, it has also survived almost two months of forward testing, which I say, cannot be said for about 90% of all the expert advisors out there (and probably not about the individual experts in the portfolio by themselves).

I have also seen that the portfolio has both strengths and weaknesses. The portfolio is strongest in trending markets, being very oscillating around moderately ranging markets. Ichimoku5 seems to take trades permanently while Moneymaker v2 is more peaceful (so to speak) in its trading. Moneymakers entries are much better than Ichimokus which seems to trade long term market direction.

Up until now, the portfolio is still up and running, giving us a pleasent surprise about what can be achieved with a combination of free experts. I will hopefully start running another portfolio sometime during the following month. As always, the trading statement for this portfolio can be found here.

Forex Expert Advisors Forex Assasin an Unbiased Review

Yesterday, an asirikuy member pointed me out to an automated trading system I have not reviewed. This expert advisor, called Forex Assasin, promises to turn small amounts of money like 300 or 5000 USD into very high amounts in the order of 100K to 1 million dollars in a very small period of time (4-5 years). Todays post will focus on the review of this trading system, specially the evaluation of the authors claims against the evidence provided on the website and my opinion about the long term profitability of the trading system. After doing all this analysis I will tell you whether or not I consider the forex assasin trading system worth buying and testing.

The claims made by the author of this expert advisor are nothing sort of bold, misleading and outrageous. The first claim is that the system gave 5 million dollars in profit during the last 5 years when no evidence at all is given about this matter. This is the classic marketing scheme EA sellers try to pull on people by portraying simulation results as if they had been real. This is misleading and dishonest. Another interesting fact is that the seller of the EA portrays himself as having become a millionaire from trading the system, why is then no evidence about his past 5 years of trading given if they do exist in reality ? Why doesnt a person who achieved such an enormous success with automated trading share the story and evidence to sell his system ?

The answer is simple, the whole website is simply a lie created around the idea to sell naive new traders a dream of becoming rich quickly. The evidence given is merely a simulation of performance which by itself is meaningless. The backtesting results of the EA show us that the system trades on the 15 minute time frame, meaning from the beginning that backtesting quality will be plagued with errors due to the smaller number of reference points per candle. Adding to that is the fact that the TP and SL change momentarily through the backtest, a good hint that the EA has been hardcoded to change presets in hindsight according to changes in trading periods. A very big problem given the fact that this makes the EA absolutely curve fitted and its results utterly worthless and non indicative of future performance. However, even if this wasnt the case, the simulations are still worthless without any live trading results which allow us to do a back/live testing consistency analysis to really know how well simulations match real live trading.

It is also fairly suspicious that the backtests are only done from 2004 when they could have been easily done from at least 2000 or 2002. Perhaps the easiest way to answer this question is that the exploitation of backtesting errors and use of hindsight might have made profits exceedingly large (trillions of dollars) making the results too unbelievable for a sales pitch, therefore limiting backtests effectively eliminates this problem by limiting the amount of profits shown.

The forex assasin trading system seems to be nothing more than the usually hyped and useless piece of trading software which uses curve-fitted simulations plagued with inaccuracies to fool people into buying the EA. If the author of the EA was actually being serious and telling the truth about his system then he would : a) show us the enormous profits he says he was making on a live account with the investor password so that we can verify its validity b) provide a live trading, live updated trading account with investor password so that we can verify the experts performance c) explain the momentary differences in SL and TP values in backtesting (which are not gradual like in an adaptive system but change abruptly from one period to another) d) provide back/live testing consistency analysis so that the validity of simulations can be confirmed.

When the author of the forex assasin provides all the above information Ill be more than glad to rewrite this review. In the meantime, this trading system is absolutely NOT worth buying or testing in the light of the evident lies, misleading statements and lack of evidence shown on the website.

If you would like to know more about long term profitable automated trading systems and how it is really possible to make profits in the forex market using expert advisors when sound trading strategies are used 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 Roboteer an ubiased review

The forex roboteer expert advisor is a trading system designed by peter parsons an elegetely experienced forex trader who is also the creator of the forex ranger expert advisor. He claims that the forex roboteer expert advisor is a long term profitable trading system and he also makes a strong emphasis in the importance of optimization and how he has been able to streamline the whole process to make it very easy and seamless for his EA customers. The objective of todays post is to evaluate Mr. Parsons claims against the evidence he provides. On this post I will give my opinions and analysis on this trading system and how I consider it stands regarding long term profitability.

The claims made by this expert advisor seller are quiet as we would expect , he claims to have up to 83% winning trades, automatic money management, 77 trades per month, built in optimization, etc. I have to say that the evidence he provides does allow me to evaluate the expert advisor and the validity of his claims to some extent. The first thing I noticed was that there are both backtests and live tests on his webpage, live tests seem to be broken up in months and some months like June seem to have been left out. I am always very very skeptycal when I see broken down live statements because the act of breaking them up can be used to eliminate losing trades. Since this guys system has a very unfavorable risk to reward ratio of almost 5:1, you would have to say that getting out some loses could perfectly make the system more profitable. I also know several forex traders and non of them ever take trades with a risk to reward ratio of more than 1:3, that is, they never take anything in which they are not going to risk 1/3 of their possible profit. Why would I ever believe that a proffesional trader would design a system with a 5:1 ratio ? I simply just dont, at least not a trader who has really been long term profitable for a few yers.

The fact that June is left out of the live tests also makes me very suspicious, why wasnt it traded ? is it never traded ? Or was it just traded and there were too many loses to show ? This is totally wrong. Also the backtesting is very limited and only partial backtests are shown. Why not show us a 10 year long backtest ? Evenmore, why not show us year long backtests with walks forward to show us how the optimization performs ? What about back vs live testing comparisons ?

Well, you guesses right, the most probable thing is that all these things are missing for a good reason, they probably show the true face of this expert advisor, which, as many other systems out there with unfavorable risk to reward ratios is just short term profitable and then gets ripped appart as the market evolves. This systems also are not very good to optimize because you cannot optimize to the future ! only to the past ! and changes in the lower time frames happen rapidly so optimization is bound not to work because you always lag the market (and it changes to fast on those timeframes).

In my opinion, this system is NOT worth buying because there is a substantial failure to provide convincing enough evidence that a) the optimization works b) the system indeed produces profits in the long run c) the systems backtests are consistent with the live testing information. That said, if all this information is provided, I will be glad to rewrite this review. In the meantime, if you would like to know more about why experts like this and others fail so frequently in the forex market and what actually works in forex automated trading lease 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 !

Trader Psychology Being a Loser Knowing How to Deal with Losing Periods

Today I wanted to write a post about one of the most critical aspects of manual and automated trading : the ability to deal with losing periods. It is very interesting how for most people (me included) it is extremely easy to deal with profitable periods but the instant that balance drops below the profitable margin we start to get into a psychologicaly different mood. Different people react differently to losing periods but usually the general reactions are the same. When facing loses, people start to make an incredible amount of mistakes in folllowing their trading systems or methodologies. People trading automated systems usually take them off their platforms and start to search for new ones, people trading manual systems start to make very emotional entries with exceedingly high risk levels.

Definitely one of the hardest parts of trading is dealing with the fact that your trading is not perfect and the market is not always aligned with your expectations. Every trading system in the world will go through draw down periods and more often than not these draw down periods are extensive and will deeply test the psychological strength of the person trading them. Going into draw down is a natural consequence of trading and it should not affect the way in which you trade. The key is simply to deal with each trade as if it was the only trade you had ever taken. The burden of previous trade results should not put a strain on your mind.

Of course, easier said than done. People find it difficult to follow a strategy which has been giving them loses mainly because they start to doubt the system they are trading. People wonder if the system will put their account into an infinite draw down spiral which will blank their accounts. Here is when confidence and knowledge become the decisive factor in the trading of systems and methodologies. Do really understand your system/method and its profit/risk targets ? Do you have enough confidence in your system to continue trading it despite the loses you are getting ? Certainly these are questions which a person should know the answer to if he or she wishes to be successful in trading. When you are in a losing period ask yourself the questions above. If you dont have the answers, then probably you should study your method or system more in depth or change to a system/method you truly understand.

I have to say that Ive found that the ability to trade through losing periods without making changes to their trading methodology/system is one of the main reasons why profitable traders are profitable and people who lose end up losing their whole accounts. Profitable traders do not increase their risk level when they trade and they do not make emotional entries when they have their accounts in draw down, something which people new to trading jump to when the psychological stress of being losers starts to take a toll on their emotions. Remember, take each trade like if it was the only trade you had taken, manage all trades equally even if your in a draw down or profitable period. Keep you risk targets small and your risk to reward ratio favorable.

If you would like to learn more about autoamted trading systems and how to trade them successfuly despite the psychological pressures by truly knowing and having confidence on their trading logic 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 !