Expert Advisors The neighborhood full of loose dogs

When I think of the forex automated trading market right now and the way in which it has worked for the past couple of years one analogy always comes to mind. I tend to imagine this expert advisor market as a neighborhood full of loose mean dogs in which you are alone and trying to get across. I think that this perfectly portrays the confusion, misinformation, exploitation of ignorance, unethical behavior and other "properties" of this forex automated trading world.

Why is this market so uncontrolled ? Why is this happening ? For me it is pretty obvious, large sums of money are involved and whenever large sums of money are involved it doesnt take long for the predators of our race to go against their "prey", that is, retail traders who have just begun and are just desperate or wishing to earn financial independence. These people will go to great lengths to deprive everyone of their hard earned money. People will give their money willingly because they dont know any better and they trust the people that lie to them to be honest. The more and more I spend time roaming around this smelly market, the more I realize how people are tricked and how low and dishonest these marketing tactics the use are.

For me there is just one solution to this problem, which is summed up in a single word : regulation. The expert advisor market is in desperate need of some kind of regulation of what can and cannot be sold. People would argue against this since people are free to buy whatever they want and everyone is allowed to sell whatever they want. That is true, but to lie bluntly in order to sell something is an entirely different matter. This EA creators sell you an expert they say can "triple you account every month", "turn x into 100x" and they say this systems have been "battlefield tested", "proved", etc, without any actual conclusive evidence to backup their claims. I did not go to law school but I do consider that tellings lies to sell people things is immoral and should be punishable by law. Specially if it causes these people to lose their money because of their purchase.

My request is simple, have a necessary degree of proof for each claim established so that they are forced to show some realistic, convincing proof of anything they want to claim. It is not that hard, I am just asking for these people to show us the truth, plain and simple. Of course, this will only become true if people gain knowledge and start to demand this in a massive fashion, in no other way will the expert advisor sellers listen. Mainly because most of them cannot backup any of their claims (as you see within my reviews). Sadly, as with the informmercial market, this is likely never going to happen because most people that enter this market are ignorant about this situation and ignorance my friends, turns people into blind men driving.

If you would like to know more about what I have learned about this market, how you can evaluate experts and their proof, build, test and program your own systems and start trading the forex market profitably using automated 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 !

Diposting oleh Unknown 01.15 0 komentar

Are we out of the woods yet

Many economists have started to criticise the trillion dollar fiscal stimulus programs by the Obama administration. Hasn’t the American learned from the Subprime crisis when it all started during the 2001-2002 recession, the Americans cut rates and boosted public spending. This brought a bubble in the housing sector which causes serious consequences to the rest of the world.

Now, with the current recession, the Americans is going to pump in trillion of dollars to boost its GDP. And the consequences? More debt and bigger bubble!

The Americans are not alone. Most of the governments around the world are increasing on their fiscal budgets and bailing out troubled banks to help steer their economies out of the wood so as to gain popular votes from the people. “China is back in bubble land,” warned the Financial Times. According to Bill Bonner, in the first six months of this year, Chinese banks lent more than $1 trillion, or about four times the rate of 2007. This loosening of monetary policy by the Chinese Central Bank is bound to add more trouble to the world in the future.

Why? Because no one would like to bite the bullet and let the economy suffers like the 1929 Great Depression. So let’s face the consequences when the next bubble blows up!

Diposting oleh Unknown 00.46 0 komentar

The Greatest Advantage of Automated Trading at Least for Me !

It is true that my posts regarding automated trading are generally focused towards the negative aspects of this way of trading and explaining why it is bound to be harder to achieve than simple manual profitable trading. However, there are a few advantages inherent to automated trading that have made it my operational way of choice and the generator of the majority of my current income level. Within the next few paragraphs I will be explaining to you one of the main reasons why I decided to use automated instead of manual trading systems to succeed in forex trading, especially why this is so beneficial for my trading style and personality. I will also tell you why this quality is also a double edged sword and why it does NOT mean that you can just "set and forget" trading systems.

Yes, we have all heard the many "benefits" inherent to automated trading. Most EA sellers just tell you that you can make money while you sleep, trade like a professional without knowing anything and simply enjoy the profits using the forex market like some sort of ATM machine. The truth is VERY far away from this and automated trading is simply not what they tell you it is. In reality automated trading is harder to achieve than manual profitable trading and it is as challenging and demanding from a psychological point of view.

What is the difference then ? What are the TRUE advantages of automated trading ? In reality automated trading has a lot of pitfalls but it also has some great advantages that made me decide to go with it instead of regular full time manual trading when starting to build my forex trading career.

Truth be told, the fact that you are able to watch the markets 24/7 and "not miss any trades" or do a "ton of analysis in a millisecond" were not the things that made me choose this way of trading over manual execution. Even though you may think that this is actually better the fact is that you can use manual trading systems that require only a few minutes every day to achieve the same profitability levels as a regular long term profitable automated trading system. I know traders who trade daily charts and dont spend much time "working" and achieve the same profit targets as me so the fact that you can just have an ever-watchful eye is not a true reason to choose automated over manual trading since being on a constant lookout for trading opportunities is not necessary nor does it warranty more success in trading.

The most important reason that drove me to use automated instead of manual trading systems was simply that - from a psychological point of view - I am better able to control my short term emotions when I do not have to take the actual trades of the systems I am using. I am very good at dealing with draw down periods since I always have a strong analysis and long term perspective but having to take trades from a strategy that has been losing for a given period of time manually is just psychologically hard for me to do. As a trader, I quickly noticed that draw down periods when trading manually made me change my strategy and this led to long term loses and deviations from my projected profit and draw down targets.

Automated trading is a blessing in the sense that it offers me the ability to have a long term plan and stick to its guidelines even if I am not actually personally executing each position the system goes into. Of course this does NOT mean that automated trading is emotionless and those of you who assume this to be the case will be making a BIG mistake. Automated trading attacks your psychology a LOT but from a different perspective. If you dont understand the system you are using you will not be successful because you will not know if you should or shouldnt stop using a given trading system when a draw down period happens, you will constantly wonder if it has stopped working and you will NOT be able to achieve long term profitability.

Even though automated trading is very demanding emotionally, it is demanding in a way which I am more comfortable with. I am very meticulous about the analysis and understanding of my trading systems and I have built what I think is a very good capacity to draw plans around automated trading systems and stick to them. Manual trading is demanding for me in a way that I cannot handle very well, reason why automated trading became the perfect answer for my question about success in forex trading.

So for me not having to personally suffer through each trade of my systems is great since I am better able to handle the great psychological pressure that is exerted by automated trading systems in other ways. However what you have to realize here is that whatever you choose -manual or automated trading -, it will be challenging and believing that automated trading will be a "breeze" simply because you dont have to watch and take every trade is going to be a FATAL mistake. In the end it comes down to having a well laid out plan, a GREAT understanding of your trading strategy and the will to execute your plan exactly as you have laid it out.

If you would like to learn more about the psychology of automated trading, the building of systems and how you can trade with confidence with a likely long term profitable system YOU build based on sound trading tactics please consider buying my ebook on automated trading or joining Asirikuy to receive all ebook purchase benefits, weekly updates, check the live accounts I am running with several expert advisors and get in the road towards long term success in the forex market using automated trading systems. I hope you enjoyed the article !

Diposting oleh Unknown 07.31 0 komentar

Support And Resistance My First Attempt to Implement Mechanical Detection of Important Price Levels

The detection of important price levels - so called support and resistance - is one of the most difficult things to do in algorithmic trading since their detection by the human eye seems to be extremely discretional, something that just pops out at an experienced trader when he or she looks at the chart. Through the past few years several attempts have been done to detect important support and resistance levels but most of them fail due to the fact that intermediate levels -which are not important - are often detected and used by computers when their real relevance is minimal. The question then arises : Can we algorithmically detect support and resistance levels in a reliable way ? Moreover, can we actually make a computer "know" the importance of each level ? Can we then develop a profitable system based on this detection ? On todays post I want to give my first set of answers to these questions showing you my first attempt at the computational detection of S&R levels and the achievements this technique has had up until now when used as part of a mechanical trading system.

On previous posts I had talked about how we could approach S&R detection in forex trading by using the fractal indicator (not the default but one that doesnt repaint) and performing a historical evaluation of the accumulation of fractals in certain zones, assigning a particular importance to each of these levels. However this approach seems to be a little bit complex so I decided to implement a much simpler approach in order to first evaluate the concept behind this way of "detecting" S&R levels. What I did was simply to use the High and Low levels of past candles counting their presence amongst different zones and assigning a "percentage value" to each price level pertaining to the "population" of historical candle high/low levels around this area. Areas that are heavily populated by hourly highs and lows and prone to be important daily support and resistance areas owing to the fact that price tends to "hug them" failing to move "straight through them".
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The significance of these levels is then easily evaluated by the percentage population of each price level and we can easily measure if price is moving towards a zone with a high population or outside a zone with a high population. When price is trading within a highly populated area it will have a tendency to remain there while when price trades in a "population scarse zone" it will tend to go to a zone where more trading has happened in the past. As it is shown on the image above, we could create a system by entering a position after we "breakout" of a zone that has a high population value. It is good here to note that we dont use levels but zones using a given amount of space to gather a given high/low population, this is done due to the fact that in forex trading support levels tend to be "spread" over a given area instead of pined to a given level (this is a consequence of not having a central exchange).

What is the result of implementing this S&R "tactic" on an expert advisor ? Eventhough the results of my first analysis are not absolutely incredible, it does reveal that the above given way of measuring S&R level and entering trades has some merit and - at least - a positive mathematical expectancy and some potential for profitability. The below image shows you the equity curve of an S&R system implementing the above explained criteria for entering breakouts of S&R levels (10 year backtesting period Jan-2000, Jan-2010).
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The system does most of the time what I intended it to do, entering trades after breakouts of S&R zones like it is shown on the image below. However the problem now becomes to know which period needs to be used to evaluate the S&R levels and what percentages are going to be required for any given S&R level to be considered important on different timeframes. As you may see, the population is an absolute number and we need to do a deep historical analysis to see what this number should exactly be to call a level "important or unimportant". Nonetheless I consider this step a very important achievement since there is now a way to measure the population of a given price level and some mathematical criteria to establish its importance. I will continue to develop and improve this S&R technique and there will most certainly be an EA with it in the future :o).
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If you would like to learn more about automated trading and how you too can learn to use, design and implement your own likely long term profitable systems based on sound trading tactics please consider buying my ebook on automated trading or joining Asirikuy to receive all ebook purchase benefits, weekly updates, check the live accounts I am running with several expert advisors and get in the road towards long term success in the forex market using automated trading systems. I hope you enjoyed the article !

Diposting oleh Unknown 13.31 0 komentar

How it All Came to Be The Story of EA Reviewers

It feels like it has been decades when I look back a few years and see the start of what would become a daily-updated blog about automated trading systems and forex trading. Many things have passed during these two and a half years, reviewers have come and gone, experts have been tested and discarded and people have got their accounts funded and wiped. Today I want to write a post to honor all of those who have participated in this story of true expert advisor reviewing, many have found this endeavor to be too exhausting and time consuming while others have found the strength to continue with their tests and their quest for that holy grail people have been looking for since 2007. But how did this all began, how did we take the decision to start reviewer websites ? Why did so many quit and who actually remain ?

This whole journey in forex automated trading started for me in middle 2007 as I was living in the quiet and lovely region of Cumming Georgia with my girlfriend. I had already been trading the forex market for a few years (with some pauses, actually I had used mt3 before but didnt realize it had an auto trading feature) and I was certainly determined to make it work this time. One day, I had the "brilliant" idea of searching for the phrase "forex automated trading" and quickly some results popped up about metatrader, the forex-tsd forum and some very initial commercial EA websites which were more about some programmer making an EA and selling it rather than a mass marketed scam ( although this experts also didnt work).

I remember buying my first couple of experts, testing them on live accounts and feeling utterly disappointed. How could this people be so dishonest ? Why would they sell me something which would lose money so quickly and failed to show any of the results advertised ? This is when I started to look for reviewers and, to my surprise, the only true website I found which tried to review experts in an independent way belonged to a nice fellow from Singapore called Ckow Yong. I quickly contacted him and we engaged in an idea sharing relationship which lasts to this day.

However, as good as CKs approach was to EA reviewing and the great effort he was making; I didnt like several things about his site including his offering of affiliate links and the fact that he traded systems like black boxes without ever wondering if it was key to understand the logic behind them. This is the time when I decided to start this blog in which I first had a CK-like approach (without the affiliate links) and then I started to move beyond what he had done, analyzing and focusing on why all these commercial systems were not working and what could be done to make a system that worked. I consider that my website is the 2nd true unbiased review site and for this I think I am one of the "old guys" in the reviewers scene, not as known or as popular as others, but still, an old dog in this field of EA reviewing and automated trading :o).

Sadly, commercial systems took a toll on CKs patience (since nothing was working) something which prompted him to leave the expert advisor scene in search for some more reliable ways of making profit in trading. I think that CK came to the same conclusions as I did but we both took different approaches to solve the problem. He decided that experts were actually not the way to go, while I decided that making long term profitable experts should be a real possibility since all my reading and analysis had taught me that the market was certainly inefficient to some extent.

Then the "true scam age" of automated trading started with the introduction of FAP turbo and about 10 new different expert advisors every month. I can tell you that this period trialed my patience but at this time I was already a lot more knowledgeable and I was able to see right through the sales pages to give my true insights about the expert advisors I was reviewing. At this time Donna Forex started to come into the picture. She took an opportunity given by the FAP turbo expert advisor in which many people wanted to use it but they didnt know how to work with it (which settings to use, how to evaluate them, etc), since CK wasnt in the scene anymore and I wasnt interested in this system, Donna came in to fill this gap and help people use this commercial system. After this I believe that Donna has filled the space left by CK in the sense that her approach is quite similar, newsletters, affiliate links, an effort to remain unbiased, etc.

Then we had some other reviewers like DuyDuy (duyduyfx.blogspot.com) who did not like to write English prose very much but did want to test expert advisors. His blog, which is still online to date, shows performance charts every now and then of the different systems evaluated by him. His approach is the simplest and utterly the most dangerous and the most transparent, he simply shows trading system results, and you decide what is worth using and what is not. The problem being mainly that this encourages the use experts which show short term profitable results which are bound to wipe accounts in the long term, something which I have talked about in a few previous posts.

In 2009 we saw the appearance of some new guys to the scene, with Casey from bestforexea.com being the most prominent. His approach to automated trading reminds me clearly of my early days with CK and reading the forex-tsd forum. Casey has always been focused on scalpers and Martingale systems and I believe that he is what I consider the questing knight of the EA reviewing community, he is attempting to find something which we have all found from experience and analysis doesnt exist but I believe that he is now starting to realize these things himself and probably we will see some interesting evolution from his part this year. Casey also did some very important contributions to the EA scene by revealing how many expert advisors were simply copy-cats of other trading systems found freely on forums.

Almost three years have passed now and I feel that we have all done our part to enrich the automated trading community with whatever approach we think is best. Donna continues to test commercial expert advisors as Duyduy and Casey while I have decided to go into a different direction in which knowledge and understanding are primordial for success. I think that they will all realize in time that commercial trading systems are not the answer (mainly because one thing is to develop an EA to sell and another to develop an EA to trade) and they will take whatever path they think is best to sort this out. It is exciting to think about the future and about where we will all be in a few years. Definitely I hope that we will all still be active and working in our own ways to bring people a true solution to long term profitability in forex automated trading.

There are also some new guys, like Chris (fx-mon.blogspot.com) . I encourage them to go on and build their own knowledge regarding automated trading systems and how to use them to be profitable. Definitely it is a long and hard journey but also a rewarding one altogether. To all reviewers and traders working on automated trading, I wish you the best luck, hopefully we will all still be working on our websites and content in ten years :o)

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

Diposting oleh Unknown 17.30 0 komentar

The Effect of Spreads on Expert Advisors

One of the most important characteristic of any expert advisor is the effect spreads have on the profitability of the trading system. This is a matter that is often neglected by people when they are searching for an expert advisor and it is a vital issue as an expert advisor that is very sensitive to spread values will most likely fail or have a drastically reduced profitability when you trade it on the real market.

The spread, as you may know, is just the difference between the bid and the ask price of a given currency pair. This is in reality what the broker charges as a "commission" given the fact that the broker always keeps this price difference as profit. Every time you enter the market you give the broker the spread as payment.

So how do you know the spread cost and the sensibility of a given strategy to market spreads ? The first factor that affects this is the number of trades taken. If a given ea takes 1 trade each month, then the cost we have to pay for trades is very small, while the cost we have if we take 10 trades a day is quiet high. The more you trade, the more your ea is working for the broker and not for you.

The second and most important factor is the average profit in pips of each trade you take. If your ea has a fixed take profit which is less than 5 times the spread, then changes in the spread will drastically affect the amount of profit you get with each trade. So if you have a 10 pip take profit and a spread of 2, then the expert might be totally unprofitable with a spread of 5.This is specially true if the risk to reward ratio is higher than 1, that is, if the stoploss is bigger than the takeprofit since not only are you working against the spread, you are also risking much more than you make in any trade. This is a pretty unsound strategy but it is used by most of the hyped commercial expert advisors (like fapturbo, robominer, piptronic, etc).

Now pay a lot of attention to the currency pair your expert advisor trades. Most of these expert advisors that aim for small profits are now targeting currency pairs that are characterized by high levels of volatility and range trading (like the EUR/GBP and the EUR/CHF) their pip value is also higher than that of USD based pairs so the profit they can get in dollars for every pip is higher. The drawback is that this pairs tend to have very variable spreads and all of these experts are bound to be unprofitable when traded in the real market. That is a reality.

If you would like to learn about more commercial and free expert advisors, as well as experts I have programmed for our long term stable profit portfolio 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 !

Diposting oleh Unknown 10.01 0 komentar