The sad truth is that most forex trading robots are developed by people who have no clue about trading or system development, hoping to hook people in more with the idea of what robots could do rather than what the software’s results actually are in reality.
I’m not saying that it’s impossible to make good profits from an automated forex trader. I just think there is a distinct difference between a well thought out program and the latest FOREX SUPER DUPER MEGA PIPS BLASTER. Unfortunately, it’s the latter that dominate the market place sucking in fresh, inexperienced traders with each big promotion.
Fortunately, there is one new service which I’ve explored for WRP readers which ticks many of the right boxes.
I’ve been a fan of Daniel Fernandez for some time and enjoy reading his regular missives on his blog: http://fxreviews.blogspot.com. When it comes to most commercial trading robots. His analysis of such programs is usually spot on and a world away from the usual affiliate-driven “reviews” you find when you Google the name of a trading robot.
Daniel doesn’t just explain what’s wrong with robots, he provides some profitable auto trading methods of his own and shows you how to do it better yourself.
Automated forex traders that work and how you can create them
The recently launched www.asirikuy.com provides you with access to a number of Expert Advisors which Daniel has back tested over a number of years and is currently subjecting to live testing. Unlike most forex robots, each EA is developed using logical reasoning which is fully explained.
Live real money results are posted on the open source site MyFXbook so you can be confident of the accuracy of real trading results.
There are three main EAs on offer including the God’s Gift EA which uses one hour charts to get in at the start of big moves. This generally means the system will experience regular small winners and losers with the occasional home run making all the difference in the long run.
These EAs are principally for longer-term trading using hourly charts upwards. Asirikuy focuses on capital preservation first and profits second with carefully calculated profit and draw-down targets for all the systems on the website.
This is the sensible flip side to the “profit at all costs and risk be damned” approach that most robots take. The annual targets are sensible, in the region of 10%-20%. This may seem disappointing given that we’ve grown to expect such gains every week from the barrage of promotions I receive in my inbox every week, but it is at least realistic and compares well to the risks taken on.
The headline returns from one of the robots using the live MyFXbook feed. 13.84% returns in just over a year may not get your pulse racing, but consider that the total gains are more than double the biggest draw down to date.
It’s worth pointing out that not all the EAs have been uniformly profitable in live trading and performance does seem to vary quite considerably depending on the forex pair used and the broker.
In his analysis, Daniel makes no use of out sample testing which I think is an important omission. When I go about creating systems I always leave the most recent data out so I can optimise a system using old data then perform a fresh test, free of hindsight bias on the new data. For example, I might use data from 2005 to 2008 to tweak a system idea, then when satisfied, test it from 2008 to 2010. If the system falls down, it’s likely it’s because I produced something that was produced with the benefit of hindsight. If the system holds up with the new data, it’s game on.
Forward testing is a form of out sample testing, but I believe the most robust systems come about when this follows on from out sample tests not instead of.
It’s worth pointing out once again that the results shown by Daniel are real live money accounts with his own money on the line, you don’t see that in many other places!
One interesting aspect of the service is the Atinalla project where Daniel shows you how to create a portfolio of Expert Advisors to increase profits without dramatically increasing your risk.
The project has an ambitious target of creating five figure incomes in 15 years time from an initial $1,000 account with annual additions. The aim is to compound annual totals in the 10% to 50% region instead of going for broke with a single robot.
It certainly is an ambitious target, but at least the risks are clearly outlined with a realistic time frame for such a profit haul.
Do it yourself
The main aim of the site is not to just give you a bunch of EAs to use in a set and forget manner. You can very well do this and trade them blindly, but at the least I suggest you become familiar with the EAs themselves, how they trade, the logic behind them and the sort of monthly ups and downs to expect.
Daniel also stresses this throughout his materials and website and he’s absolutely right. Although it may sound like it defeats the object of auto trading robots, you will probably make more money if you fully understand the system you are using rather than simply plugging it in and walking away.
Of course, the entire point of trading robots is that they trade for you and 90% of the time this will be fine. However, I like to think of forex robots/EAs as being like the construction machines on a car assembly plant. Most of the time the operators leave them to do their job because otherwise it defeats the object, but you would never plug one of the machines in and set it running without training the staff on how it operates and when to spot when it might be malfunctioning.
If you fully understand the machine you know its benefits and problem areas, so know when to take a hands-off approach and when to have another look under the bonnet.
Asirikuy really comes into its own for the person who wants to roll their sleeves up and develop their own EAs. One of the down sides of MetaTrader is that it does not contain an easy drop-down menu type system creation interface. So some level of coding is required.
In this regard, Daniel provides one of the best Expert Advisor creation guides that I have come across and this alone is worth the very reasonable subscription fee. This EA guide takes you step by step through the process with links to an Expert Advisor builder that will do the bulk of the work for you with only minimal coding required.
If you do not wish to code, there is a members’ forum where you can post and share ideas, though at this time, the forum is still finding its feet.
Considering the initial cost of just $20 then $5 for each following month, there is lot of value with the www.asirikuy.com service.
It’s not perfect and the service is evidently still finding its feet in some areas, especially as English does not appear to be Daniel’s first language.
Overall, compared to the over-hyped dross that I have come to associate with trading robots, Asirikuy is the best value guide to the field I’m yet to come across. There’s no guarantee that the robots on offer will make a profit, but judging by the logical research put into them, they stand a much better chance than the majority of commercial offerings.
Recommended, especially for anyone looking to truly understand forex robots and maybe even create their own.