Blog Archive

How To Test Your Broker's Latency

The LatencyEA measures the latency to your broker's MT4 serverA rise in recent months of the number of EAs which trade so-called impulse spikes (such as Forex Thor) has meant that a lot of questions are now being asked about latency.

Latency is, broadly speaking, a measure of the time taken to send the packets of data from your PC to your broker's server. A poor connection to the broker's server could result in orders failing to execute at the desired price and trading opportunities being missed. What might seem like a very good EA to some users, may easily turn into an absolute nightmare for others!
I say 'broadly speaking' because, to the best of my knowledge, there's absolutely no way of measuring how long it takes to make the one-way connection between the two machines. Instead, we can only measure something that is called round-trip latency.

Round-trip latency is actually a three-part process because it includes not only the two each-way trips from one machine to the other and back again, but it also includes the element of time which is taken by the broker's machine to process the instructions that have been sent and compile a suitable response. For instance, if each trip takes 200 milliseconds, and the broker's server takes 100 milliseconds to execute any instructions and compile its response, then the round-trip latency will be 500 milliseconds; the one-way latency will only be 200 milliseconds and all the important bits and bobs will have been sorted out on your broker's server after 300 milliseconds.

Capisci?

So how can we measure latency to get some sort of an idea whether our connection is any good or not?

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Cut Your Losses And Let Your Profits Run

When I was recently working to prepare the new EA Analysis pages at MellyForex, something obvious struck me and I thought it would be a good idea to write a short article to explain my thoughts. I then wrote an EA review article the other day which reminded me of that earlier promise to myself so, without wishing to procrastinate any longer, here goes.

As part of the Advanced Statistics of each EA in test, there is a tab called 'Duration' that readers can click on. Clicking this tab displays a scatter graph comparing the profit or loss in pips of each trade taken by the system against the duration of each trade.

As I was browsing through the different pages for each EA, checking the data and charts for accuracy as part of the testing process, I noticed one EA which had taken quite a lot of trades whose trade duration scatter graph looked like this:

This graph shows that the EA holds on to its losing trades for a longer period of time than it holds its winners

What struck me the most about this graph was that it was a classic example which displayed everything that I didn't want to see, despite the fact that the EA in question has demonstrated both reasonable profitability and safety during its time in the MellyForex forward test.

So what's wrong with that graph?

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Yen Drive Forward Test

Yen Drive
Robot Name:
Yen Drive - version 201

Type of Robot:
Multi-currency basket grid trader

Timeframe:
30 minute

Currency Symbol(s):
EURJPY, USDJPY, AUDUSD,

Forward Test Broker:
ThinkForex.com

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Forex Thor EA - Expert Advisor Review

Forex Thor 2One of the first steps in preparing a Forex EA review for MellyForex is to run some strategy tests on the EA which can then be analysed to provide the content for the review. The hope is then that the EA will perform in the same manner going forwards as the backtests suggest.

In the case of Forex Thor, however, which has been sitting proudly at the top of the MellyForex leaderboard for several weeks, I have to be honest at the outset and say that I don't think that those backtests are going to be of much use at all.

To explain my reasoning behind this, I feel firstly that I need to discuss something which isn't specifically related to Forex Thor and which some readers will already be fully aware of. I can only apologise in advance, therefore, if you feel that what I am about to say covers some old ground.
The problem comes about because of the exceptionally short trade duration of all of Forex Thor's trades. A quick peek at the stats page shows that the average trade duration of Forex Thor's trades in its forward test is less than 1 minute, with the longest lasting trade being all over in less time than it takes to boil an egg!

So what difference does that make exactly?

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TradeVader Forward Test

TradeVader
Robot Name:
TradeVader - version 2.7

Type of Robot:
Indicator driven

Timeframe:
15 minute

Currency Symbol(s):
EURUSD, GBPUSD, USDCAD and USDJPY

Forward Test Broker:
FX Central Clearing Ltd.

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