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Forex Cash Protector - Expert Advisor Review

Forex Cash Protector Disappointingly, the Forex Cash Protector website doesn't tell an outlandish story in the way that some EA websites do and is generally more factual than most sites I've come across.

The perverse side of my nature does enjoy reading the success stories of former bin men who have discovered Forex and now own a Hollywood mansion and drive three Ferraris and a Bentley.

The website also has separate pages to show both forward and strategy test results which does make a refreshing change, even if the backtest does only cover a one year period so possibly isn't too indicative of longer term capabilities.

Forex Cash Protector is delivered in a compressed ZIP folder which contains the EA, a DLL and some preset files, so it is necessary for users to navigate to their MetaTrader installation folder and copy the files across manually.

There are also three separate PDF manuals which are sent with Forex Cash Protector - a 5 page manual explaining how to install the EA, a 3 page manual explaining the different EA user inputs and a 2 page manual explaining some irrelevant nonsense about a trading strategy using a moving average.

About the EA

Forex Cash Protector is a trend following EA which is intended to work on the EURUSD currency pair. The manual states that it will work on both the 1 hour and 5 minute timeframes.

It uses a combination of several indicators for its trade signals and runs a stop-loss which is declared with the broker. Declaration of a take profit level is optional and the user can choose how to handle exits of the EAs open trades.


Setting Forex Cash Protector up

Most EAs nowadays come with their own self-installer, so it's a bit of pain having to navigate Windows in order to copy the files across into the correct folders.

The user inputs are quite straightforward and include 3 different options for risk management. Users can choose between fixed lot sizes, or they can risk a pre-determined percentage of the free margin on their account or they can choose a third method which is something to do with moon cycles and witchcraft.

Users can decide how they want to handle stop-loss and take profits and there is an interesting option which enables users to close a fraction of an open trade at a certain level and to then trail a stop-loss on the remainder of the position.

There are also 3 variables which control the settings for some of the indicators which are used. These are simply described as "smp", "fmp" and "rp" within the manual, with no explanation of what they might actually be doing.

There is also a default preset file included which can be applied to make Forex Cash Protector easy to set up and use. I'm not really sure why the default variables couldn't have been set at the levels of the preset, but what do I know?


The Strategy Tests

I began by testing Forex Cash Protector on the H1 timeframe using the default preset values. The 10 year strategy test showed it to be profitable which I considered to be a positive start. The balance curve is decidedly rocky though, and probably breaches most people's level of pain tolerance.

A return of 116% over 10 years equates to a compounded 8% per year for which you'd need to tolerate a 30% drawdown along the way.

Strategy Test

Encouraged by this reasonably positive start on the 1 hour timeframe, my next step was to test Forex Cash Protector on a 5 minute chart. Unfortunately, this was where it started to get a bit messy. I initially tested over just 2010 using the default set file and was encouraged even further still by a 37% return in just one year in exchange for a 37% drawdown along the way. When I then ran the same test over 10 years, Forex Cash Protector seemed to go straight into drawdown before crashing and burning after just a few months. No matter what I tried, it was impossible to produce any satisfactory long term results on the M5 timeframe.

I saw no real point in continuing with the 5 minute timeframe, so reverted back to the 1 hour timeframe which had showed initial success. Although profitable over 10 years, the equity curve was quite rocky and the drawdown wasn't too great as mentioned above. My FXCM test had been carried out using a 3.0 pip spread, so I decided to switch broker to Tadawul where the EURUSD spread is only 2.0 pips and run the test again.

With Tadawul, the end results were surprisingly quite similar even though the two equity curves have a different pattern. The 10 year net profit and relative drawdown were about the same, despite the win rate increasing from 70% to 84% with the tighter Tadawul spread. Forex Cash Protector was taking around 25% more trades with Tadawul than with FXCM, and these extra trades seem to have the effect of halving the size of the average winning trade somehow to impair performance.

Strategy Test

FXCP does contain various options to optimise performance. I did try some optimisation, but I wasn't able to improve on the performance of the default settings to any worthwhile degree.


Conclusion

It's pretty clear that any decent performance obtained on the M5 timeframe is going to be short lived. I suspect that the 5 minute settings have been heavily curve fitted to the current market conditions, so anybody choosing to run Forex Cash Protector on this timeframe would need to do a fair bit of regular optimisation work to keep the EA in tune. If you don't optimise it regularly, it's my guess that it will go into drawdown after a while and not recover.

Despite this drawback, FXCP certainly looks to be robust over time on the H1 timeframe where it is profitable. It's not a frequent trader on this timeframe (30 or 40 trades a year), and you'll need to accept that its drawdown could go up to around 30% in return for a compounded return of around 8% pa.

My personal feeling is that using profits and losses in terms of a fixed number of pips is not the way forward because markets constantly change and you need to adapt with those changes.

I'm also not a great fan of EAs that don't set a stop-loss which is what happens with FXCP using its defaults. There is an option to set a stop-loss, so I would strongly recommend that users experiment to find a stop-loss value that works.

I noticed that FXCP uses the same magic number for the 5 minute chart as on the 1 hour chart. I didn't investigate too thoroughly, but I would therefore suspect that users will encounter problems if they try to run FXCP on both timeframes simultaneously on the same account. I suspect that the M5 EA would end up interfering with trades taken by the H1 EA, and vice-versa.

The version I tested was sending its stop-loss with its order to open a new trade, and therefore wasn't ECN broker compliant. I also got a substantial number of OrderModify and OrderClose errors in the tester. These are minor bugs to fix, but some work is needed by the vendor to fix them nonetheless.


Forward Tests

As part of my testing, I've set Forex Cash Protector up on a $5k Alpari UK demo account trading the EURUSD symbol on the 1 hour timeframe. I'm using the H1 default settings as used in the strategy tester and discussed above. I've chosen not to run the EA on any other chart timeframe.

You can monitor Forex Cash Protector's performance at MellyForex by clicking here.

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