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Forex Growth Bot - Expert Advisor Review



When I decided to write my review about Forex Growth Bot, I had to think long and hard about what to say in the review.

The fact is that the EA has been around for a while now, and there's a lot about it that's already been written.

I didn't just want to simply repeat somebody else's words, therefore, and wanted to come up with something unique for this review.

Fortunately, while I was in the process of carrying out the various tests for my review, I learned something about Forex Growth Bot totally by accident and, hopefully, my analysis of the EA fulfills that "unique criteria", but you'll need to read on to find out more....

The Forex Growth Bot website consists of the typical sales letter page that everyone is doubtless familiar with by now. Unlike some EA sites, however, there are backtests on the website dating back to 2002 plus a rather interesting forward test statement (which is verified at MyFxBook) dating back to the beginning of November 2010 which shows some pretty impressive gains since it was started.

About the EA

Forex Growth Bot comes in its own self-installer and includes a licence management program which enables users to activate the EA for different account numbers.

It works primarily on the EURUSD currency symbol on the M15 timeframe, and is probably best described as a "pyramiding" trend-follower. For anybody who is unaware, the process of pyramid trading involves using the extra margin which is made available from an open winning position to open additional positions in the same direction.

This technique can produce explosive profits, but it can also be a little risky if several positions are open simultaneously which don't amount to anything, as the system can then experience higher than normal losses. It's therefore important to use a strict approach towards trade exits with this type of system, in order to stop the losses from mounting up.

I'm not entirely sure what criteria Growth Bot applies for deciding when to add to a position, and I'm pretty sure that it doesn't just use the free margin generated from open winning trades in the true sense of a pyramid trader, but it certainly seems to work! Although its win rate is relatively low (around 40% in backtests), the average winning trade size is a little under twice the size of the average loss size, demonstrating the effectiveness of Growth Bot's pyramiding strategy.

Setting Forex Growth Bot up

The Growth Bot installation is quite straight forward and the PDF instruction manual is easy to understand. There are 10 external parameters in the standard version of the EA but, for most users, it's probably only the lot size parameter and FIFO setting which will need to be altered. The other parameters relate to such things as whether a SL and TP are to be declared and some hocus pocus to do with optimising the EA for use on symbols other than EURUSD. I chose to leave the other parameter values at their defaults when I began testing.

It's probably also worth noting that there are "Power" and "Advanced" versions of the EA which are available as an upgrade and contain even more external parameters that can be adjusted, but I'm only evaluating the standard version here.

Growth Bot It's difficult to know precisely how Growth Bot works, as much of the trading logic is hidden away inside the EA's DLL, but it's no secret that the EA uses something to do with market volatility when entering its trades. I would guess that it enters the market once the volatility starts to increase marking the start of a trend, and exits its trade(s) as volatility starts to decrease. It seems to only trade at the start of a new 15-minute price bar and can have up to 5 open trades running at once as part of its pyramid strategy that I described earlier.

By default, Growth Bot won't send either a SL or a TP to the broker and, instead, it monitors its trade exits internally. It also seems to "phone home" regularly, as it seems to monitor and compare its trades against similar trades taken by the EA on the vendor's server, and is able to report if any signals to close out of a trade have been missed. I'm sure there will be many users who are prone to server outages who won't be happy that a SL isn't declared, so the EA also includes an option to set one anyway. The ability to compare trades against those on an external server should also act as some form of comfort to those worried that a SL isn't being declared.

Money management within the EA is, in my opinion, a little primitive as the EA only trades fixed lot sizes. Personally, I'd rather see an EA risk a predetermined percentage of the account balance on each trade and calculate its lot sizes based upon the distance away that the stop-loss is located. I guess that must be a little difficult seeing as the EA doesn't ordinarily set a SL as mentioned above but, even if the SL is managed internally, it shouldn't be too difficult to incorporate this sort of risk management system. The manual does set out guidelines for adjusting lot sizes according to account balance which, quite frankly, is a bit basic.

The Strategy Tests

I've previously used the Tadawul broker for my strategy tests and saw no good reason to change on this occasion. They're a 4-digit broker with a 2.0 pip EURUSD spread, and I figured this would produce some fair and representative results.

Tadawul don't apply NFA FIFO rules, so my first backtests were with Growth Bot's FIFO parameter set to false. For anybody reading this who is unaware, FIFO stands for First-In-First-Out and it means that, when several trades in the same instrument are open together, the first trade to have been opened must always be closed first before any other trades can be closed.

Anyway, the test results are below. You can click on any of the equity curve images to view the full report.

Tadawul - 2.0 pip EURUSD with FIFO false
Strategy Test

The first thing I noticed in the results is that some of the trades were taken with lot sizes which were 2 or 3 times the size I had entered. I assume that, seeing as it's a pyramid trader, this is an intentional part of the EA's strategy rather than being a bug in the code. I haven't asked the developer about it though, and you can see the trades in question by looking at the detailed statement above where trade no 57 is the first trade of several which portrays the strange increased lot size. The giveaway sign is the fact that some of the green lot size bars in the equity curve GIF image are higher than others. If every trade were the same lot size, then there wouldn't even be a green lot size bar across the bottom of the image.

Having run a backtest with the FIFO parameter set to false, I decided to re-run the same test with the parameter set to true. It's my guess that around 40% of MT4 users around the world are based in the US and subject to NFA regulations, so I figured it was only fair that I looked at a system that those guys could use.

The test results are shown below, but I have to say straight away that there's something a little odd about them. The net profit with FIFO true and false seems to be identical, but other aspects of the report such as number of trades, percentage of winners, and gross profit and loss values is different. I really can't see why this should be (and don't have the time to dwell too long on the matter) so, seeing as the net profit for FIFO and non-FIFO seemed the same, I figured the best thing to do would be to use and analyse the results with FIFO set to true.

Tadawul - 2.0 pip EURUSD with FIFO true
Strategy Test

At the start of this article, I mentioned that I had discovered something about Forex Growth Bot by accident. When I was setting my backtests up, I entered the wrong symbol and ran a pass on the GBPUSD symbol by mistake. I quickly realised the error of my ways, and stopped the test so that I could continue testing on the EURUSD, but I couldn't help but notice that Growth Bot appeared to work OK on the GBPUSD. The Growth Bot instruction manual says that the EA can be used on other symbols so, with this in mind, I decided to run a full test on the GBPUSD. I set FIFO to true, and the results are below.

Tadawul - 3.0 pip GBPUSD with FIFO true
Strategy Test

I should point out that the GBPUSD settings are "straight out of the box", and I guess that the above performance could probably be improved upon with a bit of optimisation.

I did also try Growth Bot with a few other currency symbols, but the results weren't good and I didn't have much time to spend experimenting unfortunately. If the EA is to work on other symbols, it's my guess that quite a bit of time would need to spent carrying out optimisation to find the best settings. It would probably also be better to purchase one of the enhanced versions containing more external parameters if you intend to experiment with other symbols.


Conclusion

Although I didn't mention it above, I also ran Growth Bot through the tester once again using some 99% modelling quality tick data from April 2007 using a real variable spread. Normally, I would expect the tick data results to show worse performance than the history centre data results. In the case of Growth Bot, however, the tick data results were actually much better than the history centre results. Not only that, but the history centre tests weren't particularly impressive for the first couple of years of the full 10-year test, and it's my suspicion, therefore, that Growth Bot's optimisation has been weighted more towards the last 3 or 4 years. Whilst this is good in so far as the EA should deliver well in the shorter time, it needs to be remembered that the current settings could go out of tune at any stage, and the EA's performance would then revert closer towards its longer term average.

I decided to run the history centre results through a risk simulator to get an idea of what users might expect, using the history centre test results in preference to the tick data results, as I felt they would be more indicative of the EA's longer term performance. I also ran the simulator on just EURUSD as well as on the combined results of both EURUSD and GBPUSD for comparison. The risk simulation results are set out below.

Risk Simulation

What's interesting is that running Growth Bot with both of the symbols results in well over twice as many trades, but the minimum deposit needed to run both symbols safely with zero risk of ruin is only an extra 35%. In addition, the time in days before users are likely to see their return exceed their drawdown is likely to be considerably less when running both symbols (around 15 days, compared to around 30 days for EURUSD alone) because of those extra trades. Remember as well that the GBPUSD test results used in my risk simulation are out of the box. With a bit of optimisation, it's possible that even better performance could be achieved.

Users should also be prepared to accept the rather unusual product licencing system employed by Growth Bot, and the possibility that some strange or buggy behaviour may occur resulting from Growth Bot's comparison of local trades against trades taken on its own server.

Prospective users should also note that the balance curves in my strategy tests above are prone to prolonged periods where they can flatline. Those periods may well last a year or two so, whilst Growth Bot has certainly been performing recently, longer term users may need to exercise considerable patience.

In conclusion, therefore, I would have to say that Forex Growth Bot certainly looks to have great potential, although the minimum deposit needed to run it safely is somewhat on the high side compared to other EAs. In addition, I would like to see an improved money management system implemented which uses variable lot sizes.

Otherwise, I would strongly suggest that users try running it with the GBPUSD symbol as well as its standard EURUSD symbol, and that they also consider looking at one of the enhanced versions to enable better optimisation of some other symbols.

Forward Tests

As part of my testing, I've set the Forex Growth Bot up on a $5k Alpari UK demo account trading only the EURUSD symbol on the 15 minute timeframe. Alpari UK don't have to comply with NFA rulings, so I've set the FIFO parameter as "false". That said, I wouldn't expect much overall difference in performance if I had set it at "true". Otherwise, I'm using the default settings and am trading 0.1 lots per trade.

You can monitor Forex Growth Bot's performance at MellyForex by clicking here.

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