He's certainly a funny looking chap, isn't he?
Appearances can be deceptive, however, and since putting Mr OddBot into forward test, he's certainly been performing well and has been consistently towards the top of my Live Leaderboard, and is starting to appear like a robot which is both profitable and also very safe to run.
In my latest Forex Expert Advisor review I aim to find out precisely just how good the Morpheus OddBot EA really is!
As it happens, I plan to say some nice things about Morpheus OddBot further on within this review, so it's probably best if I put my witch's outfit on at this stage and get the unpleasant matters out of the way so that we can move forwards.
My biggest complaint relates to the quality of the Morpheus website. I do understand that the OddBot developer is planning to redesign the website in the near future but, at the time of writing this article, it lacks a lot of important information about the EA and it isn't particularly easy to navigate.
Fortunately, there is a support forum on the Morpheus website that OddBot users can use for product information, downloads and support, and this has recently been linked to from the main part of the website. I guess it shows that the Morpheus OddBot developer is moving in the right direction and I'm sure that my relatively minor niggles will all be resolved in the near future.
Hopefully, by the time you read this article, the website issues will have been resolved and my above comments will appear meaningless and irrelevant.
My second observation is that the OddBot PDF installation manual is probably best described as being succinct and to the point.
It consists of only 4 pages, of which just 2 pages relate to setting the EA up. Personally, I'm not too bothered by this as I know exactly what I'm doing when it comes to setting up a MetaTrader Expert Advisor, but I guess that installation could be a little daunting for some of the Forex-newbie users out there who aren't even entirely sure what MetaTrader MT4 is.
Now that the nasty things have been said, I guess it's probably time to take my black pointy witch's hat off and move on to the positives.
What do you reckon, boys?
Well, I guess that the biggest positive of all is that the Morpheus OddBot does actually seem to work, and I'm certainly hoping to fill in some of the empty boxes and cover some aspects of the EA that haven't been explained elsewhere within my review.
About the Morpheus OddBot EA
The OddBot EA contains security measures which make it difficult to understand exactly what it is doing. The Morpheus website, unfortunately, doesn't give too much away either, other than to say it "uses internal indicator logic.. harmonic/candlestick patterns.. moving averages to place extremely accurate orders". Hmmm, I'm not entirely sure what all that means but, from studying OddBot's behaviour, I'm guessing that the EA identifies a trend direction, then waits for a price retracement which has formed a particular type of chart pattern before entering the market in the same direction as the trend.
It is a scalping EA which only takes a few pips profit at a time and it works on both the EURUSD and GBPUSD currency pairs on the 15-minute timeframe. I did also notice somewhere on the developer's website that OddBot can run on the USDCAD symbol, although my tests focus solely on the two main currency symbols mentioned, and anybody using OddBot on other symbols should carry out their own tests on those symbols first.
OddBot doesn't use Martingale, and it can trade either fixed lots or it can risk a percentage of the account on each trade. Ordinarily, it will trade through 24/5, although it does include both a time filter as well as a news filter, meaning that trading can be limited to certain times of the day and turned off completely for a while both before and after potentially market moving news is released.
OddBot sets a stop-loss and take profit value when entering the market (which can be hidden if required). From studying the trading pattern, it looks as though OddBot waits until a trade is in profit by a certain amount and then adjusts the stop-loss to lock in a small profit. In fact, users have the ability to adjust the amount that is locked in themselves.
Having locked in a small profit, the obvious hope is that the price will continue its move and the trade will reach the take profit level. In practice, however, the price generally either falls back to trigger the profitable stop-loss or the system closes the trade itself (for a decent profit) ahead of the take profit level being reached.
My tests will show that the approach experiences a high rate of winning trades (over 80%), and that OddBot is profitable both in monetary terms and also in terms of pure pips. Morpheus OddBot works on ECN/STP type brokers and it normally only opens one trade at a time, which means that there are no NFA compliance issues. It does, however, include an option to open multiple trades and I noticed that it will then close the later trades before it closes the earlier ones, meaning that it breaks FIFO rules and therefore isn't NFA-compliant when running under this option.
US-based users will therefore need to ensure that they set the Morpheus OddBot up such that it only has one open trade per currency symbol at any time.
Setting the Morpheus OddBot EA up
Setting OddBot up is reasonably straightforward, although there are still quite a lot of external parameters which the user has the option to adjust himself.
No fewer than 10 external parameters relate to the use of the time filter to determine times that the EA should trade, and 4 parameters relate to the news filter. The default is for the EA to trade through 24/5 and to ignore the impact of all news, and I was quite happy to use these defaults when first setting the EA up. Users should also bear in mind that the OddBot EA doesn't have the ability to automatically detect the broker's GMT server offset, and this will need to be calculated and entered manually for users wishing to use either of these filters.
OddBot also contains parameters to control trade lot sizes and risk level, as well as parameters to adjust stop-loss and take profit levels, and to choose whether the SL and TP are to be hidden from the broker or not. Because the OddBot EA is a bit of a black box, it's difficult to know precisely how it calculates its variable risk, and I'm unable to tell if the calculations are performed on account balance, equity or free margin.
Anybody wishing to let OddBot calculate its own lot sizes (instead of using the fixed lot size option) controls the risk via a parameter called AutoMM . In the absence of a definitive explanation within the manual, I had to start several tests and look at the worst case losses to appreciate how this parameter actually worked. It appears that, in setting its value at 10, I was risking approximately 12% of the account balance (or equity or free margin) on each trade, so I experimented with several levels and discovered that the actual risk per trade percentage-wise was factored at 1.2 times the AutoMM setting, and I eventually settled at an AutoMM value of 3 which I figured would risk 3.6% of the account.
Parameters such as maximum spread, slippage and the SecureProfit parameter are what I would personally consider to be the most important, however, and users should give thought as to their input values. With a scalping EA such as OddBot, allowing too much spread or slippage can mean the difference between a profit or a loss from a trade. The SecureProfit parameter is used to control the amount of profit in pips that is locked in once a trade moves nicely into profit. This is also an important parameter, but more about that later!
The Strategy Tests
Given that spread is always going to be an important factor with any scalping EA, I decided to test OddBot first using a typical broker with a 2 pip EURUSD spread and a 3 pip GBPUSD spread. These spreads can be easily obtained by everybody nowadays, and I happen to think it's a good starting point for testing an EA. As with previous EAs in test, I opted to use the Tadawul broker for my first tests because they not only satisfy the spread criteria, but they're also an older style 4-digit broker and this type of broker isn't generally suited too well to scalping robots. My thinking is such that, if a scalping robot can survive a Tadawul backtest, then it stands a good chance of longer term survival and warrants further investigation.
Anyway, here are my 10-year Tadawul strategy test results.
Tadawul - EURUSD - 2.0 pip spread
Tadawul - GBPUSD - 3.0 pip spread
Now that I was satisfied that OddBot was at least capable of survival when using a typical retail broker, I decided to run the same tests again using FX Primus as a broker. I wanted to make use of FX Primus's tighter spreads, so I fixed them at 1 pip for EURUSD and 2 pips for GBPUSD to give some sort of an indication as to how OddBot would be likely to perform with an ECN/STP type broker.
FX Primus - EURUSD - 1.0 pip spread
FX Primus - GBPUSD - 2.0 pip spread
Clearly, the better performance was being obtained by using the tighter spread but, after carrying out the latest round of tests I was a little concerned that better performance was being obtained on the EURUSD symbol than on the GBPUSD symbol, and I decided to investigate why this might be.
My first suspicion was that tests on both symbols were being carried out using the same SL and TP values, and it was possibly a case that "one size doesn't fit all". I figured that the TP value probably wasn't an issue simply because the TP was never being hit as trades were being closed ahead of its level. Trades would often run to the stop-loss, however, so I decided to look at some optimisation of the SL values on the GBPUSD symbol. To cut a long story short, my results showed that a little optimisation of the SL value would improve things, but the improvement would only be relatively minor. It certainly wouldn't get the GBPUSD performance up to the same standard as the EURUSD performance.
At this stage, I decided to look at the SecureProfit parameter. As I mentioned above, once a trade moves a certain distance into profit, OddBot modifies the stop-loss to lock in a small profit. The default is to lock in just a single pip of profit, and I decided to investigate if locking in a greater profit would improve performance.
For anybody unfamiliar with MetaTrader optimisation, the following images are screenshots showing the different results obtained for different values of the SecureProfit parameter. It's pretty clear that increasing this parameter by just a pip or two above its default value of 1 is actually detrimental to performance, but increasing it by more than 3 or 4 pips results in increasingly improved performance in terms of both increased profit and reduced drawdown in percentage terms.
I stopped the optimisation with a SecureProfit value of 9, and it's possible that, had I continued to increase its value further, performance might have improved further still. I don't really consider it my job to optimise EAs that I'm testing. Instead, I'd rather just steer people in what I feel to be the right direction, and then leave them to discover the best settings for themselves.
EURUSD - Optimisation of SecureProfit parameter on FX Primus with 1.0 pip spread
GBPUSD - Optimisation of SecureProfit parameter on FX Primus with 2.0 pip spread
Having carried out this limited amount of optimisation, I then re-ran the full backtests with a SecureProfit setting of 9 pips to see how it affected the look and shape of the balance curve.
FX Primus - EURUSD - 1.0 pip spread and SecureProfit parameter set at 9 pips
FX Primus - GBPUSD - 2.0 pip spread and SecureProfit parameter set at 9 pips
Although, not perfect, the GBPUSD curve is certainly smoother than it was before the optimisation.
The only observation I had from my tests using the higher SecureProfit value is that there were a lot of OrderModify errors within the results. This is down to the broker's stops level being employed which will vary from one broker to the next. FX Primus's stops level in my tests was 4 pips. With a SecureProfit of 9, any attempt to modify the stop-loss while the open profit is anything less than 13 pips (ie. 4 pips plus 9 pips) will result in these OrderModify errors.
It's only a minor problem, however, and certainly shouldn't affect performance of the EA in any way.
At that point I decided to call it a day in terms of carrying out further tests. I mentioned that there are time and news filters but, to my way of thinking, the Morpheus OddBot EA looked capable of trading 24/5 through the impact of news events, so I didn't really see too much point in removing blocks of trades when the EA already appeared to be working in an acceptable manner.
I also decided not to test the option which allows multiple trades to be open concurrently, mainly because of the non-FIFO compliance aspect of this particular feature.
I'm keen to continue with my recent policy of performing a risk simulation and of carrying out Monte Carlo projections based upon the strategy test results. With the OddBot results, I ran a simulation based upon the FX Primus test results for both the default and my optimised settings of the SecureProfit parameter.
Risk simulation based upon original FX Primus results with SecureProfit parameter set at 1 pip
Risk simulation based upon original FX Primus results with SecureProfit parameter set at 9 pips
The improvement resulting from the optimisation work is clearly visible for the GBPUSD symbol, and OddBot would appear to much safer to run as a result. The risk simulations show that it should be possible to start running Morpheus OddBot with a relatively low account deposit, and users should experience a relatively high level of satisfaction, with around half of all users not seeing their account balance drop lower than their initial deposit.
I also decided to show the modified balance curve achieved from using fixed 0.1 lots using SecureProfit set at 9 pips, simply because you rarely get to see them quite so straight!
With everything I've said above having been digested, it's important to remember that Morpheus OddBot is still a scalping EA, and the best performance from any scalper is always going to be achieved when using a broker with a very tight spread such as an ECN or STP type.
As with certain other EAs, Morpheus OddBot also seems works well over a prolonged period of time (10 or 11 years in backtests), but there are still spells of 6 months or so within the equity curves where there has been no overall return or even a loss. Prospective users will therefore need to exercise patience should these situations occur again in the future.
Finally, it is going to be important to strictly control the maximum spread and (preferably) not to allow any slippage whatsoever on the trades. This consideration is going to be particularly important if the SecureProfit parameter is left at its default value of 1, as a potential profit will be lost before you know it!
For these tests, I've chosen to use a $5k demo Forex Central Clearing account. This is an ECN account and the demo price feed is identical to the live feed, so it will hopefully portray the Morpheus OddBot EA in as accurate a light as is possible. The account uses raw spreads and adds a 0.5 pip commission to each side of a trade, making 1.0 pip total commission per round trip.
The EA has been set up with its AutoMM parameter set at 3, so that it risks 3.6% of the account balance on each trade on both of its recommended currency symbols.
Because FXCC are charging a 1.0 pip round turn commission on each trade, I am having to add 1 to the setting for the SecureProfit parameter.
I originally set this parameter to 2 but, having carried out the tests above, I have elected to increase it to 9.
The majority of trades will therefore result in what is effectively an 8 pip profit once the 1 pip commission is taken into account.
I've also set the slippage parameter to zero and am also limiting the maximum allowed spread in pips as follows:
EURUSD - 2.0
GBPUSD - 3.0
As with my other robots in test, you can monitor the Morpheus OddBot's performance at MellyForex by clicking here.