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PipRider - Expert Advisor Review

PipRiderWhen I first started to look at the PipRider EA I hadn't realised that I was going to have to jump through hoops in order to test the EA and write this review. :o

The EA is heavily protected against piracy and, as a result, it runs very slowly in the Strategy Tester. Whereas a normal 10 year test may take anything between 1 and 3 hours, a 10 year PipRider strategy test takes anything upwards of a week.

Fortunately, the PipRider support is pretty responsive and, when I explained to them what I was trying to achieve, they were able to assist in speeding the process up considerably.

Of all the Expert Advisor websites I've visited, the PipRider website is one of the more comprehensive and informative sites. It consists of several pages and explains in reasonable detail how PipRider works. There is both forward and strategy test information, together with a page dedicated to a free indicator and another page detailing a partnership broker offer which enables prospective PipRider purchasers to get the robot for free.

About the EA

Probably the main marketing approach behind PipRider is how it turns $100 into $1,000,000 in a 10 year strategy test and still works live today. I'm very sceptical of outlandish claims like this, and it was certainly something that I planned to look at in closer detail when I started my review.

PipRider trades the GBPUSD pair on the 1 hour timeframe and, to be honest, I'm not really sure how to best describe its trading style. It is certainly trend following, but it operates in a unique way by waiting patiently for a retracement in the price before entering the market in the same direction as the trend. Its profit target and stop-loss seem to vary from trade to trade and, although the TP targets are relatively small (in the region of 11 to 13 pips), they're large enough for PipRider to fall outside of the scalper category in my opinion. The other important point to note is that PipRider avoids trading the European and US morning sessions and seems to only trade onwards of 3pm UK time through to 7am the next day.

I asked the vendors about this, and their response was that PipRider avoids awkward price spikes and trend changes caused through news releases. Once the newsflow for the day is finished, markets return to a more orderly fashion and trend more gently.


Setting PipRider up

Of the EAs I've tested so far, PipRider is probably about the easiest to set up. Aside from coming with its own self-installer, the number of external parameters that PipRider offers its users to adjust is just three. And one of those three parameters is the unique licence key!

Although this certainly makes life simple and there is no possibility for any user-related errors to occur, there's also a part of me that worries about trusting money to what is effectively a black box.

The PipRider PDF instruction manual is 18 pages in length, although around half of that is general preamble, disclaimers and gubbins explaining how to attach PipRider to a chart. Once past that bit, I was able to find out that PipRider risks a fixed percentage of the account balance on each trade and that the lot size will vary according to the balance and the distance of the stop-loss from the order opening price. Encouragingly, the default PipRider risk is set at 3.5% and the maximum allowed risk is 10%. Clearly this is promoting safe trading which is something I'm in full agreement with.


The Strategy Tests

I mentioned earlier that, when I first tried to run a Strategy Test on PipRider, I found myself banging my head against a brick wall. :x

I asked questions and discovered that, when it is first run, PipRider gathers some information about your broker's server time offset in relation to GMT and writes this to a file. This information is then used to automatically detect when PipRider starts and finishes trading each day, but it also means that, unlike many EAs, it can be used in the Strategy Tester at weekends without the user needing to input an over-riding manual server offset. The problem is that, to collect the time offset information and write it to file in the first instance, the market needs to be open. Not realising this, I got up with the larks to set PipRider up one Saturday morning, only to have to wait nearly 40 hours for the markets to re-open before PipRider could complete its registration and be used in the tester. :cry:

The PipRider website explains in reasonable detail the effect that a broker's spread can have on an EA's performance, and suggests that PipRider users select a broker whose spread is no greater than 3 pips. I've been testing EAs with FXCM, and as I was able to fix their GBPUSD spread at 2.9 pips, I decided to continue with that theme. I used the default risk of 3.5% and set the maximum allowed trading lots to 100. Although in practice I doubt for one second that anybody would attempt trading 100 lots, I figured from my "back of an envelope" calculations that I'd need to set it this high to be able to get a truly indicative set of results in a 10 year strategy test.


FXCM - 2.9 pip spread
PipRider Strategy Test

So far, I was happy that PipRider was ticking all the right boxes and seemed capable of surviving 10 years. Its long term win rate was around the expected 80% and its worst case drawdown was also a respectable 17.5%.

The only disappointing thing was that there seemed to be several 6 month periods during the backtest when the equity wouldn't have made any progress. Personally, I'm not too bothered by spells of sideways movement, but I did want to look a bit closer at this, so I ran a second test over the last 18 months from mid-2009 through to the end of 2010 to get an idea of how PipRider had been performing more recently. For this test, I decided to switch broker to Tadawul to get an idea of different broker compatibility.

The Tadawul GBPUSD spread is 3.0 pips, but they offer different lot sizes and they're a 4 digit broker, so I figured this test would also portray PipRider in as realistic a light as possible.


Tadawul - last 18 months - 3.0 pip spread
PipRider Strategy Test

If you look closely at the equity curve, it's pretty easy to spot the 6 month or so lean spell towards the end of 2010 when PipRider's equity curve didn't progress, and this is when the 13% drawdown in the report occurred. In the 10 year test, I could see three or four similar periods.

If you ran PipRider live, you'd need to be prepared to accept that spells like this may happen at some stage. They're in exchange for a good, robust overall return with a low drawdown though, so it's important to sit with them, even if they might seem frustrating at the time.


Conclusion

PipRider looks to be well coded, it didn't report any errors in the logs and it seems to trade a solid strategy which is capable of withstanding the ravages of time. It shows on screen what its trading intentions are and at what price it plans to trade, and internally it is coded not to allow any slippage so I would expect to see the good backtest performance being replicated going forwards.

It declares a SL and TP with the broker, but generally uses some internal strategy to exit trades ahead of an SL being reached. Although the initial risk/reward ratio is typically a quite high level of about 9, the internal exit system reduces this to a more acceptable level of about 3. Even so, I would expect a full stop-loss to be hit on average about once every three weeks.

PipRider only enters one trade at a time, so there are no issues with NFA hedging or FIFO regulations. I noticed also that it is ECN compatible and can handle 5 digit brokers automatically.

It seems to trade around 350 times a year which is an average of about 7 trades a week. It doesn't seem to be too broker dependent, but I think it would be best to follow the vendor's recommendation and select a broker whose GBPUSD spread is 3 pips or less. There are plenty around, so it's not a major restriction by any means.

PipRider's biggest drawback, in my opinion, is that it could be prone at some stage to a 6 month spell on the sidelines where it merely breaks even. I'm quite patient and tolerant of these things, but I guess there are some out there who would become frustrated and remove the EA from its chart just before it recovers.

What I'm trying to say is that PipRider isn't a sexy EA, and it won't have you hanging on to the edge of your seat or biting your nails down to the bone. Instead, it's clearly been designed to last and it's built for comfort, not speed.


Forward Tests

As part of my testing, I've set PipRider up on a $5k Alpari UK demo account trading the GBPUSD symbol on the 1 hour timeframe. I'm using the default settings which only risk 3.5% of the account balance on any single trade.

You can easily monitor PipRider's performance at MellyForex by clicking here and there is a PipRider discussion thread on the MellyForex forum here.

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