Blog Archive

Orange Forex Robot - Expert Advisor in Forward Test

Orange Forex RobotHere in the UK, we have a mobile telecoms provider called Orange whose advertising slogan used to be - "The future's bright, the future's Orange". I certainly hope that the future will be bright for the Orange Forex Robot, which is the latest EA to go into forward test at MellyForex.

Is it just me, or are the names of these EAs becoming increasingly obscure?

Anyway, I'm not the kind of person to allow a name to cloud my judgment, so I'll quickly tell you a few important snippets of information about the Orange Forex Robot.

First and foremost, it's a scalper which works 24/5 on the 5-minute chart timeframe of the EURUSD currency pair. I already have several EURUSD scalpers in forward test at MellyForex, but they generally apply extensive filtering which means they may typically trade only once a day.

What's different about the Orange Forex Robot, however, is that the backtests on the developer's website suggest that this EA is a reasonably high frequency trader. The strategy test from January 2008 to date shows around 12,000 trades in under 4 years, which equates to 10 or 11 trades each and every trading day.

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Forex Cleaner EA - Expert Advisor Review

Despite having a rather unusual name for a Forex trading system, the Forex Cleaner EA has shown much early promise since I put it into forward test at MellyForex.

Some of that is down to good fortune in timing, of course, as I also have EAs in forward test which started badly and are only now showing their true potential after several months of sub-standard performance. Likewise, it's only fair to say that I also have EAs which have started well before going into terminal decline. In the case of Forex Cleaner, it's been in forward test for little more than a month at the time of writing this review and, in that time, it has zoomed up towards the top of my leaderboard where it currently sits proudly in third place.

Forex Cleaner

In terms of its modus operandi, I suppose Forex Cleaner could be described as a 'part-time swinger'.

Before my lusty male readers jump to false impressions that this article is all about wife-swap parties, it's probably best if a describe my term of 'swinger' in greater detail. For a start, swing trading is the process of identifying short-term tops and bottoms in the market, and trading the move between those tops and bottoms. As soon as a trade in one direction is exited, the trader generally hops back on board in the opposite direction in the hope that he can profit from the price reversal. Using this approach, trades generally follow a buy-sell-buy-sell pattern.

Forex Cleaner attempts to identify market tops and bottoms for its trade exits, but also applies some additional filtering which means that it won't take every entry unless those additional criteria are met. In other words, Forex Cleaner only swings part-time. What did you think I meant?

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Forex OverDrive EA - Expert Advisor in Forward Test

The Forex OverDrive EA is another Expert Advisor that I've recently put into forward test at MellyForex. If it shows some promise once it's been in test for a month or so, then I'll consider a full review of the EA.

Forex OverDriveThe EA itself is a non-martingale scalper which runs 24/5 on the 5-minute charts of two currency pairs - EURUSD and GBPUSD, and it appears to get its trade signals when about 500 different indicators are all standing up like soldiers and facing the right direction. Hey, 500 might be a slight exaggeration of the number of indicators used by Forex OverDrive, but I'm sure that readers will understand the concept that this EA is being driven by a shedload of different indicators.

Forex OverDrive sets a fixed stop-loss (default setting is 328 pips) and take-profit (default is 25 pips) once it's entered a trade, and it then trails a stop-loss to exit if or when the trade has moved into profit.

A consequence of the EA's high risk/reward ratio is that the EA should enjoy a very high rate of winning trades, and some forward tests on the developer's website suggest that the EA actually wins around 95% of all its trades. The downside of this high risk/reward ratio, however, is that a full stop-loss being hit will wipe out the entire profits of the last umpteen trades. I ran a quick analysis of the developer's forward test, and it suggested that Forex OverDrive's average winning trade is around 14 or 15 pips and its average loss trade is around 260 pips, giving a risk/reward ratio of approximately 18. That same analysis also suggested that the EA should trade around 7 or 8 times each week on both its currency symbols, so it's relatively easy to work out that it's going to take around two or three weeks to recover from one of the big losses.

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MellyForex October Update

Halloween PumpkinDespite recent unsettling effects on the markets caused by global economic woes, and the unending advice suggesting that automated trading systems should be turned OFF completely until after the dust has settled, the number of profitable EAs in forward test at MellyForex has increased over the last month, from seven at the end of September to no fewer than twelve by the time everybody was out 'Trick or Treating' over Halloween.

Admittedly, I've got more robots in forward test now than I had a month ago, but I find it particularly refreshing that there are a couple of EAs which I've reviewed previously that backtested well, but hadn't been performing in forward test. This month they've made it into the top part of my leaderboard!

The point here is, I believe, that it's very difficult when you look at a 10-year/3,000 trade backtest curve which has been condensed into a relatively small 820 pixel wide GIF image, to fully appreciate that the backtest might show the EA having endured periods lasting 6 months or even a year during which it may not have been profitable. It's understandable, therefore, that the best EAs aren't always going to return a profit immediately they come out of the box. This is highlighted by the Monte Carlo simulations that I conduct within my reviews which suggest most EAs only offer a 30% or 40% probability of an account balance never dropping below its initial deposit. In other words, as many as 60% or 70% of EA users are going to have to suffer a bit of pain before they get the gain!

For what it's worth, I sometimes get the impression that a lot of people just look at the start and end balances of a backtest equity curve, but don't look closely enough at the shape of the curve in between. This leads to systems being dismissed unfairly after two or three bad months, simply because the average EA user doesn't fully appreciate either the risk involved or quite how much patience is needed to trade successfully.

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