Money Management The most important most neglected aspect of automated trading

It is funny how people in forums and people who program expert advisors in general seem to address the problem of finding a profitable system and making it profitable. It seems that most of the time, most of their time and testing is spent on evaluating the entry and exit strategies of the trading strategy. People seem to think that the actual money in the forex market is gained by getting perfect entries and exits all the time, or most of the time.

I have seen people in forums go around for months trying to modify their strategies to make them profitable, they will add filters, add indicators, change the rules, optimize the variables, the indicator periods, add volatility filter, to sum it up, they will do everything they can to further perfect their entry and exit strategies. To further worsen things, most of their efforts are concentrated in the entry to the market, which is the most trivial and unimportant part of forex trading systems (see more on this on my ebook).

I have found out that the most important part of a trading system is not the entry or the exit of the strategy, but the money management. What ? Many people will just be awed by this fact as this is hardly even spoke of and people always neglect its importance when they program an automated trading system. When people buy an EA, they dont really care about how the EA actually manages their money, which is, as I have already said, the most important aspect of the system.

Usually people will use a money management system that just trades a fixed percentage of equity or a fixed lot size. They couldnt do any worse. Trading like this only relies on your account balance, not on the market and any money management system that makes sense, gauges the market to know how much money should be invested. For example, would you invest as much on the stock market now as you did last year ? The answer is NO. Why is this the answer ? Because how much you trade depends on how the market is behaving, is it a "good time" or a "bad time" ? Your money management must depend on both your account balance and market behavior, this is the way professional traders manage their trades. They dont trade X percentage or a fixed lot size, those money management strategies are just naive and precarious.

As I have shown previously, I have been able to take several systems that showed no profit at all and simply by removing all the additional filters that had been added and adding a money management system that made sense I was able to make them profitable. This is something you should NEVER neglect and something in which your attention should be focused. A money management that makes sense will make a system that makes sense and that trades according to how the market actually moves.

If you would like to learn more about automated trading systems, how I evaluate them, test them and how you to can build and program your own long term profitable automated trading strategy please consider buying my ebook on automated trading or subscribing to my weekly newsletter to receive updates and check the live and demo accounts I am running with several expert advisors. I hope you enjoyed the article !

How the Market Changes Adapting Against Market Conditions Part Two

Yesterday we talked about the definition of a "market condition" and how systems can try to adapt against changes in this conditions my "making themselves ready" for the appearence of an "ideal type" market state. I gave you an explanation based on an analogy with a camera an trees placed at different distances which makes the ability of the camera to focus the systems adaptability and the type of tree the actual result. Today I am going to talk about the "lens" which may allow a trading system to prepare itself for changes in market conditions and the evidence I have found of this actual adaptation technique being simple and valid to adjust our systems to ever-changing markets.

So what does the "lens" actually do ? Imagine that you have a system that trades a very simple entry like a moving average cross with a stop loss value of 50 pips and a take profit value of 50 pips. The perfect setup for the system is when there is a moving average cross and the market moves 50 pips towards the favorable side before moving 50 pips into negative territory. This is what we could call the systems ideal trading condition. However if you analyze any moving average cross for the past 10 years and you determine the mathematical expectancy in terms of pips, youll notice that the actual movement varies greatly as market conditions change. Sometimes the system would be able to capture 100 pips, other times 20, other times 50. In the end, you find that the "ideal" condition for the system is fairly rare and when it appears it seems that it is failing to achieve its true potential. What we want to do is implement some type of adaptation technique such that those 50 pips do not remain constant but that they change with market conditions such that the probability of reaching an "ideal" condition becomes higher.

But how does the market change ? What makes a moving average cross in 2004 give only 20 pips and in 2008 give 300 ? What fundamental characteristic of the market changes ? Of course, this is not an easy question. An analysis of market properties over time related to the extent of movements reveals that the size of movements such as moving average crosses increases as volatility does. This means that if volatility grows, then the extent of our TP and SL should grow too to show us the "ideal" condition under current market conditions. This is the technique used on many of my trading systems which adapts a systems parameters against changes in market volatility. This allows the systems to remain efficient and fit to the current markets ideal trade while maintaining a very good degree of simplicity.

So the "lens" of a trading system can be market volatility, with this tool systems are able to "focus" on current market conditions and get a clear picture of what an ideal trade under the current market status would be. This adaptation proves to be vital for systems to survive to changes in the instruments they are trading as systems which maintain fixed parameters are like a camera with a fixed focus, once the picture changes they arent unable to determine what the image actually is.

It would be naive to say that volatility is the only actual parameter of the market that changes with changing market conditions but it is the easiest parameter we can measure that allows us to generate an adaptability criteria. Of course, other ways of adaptation which measure other aspects of the market such as "pattern shapes", "length of trends/consolidations", etc are also possible but their measurement is far more complex and doesnt necessarily generate better results than those that arise from a simple volatility adapting criteria.

If you would like to learn more about adaptability and how you too can learn to build systems which adapt to changes in market conditions using volatility please consider buying my ebook on automated trading or joining Asirikuy to receive all ebook purchase benefits, weekly updates, check the live accounts I am running with several expert advisors and get in the road towards long term success in the forex market using automated trading systems. I hope you enjoyed the article !

SPREAD BETTING IMPACT MACROECONOMIC DATA TO THE LIQUIDITY OF CALENDAR SPREAD

         

         Time to enter the macroeconomic data is always an important moment for all market participants. At that time, the market for which the specified concerned, there is a significantly increased volume of orders. On the market there are the banks, hedge funds, corporations, speculation companies and individual traders. During the shows the important data outrights (ie the underlying - for example, oil and S & P500 ) carry significant moves. Not once they reach 100 pips in a matter of seconds or minutes. Sometimes its directional movements - only one way. Other times you can watch the traffic up and for a moment the same downward movement. Scenarios can be different.
     

           For Future Traders on calendar spreads time of economic data is also very important. Frequently at this time on the market begins to significantly increased liquidity. It is very important that, despite the increased liquidity, market volatility has not increased significantly. This is very good information for traders and speculators.
          Experienced trader on the spreads markets during the shows of macroeconomic data puts the orders in the market trying to take advantage of liquidity, which increases at this time.They not running away from the market before the fear that the market will perform big moves up or down. Most movements are small - market is still trading in narrow rang and trader using the using the high volume turns futures bid/offer.
   

            Due to the rise liquitity significantly increases the chance of entry into and exit from the positions. When a calendar spread continues to move in the range of 3 - 4 pips despite the enormous growth in the volume, on the market we can place large orders to turn contract with one pips profit. Frequently during major economic data specific instrument can be turned several times within a few minutes of increased volume. The most favorable situation is when spread trading in the two points. Then the trader places the orders bid / offer and waits when liquidity will allow him to get the bid and offer (or vice versa). Turning the instrument several times a high lots can be very profitable.

           The picture below shows the orders window (without queue).
         

Why I trust the Gods Gift ATR Expert Advisor

I have always said that one of the main requirements to succeed with an automated trading system is to be able to trust the system and trade it through all market conditions with the assurance that the system will be able to recover from temporary loses. Trusting and knowing how a system works also enables you to know your systems strengths and weaknesses, something which makes trading with it much easier.

One of the systems I have been working on and testing for a while is the Gods gift ATR expert advisor which I programmed based on the original Gods Gift 7c programmmed by Matt Edmonds. Now, after being involved and watching this system trade live for more than 2 months I can start to say why I certainly trust this expert advisor. So why do I exactly trust the way the Gods gift ATR expert advisor trades ? Well, because the experts traiding fulfills some of the most important aspects any profitable trading system should (at least in my opinion).

Adjusts itself to the market : This ea uses the ATR indicator in order to adjust its position sizing and market orders to match a certain percentage of market volatility. This somewhat guarantees that the expert will remain profitable under many market conditions since it is able to adjust itself to the different amplitudes of market movements.

The trend is your friend : The gods gift ATR expert advisor is able to follow trends when they develop by using a trailing stop which lets the expert take advantage of very long trending markets without getting stopped out.

Cut your loses short, let your profits run : The ea is able to cut loses by using an internal closing mechanism which follows many different indicators. This lets the ea exit the market before hitting the stop loss either when the price goes against the trade or when the stop loss is trailed after that price has moved in favor of the trader. This has the clear effect of increasing the ability to follow trends while minimizing the loses generated when the market is not with the trader.

Realistic Profit Expectations with Adequate Risk : The gods gift ea is able of producing 50-100% a year with a draw down not exceeding 20-50% (per back and forward testing results), this is a realistic profit expectation which reflects the conservative way in which the expert advisor trades. The equity curve generated by the ea is globally linear with a neat increase in equity under very varied market conditions.

I consider that the above reasons make the gods gift expert advisor a very unique and sound trading system. The ea has up until now proved to be robust and consistent, something which is a must have for a long term automated trading system. If you would like to learn more about this and other free and commercial expert advisors please consider buying my ebook on automated trading or subscribing to my weekly newsletter to receive updates and check the live and demo accounts I am running with several expert advisors. I hope you enjoyed the article !

Dont Trade Alone ! Making Profits in the Forex Market

Almost all the people that start trading forex are aware than more than 90% of all retail traders wipe their first accounts clean. If you have read any web page or book about this market, that statement should not surprise you. Taking a profit in the foreign exchange is like trying to grab a golden coin that sits at the bottom of a pool full of piranhas while a million other people try to do exactly the same thing. It is not easy, not even with the right education. The forex market has wiped clean economists, finance specialists, stock brokers, you name it, they have killed their accounts using forex.

What makes everyone that starts in forex think it is so easy ? Well, human nature for one. You never think that the bad things that happen to other people happen to you, even if chances are highly against you. What makes you better than the other traders ? Another important thing you must think about is that the 90% that lose their accounts are by no means stupid. They are, as or better prepared than you. So again, what makes you so special ?

In fact, nothing. The most important thing in the forex market is knowing how to handle your own psychology and as you know, most traits that make you successful in life, make you wipe accounts in forex. For example, being stubborn and having perseverance, holding on, being ambitious, etc. This personality traits are most certainly going to take you down, sooner or later. That is, until the market baptizes you with your first account loss, then you should have taken a lesson.

But how do those 5% that have managed to make some profits out of the forex market do it ? What in the world made them so different from the rest ? Well, most of them did not trade their first account alone. Of course, if you have someone by your side to tell you "hey, that is stupid", "hey, dont take that position", "hey, stick to the system", then things will look much better for you since you are being walked through your first experience on the market. So for all those forex newbies out there, find someone who has traded for a while and start trading with them, side by side, chances are you will both be profitable.

In my experience, a team of three people is ideal for trading. You get three different analysis plus you get two safes against stupidness. It is much harder for three people to become emotional and act erratically than it is for a single person. When you get more than three, things start to change a little as group emotional factors start to kick in and another type of stupidity arises (like a mob mentality).

So go out there, find a trading buddy and start your profitable forex career. If you would like to learn more about automated trading systems (expert advisors for the metatrader platform) in order to trade without any human intervention please consider buying my ebook on automated trading or subscribing to my weekly newsletter to receive updates and check the live and demo accounts I am running with several expert advisors. I hope you enjoyed the article !

George Soros When I see a bubble Ill buy and I see a flaw in the bubble Ill sell!

Runaway Bull Market The Dow Jones

In the beginning of 2013 hardly anybody will predict that the US market will experience the so called "Runaway bull market"! Runaway bull market means that the market is rising without a 20% correction. If we look back at the history, the last >20% correction was in 2011 August - the debt ceiling crisis. Prior to that was the 2008-2009 prolonged bear market that the DJIA was wiped out by more than 50% from its peak of 14,000. 

Nobody can predict accurately when is the next major market correction but there are a few factors that will determine the direction of the market: the Fed, the interest rates and the slowdown of the Chinese economy. To a lesser extend, some may even think that there could be a commodity crash but I think the possibility is low, but I would not rule out completely as 120 years ago in 1893 there was a stock market crash sparked by the Sherman Silver Purchase Act that caused massive bank failures during that time.

Malaysia market so far has been quite resilient without much affected by the recent Asian market sell down by the foreign funds. If you have been following my articles, you will know that I recommend the timing for entry into the market is February, May, August and November as these are the cycle low months of the year statistically. However,  I would advice investors to be cautious from August till November as these months are more volatile historically with many stock crashes happened before.

Moving forward to the second half of 2013, my stance still holds that generally this year will be a bullish year with some minor corrections of not more than 10% each. Support is 1600, resistance is 1840. And my favourite sectors are properties, construction, oil and gas.

Good luck to your investment, remember to take profits, lock in your gains first as therell be plenty of opportunity to buy low sell high. 

Happy investing,

Pauline Yong 

Jumping to Conclusions The Neglect of Statistical Significance

One of the most prominent mistakes I have noticed when people try to develop new trading systems or test commercial or free trading systems is their eagerness to jump to conclusions. I believe that the way in which many people evaluate systems and make conclusions about their profitability/unprofitability is actually faulted due to the fact that they dont take into account the significance of their results when evaluating a strategy. On todays post I will write about one -if not the most- important aspect when evaluating any trading system or strategy : Statistical Significance. Through the following paragraphs I will explain to you what this concept is and what its consequences are for expert advisor evaluation and trading system design.

When people design or evaluate a trading strategy they are usually very eager to say something about the performance of a system within a few weeks or a few months. Phrases like - if it works well on demo for a few weeks Ill put it on live - or - it didnt make a profit for 6 weeks - are very common and some of the first things new traders actually learn. The problem is mainly that this short-lived analysis of a trading system usually leads to conclusions which are only representative of short term performance and do not have any validity regarding the long term aspects of a given trading strategy.

I believe that this problem is mainly a consequence of the lack of formation people have regarding statistics - a field which is very important when developping long term performing systems. This science tells us that in order to draw valid conclusions for a given question we must have a big enough sample size. So saying that a system is unprofitable or profitable from a few months of testing is simply not valid because a few months are simply statistically not representative of long term performance. When you evaluate a trading systems performance in the short term you are simply evaluating it under current market conditions and possibly under a temporary draw down cycle which does not appear evident to you due to the short scope of the analysis being done. This is specially important for many systems that have predictably long cycles of draw down which then lead to very profitable trading periods, systems which would most of the time be discarded by people who simply dont evaluate systems in a rigurous manner.

Another problem of this "short term syndrome" is the fact that people quickly jump to conclusions about how to modify a system to make it "perform better". These modifications which are almost NEVER based on an analysis of a statistically significant number of trades may lead to an improvement of performance under current market conditions with a fatal blow to long term trading performance. On the other hand, there will also be a "praise" of systems which perform very well in the short term, often leading to the heavy use of systems that use unsound trading techniques and which put accounts at a great risk of facing a complete wipe out.

So what is a statistically significant sample size ? This question is not very easy to answer since there is no mathematical criteria to put aside a market condition from another. I have discussed this question a few time with a friend of mine who has a major in statistics and we arrived at the conclusion that - according to volatility measures - at least 5 years of analysis are necessary to draw valid conclusions about a trading system. Therefore, when going through system development and the proposal of modifications it becomes necessary to evaluate a modification or performance through the course of a five year period in order to draw valid conclusions.

In the case of systems which ARE back/live testing consistent, five years of live trading are necessary in order to conclude that the adaptability and performance seen in backtesting can effectively be reproduced under future market conditions. If the system is not back/live testing consistent the problem becomes harder as at least an initial 5 years of live trading with no modifications are necessary to make an analysis to propose changes to the system to increase its profitability.

I know that it is actually hard to go through hundreds of trades and evaluate one by one the effect of a certain modification. For most people it is much easier to just evaluate systems for a few months and draw conclusions which are simply not statistically valid meaning that they are not representative of the systems long term performance. Some people even venture to modify systems based on just a few weeks or days of trading, making modification which have an unpredictable effect on long term performance.

It is easy to understand- with such a lack of rigurous analysis and evaluation - why there is an overvaluation of systems that give short-term result and a systematic discarding of some systems that have indeed potential for long term profitability. Most reviewers show little or no knowledge regarding this field and they will be very quick to jump to conclusions without having a clue about the validity of what they are actually saying from a "sample size" point of view. I encourage everyone interested in system design or in automated trading in general to get a basic formation in the field of statistics and particuarly in the field of "hypothesis testing" which evaluates the whole process of drawing valid conclusions from a given statistical sample.

If you would like to learn more about what I have learned in automated trading and how I focus my efforts in the teaching and development of systems which have a high like hood of being profitable in the future please consider buying my ebook on automated trading or joining Asirikuy to receive all ebook purchase benefits, weekly updates, check the live accounts I am running with several expert advisors and get in the road towards long term success in the forex market using automated trading systems. I hope you enjoyed the article !

Looking at the Future Through the Past The Key to Successful Entry Logic Design

When you first attempt to design your own mechanical trading systems you often start with big questions about the way in which this is supposed to be done. The building of the entry logic - which marks the potential of a trading strategy (not its profitability !) - is quite commonly the first obstacle new traders find when attempting to develop a strategy. Generally people who arent familiar with system development will start to develop entry logic based on visual observations - without a true grasp of the underlying market- something which is bound to create significant problems and eventually lead the trading strategy to failure. On todays post I will be writing about how you should address entry development and how you should focus on the understanding of the currency pair and the building of causality chains so that you can truly build entry logic criteria that have a good potential for the development of a long term profitable trading strategy.

When you sit down and start to build the entry logic for your next strategy you have to think mainly about two very important factors. First, you need to think about the underlying market characteristic you want to exploit and second, you need to think about the chain of causality that is bound to bring your trades to exploit this desired characteristic. To do any of these two things, you require an understanding about the underlying price action characteristics of the instrument you are trying to trade. Aiming to do this without a proper understanding of the behavior of the instrument you are trying to trade will bring nothing but failure.

How do you start then ? The first thing you need to do is to ask yourself about the inherent characteristic of the market you want to tackle. For example, let us suppose you want to exploit hourly trends in the GBP/USD. After deciding you want to do this you then need to look for the "ideal trades" you would have wanted your system to get into, when you would have ideally wanted to get in. Once you know your ideal entry you now need to look into the past and see if there were any changes that pointed out that this would happen. This leads us to the second part, developing a sense of causality.

Everything that happens in our world has a cause and so do market movements. When a given market movement develops there is bound to be a cause behind it. By looking into the past and finding certain market behavior that signals that a certain event is likely going to happen we find ourselves with the goal of entry development, a market inefficiency. The idea here is to look at the past and see what particular price behavior has led to our intended ideal entry setup. Once you have pinpointed this past cause that leads to your ideal entry setup you can code the logic and do a mathematical expectancy analysis. As you see here, the key is to find a particular market behavior in the past which leads to a given outcome in the future with a high probability.

The thing you need to understand here is that a given cause is not always bound to give the same effect because market behavior is almost never bound to repeat itself in precisely the same ways. What you are doing is building a "general case" from a very specific setup. Sometimes this general case assumption will not work since your logic "misinterprets" the current behavior as its "general case" while in other instances it will match and you will enter your ideal setup. This is what leads to market exposure and - when potential for profitability exists -to positive mathematical expectancy values.
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Generally your general case will only determine the systems potential but money management (lot sizing plus exit logic) will finally determine profitability. Trying to modify an entry logic to achieve profitability is a wrong approach which usually leads to poorly built systems with very complex entry logic criteria that do not achieve long term profitability. Knowing the mathematical expectancy of your entry logic is vital for success since these data will tell you if there is potential or if your "general case" assumption simply does not work in the long term.

If you would like to learn more about automated trading systems and how you can build systems based on sound trading logic with realistic profit and draw down targets please consider buying my ebook on automated trading or joining Asirikuy to receive all ebook purchase benefits, weekly updates, check the live accounts I am running with several expert advisors and get in the road towards long term success in the forex market using automated trading systems. I hope you enjoyed the article !

Getting Ready for the Future Metatrader 5

Finally on June the first we saw the first official release of the Metatrader 5 trading platform which has the mission to replace one of the most popular and widely used trading platforms in retail forex trading. Definitely the task for Metatrader 5 is not easy since its predecessor is very powerful and has become the "industry standard" when dealing with automated trading systems for the regular investor. On todays post I want to talk to you about Metatrader 5, some of its pros and cons as well as the journey that I will be taking to produce mql5 versions of all Asirikuy trading systems. Is there anything good about Metatrader 5 ? Is it bound to be a great improvement over metatrader 4 or are we talking about a windows vista Vs XP type change ? Keep reading to find out.

I have to be honest with you and tell you my honest opinion about this new trading platform. I think that the people at metaquotes have done a good effort but I think they have neglected some key aspects that needed to be changed which could have brought an enormous benefit to the retail trader and their platform. Definitely there are several features I wanted to see on metatrader 5 that never got to be implemented like renko charts, tick charts, etc but perhaps the most important feature that wasnt implemented was real tick data logging and accurate backtesting.

Certainly the Metatrader 5 backtester has significant advantages over its current Metatrader 4 counterpart. Amongst these are the fact that data is downloaded and update automatically, there is support for several cores (multi-threading) and there is the ability to remotely login into your computer to see the progress and results of your backtesting results. Overall this will make the Metatrader 5 backtester much faster and robust, however the fact that tick interpolation algorithm is still used will make exploitation of backtesting reliability problems still a significant issue, we will probably still see the regular 97 USD expert advisor based on unrealistic profit targets taken from absurd backtests. However I have some hope in the sense that the interpolation algorithm was actually improved with the objective of removing these problems but we are still to see if this will or will not be true. The ability to use multiple pairs on backtesting- something that was previously not possible - is bound to be one of the greatest advantages of the Meatrader 5 backtester over the current backtester implementation.
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I am also excited about the Metatrader 5 new language- mql5 - and the included debugger within the Metatrader 5 platform. Any serious developer out there will tell you that the mql4 editor was a piece of garbage since no debugger was included and an extensive use of the Print function was needed to see where things were going wrong. However, the new debugger will make developing much easier and the actual addressing of problems in coding much easier. However I think that it was a very big and absolutely awful mistake not to include back compatibility with mql4 in Metatrader 5. Even though the new mql5 language is much better, including support for previous code seemed like something important to do since many people already have their strategies or efforts coded on the language of Metatrader 4. People will now have to pay to have their experts recoded or go through the process of learning a whole new programming language to be able to trade with the new platform.

So is Metatrader 5 a huge improvement over Metatrader 4 ? I would have to say that regarding automated trading the answer seems to be - we still dont know. We need to have a few live brokers that will accept this platform so that we can start testing mql5 systems. We will also need to first translate some systems into mql5 to compare backtests and see the actual quality improvements we get when changing from one strategy tester to another. I can tell you that I am excited abou the possibilities and I hope that the Metatrader 5 backtest will be all that it has been promised to be. I think that obviously our evaluation speed will be increased and our ability to use our systems on other currencies will also be expanded.

During the next few months I will start the porting of all Asirikuy systems to the new MQL5 language so that we can start to see some of the characteristics of the strategy tester and some comparisons between the simulations obtained with both backtesters. You can certainly expect some hopefully interesting blogposts about this during the next few months. If you want to learn more about automated trading and how you can develop your own long term profitable systems using sound trading tactics please consider buying my ebook on automated trading or joining Asirikuy to receive all ebook purchase benefits, weekly updates, check the live accounts I am running with several expert advisors and get in the road towards long term success in the forex market using automated trading systems. I hope you enjoyed the article !

The Gods Gift ATR Turning a Good EA into a bad one !

I knew it was only a matter of time before the regular forex crowd took a hold of my gods gift ATR expert advisor. For the past few months I have seen an outdated version of my ea appear on several websites and forums and inevitably, they have started to test the system as they test all other forex expert advisors out there. I really think its a pity. The reason why I keep the ea to myself and my customers is because I think that a certain degree of knowledge is required to trade this expert advisor and I like to serve as a guide to the people that buy my ebook or subscribe to my newsletter in order for them to use the system correctly. Below I point out the main differences between how I use the ea and how others have been testing it in order for you to know what the big differences in trading are :

How I use the system :

• I forward tested the gods gift 7c logic for 14 months before placing it on any live account
• I then programmed the gods gift ATR, backtested it on 15 different currency pairs
• I found out which ones the ea worked with and optimized them from Dec 1999 to Dec 2008.
  
• I made several risk projections to ensure that the ea would trade as safely as possible on live accounts.
  
• I then run these settings on four separate live accounts, two different sets of settings for the EUR/USD one for the GBP/USD and one for the USD/JPY.
• I tested the experts on a realiable vps with triple redundant internet connection and made the investor passwords available as well as an ftp with regularly updated results to my newsletter subscribers.
• I trade through draw down and profit and have confirmed several times the consistency I get between live and backtesting results.
  
• I wrote a manual to further help people understand what goes on under the hood
  
• I started the Gods Gift ATR challenge to include controlled third party results into the experts history.
  

How people are now testing it on forums :

• They dont do proper backtesting and optimization from 1999, the few that do use just the last year or last few months, this extremely curve fits the ea.
  
• Most of them dont have the slightest idea of how this system works
• They dont do any risk analysis and just trade it to "see what happens"
  
• Sometimes they trade it on more than 5 currency pairs on the same account (this by all means is a sure way to wipe the account)(I only trade one per account ! for very good reasons)
  
• They trade it on all pairs with the same settings, without any preoptimization. They also test the ea on some pairs for which I know for certain the ea is NOT long term profitable, sometimes not even short term at all.
• They run an outdated version of the ea which they adapted to use five digit brokers but in doing so they corrupted the ATR money management and market order size logics (again, they seem to lack of an understanding of how the system works)

As you can see, the great differences between how I test the ea and how it gets tested in forums is just too great. Inevitably, they will conlude that the ea is unprofitable eventually because they are trading it the wrong way. Why dont I start posting in forums and share all my results for free with everyone and help them succeed ? I am not interested in that. People that go to forums are sometimes arrogant and unwilling to change their mind sets about expert advisors and automated trading. They want you to explain everything to them and somehow, make them profitable in forex trading. I am not interested in fighting with people about how this should be tested or traded, etc. This is why I never asked the forum Administrator to remove the gods gift atr when this outdated version was posted on a forum a few months ago, because I know that even if the ea is out there for everyone, only one out of ten thousand will be able to find the settings and trade it the correct way and with enough discipline.

For this reason, as I outlined before, I just keep the gods gift ATR ea and testing to those people that are commited enough to read my posts, make a very small purchase and change the way in which they think about automated trading systems. Automated trading requires effort, requires knowledge and most of all, it requires commitment, something which I feel the crowd that is looking for everything on a silver plate fail to have. As you see, people at forums can turn perfectly good systems into terrible ones just by being totally irresponsible and incoherent with their testing. Why in the world would they test the ea on several currency pairs at the same time on the same account ? and all of them with the same settings ? I dont know. It is just a consequence of them not knowing what they are doing.

The worst thing about this is that they may get a month or two of profits and someone, somewhere will run that on a live account and lose money because of the irresponsability of the people that test these systems just for the sake of it. In order to test a trading system you must understand what it does and how it does it best, it is not about throwing the system into testing as you see fit.

If you are interested in learning more about the gods gift atr please consider buying my ebook on automated trading or subscribing to my weekly newsletter to receive updates and check the live and demo accounts I am running with several expert advisors. I hope you enjoyed the article!

An Important Decision No More Reviews on the Front Page

Through the past several months of everyday posting, I have realized that my Asirikuy visitors are divided between two specific types. There are some people who are quite new to automated trading and find my website through search engines and those who have been following my website for a while and read it almost everyday. By talking to people and analyzing their browsing habits on both sides I have reached an important decision for my blog. From now on I will not be posting any reviews on the front page. On todays post I will be explaining the reasons behind this decision and I will also explain the consequences I think it will have related to both types of website visitors.

If you have been a frequent visitor of Reviewing Everything Forex, then perhaps you have already seen that most of the commercial systems out there are not worth buying and testing for me. In the end, reviews start to get very boring and they seem to repeat the same story over and over and over again. I have been accussed of upselling my own products (because that would certainly make me a millionaire :o) - sarcastic note) and even of bashing every system without any consideration.

Those of you who have been Asirikuy members or readers for a while know that I am a very rational person and that I only review the evidence I see. As a matter of fact, I almost never say that a system is unprofitable but what I say with exhausting repetition is that systems do not have enough evidence to be considered profitable. In the end, if commercial sellers want to prove their point, they should just provide reliable evidence. Nothing more ! I am not asking for 30 years of live testing, I merely ask for 10 years of backtesting with 6 months of live/back testing consistency analysis. But what a difficult thing this is to provide when your system is actually not reliable :o) (my own attempt at drawing a cartoon shown below)
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I however consider reviewing an important part of this site since getting people away from commercial experts that simply cannot backup their claims of profitability is a vital aspect of my social job in automated trading. Even if people never buy one of my products, the fact that they didnt fall prey to any one of this unethical affiliate sellers or scammers out there is valuable enough for me as a personal achievement.

In the end I have seen that people who find my reviews of commercial systems do so through search engines while they often never find them through forum links or direct access. Publishing reviews on the first page therefore only has the effect of boring my faithful readers (who arent that interested in commercial system reviews) and driving very little traffic from non-search engine sources. For this reason I have decided that reviews from now on will be published within the website but they will never show on the front page. Everyday there will be a fresh article about automated or forex trading and any of you interested on a systems review can search it through the label drop-down list on the left hand-side menu or simply google fxreviews and the name of the expert advisor to have it show up. I think that in the long term this solution would satisfy both my long-term readers and the new forex traders looking for some insights about the latest forex product.

What do you think about this decision ? Do you agree, disagree ? Any input will be highly appreciated ! Of course, if you would like to learn more about my work and would like to support me without any upselling pressure please consider buying my ebook on automated trading or joining Asirikuy to receive all ebook purchase benefits, weekly updates, check the live accounts I am running with several expert advisors and get in the road towards long term success in the forex market using automated trading systems. I hope you enjoyed the article !

Important Facts about the Forex Trading System

Forex is considered as a financial system on the foreign exchange. It allows the trader to purchase foreign stocks or currencies. The forex trading system is popularly increasing in the internet in leaps and bounds each day. It provides useful information about the companies wherever it is located. The traders stay informed so that they can make a wise decision when purchasing and investing their money. Several forex trading systems are allowing the traders to make withdrawals, online inquiries and purchases so that they can create additional wealth by using their invested money.

Forex trading systems involves money investments from a company which is located overseas. Learning more information regarding the company is helpful because you can obtain the latest available programs and processes. You can also double or triple your invested money within a short period of time. You can avail of the forex trading system that only requires a small amount of investment, as low as 5 dollars, while other forex trading system can require a large sum of money to be invested, as high as 500 dollars. Remember, one forex trading system is different from another forex trading system. Each has its own terms regarding the duration period of your investments.

If you are wondering how long your money will remain invested, then you must carefully read the company's fine prints where you are investing your money. Some company may require a 48-hour investment while others may require a 30-day turn around time. Always read the information being provided. It will explain your current money status upon investing it and its future outcome.

Forex trading systems allows the trader to purchase companies, stocks, or other country's investments. It does not matter where you live since forex trading systems are also located in any parts of the world, as well as the company where you are investing your money. The traders can invest their money in companies located in China, Japan, United States, Russia, Germany, Africa, and other countries which are recipients of the investments on forex trading systems. It does not necessarily mean that you have to be living in the country where you are planning to invest. This is the secret of the forex trading system. Your personal wealth and personal preferences can be enhanced while investing.

This is also the major reason why forex trading systems are well known. It can really make extra money by investing the cash since forex trading is about putting the money on another currency either for a short or long term period in order to earn bigger sum of money. Most forex trading systems are typically based on how stock exchange works. You will find out that forex trading systems can permit currency rate investments, currency change from one country to another, and investment from a foreign company. Hence, forex trading systems are built upon global investors, global companies, and global currencies.

Remember, there is no difference between online and offline forex trading systems with regards to the projected results. However, online forex trading systems can quickly access your money. The traders can move, invest, remove, and trade their money faster compared to offline forex trading systems.

Somehow, it could bring wealth to the investors who are willing to invest and trust the brokers when making additional decisions. But the question is who you are going to trust. It is advisable and helpful in any kind of trading systems or company investments to trust the person whom you are transacting with. It is a wrong company if you cannot reach the representatives on forex trading systems either by fax, email, phone, or even in person. A company which utilizes forex trading systems and offers opportunities to the traders to worldwide investments is good. However, they should communicate with the traders any time during business days.

Moreover, it is advisable to look for a company that uses forex trading system that puts your invested money first and foremost, how you are going to invest it, and listen to the things you wanted to do. If a forex trading company is just calling you at all times and giving you little space for decision making, then avoid doing business with them. Remember, this company should realized that being the end user and consumer of their forex trading systems, they should listen to you and learn about your plans regarding with investing your money before making the investment.

The Turtle Trading System EA Trading the Turtle System II

After searching a lot for an expert advisor that had the exact same rules of the turtle trading system, I found out that all of the free experts out there that try to trade the turtle system differ from the rules in one or another way. Since this system has the reputation of being profitable and very mechanical, I decided to give it a shot and program my own version of the Turtle trading system following the turtle rules to the letter.

Well, I programmed an expert advisor to follow the rules of what the turtles called the trading system number 2. My ea does exactly what the turtles say it is supposed to do. It enters trades on 50 day breakouts, places stops at 2N and then enters an additional of maximum 3 positions in 1/2 N intervals with the N equations defining lot sizes so that the amount of capital risked is also adjusted to volatility (as the system says). The system exits trades based on a 20 day breach as it is also described by the system.

Now, I would have expected this trading system to lose most of its trades and then show tremendous recoveries on a few trades each year. That is exactly what I observed in backtesting with the small difference in that the big wins experienced during the trending periods were not enough as to compensate for the huge loses suffered from all the false breakouts experienced by the system. My ea newsletter subscribers will have access to this ea from today, so make sure you join my newsletter if you would like to test this ea yourself.

Right now I am trying to find additional criteria that can be added to the ea in order to prevent the ea from losing most of its profits on false breakout trades. My best guess is that breakouts need to be further filtered out by the use of an additional indicator which reduces the number of false signals experienced by the system. Make sure you leave a comment if you have any ideas !

I found out that the lack of profitability I was observing was due to some programming glitches, make sure you read my latest post to see the first 10 year profitable backtests of this system !

If you would like to learn more about this ea and other free and commercial expert advisors please consider buying my ebook on automated trading or subscribing to my weekly newsletter to receive updates and check the live and demo accounts I am running with several expert advisors. I hope you enjoyed the article !

The Micro Account Stimulation Project A True Commitment to My Fellow Traders o

Those of you who are newsletter subscribers may have already read about the micro account stimulation project on the newsletter sent to you on last Sunday. I wanted to dedicate todays post to disclose this project to everyone else so that website visitors as well as ebook customers can learn about it and give any comments or suggestions on the subject. Through this post I will discuss with you what the micro account stimulation project is about, what inspired it and what I expect to get from it through the following years.

So what exactly is this micro account stimulation project (from here called MASP) ? (I really like to give things weird names, right ? ;o) ) A few days ago, while I was doing all my weekly analysis for my weekly newsletter as well as planning for all the trading that would go on next week (both on my managed and personal accounts) I realized that the amount of testing that was going on at the website was not enough to actually test all the systems, projects and ideas that will be going on in 2010. I also realized that I was going to need to open a dozen or more trading accounts and that opening such a large number of micro accounts would not be possible due to the current number of accounts I own on all the different metatrader 4 brokers. Therefore, doing all the testing that I wanted to do for my subscribers on 2010 would become almost impossible for me to do in a reliable fashion, with the brokers I wanted with the quality I wanted, etc.

Then I had a great idea ! :o). What if I give people the money to fund their micro accounts ? This way well be able to have a lot of testing information and theyll be able to have funded micro accounts in which they can experience long term profitable systems themselves while we all analyze and see their live trading results. Since the number of subscribers is enough to cover my VPS expenses then why not give the money back to subscribers in a way in which we all can enjoy the tests and results ? Why not build a community with a lot more testing going on ?

The idea of the MASP is exactly this. Once each month, at the end of the month, I will give away 100 USD to one my newsletter subscribers (chosen randomly, feel free to suggest selection mechanisms !!). The only condition is that this 100 USD are used to fund a forex cent account on Alpari US, IBFX, Fxclearing or LiteFX (these are the brokers I know who offer nano lots (one cent per pip with 0.01 lots on the EUR/USD)) and this account is run on a VPS and trades an automated trading system the person chooses amongst different options I give him/her. The account will have to be traded for at least 2 years. After this period of time, the money and any profits will be owned by the subscriber. I am effectively giving away this money so that we can all have a far more varied broker/system/instrument repertoire than what I could obtain by funding micro accounts personally. Add to this the benefit that one subscriber each month will get the experience of running a system "risk free" (in the sense that I gave the money to fund) on a live account. This is a true and effective way of giving back and really helping the profitability of a fellow forex trader. Truly helping someone become profitable in automated trading for the long haul.

Of course, nothing prevents people from taking the 100 USD and running away with them and never opening the cent account or doing the tests. However I will try it for the first few months and see if the idea works. My opinion is that my subscribers are honest people who really want to be profitable with forex automated trading and they will welcome the chance to participate on the tests and open the live account with the money I give them. When a person is chosen I will obviously send him/her an email to ask them if they agree with the conditions and would be willing to carry on the tests, if they dont have the VPS or would not like to make the commitment to trade the account with the selected EA for the next two years then I will pass the offer onto another subscriber. If the idea goes well I will increment the number of accounts funded each month as the number of subscribers increase, hopefully by the end of 2010 I will be able to give away 300 or 400 USD every month :o) (hopefully if more people start to see the value on all the services offered with the newsltter and decide to join)

So what do you think about the MASP ? Do you think it is a good idea ? Do you think it contributes to people becoming long term profitable using automated trading systems ? Please leave any comments you may have abou this, I am really interested in hearing out your opinions ! However if you would like to learn more about all the systems I have programmed as well as how you too can become long term profitable using reliable automated trading systems please consider buying my ebook on automated trading or subscribing to my weekly newsletter to receive updates and check the live and demo accounts I am running with several expert advisors. I hope you enjoyed the article !

The Asirikuy Index A General Performance Indicator

Yesterday while writting all the material which is added weekly to asirikuy and doing the weekly video additions I started to ask myself if there was any way in which I could measure the current performance of asirikuy as a whole. That is, I wondered if I could come up with a given statistical tool which would measure the performance of all the trading systems of asirikuy simultaneously. Then, after a lot of thinking time, I realized that there was a very simple solution to this measuring problem. Todays post will be dedicated to the communication of this new measurement tool called the Asirikuy Index.

So what is the deal with measuring Asirikuy perfomance as a whole ? In asirikuy we use many different trading systems which I have coded (partially or totally) and we have many live accounts currently running these trading systems on different brokers, settings, etc. We know how all these trading systems are working separately but there was no way for me to communicate the joint performance of all asirikuy systems to the world without disclosing the tests. Moreover, there was no way in which members could get an idea "as a whole" of how asirikuy was doing (all the joint trading systems) but they had to go over all the tests to know what the "global performance" was looking like.

Then I had the idea to come up with a number which could be a global indication of the equity production of asirikuy, a number which could be disclosed to everyone to give people a feeling of how asirikuy was doing. This number should be simple enough to give anyone a straight forward idea of how the tests on the website are doing in general - without needing access - while providing a tool for current asirikuy members to understand how asirikuy is performing as a whole. The number I came up with is what I call "the Asirikuy Index".

What is the Asirikuy Index ? It is a measure of the joint performance of all the live accounts traded on the website. The index is simply the sum of all the current equity percentage gains or loses of all the trading systems being traded. The index simply tells you "if you were trading your capital with the exact same systems within the same brokers and with the same number of accounts (of the same size) this would be your current profit/loss". It is a true measure of Asirikuys performance as a whole and lets the world know how we are doing, something which may be something people want to know before joining the website.

For example, if asirikuy currently had only 3 live accounts and their results were +20, +12 and -25% then the asirikuy index would be 7% (20+12-25), meaning that if you had opened three accounts, funded them with equal amounts (for example, three 1000 USD accounts) , on the same brokers and with the same settings you would have gained 7% (of a single accounts investment) up until now. Of course, the Asirikuy index could be manipulated by removing bad accounts from testing but I guarantee that this wont be done as if any accounts are removed from testing their current draw down will be kept as a part of the index, as it was a realized capital loss.

The current Asirikuy Index is 95.18% and it will be updated each week to reflect changes on the weekly profits and loses of all the live trading accounts. Of course, the measurement is not perfect and it has a lot of room for improvement but it is a very basic view of the overall performance of the trading systems. It also provides us with a glimpse of the effect of broker and system diversification since the index is the result of the combination of several brokers and expert advisors. In the future we will also be able to do cool things, like plotting the Asirikuy Index as a function of time !

If you would like to learn more about the trading systems used in Asirikuy and why I consider them to be long term profitable please consider buying my ebook on automated trading or joining Asirikuy to receive all ebook purchase benefits, weekly updates, check the live accounts I am running with several expert advisors and get in the road towards long term success in the forex market using automated trading systems. I hope you enjoyed the article !

The Testing Time Problem For How Long Should I Demo Test

When people start to get into the world of automated trading systems they soon find out that there is a sort of "general protocol" established by most of the online user community to use forex expert advisors. People are generally told to get an EA, demo it for a certain period of time and then, when if the demo gives satisfactory results, run the expert advisor on a live account with real money. Where did this idea come from ? It came from the notion that regular people have that a minor test of a demo account will most likely mimic trading on a live account later on. Todays post will focus on explaining why this criteria to evaluate profitabilty is wrong and why most of the time it will only lead to the discarding of profitable systems and loses on forex live accounts.

What is wrong with this testing approach ? You take an expert advisor you want to test, run it on a demo account for X weeks, then you are sure it is profitable so you run it in a live account. What ? From where did people get that a profitable or unprofitable period of a few weeks or months on demo is any indicative of the experts profitability on a live account ? I certainly do not know. A demo test of a few weeks or months is only going to tell you if the expert is profitable under a very narrow window of market conditions, these conditions are bound to change once the market starts to evolve, leaving the actual usefulness of your demo period in the trash.

What if the demo testing period only generates draw down ? Does this mean the expert is unprofitable ? No, it doesnt, many long term profitable systems go through long periods of draw down (even one or two years) before the very profitable periods which generate most equity gains. Then you are bound to discard long term profitable system when using this demo testing small periods because long term profitable systems are always most likely to be within a breakeven/draw down period than within a profitable one. Now what if you have one year of demo testing ? good enough ? No ! Again, forward testing is not the only thing you need to take into account. Some systems with terribly unsound trading techniques can generate a lot of money on periods of even one or two years before wiping everything out. This is the case for some Martingale systems, you can also be using a curve fitted system which then goes out of date and starts to wipe your account.

So is there any amount of time you can have in demo testing which will inevitably ensure you that you will not lose money on a live account ? No ! Long story short, there is no substitute for analysis and sound evaluation of trading systems. No forward testing period, no matter how long, can cover for the testers ignorance about the system or its potential for long term profitability. How can you be sure then that a system is going to be profitable in the long term ? You cannot ! However you can ensure that there is a high probability for your system suceeding in the future if you ensure that the system uses sound trading techniques, is able to adapt to varying market conditions and performs in a satisfactory manner in long (ten year or more) simulations with consistent results in live testing.

If you would like to learn more about my criteria for the evaluation of long term proftability and how you too can start your journey in profitable automated trading with realistic profit and draw down targets please consider buying my ebook on automated trading or subscribing to my weekly newsletter to receive updates and check the live and demo accounts I am running with several expert advisors. I hope you enjoyed the article !

The SDS or Simple Daily System A Free Worth Testing Expert Advisor

Readers of my newsletter have known about this trading system for a little bit more than a month. The SDS or Simple Daily System was created conjunctively at forex-tsd.com . I, in particular, have been using a version of this ea programmed by a person whose online alias is Derek.

The expert advisor is programmed to follow long term trends based in part on the PSAR market indicator. What I like a lot about this expert advisor is the fact that it uses a money management technique referred to as DAlembert money management. This tecnique simply increases lot sizes linearly with loses in order to ensure faster equity recoveries. It is ideal for expert advisors that rarely suffer from large streaks of consecutive loses but are likely to have several win, loss, win, loss sequences and several profitable trades.

Almost every expert advisor may be extremely improved by additions of proper money management and this is a great example of this. Without this system, the SDS ea would be a practical loser since its winning trades do not overcome its loses by great numbers and even sometimes fall behind as per backtesting. However, introduction of this money management greatly increases the odds of this expert making substantial profits.

You should also take into account that people at forex-tsd.com often overtrade their systems. Most of them have tested this expert on several currency pairs at the same time when this is a sure way of losing with this system as you risk about 25% equity draw down for each 5% of consistent monthly profit you want to make.

I have forward tested this expert (EUR/USD daily) for the past month and up until now, it has fulfilled my expectations. The current rangy EUR/USD market is sure to let us know whether this expert will or will not be considered likely profitable. If you want to take a look at the trading statements or learn more about this and other free and commercial expert advisors I have reviewed please consider buying my ebook on automated trading or subscribing to my weekly newsletter to receive updates and check the live and demo accounts I am running with several expert advisors. I hope you enjoyed the article !

The 8and8 EA A Hopefully Profitable Expert Advisor

During this past few days, I had been implementing the 8and8 daily trading system into a forex expert advisor. When I finished coding the system and started back testing its daily trading results, I realized that the system is unprofitable as an automated trading system due to the excessively large amount of mixed signals generated from the cross of two indicators. As it usually happens with crossing systems, whipsawing becomes a very hard problem to solve. On this months daily chart, which is shown below, I tried to pinpoint the places that caused heavy loses due to intense crossing of the EMA and the RSI indicators.
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The system does much better manually because trades are taken in a very discretionary manner. For example, you would not take a trade against the main trend when there is an important support/resistance level ithat has to be reached in sight. These things are not visible to automated trading systems (that easily), so it becomes very problematic and the experts fail when they have fixed SL and TP orders.

My first attempt was to try to fix the stoploss and take profit problems by making them ATR adjustable (hey ! its my flavour of the month and it really works !). Sadly, the whipsawing problem absolutely killed the idea as too many bad entires happened due to the intense crossing of the two indicators (still it was much better than the original).

I then started to think about the expert advisors I know that are at least likely profitable, Gods Gift, Simple Daily System, etc. I realized that their logic often involves some sort of volatility/range condition filter so that positions can only be entered when strong trends happen.

After struggling for several days with the idea and doing a ton of optimization with several range and volatility filtering ideas, I came up with the expert advisor I am presenting you now. The result ? A very clean equity curve in backtesting from 1999 to 2008 (EUR/USD). The expert advisor does a great job at filtering range conditions and just trading when the conditions are "right". Although the rules changed a little from the original 8and8 system, you could say that the main idea "daily trend following" is alive inside this modified trading system. The main modification is a simple filter based on the ADX indicator which makes the ea not to trade in raning market conditions. Lot sizing adjusted to volatility was also added.

Below you can see the backtesting image of the expert (from 1999 to 2008, modeling quality is n/a because of several mismatch errors in my 1999 and 2000 data but becomes 90% once you test from 2001 (2001 to 2009 is exactly the same anyway)).
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Now, you may be asking yourselves if I intend to sell or give away this ea for free. Of course, it is available to anyone who buys my automated trading ebook or subscribes to my newsletter but feel free to buy me a cup of coffee and email me if this ea is all you want (a link is available at the bottom left for this). The ea is profitable according to backtesting although its maximum draw down and yearly profits are almost alike, so you could expect a 50% yearly profit with a 40% maximum draw down. It will be forward tested from next week.

Other, expert advisors like Gods Gift (specially my ATR modified version if you read the last post !) and the Simple Daily System are free expert advisors that do make profits and will most likely continue to do so in the future, if you would like to learn more about them and their settings please consider buying my ebook on automated trading or subscribing to my weekly newsletter to receive updates and check the live and demo accounts I am running with several expert advisors. I hope you enjoyed the article !

Yes You ARE Looking for the Holy Grail A Message for People New to Trading

It is very interesting to analyze the answers you get when you ask people what they are looking for and if they think that what they are looking for is the automated trading "holy grail". This mythical piece of code is an EA that does NOT exist which achieves "unbelievable" results. However despite the fact that most people will utterly deny that what they look for is the holy grail - they will always say they know the holy grail doesnt exist - when you analyze the answer to the question "what are you looking for in a trading system?" you will realize that the bast majority are indeed looking for this mythical piece of code. On todays post I will talk about the holy grail and new traders and especially the relative character of the definition of this term and why so many people are looking for it even if they categorically reject to be doing so.

What average yearly profit to max DD ratio do you consider realistically achievable ?

So what is this trading "holy grail" exactly ? Its definition is actually simple and yet very complex. In my mind a holy grail is a hypothetical system which achieves results superior to the highest achievable maximum draw down to average yearly profit ratio allowed by the market in real returns over the past ten years. This means that any system that can do better than how the best REAL trader has done within the past 10 years is the holy grail. The best way to measure this "better" character is by using the above mentioned ratio which compares profit to risk.

When we look at the performance of forex traders for the past ten years -and the best registered traders since then- we notice that any system that achieves an average yearly profit to maximum draw down ratio of 5:1 over a ten year period is in fact a holy grail (check my post on the Barclay index to learn more about REAL long term performance of forex traders). This means that - being realistic - a system that achieves a 100% yearly profit with only a 20% maximum draw down over ten years is a holy grail. A system that is extremely unlikely to exist due to the very nature of the markets and the long term limitations on performance it imposes.

When we then ask new traders what they are looking for the answers are actually quite interesting. As a matter of fact, the above mentioned realistically inferred holy grail becomes the "lower standard" of a given set of return figures that are inferred from short term results and "lore" rather than from actual long term real performance records and realistic expectations. The 100% yearly profit with 20% maximum draw down becomes something that new traders perceive can be "easily achieved" and things like a 20% monthly profit with a 5% maximum draw down start to become the "grail" targets.

As traders start to accumulate more experience and they get to know the market and the inherent limitations of profitability and draw down they start to lower these figures. A trader with one year of experience is bound to give a 5% monthly profit with a 5% maximum draw down as a realistic expectation while it usually takes traders 5-7 years to realize that the before mentioned grail of a 5:1 ratio of average compounded yearly profit to maximum draw down ratio taken from real performance data is actually the real "extremely hard to achieve" target.

So chances are that if you are a relatively new trader you are looking for a system which is quite unrealistic and your actual "holy grail" is way beyond the limits of what the market is willing to let you get. In the end, most traders are looking for holy grails, even if they believe they currently have "realistic" and sound expectations of draw down and profitability for their trading systems. If you would like to earn a true education in automated trading and learn how you too can design and build your own systems with realistic profit and draw down targets please consider joining Asirikuy.com, a website filled with educational videos, trading systems, development and a sound, honest and transparent approach to trading systems. I hope you enjoyed this article ! :o)