If any robot on sale is really profitable, why do they sell it and not use it for themself?
Why are they going to work and spend money for marketing instead trading with the robot for themself? Might it be, that they just use the robot as afterbuyers?
I’d never buy an ea and if self constructed, it has to withstand 2 years of backtest, a proper and clean system and some months of live testing. Then you have a chance but no warranty to win and if you win this can be limited to a time and then it could stop winning and start losing.
That is the risk and if this risk would not be there, all people would be rich which is impossible.
Yes, I hear you. But then, the Megadroid sold for $500, right? So if they sold 100 a day, that’s $50,000 a day. That’s some very serious money. Looking at their results…several hundred percent profits per year, backtested to 2001…no bad years…you’d think that they’d sell at least 100 copies a day. And let’s say that they have to refund 75% of the purchases…that’s still $12,500 per day.
OK. Btw, how far back would historical data be relevant?
There’s quite a good video made by the guy who developed the Wave 59 charting application where he discusses the design of a system based on walk forward optimisation. He concluded that just at the point in time where he’s able to establish that a particular set of parameters for a system results in optimum returns, those parameters then cease to work. He has a system based on fading those signals. If you think about this probably has some merit, every mug punter with a copy of trade station is going to be running the very same optimisation routines over the same data, and reaching exactly the same conclusions. As these are the people who inevitably lose, fading them seams reasonable. Lets face it, at the point that an edge gets so obvious that practically everyone can see it, then there’s a very good chance it’ll stop working.
I sort of understand you. But then, if everyone was doing the same things, wouldn’t that make the waves bigger? More price action, more profits for all?
How long would you forward test an EA ?, its a difficult question, you need a reasonable number of trades (I’d argue a minimum of 400 long and 400 short), and over a reasonable sample of market conditions, even for relatively high frequency systems I’d probably suggest 6 months to a year.
OK, this seems reasonable.
In my experience, mechanical systems only have a small edge over random chance (and thats all they need). The varience in returns is a function of the square root of the number of trades, therefore if your trying to identify what might be a small edge, unless you have a large sample size, that edge will almost certainly be masked inside the random distribution of returns.
But there’s some predictability as the automated systems all jump on/off the train…I suppose I’m trying to join in with that. It seems like they all work together to produce all of these waves. That’s what I’m looking for. Presently, there’s no way I could handle any fundametals, etc. for long-term trading. I don’t think I could stomach trading over a day or two. I think I’ll be most happy as a scalper…just picking up on the little stuff…trading on the trends.
Anyway, thanks for the advice! Hope to see you around!
Robert
That is good for the seller, but how would that be good for the trader? The trader has to pay at first and then he must get that money back by trading to break even.
Looking at their results…several hundred percent profits per year, backtested to 2001…no bad years…you’d think that they’d sell at least 100 copies a day. And let’s say that they have to refund 75% of the purchases…that’s still $12,500 per day.
That’s also good for the seller. Congratulations for him and his marketing.
The point with the crowd jump to buy is that fact there are different settings with robots and that will play out that all the robots buy/sell at different times. For some it’s good, for some bad.
If all would use the same settings it’s the same. Those who buy a microsecond earlier are in profit and those who buy then at a more expensive price will lose the spread from the first if not at all.
In fact, if a wide crowd uses the same file time it would become a really random event at which time and price their orders would get filled.
You can see sometimes those spikes when it jumps 50 pips in a second or two. Thats the sign that a particular system is used by a crowd.
About those robots what you can buy: Would I invest my money in a black box system? Say, anybody would tell me he is a big winner and if I would give him my money, I could win big, too. Would I give him my money in this too good to be true scheme?
No. Because there is my initial question: Why would anybody sell a really good system if he could gain a lot more money with it for himself? If he gives that away, he gets this random crowd effect and the system loses performance for the individual.
There is another fact: That a system worked in the past, however long the period it was, gives no warranty it will work in the future. The future is unknown. Even with my very own confident robot I would not give warranties to myself it would trade profitable until I am the multimillion dollar guy. It’s like a business, where I hope that it will last and then take out a small percentage of gain regularly after break even. That’s the paycheck for me. If the robot then later runs the account to zero I can just hope that my paychecks gave me a positive roi.
I’m a businessman and investor since decades and that is the way I make money. I could also sell my robot, but I guess my robot is more profitable if I use it for myself. To speak clearly: I guess I would get less money if I would pay for marketing, etc. etc. and even if ppl would buy the robot. I can make way more money with using my robot only for myself. Demo and live trading shows this.
So, now you know why robots on sale can’t be that successful than a confident system or robot. They might give you some gains, but that is not sure. At first you have to pay for and that is loss, not profit.
As I wrote above. Additionally: That would soon become a “all ppl are rich” scheme. But that is not possible. Forex is a zero sum game. So, it is a ponzi scheme, if you hope for that. A few will win (those with the fastest connections and the first orders which get filled and are brokers and banks) and all the others will pay for their winnings - say lose.
I wouldn’t buy a robot or system, but if I would buy one, I would rather look for a not so crowded system. If the system is more or less good, there is a much better chance to win.
An inherent law in investment business is: You can’t win if you go with the crowd. The crowd loses and there is no exception from that.
The winners of robots on sale are largely three groups: Marketing business, brokers/banks, and the sellers of those robots. I wouldn’t say you can’t make money with it, but that is not as easy as it looks first. Plus it might have a more random factor than it seems first. Anyways - good luck!
Yes indeed! I say this to explain why they’d sell their EA instead of only using it for themselves. The way they market it…it really looks good, even if it’s only on the surface. For the masses, often that’s all you need.
The point with the crowd jump to buy is that fact there are different settings with robots and that will play out that all the robots buy/sell at different times. For some it’s good, for some bad.
If all would use the same settings it’s the same. Those who buy a microsecond earlier are in profit and those who buy then at a more expensive price will lose the spread from the first if not at all.
In fact, if a wide crowd uses the same file time it would become a really random event at which time and price their orders would get filled.
Yes indeed. But then the guys who created the EA know when it’s going to open and close orders, so they know to open/close orders slightly beforehand. Maybe the best strategy is to sell an EA, and use a modified version of it…to trade a little earlier! Or just post an EA for all to use for free, and to use a modified version behind the scenes!
You can see sometimes those spikes when it jumps 50 pips in a second or two. Thats the sign that a particular system is used by a crowd.
Yes, I often wondered about those. I had thought it might be a big buyer/seller…followed by automated trading that jumps on the train…and then the big buyer/seller makes a countermove to pick up on that profit!
About those robots what you can buy: Would I invest my money in a black box system? Say, anybody would tell me he is a big winner and if I would give him my money, I could win big, too. Would I give him my money in this too good to be true scheme?
No. Because there is my initial question: Why would anybody sell a really good system if he could gain a lot more money with it for himself? If he gives that away, he gets this random crowd effect and the system loses performance for the individual.
Or he could use a modified EA to benefit from the one everyone else uses! But I do really agree with you…I’m not about to go out and buy this. I might if it gets a lot cheaper…to play around with on a demo. But I sense you know what you’re talking about.
There is another fact: That a system worked in the past, however long the period it was, gives no warranty it will work in the future. The future is unknown. Even with my very own confident robot I would not give warranties to myself it would trade profitable until I am the multimillion dollar guy. It’s like a business, where I hope that it will last and then take out a small percentage of gain regularly after break even. That’s the paycheck for me. If the robot then later runs the account to zero I can just hope that my paychecks gave me a positive roi.
I’ve got a newbie EA that I’d like to get working well…I’ve got the same aspiration. I love to work alone…I can actually think when I’m alone! And I’d love to consult with others on messageboards like this.
I’m a businessman and investor since decades and that is the way I make money. I could also sell my robot, but I guess my robot is more profitable if I use it for myself. To speak clearly: I guess I would get less money if I would pay for marketing, etc. etc. and even if ppl would buy the robot. I can make way more money with using my robot only for myself. Demo and live trading shows this.
Interesting. I’m not a marketeer myself…I actually hate selling things.
So, now you know why robots on sale can’t be that successful than a confident system or robot. They might give you some gains, but that is not sure. At first you have to pay for and that is loss, not profit.
If I may say one thing: Learn to code your own EA. It’s not that difficult at all and it’s definitely not that hard work if you look for what you may get in the end.
Just a personal opinion, though. But you can never have from others, what you can code for yourself. You can even change and optimize the code from time to time and make it better and adapt it to several market conditions.
You can also look at this mq4 website. There are a lot of EAs already. Freely available with source code. You may adapt one of them to your need and this will cost you nothing than time and work. What you invest as time and work will give you lessons, but while paying money for turnkey applications, you will only lose money. Plus you can never be sure what that black box is doing with your money. It might work for a couple of months or years and then poof all is gone in one trade. You never know, if you do not have the source code.
Yes, I have one underway…using EMA crossovers with some safeguard checks before each trade. Right now, with backtesting from Jan 1, I’m up about $2700 using a $5000 test account. This is with one order open at a time…24 hours a day, minilots ($100 before 100x leverage) that don’t increase when the account increases. What do you think? Am I fooling myself?! I did optimize the code to go from about 1500 profit to about 2700 profit. But I look at it this way…if I pick a short EMA, a long EMA…and it turns out that changing them a little increases profits, why not stick with them for the future? The original numbers were pulled out of a hat…I could just have easily pulled out the new numbers, right? Do you think this way when you wrote your EA?
You can also look at this mq4 website. There are a lot of EAs already. Freely available with source code. You may adapt one of them to your need and this will cost you nothing than time and work. What you invest as time and work will give you lessons, but while paying money for turnkey applications, you will only lose money. Plus you can never be sure what that black box is doing with your money. It might work for a couple of months or years and then poof all is gone in one trade. You never know, if you do not have the source code.
Yes, I’ve seen these on the mql4 site! I found coding examples where the time of day is checked (I have yet to add this), etc.
I’ve got so many things I want to check. Like how the volume changes, etc. And I haven’t even played with the oscillators yet (good for ranging prices, right?).
Thanks for your input! I’ll be hanging around!
Robert
Well, if you have a good system, check it in backtest for at least 2 years. Then try it with demo or live, if backtest shows a steady line left bottom to upper right. If you have micro lots and plenty of money (and that is what we want to play with, right?) and not peanuts, micro lots are not really a big risk. If you put, say 1000 usd in an account, a pip is 10 cents with usual micro lot size. Average daily range eurusd would just be around 13 bucks risk.
I checked my robots live trades in backtest. Most are identical, but not all. In demo you might have the same problem.
I coded 4 or 5 robots until I got one which works like a charm in backtest and live is also profitable right now for a couple of months.
What you need for a good system is a simple and clear strategy. You don’t want to have a so complicated strat, that all the settings you play with and adapt to your results in backtest will produce a robot for the 2 years period in the past. You need one that is reliable also in the future.
If you have that strat and 2 years backtest is still profitable, then you might tune those 1 or maximum 2 main settings to improve the results.
Do not believe it must be too complicated. The opposite is true. As naked strat without compounding and money management the system must produce profit. Then you can improve that with mm and compounding to the results which may produce a reliable roi.
If a naked strat makes no profit over 2 years with a steady line, then you can push that to the trashcan. It’s all about risk. If you can cut risk, you will have an edge automatically. If you can’t cut that risk, you are on the wrong side.
So, don’t look for the big profit first. Look for the lesser losses at all. If you can minimize losses, you can then in the next step tune lot size to increase profit.
Plus if I speak about systems, don’t even think about martingale, trading without stops etc. etc. Thats all the quick poor path.
I started with coding 30 years ago, with investments 10 years ago and with forex particular around 1 year ago. I can tell you, it is not that easy as it looks like. The coding is not the big deal at all, if you can code a bit. MQ4 is really easy. The traps lie in the investment skills. In my opinion it needs a good combination of investment skills with logic thinking and throwing away all the hearsay what is flooding the forums here and everywhere.
I worked a lot for big banks and let me tell you: They are not in any case better than you could be with a small robot of your own. Big banks now use robots. They spend a lot of money for them to become better. But that involves a lot of ppl then and good management and then the strats become visible to others etc. etc.
Plus look at how many banks and hedge funds make a huge loss until default. If you know what you are doing, I guess it is definitely possible to make a fortune. So, it’s worth to spend months or years of learning full time.
You can good compare trading to pros at sports. Tiger woods has a big team, but he would even one of the best players without any other team member. He is the key. So, you and your robots what you code are the key. You do not really need a team. Trust in yourself.
Right now I have a demo acct with MBTrading…they only have data going back to Oct -09. I like them because they’re an ECN…with small commissions. Do you really think I have to go back beyond that? I figured that things change, so I wasn’t worried about only having 8 months of data.
What you need for a good system is a simple and clear strategy. …
Yep…that’s all I can handle right now anyway! I’ve never even drawn a fib yet! I really don’t like the idea yet…how silly! But if banks use them, I guess I’ll have to get into them one day.
So, don’t look for the big profit first. Look for the lesser losses at all. If you can minimize losses, you can then in the next step tune lot size to increase profit.
Plus if I speak about systems, don’t even think about martingale, trading without stops etc. etc. Thats all the quick poor path.
Yes, I agree totally.
I started with coding 30 years ago, with investments 10 years ago and with forex particular around 1 year ago. …
Wow! So do you think the Forex is better than stocks, futures, etc. for someone who wants to trade via EA’s? I just don’t see myself being able to handle manual short-term trading…too stressful. And regarding stocks…the companies have to be transparent to value them…and I don’t think they are…but I suppose there are a lot of “unknowns” in the forex also.
I do like coding…I actually think it’s fun. Overall, coding EA’s and working at home, alone, is a perfect fit for me. That’s why I’m determined to give this a shot.
I can only speak for myself and I do not forex only. In fact, forex ist far less than 5% of my investment capital. If it runs well then I get a huge roi anyways and if it will end in loss, that’s not really a big issue then to me. It’s a check now and we will see. The point is: If you have a stock, you own that stock. You can even trade with stocks via cfds, but you do not own that stock then and this implies a risk. Same with currencies.
Anyways, I can only speak for myself and how I see it now. Like I see it now, a currency has not so much risk of default than a company has. Even a big company. There is also more liquidity involved and that means no single player can really tune the large time frame charts for long. I had also some profit with stocks, but got also burned while one company buys the other which I had stocks in and so on. That is simply not possible with currencies. On the other side - with stocks you have only one pair. So it goes and goes. It’s a personal thing what you prefer.
Regarding that data: I had robots which worked like a charm in one year and ended in loss the other year. Even 2 years is the minimum. I speak about larger time frames. With 2 years you have a lot of market scenarios around to have an almost reliable check. If you are unsure, you can also demo trade and it is probably better than backtest. You just have a bit longer to wait until going live.
One cardinal lesson for me in coding robots was: 95% what you can read everywhere is the path to easy loss. If you start coding, you will see that for yourself.
Regarding those fibs: Yeah that might work and it’s easy to code. I don’t use that, however. Just a personal thing, too.
To be profitable, you must analyze the markets first. Look at the price action and that is the key of all. Just looking at charts, trying to find the rhythm and blues of if. Price is definitely not random. It’s how people act. How do people act? There is a rhythm. Like they go for breakfast in the morning and to sleep in the evening.
