MultiBob EA

Here's a nice EA developed by a contributor to Steve Hopwoods Forex forum called "MultiBob".

It trades an implementation of a manual trading system developed by a guy called "Nanningbob" across many currency pairs simultaneously.

I've been manually trading Nanningbob's 10.2 system for a while on demo charts, and have had a fair amount of success with it. The system uses weekly pivots as support and resistance levels, and the weekly open for the last two weeks as a guide to the trend.

Here's the current results:

Up almost $1,000 on a $5,000 FXDD demo account in two weeks. Not bad.

However, due to a bug, this robot had several AUDNZD trades open at once. The market moved in their  favour creating most of the profit. Still, it's not been doing too badly with other trades and it's an interesting design.

It's not possible to run back tests on this sort of robot, so we have forward test results only.

I've been keeping the robot up to date as new releases come out, and use the default settings.

If you're new to Steve Hopwoods forum, beware. It contains a lot of very useful information, but I have noticed the posters can be a little enthusiastic about almost every system that comes out. If you're not careful, you might mistake the site for the holy grail of trading, load all of the offered EA's onto charts, and lose all your money.

Update: Another week of results, and this robot has managed to wipe out all those gains - over $1,000, gone!

Working Robots

Some people say that trading robots simply don't work. You can try hundreds of different robots and have no success with any of them.

This certainly does appear to be true. Over the last three years, I have tested hundreds of robots, both of my own design and others, both in back tests and on demo accounts using live trading data, and have yet to place one for any length of time on a live trading account.

Some robots perform well for a period of time, and then fail miserably. Others have spectacular back test results and then perform completely horribly in forward tests or live accounts.

Currently I have several robots which have shown promising  results over the last half a year, but I still do not trust them enough to run live.

So, it's really true then? No robots work?

In my experience, certainly none perform as hoped - that is generating huge amounts of income daily while the operator sits passively by or goes about his or her day leaving the robot to it. At best they are clumsy and crude, and you're a lot better off learning to trade manually. If you use 4 hour or higher time frame charts, it doesn't even take very long.

But here are a few examples of robots which "work" as long as your expectations aren't too high.


3 Pair Hedge Robot

I would feel comfortable running this robot on a live account - however it doesn't generate much income. Orders can be open for weeks, sometimes months, and it's designed only to return $20 profit from a $5,000 account. Even with a $50,000 account, that means $200 perhaps every week. However, it is reliable, and doesn't go into too much draw down.

It's best return was about $80 in one week. This happened only once during it's first 3 month test period. It's currently on it's 2nd test period, and since 2012-09-17 has returned only $62. 1.24% in 3 weeks.

It's designed to create a synthetic currency pair, which due to market fluctuations will eventually move the account into profit and it will then close the orders. Maximum observed draw-down was about $150. 

This particular design hedges EURUSD, AUDUSD and EURAUD. I have guessed which lot sizes to use for the pairs. I tried another robot which hedged GBPCHF, GBPJPY and CHFJPY but draw down was slightly worse and it ran for over a month and never returned a profit. I think it was close, but I gave up on the design before it could. It's possible I got the lot sizes wrong, which made profit more difficult to come by. 

So this is an example of a working robot. You can download and use it yourself. Just run the robot on a EURUSD chart with an account containing at least $5,000. In a few weeks you will be $20 richer. 

Pending X High-Low

This robot trades consolidations. True to form, in a consolidating market, of which recently we've had a lot, it works well. However eventually a trending market will come along and it gets killed.

I've added the ADX indicator to try to filter strong trends. The stop loss and other settings aren't particularly optimized. Usually once it entered an order I'd move the stop loss manually anyway.

I don't know how long I've run this robot for, but it's been a long time. Possibly 9 months or so. It's rarely ever exceeded $100 profit. Even now with the trend filter in place, $100 seems to be the best it can do.

Like many of the other robots I'm currently demo testing, it returns great results in back tests. I suspect every so often it catches a great trend or has orders open over the weekend and the market gaps heavily in it's favour and this may explain the great back test results. Whatever the reason, it's been running so long and has been so consistent I would be happy to run this on a live account. But I wouldn't expect much profit from it. 

Additional manual intervention may possibly make this robot more successful. It's easy enough even without the ADX filter to see when the market is trending and when it's not, and it is good at entering trades. Just it's follow through needs work. 

High-Low 1D

Here's the last example of a robot that "works". This is a shockingly bad example, so the code is not provided due to embarrassment. But nevertheless, we're showing robots that "work" even if their success is very mediocre.

This is a hedging robot. I have long forgotten how it even works. It's been running for so long and has had orders open all this time. Many only just closed in the last few days. I was beginning to think they never would.

So, from all the time it's been running ... weeks? Months? I really don't know. I long ago stopped paying attention to this robot ... but anyway, it's made $36.

Look at the AUDUSD chart in the middle of the screen shots. See the mass of orders which just closed? This is a silly, silly design. Yet, it works. 

Weekly Breakout Hedge EA Results to 2012-10-06

Here's another weeks worth of results from my Weekly Breakout Hedge EA. While I won't be providing regular weekly updates for this robot, I was impressed enough with this weeks returns to write another post.

Last week it had been running for approximately one month, and had a profit of $166. With a starting balance of $5,000 that's a little over 3% return a month. Quite small compared to the returns good traders can make, but more than 10 times the average savings account will pay over the course of a year.

Here's this weeks results:

Balance of $5292, or a $292 profit since the beginning. $115 profit this week, or a 2.22% return over last week. 5.84% total return over 5 weeks.

So instead of a 3% return per month, perhaps we can get 4 or even 5% every month. This doesn't sound like much until we realize that is a 60% return a year. 

Sounds impressive, and perhaps too good to be true? 

Consider that the Inside Bar EA who's results are often posted on this site have returned 40% per quarter for the last two quarters - or 80%. Had we been trading for investors, we could have quit after the first quarter and taken the rest of the year off (probably would have been a good idea considering the poor results returned so far this quarter!)

Traders can and do exceed this return regularly. Not all of them can consistently maintain this level of return though (much like our Inside Bar EA). Many investors would probably be extremely happy with a 20% return.

So what could go wrong with this EA? Maybe the broker will develop "issues". Perhaps price spikes will do their best to wipe out the margin in the account. Or perhaps the EA will fail to place trades where it needs to and develop an irrecoverable draw down when the market decides to trend strongly once again, erasing our profit.

Previous experimentation with hedging has shown that things can go wrong quickly once the market decides to move one way or another and you have a lot of orders open in the wrong direction. With leverage, hedging can kill your account very quickly and the market must move twice as far to counter hedged trades. If the market doesn't move, then your capital is tried up, sometimes for weeks, or even months.

I am currently testing several other hedging EA's which are experiencing precisely these problems. While they do seem to be working (with very small lot sizes at least), and while they do seem to return profits, the profits are small and rare. It's particularly dispiriting to have a profit and then have positions in draw-down equal to most of that profit for weeks at a time. 

Big market moves are the only time these EA's can close their hedged positions and then only for a very small profit. You could make a lot more profit by waiting patiently for these big moves and capturing them with non-hedged positions. 

What's impressive about this particular EA is that it's made almost as most profit with little or no draw down as the other hedging EA's being tested in a third of the time. This could be due to the weekly open line which this EA uses a base for it's trades being statistically significant, or it could just be luck. Time will tell, but so far it's exciting enough that I'm writing another post about it.

Even a 3% return per month, while not enough to live on unless you had a particularly large account, would be enough to excite potential investors. Perhaps I can create a hedge fund out of this system. That would be pretty exciting! It's a fairly safe system, requires almost no intervention, and returns more a savings account and more than most stocks and mutual funds. 

With any luck, by lowering expectations and going for smaller, but safer and more consistent returns over a much larger time frame, we might be onto something. There's certainly nothing magical about this system - simply our goals and perspective have changed.

So what will go wrong? We'll see in the coming months.

Update: for the week 7-13th October, this robot made only $39, or a 0.7% return.

Also, I realized that a big enough market spike would trigger orders in one direction, and it could be months before prices moved enough in the other direction to enable the orders to close in profit. This is particularly likely in JPY and CHF pairs. I think the lot sizes used in this robot are low enough that the risk of a margin call is unlikely, but it's still something to be aware of.

If such a spike was to occur, we'd assess the market direction and eventually close the orders at a loss, using profit gained with other pairs to hopefully offset this.

Inside Bar Results to 2012-10-06

Here's some updated results from the last surviving robot of a series we tested regularly some time ago.

The "Inside Bar" robot is currently on it's 3rd FXDD demo account (they expire every 3 months). In that time, starting with a $5,000 balance, it had returned a $2,000 profit each period, for a total of $4,000. If it had been one account that hadn't expired, the profit would have been more, as the lot sized used in trades is calculated from the equity of the account.

It is one of my most successful robots, and has inspired several variations which are currently under going testing. Additionally, the method was traded manually on a demo account with excellent success. Until, that is, recently, as we shall see.

The top picture shows the current account balance - $4,603.50. So it's down almost $400 since starting on 2012-09-17.

The second picture shows trades from this last week - a loss of $88.01.

There was one particularly good EURUSD trade which could we could have squeezed some more profit out of this week, but unfortunately the settings were not favourable to allow it's capture.

We may yet recoup the losses and end up in profit. We'll see. Another two and a half months left on this demo account.

The variations on this design haven't been doing too well lately either. Which leads us to ...


Inside Bar - Manual Trading

After being impressed with the Inside Bar robot results, I coded several variations and started demo testing them. But they performed poorly. Curious, I started manually trading the inside bar system, simply placing pending trades whenever the indicator showed an inside bar formation. With minimal effort, I had spectacular results, which lead to a small few changes in the new Inside Bar robots code, mostly related to stop losses and order expiration.

However, the last few weeks haven't been kind to the Inside Bar method of trading. At least not the way I'm trading it, which is with minimal attention to the charts.

The top picture shows the manually traded Inside Bar methods results. From a starting balance of $5,000, we're down to $4,384. Three orders are currently open with a profit of $80.55. 

The second picture shows last weeks orders - a loss of $410 - the worst week yet. 

I missed a good EURUSD trade early in the week (which the EA version caught for a small profit), was whipsawed badly on the USDCAD, and basically had a horrible week with no winning trades (other than what is currently open).

These results show that this method doesn't work under certain market conditions, which currently I'd describe as "emotional". Not really going anywhere but with huge swings.

This method could possibly work if, when we received an Inside Bar signal, switched to a lower time frame and, using the 4 hour Inside Bar high and low levels, carefully watched the trades. We'd have to adjust stop loss levels quickly and go for smaller profits. It would be time intensive, but it should work.

We *may* recover our losses using this method as-is in the next few weeks, but if these market conditions continue, there may not be much of an account left to trade with. 

Also, the EA version trades only EURUSD and AUDUSD. This manual system adds USDCAD and GBPUSD. The other automated versions trade 8 different currencies. I suspect the AUDUSD is the better currency to trade with lately. 

The lesson learned from watching this EA for over 6 months has been that the market can change and ruin an otherwise good EA. While it's days aren't over yet, the recent results are a little pessimistic. 

danw2 - pending - ema high-low EA

This is an EA I wrote quickly to test out this forum thread on Forex Factory.

It's similar to several other EA's I've coded and tested over the years, except it places trades upon a cross into a channel created by the high and low of a moving average, whereas all of my designs entered trades when price exited the channel.

At first glance at the chart generated by the back tests (not shown), I was impressed that it seems to capture trend changes very early.

The system listed on Forex Factory calls for a 5 period moving average on the daily chart to form the channel, whereas this robot uses a 10 period EMA on the 4 hour chart.

I ran about 5 back tests with various settings (no full scale optimization) and got some positive results. This is generally a good sign. Of course, I have tested only on EURUSD and only for a limited period of time. Still, when robots perform this well with very little modifications of the initial (wildly guessed) settings, it intrigues me.

Back test on 4 hour EURUSD from 2011-1-1 to 2012-09-05

Fairly nice equity curve, 25% return, 10.95% draw-down using an automatically set lot size (back test was with a $10,000 account and initial lot size was 0.1, adjusting automatically with equity).

Consecutive loss count can get scary at times (11 maximum constitutive losses), however that appears to be the worst statistic from this result.

This is a pretty good result. But I'm too scared to test it further, because it will undoubtedly be a failure! However, if these limited automated results can be this good, I'm sure trading this system manually will be even better. It's also an extremely simple system and wouldn't take much time to set up and monitor trades.

EURUSD - 2012-10-04

Depending on the time frame and zoom level of your charts, EURUSD has been in a mild down trend for the last two weeks or is basically flat. 

60 minute EURUSD chart

Above is the 60 minute EURUSD chart, showing the down trend from 17th September when price failed to breach the recent high made on 14th September. 

The red line is the 100 period simple moving average. The last few days show it flattening out, and even turning slightly upwards. Price is consolidating. Our blue bearish trend line may be respected but it's too early to tell at this stage. As always, we'll keep an eye on other currency pairs to see what their story is.

AUDUSD (not shown) has been plummeting recently, while GBPUSD (also not shown) has just this week started showing signs of bearish activity. USDCAD (not shown) is starting to look bullish. Since these currencies are usually correlated, we'll be looking for more signs of bearishness on EURUSD. 

One cause for concern however is EURAUD, which has been heading north:

4 hour EURAUD chart

This has probably been due to AUD weakness,  but for EURUSD to resume a bearish stance in line with AUDUSD and GBPUSD, we'd expect to see EURAUD at least stall. If it continues upwards, while AUDUSD continues down, either look for more EURUSD bullishness or hold off on EURUSD trades until the picture is clearer. 

In the meantime, however, you could take advantage of moves in these other pairs.

Update: Looking at the economic calendar for tonight reveals (yet) another ECB Press Conference, as well as employment data from the US. Often many currency pairs are totally flat when these events are pending, whereas the last few days we've seen some movement. This will be interesting.

Weekly Breakout Hedge EA

Remember the series of robots we were testing a while ago? Among them were a few based on weekly breakouts. They were extremely promising, sometimes giving huge returns - although only when the market felt co-operative, which lately hasn't been often. 

One of these robots is still running, although it has lost $1,500 from a $5,000 demo account quite a while ago and the balance has barely moved since.

Frustrated with the seemingly constant whip-lashing around the weekly open line, I created a hedge robot. If the price breaks out and keeps travelling in one direction for the entire week - great. If it whipsaws, then it hedges the move with additional buy or sell orders and attempts to close the orders when they reach at least $1 in profit. 

It's been running for a month and it's doing fairly well. 

$166 profit over a month isn't much, but this robot is running very conservative settings. The profit was generated fairly safely. 

With a $50,000 account, that would equate to a relatively safe $1,660 monthly profit (bar something extremely bizarre happening in the market, or more likely, problems with the broker). It's perhaps not a liveable income for most, but 3.30% a month it is a very decent rate of return.

With hedging robots, I've learned the hard way not to over leverage, because doing so gets you into trouble very quickly.

I have several other hedging robot designs currently being tested, and they're doing OK, but even with small lot sizes will go into uncomfortably high levels of draw down sometimes, and they can stay that way for a few weeks, tying up capital, until the market finally moves and allows additional orders in one direction or another and the robot can finally close in profit.

This particular robot seems to spend a lot less time with open orders in draw down than the others. I'm thinking because weekly open line is significant and thus makes a better starting point for placing orders than some of the other designs. 

Code for this robot is not currently available. However if you look at the chart, you should be able to easily figure out how the robot works.