Forex Dan

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!

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.

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.

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.

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.

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.

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.

EURUSD broke through a step bullish trend line last week after forming a double top (see 4 hour chart below), but its struggling to become bearish. Other currency pairs are behaving similarly. Apparently there is yet more news from .... Europe .... due out this week, which could explain the lack-luster behaviour. Still, EURUSD is making lower lows.

EURUSD Daily Chart

EURUSD 4 hour chart

Lately I've been looking at the tick volumes. I haven't yet decided if they provide any useful information or not. The volumes on the 4 hour charts show a slow down at the end of the US session, but the daily chart includes volumes over the entire trading day, so may be more useful. The daily chart above shows volumes slowing. The last few candles have long wicks - suggesting a lot of uncertainty. Considering we have both bearish and bullish candles, and that they all have wicks, it's suggesting a lot of uncertainty. Looking at other currency pairs (not shown) reveals a similar story.

Not much we can do except hold tight and see if the orange trend line on the 4 hour chart is respected. In the meantime, we could risk a small short order below 1.2870.

They say "don't pick tops and bottoms" and "follow the trend" and all that other good stuff. It's good advice, but it's still fun to try and determine when a trend might end. If you get it right, you'll be in on the very beginning of a new trend! Of course if you get it wrong, then all the people with orders following the trend will thank you very much for your money.

First of all, are we in a trend? It depends what time frame you look at. If you look at this chart below, then you could safely say "yes". Price is well above the 100 period high & low moving averages.

4 hour EURUSD chart

But look at that trend - so step! Surely it's over extended and due to come down, right? And you know what they say - the bigger they are, the harder they fall. Or something like that.

So lets look for evidence that the trend is about to end, so we can possibly get a nice trade set up.

First we have the 4 hour EURUSD chart, same as above, but this time with a yellow box. See the long wick of the candle in the yellow box? And the following candles have not yet penetrated this high. Also, if you look at previous candles, none have a wick quite so long. This could mean buying is exhausted for the time being. However it could also mean that traders booked their profits on Friday and went home early, so let's see what other evidence we have.

4 hour EURUSD chart

Dropping down to the 1 hour time frame, we can get a little better idea of what might be happening. We can now draw a bearish trend line, and wait to see it price will touch it a third time. Also, note the RSI indicator is also showing lack of bullish momentum. If we were feeling brave, we could possibly place a trade below this recent price action at 1.3100 and hope it drops to the bullish trend line. However the trend is strong, so it's risky.

1 hour EURUSD chart

For a bit of confirmation on what might be happening, let's look at the AUDUSD, which is often (but not always) correlated with EURUSD. Here we can see price hit a major resistance level, made two big wicks, and how now dropped to the bullish trend line. How exciting!

4 hour AUDUSD chart

Below is the daily USDCAD chart. Usually (but not always) this pair will be inversely correlated to EURUSD and often also AUDUSD, depending if resources are rallying or if markets in general are feeling frisky. We can see a nice long wick on the daily candle here, and price has started moving back up. Things are moving uniformly together across the pairs, at least.

Daily USDCAD chart

Lastly, here's a cherry picked 15 minute EURUSD chart with Ichimoku Kinko Hyo plotted. Price has broken through the cloud to the downside. Sell! Right? Maybe. Look at the size of the candles though - not very big. It shows there isn't much momentum going on yet.

15 minute EURUSD chart

So, if we felt adventerous we could place a small bearish EURUSD trade with a stoploss above Fridays high. But personally, I'd wait to see what these other pairs are doing, and wait for momentum to pick up. If AUDUSD broke through it's bullish trend line, I'd be more willing to place my EURUSD bearish trade. Otherwise I'd be looking to go long if price either moved above Fridays high or made it all the way back down to it's bullish trend line.

If we take fundamentals into account as well, selling EURUSD at this time probably isn't recommended, except perhaps on the smaller time frames.

When I started this website, I was testing a breakout trading strategy based on a Forex Factory forum, called "Stairstep Breakouts".

Perhaps partly because I did have some success with it to begin with, and partly because of the authors confidence, it was the only system I used for a while. Most of the robots I developed became breakout based, and sometimes they even seemed to work quite well.

It was the first system I ever seriously tried to trade manually. Unfortunately, it hasn't worked out so well for me. It could be because I lacked the patience to sit at the computer for hours on end waiting for breakouts, or because I kept going to bed with live trades active and not managing them properly. Probably the fault is completely mine.

I tried various methods of trading it. I would set alerts to go to my phone. I would try trading every breakout no matter what. I tried trading only on the 4 hour time frame. All without much success.

The biggest problem was that I would often get whipsawed. The next was that the successful trades weren't returning enough profit to counter this problem, and my account balances (mostly all demo) dwindled.

Week after week of looking at charts trying to catch these breakouts, I noticed several things. First, whipsaws occurred very frequently when the market wasn't sure what it was doing (consolidating). Second, in strong trends, I was closing trades way too early.

This lead me to try weekly breakouts, inside bars and swing trading, which worked very well at first, until I had troubles again with consolidating markets.

Then I investigated Nanningbob's trend and pivot based system, which worked even better.

Currently I'm manually demo trading several systems based on the above, and have had a lot more success than I ever have with the breakout system.

However, I credit this particular breakout system for making me watch prices more closely and paying more attention to what's happening, which in turn lead me to the systems I trade now. The time spent studying this system, even though it hasn't worked for me, has been extremely valuable.

Most pairs went on a rally after last news from last Thursday and Friday, and have been charging hard ever since. Tonight there is yet more news from the US, which will either push everything higher, or reverse them, at least for a bit.

There's some signs of the current trend stalling, which is perhaps isn't as noticeable on EURUSD as it is on some other pairs, such as the often correlated AUDUSD. It's also interesting to watch EURAUD.

Below we see the EURUSD chart with it's current trend in orange. But the yellow line represents yesterdays high, and price hasn't quite pushed through it yet.

EURUSD 1 hour chart

Here is the AUDUSD chart which has failed to reach yesterdays high and looks to be descending. If it breaks the yellow support line, I'd be dubious if EURUSD rally will continue tonight. If it does, there may be erratic price action first.

AUDUSD 1 hour chart

Finally here is the EURUAD chart. We can clearly see price has failed to go past the yellow resistance line twice already and it's preparing for another test. If it fails, it will suggest the EURO has no strength left, and we'd expect to see EURUSD fall.

EURAUD 1 hour chart

There's several other clues, such as a strengthening USDCAD, RSI divergence on the 1 hour charts across several pairs, and dubious volume readings (not shown). All of this information is showing that traders are starting to doubt the US announcing QE3 tonight. We'll see how it plays out.

I currently have a small short AUDUSD trade and long USDCAD trade on demo accounts active. However I also have an ongoing long EURUSD trade from last week which is safely in profit and has a trailing stop set to lock in profit should it drop.

--

Update:

Well, a bit of volatility, but EURUSD & AUDUSD resumed their uptrend. The nasty spike would have made trading difficult. EURAUD bounced off resistance is trading lower in a continuing consolidation pattern, suggesting EURO and AUD are about even right now, whereas USD is losing value.

EURUSD 1 hour chart

Here's this weeks results from the most promising of our robots currently being tested, and one that has been reviewed regularly on this site for a few months now - the Inside Bar robot.

A pretty crappy week, with this robot being down $135. Last week wasn't too pretty either.

Then, boom! This happened.

This is how you want things to go!

Looking at the market, many pairs haven't moved much the last few weeks. Everyone was waiting for - wait for it - news from Europe. Combined with August holidays or something, which is seen as a low volume month.

Then when prices finally do start moving, they move rapidly, and this robot caught a nice AUDUSD move.

This move was seen across many currency pairs, and many of my other robots - which had been sliced and diced the last two weeks - caught this move as well and ended up either in profit or at least recovering a lot of their losses.

This reinforces the idea that "systems" don't matter all that much. Keeping out of choppy price action and setting appropriate stop loss and take profit levels can make much more difference.

Big price moves will happen eventually. Price will go up, or it will go down. Many systems will get you into trades. But keeping out of the chop the rest of the time is really more of a skill than catching the big moves.

Think of it as being on a sailing boat. There's no problem when the wind is blowing strongly and you're way out in the ocean. It's when the wind isn't blowing and you're close to the coast trying to avoid the rocks that will test your skills (and patience).

I have 3 other Inside Bar systems I'm trying at the moment, too. Two automated, and one manual. The manual system was doing extremely well, but also suffered this week due to chop. In retrospect, I should just have stopped trading, but was trying to follow the rules of the system and take trades when they were available. It was pretty easy to see, however, that, for example, the USDCAD was flat, and the buy and sell stop levels offered by the inside bar where above/below past candle wicks, and any orders were likely to get stopped out. And they were.

The automated systems have been posting losses for the last few weeks. I'm not sure why. They missed several good trades for some reason. Also the spread can make a big difference. Currently these systems are trading on 8 currency pairs, and the spreads can be quite large. Reducing the pairs traded to just a few low spread ones, figuring out how to filter trades in a flat market, and also why they are missing trades are the things to fix in these systems.

Moving averages are funny things. Below we have a daily EURUSD chart with high & low 100 period moving averages plotted. Price climbed for a while, then hit the lower average, and looks like it's now reversing. A fairly clear sell signal.

Daily EURUSD chart

But what's happening on the lower time frames? With the same averages plotted on the 60 minute chart, we can see price descended and bounced off the lower moving average.

60 minute EURUSD chart

Where's it going to go now? It's a little difficult to tell. While price appears to be making lower highs on the 60 minute chart, it's not making lower lows. There is a bullish trend line on the daily chart, but price would have to push through both moving averages.

GBPUSD & EURAUD (not shown) look to be in up trends for the moment, but their momentum has stalled. We'll just have to wait and see.

We're looking for price to exceed 1.26, or better yet, 1.27, or drop below 1.247, which is below Fridays low and also the lower 60 minute 100 period moving average.

EURUSD broke out of it's nice little triangle formation and along with some other pairs has been trending upwards nicely this week.

Daily EURUSD chart

News that the US may start printing more money soon has probably lead to this movement. What we want to know now is how far it's likely to go up.

Looking at the daily EURUSD chart above, we can see price has just touched the lower 100 period moving average line.

There may be a slight reversal before continuing up along the bullish orange trend line, or it may collapse below it and continue along the main down trend of the last few months.

EURAUD, EURGBP (not shown) indicate continued EUR strength, while USDJPY indicates possible USD weakness. Things are looking good for continued EURUSD momentum, but we'll want to see price clear these moving averages first.

Here's a good article about mirror trading - linking your Forex account to another traders, which copies their trades and (hopefully) makes you money for a very small commission.

It lists several mirror trade providers, and makes an interesting point about ZuluTrade, a system I have had experience with.

... "the vast majority of so called “traders” on their platform are incredibly bad traders, who use vastly excessive leverage to boost their performance returns. Thus whilst their ‘headline’ performance return maybe several hundred percent, the reality is that it might only take 1 or 2 losing trades to wipe out your entire account."

So if you trade with ZuluTrade, be careful. While they have added more filters and safeguards, you'll want to carefully check their traders statistics. Generally you want to see large trade profits with very small draw down. Win ratio isn't as important.

The other systems I have had no experience with, but they sound interesting also, especially Currensee.

It's mostly just soup on EURUSD, the chart we usually review here, so let's look instead at a different currency pair.

Here is the AUDUSD.

Daily AUDUSD chart

As you can see, a trend line is easily added to the nice, regular bullish trend pattern. AUDUSD has been behaving itself nicely! After regularly watching EURUSD for a long time, you'd be forgiven for forgetting that currency pairs can actually behave and form proper technical patterns.

A slight break has appeared below the orange trend line. Given that this is a daily chart, it should be a fairly reliable signal. Sell below 1.04.

Some fundamental reasons not to sell are the fairly high interest rate paid for carrying the AUDUSD over night, and that the Australian economy continues to do quite well. Also, where else will people put their money?

Still, with such a strong technical signal, it's probably worth placing at least a small sell trade using a pending sell stop order.

Here's an EA I threw together quickly after reading this thread on Forex Factory.

The idea was to get the trend from a higher time frame, and when the trend matches on a lower time frame, place a pending order above/below the high/low of candle going against the trend.

It didn't generate many orders in back tests with the settings suggested by the thread, so the time frames were adjusted to the 4 hour and daily.

Results, after optimization, weren't bad. Some profit across the year. Was too scared to try it on any other pairs, as they usually all show horrible results, which possibly indicates my EURUSD history data used for back testing is too optimistic somehow.

Back-test on EURUSD, 1-1-2011 to 1-1-2012

Regularly reviewing several automated robots over the last few months has been fun, and it's also been a good learning experience.

Some robots run well for a while, then ultimately fail when left to run long enough due to a changing market. Some bugs have been found, some settings changed, and some good comparisons between systems have been made.

We've come to a point where we can easily see that most of the regularly reviewed robots have failed, and there's no more point continuing. While it's possible they may yet recover and start posting gains again, it seems a better idea to focus on the one robot which has been consistent through this whole process - the Inside Bar robot.

I have many other robots currently undergoing testing, and I may revive regular reviews and post results from some of them too.

Additionally, I started a spread sheet so as to more easily see robot performance over time, and this seemed like a good idea. However there's several good websites which allow the collecting of results directly from the trading platform, and this might be a better idea for future reviews. We'll give it some time and see what is decided.

Let's do a final review.

Inside Bar

This is the Inside Bar robots current results. Remember that this is the second iteration of this particular demo account, the first having expired with an approximately $2,000 gain from a $5,000 account. Currently it's about half way through it's second three month demo period, and is up another $1,200.

This robot is running on two currency pairs only, with different stop loss and trailing stop settings, with fairly high margin.

Because of the success of this robot, several variations of this robot were coded and put onto demo charts, and they haven't done well.

Additionally, we started manually trading this system as well, and it experienced quite a bit of success with minimal effort. Pondering why this should be, bugs were found in the automatic trailing stop and stop loss settings of these other robots.

These bugs are now fixed, but the systems continue to do poorly. The manual account hasn't had much luck the last few weeks either, and we're thinking this is due to market conditions.

However, we also noticed positive trades seem to cut off too soon. We realized the margin filter was closing these down. Because of the high leverage and because the robots are running on more than just two pairs, margin became a problem.

This is also fixed now, so hopefully in the next few months we should see some positive results. If we don't, then this will be very perplexing!

Pending Reversal Candle

This robot returned poor results in back testing, then was erratic during demo testing, but ended it's first demo account run up $2,000. So we let it run. It's now down $1,000. Don't know what it's deal is, not really bothered by it, either. We have several other robots which incorporate similar principals, so there's no need to focus on this one any more

Daily Close Break Out

This robot underwent a minor and then a major revision, but continued to perform poorly. It was discontinued some time ago.

Weekly Close + ATR

Believe it or not, this one was up $1,000 just a few short weeks ago, but profits were whip-sawed away.

Bugs were fixed in this robot, but performance didn't improve. It really is sort of similar to the inside bar robot anyway, except the inside bar robot can move around a little more.

I'm still inspired by these robots, but with the terrible performance, I don't think we can justify keeping them running.

Weekly Break Out 2

Pretty much what I wrote for the above robot is true for this one, too.

--

The Open-Close H4 and Daily Close Break-out bots were discontinued some time ago, and so there's no results to post for them. Just know that they were terrible!

So there we have it. Out of 6 robots, 1 continues to show promise, even through tough conditions. It works well as a manual system, works well as an automated system, but care has to be taken with stop loss and take profit levels, as well as watching leverage and choosing the pairs it runs on wisely.

We'll keep you updated on the performance of the current Inside Bar robot, as well as it's derivatives from time to time. We may also add a few more robots that we currently have under wraps.

It's August, and trading volumes have dropped off. I tried to trade in August last year, and it was a horrible nightmare.

But, let's press on with a quick EURUSD analysis. I haven't done one of these for a while, since I've started focusing more on other currency pairs, and am finding them a little easier to trade. EURAUD was trending nicely for a while, and GBPUSD was lending itself quite well to breakouts, generally following the EURUSD but moving further and enabling the breakout systems to catch a few pips.

I'm a little surprised that there are some actual patterns on EURUSD. It sort of seemed like a mindless soup. I've been using the high & low 100 period moving averages as a reference on 1 hour and 4 hours charts when I do look at EURUSD, and noting highs and lows near where prices cross these lines.

EURUSD, 4 hour chart

If I were to trade EURUSD, I'd be looking for a break above 1.2390 or below 1.2240.

With a few hastily drawn trend lines in there, we can see a triangle forming:

EURUSD, 4 hour chart

So this can serve as a little better guide, and we'd be looking for a big breakout with a lot of momentum above 1.2350 or below 1.2250, or basically any big move through the trend lines.

Here is an update to the inside bar indicator. In addition to the arrows indicating which bars are inside bars, it draws a box around it including the user set buffer, and text below the box tells you the size in pips of both the inside bar and buffer zone.

You can also tell it to use push alerts, to send notifications to your smart phone via the mobile MetaTrader 4 app.

This particular indicator calculates inside bars as the high and low being "inside" the high and low of the previous candle.

The colours and text locations are not user adjustable, but if there's interest, I can modify it to include these features.

After realizing the automatic stop-loss and trailing stops weren't adjusting between trades, fixing the bug, and letting the automated robots run for a few more weeks, nothing really changed. They continued losing at approximately the same pace.

It wasn't until I noticed I had much better success with a series of robots when I adjusted the trailing stop manually, that I eventually realized there's another bug concerning the automatically adjusting trailing stop.

The bug is that the trailing stop - when set to automatic - adjusts to current price action on the screen.

For example, if the stops are calculated from the range between some highs and lows, then when the order is placed, the stop loss is set correctly, but the trailing stop is recalculated at the next bar. If the range has increased then so has the trailing stop.

This only affects robots using automatic settings for trailing stop, and only if they're not calculated using the ATR.

Unfortunately this is a large percentage of my robots, so I'll have to fix the bug and let the tests continue.

Out of the six robots we were regularly reviewing for the last few months, only four remain. Out of those four, three are erratic at times, with big wins followed by big losses or small losses eroding the wins. One is still doing fairly well.

Here's a quick review.

Inside Bar

This is the robot which has been fairly consistent. It ended it's demo period with a $2,000 profit, was reset to $5,000, and is up again about $1,250.

I've created two variations of the inside bar robot, but they haven't done as well, and I'm not sure why. However, I've also been manually trading this system and it shows promise, leading me to believe there's an issue with the stop-loss and trailing-stop settings.

Pending Reversal Candle

Every so often this robot wins large, and it ended it's last demo period up about $2,000. So far in this demo period it's been mostly down and isn't doing so much. Not sure what the future of this robot will be.

Daily Close Break Out

This robot had periods of nice profits, but generally was a pretty big loser. After more tweaking, another good week or two, it bombed and kept losing. Finally decided to ditch it.

Weekly Close + ATR

Another erratic bot. Currently in profit, but is badly affected by consolidation. I still have a feeling this robot can be successful with some minor adjustments or filtering, but haven't quite figured it out.

Weekly Break Out 2

Pretty much the same as it's cousin mentioned above, but currently isn't in profit. Had a great week where it made over $1,000, which was quickly eroded the next week by whip-sawing.

Open Close H4 Bot

The oldest robot, which was kept to show trend strength. It had been a while since it had a winning period, so I tweaked it. Later, it was tweaked again, and then I realized it was not serving it's purpose any more. So it was ditched.

--

So, there we have it. Inside bars shows promise, and while the others may also be successful somewhere down the road, it takes time to monitor them all.

An additional interesting thing is that I found a problem with automatic stop-loss and trailing stop settings, where they were set automatically when the robot started, and then not again like they were supposed to be.

However after fixing the problem, none of my robots seemed to perform any better!

Here's an interesting video about trend following. Interesting points the speaker makes at the beginning is that you need discipline, money management skills, and that being of lower than average intelligence can be a benefit!

http://www.youtube.com/watch?v=wbT_N6mZYR0

No results this last week due to illness.

Despite the never ending Euro-zone problems, you'll notice the EURUSD has been in an up trend since the end of May.

(4 hour EURUSD chart)

Fibonacci lines drawn from the down trend which started at the beginning of May to the end reveal possible stopping points for this trend. Having already blown through 38.2, other possible targets are 1.279 and 1.29.

One thing to watch, however, is what appears to be a double top on the 4 hour chart, with long wicks and a bearish reading on the RSI indicator, indicating slowing momentum and possible reversal.

( 4 hour EURUSD chart with RSI)

We'd be looking to buy if price continued upwards from 1.275, or sell if it breaches the trend line at approximate 1.26.

Pages

Oct 6, 2012

Oct 4, 2012

Sep 26, 2012

Sep 25, 2012

Sep 17, 2012

Sep 13, 2012

Sep 8, 2012

Aug 27, 2012

Aug 24, 2012

Aug 23, 2012

Aug 21, 2012

Aug 16, 2012

Aug 7, 2012

Jul 30, 2012

Jun 25, 2012

Jun 20, 2012