Thread: System Reviews by DailyFX Course Instructors

Dear Jeremy

my name is Marin and I am new to forex trading and a few days ago I was reading your review on automated trading and you mentioned that wealthbuilderfx-striker EUR/USD is very good trading system but when I found it , it showed diffrent MaxDD and RAR lower of what it should be for a good trading system. Aslo I would like to know why the systems does not close at highiest pips but most of the time lower number. English is not my first language so exuse me if it not very clear. thanks

Originally Posted by marin.dinev

Dear Jeremy

my name is Marin and I am new to forex trading and a few days ago I was reading your review on automated trading and you mentioned that wealthbuilderfx-striker EUR/USD is very good trading system but when I found it , it showed diffrent MaxDD and RAR lower of what it should be for a good trading system. Aslo I would like to know why the systems does not close at highiest pips but most of the time lower number. English is not my first language so exuse me if it not very clear. thanks

Hi Marin, I think your English is clear.

I haven't touched the WealthBuilders EURUSD since Dec 2008 or given it a formal review since Oct 2008. Your post made me curious to check it out as it has not been on any of my filters for quite some time...and I can see why. It certainly has been struggling.

If you are looking for a EURUSD system, consider the DBSwing EURUSD. It has only 2 max positions and has been trading since June 2008. Press HERE (System Reviews by DailyFX Course Instructors)for the most recent review on it.

Its RAR has been solid with no significant draw downs thus far. Of course, that could change at any moment.

Hi Jeremy

thanks. The Currency Pairs doesn't matter what matters is the end resalt . I need a system that brings about $200 per day on $10000 monthly figure.I understand that not all pair can work together. I have put two EUR/USD systems on my platform would that be OK ? Thanks again.

Originally Posted by marin.dinev

Hi Jeremy

thanks. The Currency Pairs doesn't matter what matters is the end resalt . I need a system that brings about $200 per day on $10000 monthly figure.I understand that not all pair can work together. I have put two EUR/USD systems on my platform would that be OK ? Thanks again.

I think you will be hard pressed to find any investment that consistently provides those returns...that's about a 40% return each and every month. There may be times when you see that type of result, but those times will be infrequent and not consistent. Expecting those results day in and day out, week in and week out is setting yourself up to lose your whole investment ($10,000). There are times when the portfolio and strategy will go through draw down as the market changes conditions.

I've mentioned it here numerous times over the past couple weeks about how the market is giving me clues it is changing its condition from quiet range to a more volatile trend/breakout. That means what has worked over the summer, may not continue to work moving forward.

Whether you have 1 or 2 or 10 systems is up to you. For those systems with a track record, what have their historic drawdowns been like and are you able to stomach those losses?

More than 85% of FX traders blow up their accounts. If you can put together a system or group of systems to produce gains month after month, then you are in the top 10-15% of traders in FX. The US Stock market is 5% lower now than where it was this time last year. So not only would you be in the top 10% of FX traders, but a FX account that is growing is also ahead of the average investor in the stock market too.

I state this because I don't want you to become a part of the other 85% that crash their account. Perhaps, consider approaching the portfolio from this method :

1) Assess how much risk you can handle
2) Find out a combination of trade size and signal providers that meet your risk profile
3) Use signal providers that have been around at least 12 months so you can see how they have endured the chaning market conditions

Hello Jeremy,

I'm wondering why you did not consider IntelliForex-Swing USDCHF for the portfolios you designed here (or at least I did not find it). Besides, I'm using it on a live account.

It seems to me that it agrees with the characteristics one might search in a trading system, including a RAR around 3 and it's trading for next to 2 years already. Max DD is also quite low.

Could you post a review or comment on this?

Thank you and have a good week

Originally Posted by Alec

Hello Jeremy,

I'm wondering why you did not consider IntelliForex-Swing USDCHF for the portfolios you designed here (or at least I did not find it). Besides, I'm using it on a live account.

It seems to me that it agrees with the characteristics one might search in a trading system, including a RAR around 3 and it's trading for next to 2 years already. Max DD is also quite low.

Could you post a review or comment on this?

Thank you and have a good week

Hi Alec...

Here is a link to a review of the IntelliForex-Swing USDCHF (System Reviews by DailyFX Course Instructors)system from back in August. I agree with you. They don't trade a lot, but they are consistent.

This signal provider has made the short list for consideration on a RAR portfolio. I'll be narrowing that list down some more for those systems that have been around at least 1 year with solid RAR figures.

Here is a portfolio made up of 3 signal providers. I opened a demo account with these 3 providers and a starting balance of $5,000 on September 9, 2009.

Some details regarding each of the signal providers are listed below (data as of 9/9/09). As you can see from the portfolio equity curve, it turned $5,000 into approximately $38,000 in 3 months with minimal drawdown.

Since this is a demo account and it expires on October 9, I will reveal the portfolio and its results for the past 30 days on Thursday October 8.

Hi Jeremy

I'd say you used some of those recent systems, like the "bio-chemicals" - oxidative, secretory, etc - which are able to make spectacular profits.

And this I'm saying, because I've used them myself, if even for a few hours. The nerves of having so many positions open at the same time and the potential for killer drawdowns...

I used them recently to try to mitigate the drawdown of a more reliable system, with success.

I selected a 'biochem', activated it, and let it trade until it would start closing the (10 or so) positions; I would then deactivate it, letting it manage the remaining open positions but preventing it from opening more.

That gave me a fairly nice profit. Positions closed - bye-bye.

Now, to answer your question, no. I wouldn't invest in that portfolio, not for 3 months, not for one month. Besides, you haven't told us which was the result of your 1 month demo trading.

However, it's tempting. You see all those systems making thousands of pips in days, if not hours. Your system(s) are struggling to make a few pips profit, or trying to recover from drawdowns... You feel you need some of that.

The recent couple of times I used systems like those, I did it based on a feeling, an intuitive action. We were just past the third week of the month and my filter was, basicly... Well: huge profits, virtually no drawdowns, and a reasonable number of trades. For THAT 1 month.

It worked. The other time, on the previous month, had worked even better. The 'feeling' (intuition, whatever, the 'Force' - LOL) was stronger. The previous time I was more certain it would work.

But I need to know the why. If there is one. To be able to repeat a good result, one has to know what weighted on the 'good' decision. Why, a couple of months ago, I was so certain I had a good chance of winning with that strategy? Was it just luck?!

I'm fairly certain there were objective factors weighting on my degree of certainty.

What sense can you make of this (if any)?

A good day to you, James, and to all the other participants of this Forum. Thank you

Originally Posted by Jeremy Wagner

Our last update of the Low Equity Portfolio was on July 8 2009. (Press HERE for a link to that update.)

Since then, our portfolio has drawn down approximately $400 to $4,541 (we originally started with $5,000). The market conditions of the summer have been fairly quiet which hasn't helped. I am beginning to see signs of the follow throughs on break outs which means trend trades may begin to see some momentum.

I like a strategy that can trade sideways when the market conditions it enjoys do not exist currently. Since I believe conditions are going to change soon, I will leave the portfolio as it is. If that were not the case, I would be on the look out for a range lovin' system to add to the mix.

Which ARE those range lovin' systems I don't know of?

Originally Posted by Alec

Hi Jeremy

I'd say you used some of those recent systems, like the "bio-chemicals" - oxidative, secretory, etc - which are able to make spectacular profits.

And this I'm saying, because I've used them myself, if even for a few hours. The nerves of having so many positions open at the same time and the potential for killer drawdowns...

I used them recently to try to mitigate the drawdown of a more reliable system, with success.

I selected a 'biochem', activated it, and let it trade until it would start closing the (10 or so) positions; I would then deactivate it, letting it manage the remaining open positions but preventing it from opening more.

That gave me a fairly nice profit. Positions closed - bye-bye.

Now, to answer your question, no. I wouldn't invest in that portfolio, not for 3 months, not for one month. Besides, you haven't told us which was the result of your 1 month demo trading.

However, it's tempting. You see all those systems making thousands of pips in days, if not hours. Your system(s) are struggling to make a few pips profit, or trying to recover from drawdowns... You feel you need some of that.

Alec, I have the same feeling about FSS. Try to ride a system or a small number of them with a hot hand and then book your profits before they hit a drawdown.

Jeremy's approach is methodical and well planned but does not give 'outstanding results' and we are not here for conservative investing.

Can you share with us the sort of returns you got and the leverage you used?

Originally Posted by Alec

Hi Jeremy

I'd say you used some of those recent systems, like the "bio-chemicals" - oxidative, secretory, etc - which are able to make spectacular profits.

And this I'm saying, because I've used them myself, if even for a few hours. The nerves of having so many positions open at the same time and the potential for killer drawdowns...

I used them recently to try to mitigate the drawdown of a more reliable system, with success.

I selected a 'biochem', activated it, and let it trade until it would start closing the (10 or so) positions; I would then deactivate it, letting it manage the remaining open positions but preventing it from opening more.

That gave me a fairly nice profit. Positions closed - bye-bye.

Now, to answer your question, no. I wouldn't invest in that portfolio, not for 3 months, not for one month. Besides, you haven't told us which was the result of your 1 month demo trading.

However, it's tempting. You see all those systems making thousands of pips in days, if not hours. Your system(s) are struggling to make a few pips profit, or trying to recover from drawdowns... You feel you need some of that.

The recent couple of times I used systems like those, I did it based on a feeling, an intuitive action. We were just past the third week of the month and my filter was, basicly... Well: huge profits, virtually no drawdowns, and a reasonable number of trades. For THAT 1 month.

It worked. The other time, on the previous month, had worked even better. The 'feeling' (intuition, whatever, the 'Force' - LOL) was stronger. The previous time I was more certain it would work.

But I need to know the why. If there is one. To be able to repeat a good result, one has to know what weighted on the 'good' decision. Why, a couple of months ago, I was so certain I had a good chance of winning with that strategy? Was it just luck?!

I'm fairly certain there were objective factors weighting on my degree of certainty.

What sense can you make of this (if any)?

A good day to you, James, and to all the other participants of this Forum. Thank you

Alec, I appreciate your comments and personal experience. Many traders have had and will have those same thoughts you experienced. I appreciate your sharing your experience so others can learn from it and maybe we can build a better mouse trap because of it.

With the demo expiring on Thursday Oct 8, I'll provide the results then. I wanted to give the readers the data that existed on September 9 without knowledge of what happened there after. The same principle we have when we add providers to our portfolio.

I like your reflective thoughts : "The recent couple of times I used systems like those, I did it based on a feeling, an intuitive action. " and also, "But I need to know the why. If there is one. To be able to repeat a good result, one has to know what weighted on the 'good' decision. "

Usually, our feelings get us into trouble. It's our feelings that will get us emotionally attached to trades and hang onto losers too long. Its our feelings that make us want to throw an extra lot on the trade because we think this is "the one". Essentially, feelings are subjective.

You are exactly right that to repeat the process, you need objective data to look at. You can probably 'feel' you way through a time or two or five, but a good disciplined trader will step aside from feelings and look for objective reasons to take action.

Let me give you an example :
A recent test I ran was random entries into the market. Buy on even days, sell on odd days at a given time each day. No regard to trend or other filters were used, simply determine if the day was even or odd. These 'random' entries (using 50 pip stop, 150 pip limit) produced a hypothetical net profit from 8/7/07 to 8/7/09! What does this mean? Was I lucky? Perhaps.

Objectively, the strategy above has a favorable risk to reward ratio ( 1 : 3 ). That gave it enough edge to produce the profit. Closer inspection of the 2 year testing period reveals many months where no profit was made. There are certain conditions it liked and times when drawdowns occured. I would never trade this type of strategy live because there isn't enough edge relative to the risk encountered.

That's how you will know if your strategy can survive...if over the long run the expected payout is enough to compensate for the risks taken. Therefore, a longer view approach is needed to make that determination. Keep testing it and see if you are able to reproduce the results time and time again. It is an interesting approach and I'm interested in your results.

Originally Posted by Alec

Which ARE those range lovin' systems I don't know of?

In my opinion, the market has been in a wide range for the majority of 2Q and 3Q 2009. Pull up a filter of the top pip collectors for the past 6 months and you'll see signal providers that love this environment.

Originally Posted by Lemur

Alec, I have the same feeling about FSS. Try to ride a system or a small number of them with a hot hand and then book your profits before they hit a drawdown.

Jeremy's approach is methodical and well planned but does not give 'outstanding results' and we are not here for conservative investing.

Can you share with us the sort of returns you got and the leverage you used?

Lemur, how do you determine when drawdown is imminent and therefore book the trades?

On a side note, remember, we have live clients from all walks of life in the FSS....conservative investing to you would mean something different to another client.

Clients are interested in methods of growing their accounts...however that may be. When presented with different methods, they then can choose if the expected returns meet up with their personal risk appetite.

Originally Posted by Jeremy Wagner

Lemur, how do you determine when drawdown is imminent and therefore book the trades?

On a side note, remember, we have live clients from all walks of life in the FSS....conservative investing to you would mean something different to another client.

Clients are interested in methods of growing their accounts...however that may be. When presented with different methods, they then can choose if the expected returns meet up with their personal risk appetite.

Jeremy,

Your logic for selecting systems per your posts is solid. However, from looking over these currency systems, most seem to have limited 'life-span' for when they are in synch with the mkt.

I am proposing an approach where somebody jumps in on a 'hot-hand' system, rides it for a significant run up (say 100%) and then exits so that profit is not then given back. If unlucky and the system starts to enter a drawdown on entry then one could exit after say 10% of initial capital is lost.

Basically, its a 'smash & grab' approach and if things don't start going well straight away, exit immediately to protect capital. Alec seems to have done something like this quite successfully. Not very scientific I grant you and I understand the drawbacks but the alternative of selecting several systems over a long period of time is unlikely to give 'outstanding results'. I would be v happy if you can prove me wrong on the latter.

Originally Posted by Lemur

Jeremy,

Your logic for selecting systems per your posts is solid. However, from looking over these currency systems, most seem to have limited 'life-span' for when they are in synch with the mkt.

I am proposing an approach where somebody jumps in on a 'hot-hand' system, rides it for a significant run up (say 100%) and then exits so that profit is not then given back. If unlucky and the system starts to enter a drawdown on entry then one could exit after say 10% of initial capital is lost.

Basically, its a 'smash & grab' approach and if things don't start going well straight away, exit immediately to protect capital. Alec seems to have done something like this quite successfully. Not very scientific I grant you and I understand the drawbacks but the alternative of selecting several systems over a long period of time is unlikely to give 'outstanding results'. I would be v happy if you can prove me wrong on the latter.

Hi Lemur, there are many different ways trading can be done. Results boil down to risk. I believe you can't receive 'outstanding results' without taking incredible risks. Therefore, outstanding results is relative from one trader to another as is their risk they are willing to take.

I believe there is a way to balance the risk out with a more active Market Conditions approach to trading. It would be an approach with some similarities that you and Alec have mentioned. I've been working on a method to assist others and hope to have it made available in a couple months.

As you work your strategy, feel free to share your ideas with others.