To begin, currencies are bought and sold in pairs because there needs to be a reference point. Let’s take GBP/USD, for example. If you simply bought 1 lot of the GBP, there would be no other currency to base its price from. . .how much is the GBP worth now vs. an hour from now? You have no way of knowing without another pair as a reference.

The first currency in the pair (in this case, the GBP) is the base currency. You are buying this base currency, and hoping that it will increase in value so that you can make a profit. The second currency, or the one after the slash (in this case, the USD), is called the quote currency or counter currency. This currency shows how much you need to pay in order to buy 1 unit of the base currency. For example, if the price of the GBP/USD pair is 1.5150, it will take 1.5150 USDs to purchase 1 GBP.

The counter currency (the USD in this case) is also being sold simultaneously while the base currency (GBP) is being bought. Why is this important? It can help you draw parallels in pairs, thus assisting you in making good decisions. Let’s say, for instance, that you are purchasing the GBP based on the fact that you think the USD will get weaker. This can translate to other pairs using the USD as a quote currency. . .the AUD/USD, EUR/USD, etc. If the USD weakens as a whole, the likelihood is that pairs with the USD as a counter currency (USD on the bottom or right side of the slash) will appreciate, or increase in value.

When you buy 1 lot of GBP/USD, you are purchasing 100,000 units of GBP based on its value in dollars. That is a lot of currency that you are able to purchase! It is, indeed, and this is due to the leverage that the broker gives you in order to purchase more than what you can afford to with the money in your account. For example, with 100:1 leverage from your broker, $1,000 is required to purchase 1 lot of currency. Some brokers offer higher leverage. . .allowing you to purchase more lots with less money. Sounds great, right? It can be. . but be cautious! It can also get you into trouble quicker!

As you can see, there is a lot of knowledge behind the scenes in regards to purchasing 1 lot of a currency pair. Manual trading can make a lot more sense when you are armed with the knowledge of the ins and outs of what is actually occurring.

The second factor (and it rivals timeframe for number one) is the number of pips that we are looking for as Take Profit. Among traders, 1 to 15 pips as Take Profit is most often considered a scalp trade. This is the essence of the scalp, really. . .to get in, get out, and make sure you take a couple of pips of profit with you. Anything over 15 pips as a Take Profit level probably belongs to another type of strategy.

Risk. Yeah, you’ve heard it over and over again. Risk, lot size, money management. . . this is the be-all and end-all of the Forex market. In scalping, as discussed above, we are looking for a small amount of pips for profit. This is the first reason scalping strategies typically use much higher risk than other strategies: we want to make the same amount of money even though we’re taking less pips profit! The second reason the risk can be higher, though, is that the Stop Loss is typically much lower than in other strategies (don’t worry, we’ll cover this later!) And a third reason: we’re out of the trade faster than in other strategies, exposing ourselves to less risk.

Okay, so we say “out of the trade faster.” How long are we planning to hold this trade? If it is more than a few hours (read: maximum 4 hours), we’re probably not using a scalping strategy. Once again, the purpose of scalping is to get in, get out, taking profit with us with little risk. The longer the trade is held, the more risk we expose ourself to!

The aforementioned Stop Loss: it is typically acceptable to be 40 pips or less in a scalping strategy. This allows many of the other factors we’ve discussed to work; first, it allows for a larger lot size without putting too much of the trading account at risk; secondly, it allows us to get out of a trade that did not take the immediate direction that we predicted; thirdly, and probably most importantly, the Stop Loss must be small enough that it doesn’t take too many profitable trades to make up for it (we also want a profitable strategy, right?)! The Stop Loss, while not high on the list of factors in determining the strategy, is essential to scalping! The remainder of the strategy just simply won’t work without a Stop Loss of 40 pips or less.

The last few factors can be grouped together, as they are not necessary or essential factors in determining whether or not a strategy is considered scalping. Firstly, we have number of trades. A scalper can typically make more trades than a long-term strategy, since it gets in and out of trades quickly. In addition, a scalper tends to strive towards a large number of trades in order to build the profitable pips, whereas a long-term trade can get those pips in a trade or two. Secondly, the time of day is a factor in SOME scalping strategies; many scalpers prefer or work better (EA-wise) if they trade during a quieter, ranging period of time. It is often easier to determine direction during these times, and there are less surprises. Lastly, and this only applies to EAs, many scalpers use a fake S/L. Brokers do not tend to like scalping, as it is often more profitable than other strategies; thus, some EAs use a false Stop Loss (and have a smaller, internal Stop Loss) to “fool” the broker (if you believe the brokers need fooling that is!).

Scalping is a strategy typically used on short timeframes with quick transactions. Larger lot sizes are used to take just a few pips profit in a short amount of time. Many EAs use this strategy; the factors above can help you determine whether or not this is the strategy used by your favorite EA. Happy scalping!

If you have decided that Forex Robot World Cup is for you and you want to buy it, you can get it through this link:-

https://www.plimus.com/jsp/redirect.jsp?contractId=2642786&referrer=donna-forex

The Bonus

dfTrendRetrace manual system. I haven’t sold this system or otherwise released it/made it available.

The system aims to catch moves in the market at low risk times. It uses a very low stoploss and a large take profit. It is no holy grail but it is a simple, low risk system that works. It generates anywhere in the region of 100 to 300 pips per month. Quite often the trades triggered by dfTrendRetrace will make themselves known to be successful (or not) very quickly, the successful trades often having drawdowns of less than 5 pips. (email me after purchase to get this! admin@donnaforex.com)

Help/Support?

If you buy Forex Robot World Cup through my link above i can offer you further help as may be needed. This can include in the future access to my updated research / combination of settings and robots used for Forex Robot World Cup. Anyone who has used me for help and support previously will know that the information i can provide is down to earth and honest – firmly based in reality rather than fantasy of what vendors may like us to believe – and that goes for any vendor, i’m not talking specifically about this product (as indeed the results are real for this – which is unusual in itself but not without its problems as most people would not be comfortable trading at this level of risk).

But What do you REALLY think about this collection of robots?

This is a common question lately on my email. I will say here the same as i have said via email, and that is if i had to put my money on any robots working well in 2010, it would be put on this particular collection of robots. There are no guarantees in anything of course, but the odds are swung considerably in favour of FRWC based on a number of factors:-

1. Number of options. There are many robots with very different strategies. Some of the robots are the kind that i personally wouldn’t want to trade at all, in almost any situation – however there are enough “good” looking robots to make me feel relatively safe moving forward that at least something will be working well at any one time.

2. Transparency. The creators have been honest about their claims and the accounts they display are real money and are true and correct. This is not something i’d write about lightly and is not a claim you will see me verify often, if ever, but in this case the results are definitely true.

3. Liquidity issues. We have seen big problems with liquidity in the past with certain robots. I do not believe this will be an issue with FRWC  for a number of reasons. Firstly, the price is much higher and hence there will naturally be a lot less sales. Secondly, there are a number of robots, at any one time not everyone will be trading the same robot. Next, the robots are mostly not scalpers, and non-scalping robots are much more resistant to minor fluctuations and change. Finally, these robots can be applied to any Metatrader accounts (so not all traders are locked to a single broker such as occurred with Evolution robot)- this means that if you have any broker issues you can simply move elsewhere.

But will it really work in 1 year from now?

I don’t know. If i have to be totally honest here, i would say that a few of the robots very likely will stop working – that much is almost certain and a pattern we see time and time again with many different robots. This shouldn’t be viewed as an automated money making machine that is going to last you from now until you die in 20,30,40,50 or more years. It is also no holy grail. Robots commonly can and do fail, even to the best. This is why before deciding to make a purchase you should ensure that you are going to get full value out of it in a reasonable period of time (let’s say 6 to 12 months as a conservative estimate, taking all factors into account). This all but excludes you from buying these systems unless you have fairly substantial sums to trade with (or are willing to take very large risks) which will easily see you recover $999 plus extra profits in that time.

You are just saying good things because you are an affiliate!

Well, that is true to a certain degree, i’m not lying there. I have a business here. I am a professional trader and i can make my living trading, but i also like running my business and helping other traders. My business needs money and i have staff i have to pay too. We have several projects under development of our own for some genuine, solid attempts at creating a great robot, all this takes time, resources and money.  However, i will never bring to your attention or knowingly promote something i know to be very bad. If the worse comes to the worse and there is nothing good to talk about i’ll just have to stop talking, and start writing negative reviews (and there are a few on here if you want to browse the site a little!). So yes, if you buy via this link i will make some money – and you will have my gratitude for supporting my site and my research, and you will be rewarded with our help and a free manual trading system. There are websites out there which claim to be independent review sites but I can assure you that the majority are not – they simply have clever means of cloaking their affiliate links to fool you into thinking they are not trying to make money.

Finally, here is the link again: https://www.plimus.com/jsp/redirect.jsp?contractId=2642786&referrer=donna-forex

I don’t want Forex Robot World Cup but I want your support?

If there are other trading matters you would like help with then you can join the membership area of our site, please don’t buy FRWC if you don’t actually want it! I can answer general trading queries through the membership area private members email.

• FSA Regulated
• Credit card funding available
• Fixed Spread and Variable Spread accounts
• Microlots available
• Minimum account size 250 EUR

Trading rebates are 0.25 pips/standard lot for the Fixed Spreads Account and 0.125 pips/standard lot for the Interbank ( Variable Spreads ) Account.

Sign up instructions – New Accounts

Simply apply through the following link:
Click here

Sign Up Instructions – Existing Accounts

1. Apply for a new account through our coded link:
Click here

2. Once this new account is approved, log into the Secure Client Area and request a transfer of funds from your old account to your new one.

or

Fund the new account by external deposit.

• CySec licensed and FSA registered
• Credit card funding available
• Non Dealing-desk broker
• Microlots available
• Minimum account size $500

Trading rebates are 0.6 pips/standard lot for all pairs with the exception of the Eur/CHF and Eur/Gbp which pay 0.15 pips/standard lot.

Sign up instructions – New Accounts

Simply apply through the following link:
Click here

Sign Up Instructions – Existing Accounts

1. Apply for a new account through our coded link:
Click here

2. When the new account has been approved, request a transfer of funds from the existing account to the new one using the following form:
Click here

3. Email the form to support@tadawulfx.com

• NFA Regulated
• Credit Card funding available
• Minimum lot size is a Micro-lot ( 0.01 )
• Minimum account size $250

Trading Rebates range from 0.6 – 0.7 pips/lot.

Sign up instructions – New Accounts

Simply apply through the following link:
Click here

Sign Up Instructions – Existing FXDD Clients

FXDD does not allow existing clients to add/transfer an IB on new or existing accounts.

• Non Dealing Desk Broker
• 5 digit pricing
• ASIC Regulated
• Minimum lot size is a Micro-lot ( 0.01 )
• There are minimum deposit requirements

Trading rebates are 0.3 pips/standard lot.

Sign up Instructions – New Clients

1. Apply through the following link: http://www.gomarketsaus.com/?a_aid=AslanGroup
2. Once you have placed the first trade in your account, please send an email to admin@theaslangroup.biz ( Write “Go Markets” in the subject line ) and include your name and MT4 log-in ( the 6-digit number beginning with “5″ )

Existing GoMarkets Clients

This broker does not allow existing clients to add/transfer an IB on new or existing accounts.

If you wanted to get a copy of Forex Megadroid, you need to do this today.

Visit the Megadroid site HERE (affiliate link – pls consider using to support donnaforex.com -it won’t cost you any extra to use this link)
Or, non-affiliate plain link HERE

Instant Execution is just what it sounds like, a trade which is placed immediately into the market. It tells the broker “I want to buy (or sell) and I want to do it now”.  Here is how to open a trade:-

Click on the “new order” button in your metatrader toolbar (or press F9, or right click on a chart and go to trade—>new order). This will bring up a screen looking like this:-

On the left of the order screen you will see a ‘tick’ chart. This is showing you the tick by tick movements in the market for both the buy and sell quotes (the difference between the two being the ’spread’).

You will need to fill in and check all the boxes. Most are self explanatory for instant execution orders, however the definitions of each are listed below:-

Symbol – Check that you have selected the correct currency pair which you want to trade on.

Volume – This is the size you wish to trade at. Discussing trade sizes is beyond the scope of this article, however, it is worth noting that the size you trade at will depend on the strategy you are using, the stoploss you wish to use, and the size of your account. I would suggest as a very rough ‘demo-only’ guide to use 0.01 lots for any accounts less than $500, 0.1 lots for any accounts between $500 and $2000, and for larger accounts roughly 0.1 lots for every $1000 to $2000.

Stoploss and Take Profit – Enter the values you wish to use for stoploss and take profit if you have them. It is not essential to fill this in although it is recommended!

Comment – Optional box to write any personal notes you wish to appear on your statement, for instance you might want to tag this trade as being “strategy A”.

Type – Instant Execution or Pending Order. We are dealing with Instant Execution here as we want our trade to be placed NOW. Pending Orders are for trades placed later.

Sell / Buy Buttons – Click blue buy button to buy, and red sell button to sell – as simple as that! You can see the current price quotes right above the buttons in big bold type.

Enable maximum deviation from quoted price – If you select this it simply allows the broker to accept your trade even if price in the market shifts slightly from the time you hit “buy” (or “sell”) to the time it reaches their servers. You can select in “maximum deviation” exactly how many pips different from the entry price you are willing to accept. Most auto-traders will be familiar with this function and it is called “slippage” in most EA settings. When I trade I usually try to enter without any such slippage and therefore leave this box unticked. If the market does shift I then get a rejection message back from the broker if my trade cannot be placed. If you trade frequently in very fast markets (e.g. if you like trading news events) then you may find it essential to tick this to allow for the movement.

Once you have filled in your order box and you are sure everything is correct, just go ahead and click on your button to buy or sell. You will get a popup box confirming your order has been entered successfully and you should now see your new trade in the bottom of your metatrader. Note that all new trades will show an immediate loss due to the spread, unless you are lucky enough to have entered in a fast moving market in your favour!

Tip For Making Quicker Entries

If you just want to get into your trade immediately and don’t have time to mess around entering your stoploss and take profit values, then don’t. Just bring up the order screen, check it over quickly and hit buy or sell. You can go into your trade later and edit it and adjust for the stoploss and take profit values.

Closing Or Editing A Trade

To close a trade, simply right click on it in your Metatrader and select “Close Order”.

To modify your stoploss and take profit values, right click on the trade and select “Modify Order”. You should now see this screen:-

If you know your exact stoploss and take profit values, then you should type them in the stoploss and take profit boxes (or use the arrows in the boxes to scroll up or down to your values).

If you do not know your exact stoploss and take profit values then you can tell metatrader to place the stoploss or take profit a set number of points away from current market price. Select this in the “level” dropdown box. Note that a lot of brokers will not allow you to place your stops and take profits within 10 (or sometimes 5) pips of current market price. One further point to note is that when you select a “level” of 10 points this does NOT necessarily mean 10 pips, it means 10 points (movements of your brokers price). For 5 digit brokers therefore if you select 10 points it actually means 1 pip! (4 digit brokers 10 points would be 10 pips).

I would expect most people when viewing live statements note down the start balance at the top, then promptly scroll to the bottom to see the end figure. Whilst this is a nice, exciting (hopefully) first look at a statement it is by no means telling you much at all about the system and its effectiveness, and more importantly, if you are going to be able to stand trading it!

For instance, as i write this our current FAPTurbo statement is looking reasonably OK. We have a nice gain showing of almost £300 on a £2,000 account. So it is not a miracle gain but most people wouldn’t mind seeing that on their own accounts, right? (see our statement here).

Looking below the surface, we see that this statement also shows periods of loss. We do not have a perfectly straight journey into profit, gaining a nice neat sum of money each and every day to our eventual goal. In a winning robot it is quite often “two steps forward, one step back” in the path to gaining money. The trick then with analysing results starts with determining what is important and finding a way to quantify that so as to compare it with other systems. First i will define a very simple mathematical way of looking at how consistent a robot is (or is not), and secondly i will give a more visual approach which is perhaps simplier to understand.

Drawdown

Maximum drawdown is a measure of the biggest “dip” in results which is observed on your statement. In the above example, our maximum drawdown was £557.64. This means that the biggest drop in equity was a huge £557.64, or 23.42% of our account. It just so happens that in this account the drawdown came after we had already made some profit, so looking at our statement it probably doesn’t sound too bad, the very worst position our account was in was just £176 down from our original starting point.  However, we could have just of easily have jumped in and started trading right before the maximum drawdown occurred, our £2000 account could have easily been taken down below £1500.

Risk

The problem with looking at drawdown is that it is very much dependent on the risk levels the user has used in their trading. If i had doubled my risk on my FAPTurbo account, my £557 drawdown could have been a whole lot worse. In some cases this will make a robot look a lot worse than it really is when traded at reasonable risk. I therefore find it much more helpful to monitor drawdown based on how much profit the EA generates. If the average amount of profit in one month is more than our maximum drawdown then this i feel is a good sign in a robot.

In this example, we have roughly 4 months of trading producing £294.51 of profit. Thus in one month the average is £73.63 profit. With a maximum drawdown over this time of £557 we see that the drawdown is over 7 times bigger than our monthly profit (!). This is telling us, that assuming everything is ‘average’ all of the time (which i have to say it never is!!!), it could take us 7 months to recover from the maximum drawdown to be expected.

For the sake of comparison, take a look at our Megadroid stats. We saw a maximum drawdown of £217.74 and an ‘average’ monthly profit of £138.37. Average recovery for that maximum drawdown therefore would have been well under 2 months, making Megadroid our most stable robot of 2009.

Problems with this approach

One of the main issues with this approach is that it will only work when you have a fairly large set of data to analyse. There is no good applying this method to just one month of trading, or two. Infact, anything less than 9 to 12 months for a frequently trading robot, is too few results, and for infrequent trading robots it may take several years to build up enough data. The more data you have, the more significance that maximum drawdown figure holds, the more likely it is going to be the case that the maximum drawdown figure is pretty accurate and it really is the maximum amount of drawdown you might expect.

Very obviously here too, we cannot say that the maximum drawdown we have experienced thus far is going to be the maximum drawdown we will ever experience. This is simply not the case. Infact, the longer you trade, the more likely it becomes that your maximum drawdown record will be broken and you will experience an even bigger one (a more visual example of this: the more times you flip a coin, the more chance you have of hitting a run of 10 heads in a row). All this is of course purely hypothetical so not necessarily of value in determining what may happen in the future, however it can tell us which robots performed better in the PAST.

Another problem we have is that although this tries to overcome the effect of risk (e.g. it eliminates to a certain extent the question of if i used 10% or 20% risk on my trading, the figures would merely be doubled but the recovery time figure should stay relatively the same), we do not fully overcome the effects. This is particularly important to note on robots which have obviously been traded at very high risk levels. For example, if an account traded at extreme risk, loses 50% of its equity in one big trade, the recovery time can be drastically increased in this instance because money management on the robot (if turned on) will kick in and start making much smaller trades (whereas if we had only lost 5% of equity, it would still be making relatively large ones and would dig out of its hole quicker!). The robots i chose to analyse in this example were pretty easy to compare since they used very similar levels of risk and that risk was not extreme (above 25%, although anything above 15% could be effected noticeably).

Visual Approach

The general idea of what we have discussed in a mathematical sense above can be seen on charts visually, along with other information which will be helpful for analysis. Here is (a section of since the full one is too big) our aforementioned FAPTurbo equity curve (to see the full one visit our stats):-

The maximum drawdown we described previously can be clearly seen here in the equity chart. From around trade 47 to 72 we see declining performance, the biggest dip in the whole of our equity. When analysing people’s results and perhaps considering if you would like to trade the same robot, it may be worthwhile focussing just on these sections where you see very bad performance. Try to block out and cover up the other, profitable parts of the chart and ask yourself if you would feel comfortable trading this robot, had your account entered at that worst possible moment? Would you still be able to hold on?

Looking from trade 79 onwards on the chart we see an almost perfect curve, steadily gaining money. If i was an unscrupulous robot seller i might use this section to show in my advertising material perhaps as “real live evidence”.  Likewise from trade 0 to trade 44.

When looking at very long term results you may be able to spot cycles in the market where a particular robot worked well with market conditions, and other periods where it worked badly. Seeing distinct periods of good and then bad performance is perfectly normal in an equity curve and merely indicates that the robot works better in certain conditions. Obviously what you are looking for is that overall, the equity line is going in the right direction, and preferably doing that in a relatively smooth manner.  Equity cuves which show large portions of the account “under water” (under the start point) should ring up alarm bells as to there being something not quite right with the system.

Demo results often look very different to the live graphs i am sharing here but i thought i’d touch on them briefly as there are a few characteristic equity curves to look out for in backtests which can indicate a dangerous/high risk robot:-

This is what a backtest which has been optimised to death looks like. It often uses high risk money management, perhaps risking as much as 60% or more on one trade. Combined with parameters optimised to never show a loss on backtest, this creates an exponential exploding chart somewhat akin to a rocket taking off, catapulting a measly $200 to an earth shattering $100 billion or more. Unfortunately when you put these robots on your account it is usually time for the robot to come into land. Some robot vendors sell this type of robot not realising that they have over optimised and merely thinking they did a good thing, others may sell it knowing outright that it is not going to work in reality.

This is a very typical martingale strategy equity curve. A martingale strategy is one that tries to guarantee a win by increasing the trade size as a trade is losing, in its purest form this is done by doubling up the lot size of the next trade after each loss. This produces equity curves like the one shown. The account will make steady small gains overall, but the dips along the way are the times when the trades lost. The very big dips represent times when there may have been multiple losses in a row and a big accumulation of very large lot sizes being traded, then the account getting “lucky” (this is a gambling strategy!), and recovering. Eventually, unless you have limitless funds, ALL martingales will end in a great big dip which gets so big your account cannot stand it and falls in on itself. Going back to our coin flipping anaology, how many times in a row can you get away with flipping a coin before eventually you come up with 25 heads in a row? Luck runs out eventually unless (or perhaps even if) there is solid forex strategy incorporated behind the martingale.

Well, i feel we have veered off the topic a little bit now, but i wanted to point out a couple of equity curve shape warning signs, incase you happen across any out there. They look great at first glance but are very clearly not something to get too excited over. There are many more typical equity shapes i could share but we will leave this for another article on another day.