Dmitri Chavkerov | Automated Forex Trading Systems Article as seen on Yahoo Finance
Forex Peace Army’s Watanabe Test Forex Project Revolutionizes Some Traders’ Attitudes Towards Automated Forex Trading Systems, Including Those of Metatrader Forex Expert Advisors, Says CEO Dmitri Chavkerov
NORTH PORT, Fla., Sep. 05, 2013 /PRNewswire/ — When one and a half years ago, Forex Peace Army announced its Watanabe Test Forex Project, many traders were hopeful of finally realizing the dream of a set of automated forex trading systems making them money while they sleep. Today, however, their dreams seem much further from reality than before.
“Honesty, or rather lack of it, has always been an issue in the forex world, especially when it comes to companies, whose business depends on the reporting of trading performance. Forex Peace Army filled that niche by introducing technology, which allowed companies to hook up their live trading accounts to our system, and us in turn displaying it on our website live,” says Dmitri Chavkerov, CEO of ForexPeaceArmy.com, one of world’s most visited websites in the world for forex information.
“Since its inception, we have had more than 800 tests submitted through our system, more than half of which were submitted into the metatrader forex expert advisor category, which of course is a huge number, considering that forex testing is a relatively small niche activity in itself, let alone the forex metatrader expert advisor category,” he says.
Metatrader is a popular trading platform that most forex brokers offer to their clients. An expert advisor is a program, which follows a set of predetermined rules to automatically open and close trades.
“If one looks on Forex Peace Army website right now, they’ll see 77 active tests in the metatrader forex expert advisor category. All of them are for real accounts. For example, we have a test that started on January 14th, 2013 with equity of $2,500, which currently has equity of $8,406.62. That’s a return of 236.26% in less than 8 months. A person looking at such test may get excited and assume that if he were to put $10,000 into an account and allowed this expert advisor to trade it for him, he would have $33,626 in 8 months, but our Watanabe Forex Test Project, which we started one and a half years ago showed that it’s not nearly that simple,” says Dmitri Chavkerov.
In 2012, Forex Peace Army introduced a forex trader, who is known in their forums as Mrs. Lee. She decided to choose several top performing expert advisors through Forex Peace Army’s performance testing section and hook them up to her real forex trading account, in an attempt to replicate their performance.
“Over a period of 74 weeks, Mrs. Lee has invested a total of $1,451.38. Her current account equity, including withdrawals is at $918.10. That’s a total loss of -36.74%,” says Dmitri Chavkerov.
“When new people come to forex, most of them assume that there exists a trading system that they would be able to learn, dedicate certain number of hours per day at the computer, and at the end of the month come out profitable. After a while of struggling, most of them learn about the existence of automated trading systems, so they say: ‘Great, instead of me watching the markets for hours at a time and executing orders, I’ll let an automated trading system do that for me.’ They then may end up on Forex Peace Army, see these metatrader forex expert advisor tests with impressive performance, some of which have been running for more than a year. They buy the advisor, launch it on their usually relatively large trading account, since they plan to live off of it, and within a matter of months, and sometimes even weeks, their account goes bust,” says Dmitri Chavkerov.
“That happens because most expert advisors are programmed from market data for the past several years. A profitable formula of parameters is derived from the old data, under the assumption that the market patterns will remain the same or similar for many more years to come. What the program cannot take into consideration is that just like in life, nothing happens in the forex markets in exactly the same way again. If similar market conditions continue to exist for a while, the expert advisor may be profitable for that while, and then, when market conditions change, it will blow the equity of the account. Nobody knows for how long the market conditions will remain similar. They may last 2 years, 2 months, 2 weeks, 2 days, or even 2 hours,” says Chavkerov.
If a particular roulette had a history of 8 blacks, and 2 reds, the chance of it being a black on the next spin would not be 80%, but would still be less than 50%.
According to Dmitri Chavkerov, since past performance in forex can never guarantee future results, one can apply similar roulette logic to the forex expert advisors.