How Did This EA Make 17% in a Backtest?

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tradingdong

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I came across this Forex EA, which made 17% in a backtest from January 2016:

http://bit.ly/2aV1SXK

I was wondering if anyone knew how it was able to produce these results with such a smooth equity curve?

Any ideas? :smart:
 
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Look carefully and you will see that the bets in a downturn start increasing ! It is a sort of martingale. Looks good superficially but beware it could swallow your entire account.
 
tradingdong said:
. . . I was wondering if anyone knew how it was able to produce these results with such a smooth equity curve?
Any ideas? :smart:
Click to expand...
Hi tradingdong
Welcome to T2W.

The internet is riddled with websites, blogs and YouTube videos showing remarkable returns like this. As in this case, invariably, they only tell you what you want to hear and conveniently omit the things that reveal the true picture. Here, it looks to me as if they've cherry picked the best month when the robot performed well. The question is how did it do in the proceeding months and the months after January? One month's results prove nothing.

I suspect the robot has been 'curve-fitted', which involves fine tuning it or ‘over-optimizing’ it, so that it produces the best possible performance using historical data. However, exactly the same market conditions won’t occur in the future, which may result in poorer profits than the curve-fit test. And by 'poorer profits', I do of course mean losses!

I didn't study the video in detail, but a common tactic with vendors of this kind is just to leave trades open until they show a profit and conveniently forget about the losing trades. Or, as Pat494 suggests, they employ a Martingale type strategy which will work very well for days, weeks and even months at a time. However, when it fails - which it always does eventually - the result is financial Armageddon.

What the video maker appears to be selling is the know how to produce charts like the one he shows. To be fair, he probably can do exactly that. But don't be fooled by this as, for the reasons given, there's a world of difference between a great looking equity curve and profitable trading. Almost certainly, he's selling his robot skills as he can't make money trading. After all, if he could turn $40k into $46k month in month out - he would just get on and trade for himself - there would be no need to show prospective punters like you how to build robots.

If you're thinking about buying his products or services, be sure to read this FAQ first: How Can I Distinguish Between Scams and Reputable Vendors?

Caveat emptor!
Tim.
 
tradingdong said:
. . . How did the equity curve stay so smooth if there were losses? There doesn't seem to be any drawdown.
Click to expand...
tradingdong - if all trades are closed at a profit, then there is no drawdown. If you think you can create a robot without any coding knowledge or experience in 30 minutes that produces consistent profits month on month - go ahead and buy it. Needless to say, if it worked, the world and his wife would have done just that and we'd all be fabulously wealthy. The fact this obviously hasn't happened tells you more than you need to know. It's total nonsense, pure and simple.
Tim.
 
timsk said:
tradingdong - if all trades are closed at a profit, then there is no drawdown. If you think you can create a robot without any coding knowledge or experience in 30 minutes that produces consistent profits month on month - go ahead and buy it. Needless to say, if it worked, the world and his wife would have done just that and we'd all be fabulously wealthy. The fact this obviously hasn't happened tells you more than you need to know. It's total nonsense, pure and simple.
Tim.
Click to expand...

Firstly, not each trade is closed at a profit, but each sequence is, from what I've seen.

Secondly, there would be drawdown, even though the sequence is closed in profit. If you have a $10,000 account, and risk $100, then it drops to $90, the equity is now $9,990, even though you may close the trade at $110 the next day.

This is not so in the video. The equity never has any drawdown :confused:
 
tradingdong said:
. . . Secondly, there would be drawdown, even though the sequence is closed in profit. If you have a $10,000 account, and risk $100, then it drops to $90, the equity is now $9,990, even though you may close the trade at $110 the next day.

This is not so in the video. The equity never has any drawdown :confused:
Click to expand...
The reason you're confused is because you don't know what you're looking at. Nor does anyone else for that matter, as the person/company behind the video doesn't make it clear. And the reason they don't make it clear is so that prospective punters focus on what the vendor wants them to focus on which, of course, is the rising equity curve and $ signs. How the equity curve (if that's really what it is) was created is totally irrelevant, as it bears no reflection of what would happen in real life on a live account.

Unless you're the person behind the robot and the video, in which case you have a vested interest in keeping this thread alive, I suggest you move on and don't waste any more of your time on something that, self evidently, is a ridiculous proposition aimed at the naïve, gullible and greedy.
Tim.
 
Something tells me he's there for promoting this BS. But I can be mistaken, though
 
timsk said:
The reason you're confused is because you don't know what you're looking at. Nor does anyone else for that matter, as the person/company behind the video doesn't make it clear. And the reason they don't make it clear is so that prospective punters focus on what the vendor wants them to focus on which, of course, is the rising equity curve and $ signs. How the equity curve (if that's really what it is) was created is totally irrelevant, as it bears no reflection of what would happen in real life on a live account.

Unless you're the person behind the robot and the video, in which case you have a vested interest in keeping this thread alive, I suggest you move on and don't waste any more of your time on something that, self evidently, is a ridiculous proposition aimed at the naïve, gullible and greedy.
Tim.
Click to expand...

I think you're confused base on your previous comments, but anyway....

The data may have been manipulated, but the equity curve isn't irrelevant.

And no, I'm not the dude in the video :sneaky:

gerryg said:
Something tells me he's there for promoting this BS. But I can be mistaken, though
Click to expand...

Well you're wrong. I wanted to get other people's opinions before putting any money at risk. I knew it wouldn't be what it seemed, but with an equity curve like that, I wanted to dig further. So far, no one has a clue....
 
tradingdong said:
. . .So far, no one has a clue....
Click to expand...
:LOL:
I'm not confused at all and, as for not having a clue; on the contrary - I know exactly what's going on here. I and everyone else are merely trying to save you from wasting your money. But, it's your money to waste; if you think the robot has merit - buy it. Come back in a month's time with a live account showing us how you turned $40k into $46k. It's a challenge I and other experienced traders have issued many times over many years here at T2W. To my knowledge, no one has ever done it. Of course, there's a first time for everything so, please, be my guest.

tradingdong - unless you want to address the very specific points I've raised, I've not got anything more to add - so I'll butt out from here.
Tim.
 
timsk said:
:LOL:
I'm not confused at all and, as for not having a clue; on the contrary - I know exactly what's going on here. I and everyone else are merely trying to save you from wasting your money. But, it's your money to waste; if you think the robot has merit - buy it. Come back in a month's time with a live account showing us how you turned $40k into $46k. It's a challenge I and other experienced traders have issued many times over many years here at T2W. To my knowledge, no one has ever done it. Of course, there's a first time for everything so, please, be my guest.

tradingdong - unless you want to address the very specific points I've raised, I've not got anything more to add - so I'll butt out from here.
Tim.
Click to expand...

I'm not going to waste my money to even try it. I already knew it was probably BS, but just wanted a second opinion.

What points do you want me to address? I mentioned about there being drawdown, since not all trades were in profit, but you skipped over that.
 
tradingdong said:
Not exactly. The equity curve has no drawdowns, which isn't because there aren't any losing trades, because there are. The balance whipsaws a bit, before reverting back.
Click to expand...
tradingdong - one final attempt to get you to focus on reality rather than the smoke and mirrors the vendor wants you to see. If the vendor doesn't explain - or provide sufficient information and data for people to work out for themselves how the equity curve is created - then everyone is in the dark. And even if he does do that, for the numerous reasons provided already, it's a pointless exercise trying to answer your question as the equity curve bears absolutely no relation to what would happen in real life trading a live account. I'm sorry to say you're on a road to nowhere with this, flogging a dead horse, going down a blind alley etc.
Tim.
 
One key issue to consider is are the results based on taking trades at the last traded price ?

If so you can be certain that in real time where it is not possible to enter and exit on LTP the results will probabaly show a loss and often a large one.
 
tradingdong said:
Yes, I wanted to know the method of producing those results. I didn't say that I believed the claims.

Thanks for your replies.

True, that may have been a good month, but another video showed smaller profits, but still consistent over three months:

https://www.udemy.com/direction-independ-trading-elite-traders-forex-strategy/

How did the equity curve stay so smooth if there were losses? There doesn't seem to be any drawdown.
Click to expand...

hey TD ......as the others say .....this business is sadly full of snakeoil saleman and downright crooks .........all ready to take your money

anything can be made to look good .........never underestimate what a crooked vendor can do with corrupted data and documentation

that's why nothing can really be verified on results etc etc ......its a waste of time trying ..............if you want to deal with anyone they need a very very long established track record .....and your own due diligence again over then ongoing / live performance

smoke and mirrors :p;)........

N
 
tradingdong said:
Not exactly. The equity curve has no drawdowns, which isn't because there aren't any losing trades, because there are. The balance whipsaws a bit, before reverting back.
Click to expand...

That's just the way the graph is plotted. It only shows the balance and equity at the close of each trade. Since the system never closes trades during equity drawdown ( just keeps opening bigger ones), you just don't see it on the graph.
 
Or again the results are just manufactured........they are plain lying ......

Taxi
 
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