It’s obvious this is a strategy that only works in a strongly trending market. In a market such as we have had recently – where price tends to spike to new levels on a daily basis only to quickly retrace to the point where the spike began – a strategy like this gets badly whipsawed.
Have a look at the following graph of my account as tracked on Myfxbook (update June 2015: the link no longer works as I have started testing other robots on this account, so any illustration would be confusing):
… Myfxbook account removed, see explanatory text above…
As you can see, it’s been a rocky ride, and I’m now over 10% in drawdown. This is entirely due to the way FGB enters trades. It waits until price spikes high or low, and then tracks sideways for a while. If price then spikes in the same direction again it enters a trade.
This works beautifully when something fundamental changes in the marketplace and the sentiment on a currency pair changes fundamentally.
For example, if news came out that the Euro was likely to vanish in the next few years, with all involved countries reverting to their own currencies – Drachma, Lira, Francs etc – and the news was sufficiently believable, the Euro would tank. This would very likely cause EURUSD to take a series of hard spikes down.
And if the news continued to reinforce that sentiment, we would most likely see EURUSD continue on a downward path for an extended period. In such a situation Forex Growth Bot would probably make an absolute killing.
The reverse is true: if the sentiment on the Euro turned remarkably bullish overnight and the EURUSD went on a long-term upswing, FGB would once more be in the money (and so would I :-)).
The problem is, at the moment price is giving a lot of false signals to FGB. It spikes up or down (usually during the European session) and is very likely to then make one last short leg beyond that spike before it returns to the point of departure, coming back to be broadly within the current range.
So what am finding is that FGB buys the top of a move up or sells the bottom of a move down, and when price retraces I get taken out for a loss. The following graph shows an example:
The two white circles indicate where FGB sold. You can see how the EA is attempting to sell retracements of a spike, in this case to the short side. However, these spikes are simply due to the way the market is moving right now, probably due to (comparatively) thin liquidity. If that first spike down had been due to bad news for the Euro being announced, the move would have probably continued and I would be in the money.
Looking at charts like this and knowing what I know as a manual trader, I would never have sold the first position, and would have waited for confirmation on the second. At least the second sell occurred at around number and old support resistance level. But then, I guess that’s me looking at it as a manual trader.
And this brings me to the point about trading robots. You really need to know how they operate, and whether you consider that to be an intelligent way to trade. The best forex robots for you to trade will be those that trade the way you would want to trade, if you were at your PC at the time the opportunity for the trade occurred. Having observed FGB’s manner of trading breakouts over the past few months I have come to the conclusion that it is not suited to me. I will most likely give it another month or so to see if I can recoup some of my losses before I pull the plug.
I’d be really interested to hear what others have to say on this, so if you have any thoughts feel free to leave feedback below.
In summary, FGB is a breakout strategy which may or may not suit you personally. There is no denying that it has been extremely profitable over the long term, but you need to be able to weather some pretty stormy passages along the way.
NB: take a special note of how the following sales page for Forex Growth Bot brags about real live Myfxbook verified results, without actually giving a link to any such proof. Seriously, don’t you think they would provide such proof if the robot was still working? As the Latin saying goes, Caveat Emptor! (Update October 2015: this link has now been deactivated, wonder why?)
Forex Growth Bot