Today we focus on a very unusual expert advisor -- the GPS Forex Robot, developed by Mark Larsen and his team.
Now, whatever I will say in the following lines would perhaps not matter to people who have heard of Larsen before. Every time a forum participant mentions his name, it's generally followed by a narrative of ruined accounts, failed refunds and crappy software.
Still, I believe it's worth exploring this GPS Forex Robot for the sake of developing a habit of digging deeper into complex matters -- things that appear bright and shiny on the surface, but are spoiled on the inside.
Let us start with the basics.
The programmers of the GPS Forex Robot (variant 2) offer it for sale for $149, and there is a 60-day money back guarantee. So far so good -- for this price, we might expect the expert advisor to match the performance of the Forex Growth Bot, or FGB, which costs $129, and the Forex Invest Bot, or FIB,- $197.
More Details: http://www.socialleadfreak.com/gps-forex-robot-review
Don't Go Chasing Waterfalls
The cheesy website promotes the GPS Forex Robot as a real miracle maker. As soon as you apply it to a Metatrader 4 (MT4) account, you will just have to wait for the miracle of 98% winning trades to take place. If this looks too good to be true, that's probably because it isn't.
But let us examine the block-buster asserts further. According to Larsen, a reverse strategy enables rapid compensation for losses incurred. Say the robot purchases EURUSD and suffers a loss. As a result, it will immediately open a reverse trade (sell) -- a strategy called stop-and-reverse. Actually, that's something quite simple to implement in a software -- even by novices -- so there goes the"genius" of the two developers (Ronald and Antony) responsible for the bot.
The fascinating part about this bot is its approach to increase trade contract sizes. After the EA reverses a trade, it raises steeply the trade contract dimensions -- from 5 to 9 times.
Does this remind you of something? To me, this looks like a Martingale strategy, which is a gambling method, where you start with a certain bet size, then double it every time you lose and keep doing so until you win, when you return to the original bet size. What is dangerous about this strategy is that it can guarantee specific gains only to gamblers with infinite wealth and there is not any limit on the maximum bet you can make. However, if your wealth is limited, which generally is the case with forex trading, or there is a maximum amount you can exchange (again -- the situation with trading), then you may end up buried under the burden of continuously rising bets without a genuine chance to return your losses. That is to say, if you lose more than once, your account will most likely fail.
Let's explore the backtests to determine how the peculiar strategy of GPS Forex Robot works. The trading is with EURUSD, using one-hour (H1) time period.
At a first glance, the picture is rosy, as this incredible robot makes drives a first deposit of $10,000 to a net profit of $100,952. Adding to the sequence of positive news, profit trades (89%) outnumber the losing trades (11%). Pay attention, however, the average profit trade ($219) lags behind the average loss trade ($824)! That is troublesome because a succession of losses can get you into a really deep trouble.
The history of trades is really enlightening, as you may see the odd trading strategy of the robot in action. By way of example, on May 27, 2009 there's a heavy loss of $919 after buying 1 lot of EURUSD. The robot immediately reverses the plan and opens a market trade but with commerce contract size of 6.8. This time it's a winner -- there is a gain of $904, but such profitable trades can't be guaranteed.
Forward tests: Cradle of Loss
A real account on Myfxbook.com, to which the GPS Forex Robot is applied, provides us with further insight concerning this EA. The transaction is with EURUSD and began on May 21, 2012. Since its activation, the account has registered a profit of 153%, which, given the initial deposit of $100,000, represents a whopping sum.
The account has not registered one month of losses since its launch, even though the growth rate is slowly declining.
A worrying sign is that typical pips per trade are in 4.6, which hints in vulnerability to fluctuations in market behavior. By comparison, FIB's Synergy FX account appreciates average pips per trade ratio of 13.6, while the ratio stands at 6.6 for FGB's account with ThinkForex.
The risk is low, but since drawdown reaches a good level of 10%, the same as that of FIB and much lower (which is good thing) than the 42% recorded by FGB's account.
The curious part is from the background of transactions as once again we encounter the stop-and-reverse strategy and the specific version of the Martingale method. The robot applies both approaches when there are especially heavy losses. By way of instance, after a losing trade (the reduction is $10,230) on June 8, 2012, the robot reverses the strategy and raises the trade contract size from 11 a lot to 75 lots. In the event the robot had suffered another loss like the preceding one, but with the increased trade contract size, the total loss would have amounted to $71,088. Imagine what would have happened after a series of 6 or 7 losses, or even 20!
If you are acquainted with Isaac Asimov's work, you ought to know the First Law of Robotics -- that is, a robot can't harm a human being. The GPS Forex Robot clearly violates this law. It could be not harming the dealers, but it is harming their accounts. It is like the Rosemary's baby sleeping in the cradle of reduction. You just don't know when the baby is going to awaken and unleash hell.
Don't Care about Bad Reputation
The funniest thing is that Mark Larsen appears to not care at all about the strategy used by the GPS Forex Robot. In actuality, he's the only person to have rated this EA with five stars, in his own review of the program. Way to go, Larsen! Even if that's the way to hell.
Know your keywords
Expert advisor (EA) -- An algorithmic trading platform to the MetaTrader platform; a trading robot. EA's can either be downloaded at no cost or for a fee, or can be programmed in the MQL programming language.
Backtesting -- Testing a trading strategy on previous time periods through a simulation.
Drawdown - A dealer's biggest loss for a certain period of time, expressed either in pips or as a
Percentage of the trader's profit. The lower the drawdown percentage, the less riskier the trading
Let's say you begin with a balance of $1,000, then make a profit of $1,000, and after that lose $500.
Lot - The standardized contract size of a trading instrument. A standard lot consists of 100,000
If you are buying 1 lot EURUSD in 1.3000 for example, you're buying 100,000 Euro for 130,000 US Dollars.
Pip - The fourth digit after the decimal sign of a price quote. For example: if the EUR/USD moves from
1.3350 to 1.3351, that is one pip. Pips are utilised to quantify price movement, profit and slippage. http://www.imfaceplate.com/elizabetherickson99/can-i-get-gps-forex-robotwww.imfaceplate.com/elizabetherickson99/can-i-get-gps-forex-robot