The Forex Robot World Cup – Another playground for the forex loser
Recently a large and well-respected forex broker hosted the forex robot world cup (FRWC). The supposed idea was to get all the “top” forex automated trading systems (robots) competing with each other to find the cream of the crop so that you, the retail forex trader could benefit by buying one of these ‘top’ systems.
That was the supposed idea. The real idea was to sell more rubbish to an unsuspecting (or gullible) public. This would come in the form of $995 a pop for the “best” robots as “proved” by the competition.
So it all started with a $150,000 carrot to get computer programmers to give themselves out as traders and experts creating automated trading expert advisors. This created a nice big ticket “product” for the internet marketing boys to sell so they could boast about their last 6-figure payday on their next internet marketing video.
Why do I say this competition is junk? Here’s why:
The first- placed robot (the competition ran over two months only) made returns of 145% with the next best coming at 88% over the same period. Slick marketing told you how rigorous the testing and process was and how you can now buy these robots and trade away to the end of time without having to think too much – for only $995 fee to gain access to the “best of the web”.
I ‘ll tell you in a minute why this is all just the same old hype in a new package but really it is not even necessary for me to go to that trouble if you apply some common sense. Tell me again what you are buying? A forex machine that you plug in and play? Data goes in one end, money comes out the other? Where do I sign up?
Right over here please, along with this long queue of suckers.
Ok, don’t believe me? Well tell me this then. What on earth are they doing closing subscriptions to purchase the top robots after only a few weeks on the market? I mean these guys are sitting on the hottest money making machine ever invented by man. Here is a robot that can return more than 1000% a year. If you start today with $1000 you will be able to retire with $100,000,000 after five years of leisure.
Is anything adding up for you yet? No?
All right, try this for size. Fact – nine out of ten forex traders fail. This competition took the 329 “best” robots, in other words, the one in ten principle would deliver 30 positive results. Let’s say 32 out of the 329 robots. And what did they get? Ten percent? Five percent? Not even. About 3% of all the “best” wannabees made positive returns.
Do you know what these guys are selling? Really selling? I’ll tell you. They are selling your perfectly good democratic right to be ignorant and lazy. Lazy because you don’t have to think, the robot will do that for you. Ignorant because everything they say and do is premised on a misconception of how the forex market works.
C’mon guys, I mean really.
If you take a couple of hundred trading robots, someone is going to give you extraordinary returns over two months. It is a natural bell curve. Over six months that bell curve will flatten out and after a year the picture is going to look a little sick for the forex robot believer. Do yourself a favour. Ask them to run the competition with this year’s winner for twelve months instead of two months, and see what they say.
What happened to the most revered adage of “past performance is no indication of future performance”? On what basis can you value the performance of a few randomly assembled computer programmes seeking patterns in the sea of currency price data over two months? How can this ever have any meaning in determining potential long term returns? Odds are even that the worst of these robots and the best of them over the first two months will have changed places in two years, or most likely, both will have converged to zero returns.
In effect what they are saying is that it is possible to reduce the most complex, liquid, biggest market ever to exist to binary code, let a computer programmer who doesn’t know his Euro from his Yen, put it in a trading robot and make money. That’s how predictable the forex market is according to them. If you want to carry on believing that then I think that there is nothing that will ever stop you except a big hole in your bank account, and even then… But if you don’t believe me that this is a recipe to lose money, buy a robot, let it run for a year or two and see for yourself.
Oh sorry I forgot, you can’t. They aren’t selling them anymore.
If you disagree with me, tell me why. Convince me that I am the one talking rubbish. But if what I am saying makes sense to you then you are probably a Bird Watcher already, or fast on your way to becoming one.
…and if you are a Bird Watcher, you qualify for a March 2010 special offer to join my Personal Mentor Program. (Click Here)
Filed under: Automated trading
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All so true, but while there is a line of suckers, this stuff will always have a supply and a demand.
I whole hardheartedly agree. Why would anyone sell the goose that laid the golden eggs. What really surprised me was that FXCM would associate themselves with the competition.
While it is true that the intention behind the cup may not be a positive one, it is also true that some traders do code their trading rules into the computer. What’s your take on the difference between robots suckers and proper automated trading strategy?
Victor
What went wrong here was that in the sole interest of a marketing effort the illusion that computer coders can invent proper trading systems was promoted. If you have a proper working trading strategy I would say it is definitely worth coding that. It is one of my goals to have a 4×1 automated system up and running by the end of this year. Trader first coder second, not coder first, trading system as byproduct! That is also why I have decided to make a special offer with the mentoring with this post. Own your own brain, design your own program and then let a computer programmer put it in code.
Denny
Now I think about one of my favourite TV characters (not that I watch a lot of TV shows) – Boston Legal’s Danny Crane!
It is all about marketing. Rent MT4 platform. Need trades. Get suckers to open accounts. Get trades. The problem being in order to get the Clickbank Internet marketing wizard cabal interested you need a product on which they can get commission (they can’t get IB fees). Therefore the end of the competition “product” for the IM wizards. As I have stressed in BWILC 2010 – there is nothing wrong with it. If you don’t do marketing there is no way you will be found on the modern internet. But it is imperative that traders understand the marketing environment and how to react to it. Nothing beats knowledge and understanding. For that there are no quick solutions.
Can i ask how can you make the 4X1 method into a robot, it will not account for any fundamentals will it, which is one of the biggest problems with these robots?
Thanks Dirk,
As always words of wisdom. My own instant reaction when the sale promotion started “how can they claim it is so great after only 2 months?” and looking at the charts the 2 months showed a nice trend rather than sideways movement.
I am developing my own robot based on a purely mechanical system to see how it goes. Before I would even think of going live it has to have a long history of at least 60% winning trades with average win value of at least $2 for every $1 lost. It is for me, not the market.
If the robot does really work who needs the hassle of selling and supporting it for a few lousy quick bucks.
I disagree with your conclusion. OK, FRWC is 100% junk and robots made to win a race (high risk, win or bust) are completely different from true workable trading robots. Just like most manual strategies cant be computerized because of the manual intervention required – Their are also computer forex systems that cant be manually traded because of the 24/5 attention and complexity of calculation needed. My system uses hedging and is very low Drawdown/nice steady profits but could never be manually traded. Its NOT available for sale but I use it to manage accounts. My 6 month test is +77% and my http://fulltime247.com 3 month test is +30%. – Is it 1000% per week? NO!! but there are EA strategies that work. Dont throw the baby out with the bathwater.
I’m afraid to say at this time last year I might have been swayed to purchase this incredible robot. It is not that I am lazy or ignorant but we see some incredible examples of successful automation so why not Forex? Especially for the uninitiated the hype is incredibly persuasive. Fortunately I came across bird watching first. And I know why not Forex. But it is extremely sad how rich these system and robot sellers are becoming by swindling naive and gullible people.
Pip machines! And missing all the fun and pleasure of managing my own trades. It would be like drinking coffee from a slot machine — styro cup and no aroma or flavour!
Automated trading? Unattended??? Not gonna happen unless in very distant future. Right now the best trading algorithms developed or owned by funds and banks need recalibration SEVERAL TIMES A DAY to stay profitable. I have nothing else to say
I agree wholeheartedly about this particular robot, although there are strategies that can be automated successfully.
I was very interested in the #2 place robot – it had a very smooth equity curve. However, I went and looked at the trades it took. It was risking 200 pips to make 20!!! It would open 5 trades in the same direction several pips apart with huge stop losses and tight profit targets. Talk about a recipe for disaster!
And 2 months is a ridiculously short time to run a robot and claim success. And then they combine the top 5 – woo hoo! Lose your money 5 times faster when the market doesn’t cooperate.
I was wondering, if this people have discovered a gold pit, instead of selling it to the public they should mine themselves and get rich. Anyway, for laboratory purposes, I think it is worth considering an automation project, as Joaanne suggested and adopt all the principles BWILC layed-out with the purpose of finding the gap where FRWC failed. But owning our brain is all what BWILC is all about. Problem? Offer option 1 (own your brain; option 2 (DrRoboForex). Now which one are you?
It’s easy to criticize others in promotion of your own product. Here’s what “Dr. Forex” didn’t tell you. They closed the doors to further customers because they are constantly optimizing the robots according to market conditions. They are doing a lot of work, and constant modifying and retesting. I get an email at least once per week with instructions on what settings I need to change in order to stay optimized. The constant upkeep limits the number of customers they can feasibly service, since they spend a lot of time with technical support (I personally have contacted their technical support at least 9 times). And so far, I’m making money. Will this product stand the test of time? That remains to be seen, but you have to admit that constant upkeep is unusual for this type of product, constant upkeep possibly invalidates Dirk’s premise that the robots just got lucky for two months, and constant upkeep explains why the number of customers is limited.
N
It is not too difficult to code the 4×1 strategy and median trading methodology. I don’t think one must make the mistake to think you place trades primary based on fundamentals. Fundamentals form a backdrop against which you place trades with certain biases and risk management principles which can all be coded. One will either have to “optimize” it on an ongoing basis if you cant mitigate big fundamental changes automatically by adjusting your trades (automatically) or accept there may be a need for manual intervention under certain conditions. Its not going to be fool proof but can be coded for sure.
Ken
Let me know how it goes!
Fulltime247
I don’t think my conclusion is that no automated trading will work. It wasn’t a comprehensive treatise about automated trading. I gave my take on FRWC and some of the issues, including the implicit play on gullibility of the masses that you can make long term conclusions about returns from 2 months of trading by automated systems in order to get people to pay $1000 to find this out for themselves.
Ed
I can assure you there are a few sharp brains developing systems based on 4×1. I know of several. I am also happy to discuss this with anyone (trader / programmer) with ideas. Email me.
Gabe
I think a poll will show that it is a very small minority view that this post or anything else I write is “criticizing others in promotion of my product”.
They closed the doors because the robots are hopelessly inadequate to live up to the expectations that they have created with their hard sell. Now they have to do everything they can to keep up with the expectations at least to beyond the refund date. Another reason they do it is because they will not be able to continue to get in clients in two, three, four months on the basis of the 2 months performance, they will have to disclose the subsequent performance, otherwise their back will be open for massive lawsuits. While they didn’t disclose the need for constant fiddling (after you have forked out your $1,000) in the big sucker suck they will have to disclose it down the line and guess what? They won’t sell anything.
Well well well, they certainly didn’t sell it under the pretense that they will need constant optimizing after you have paid $TOP for best robot of them all. What was the point then of apparently back testing it with four years data? And that four years included a 1000% increase in intra day volatility according to certain measures for a six month period whereafter it normalized again. Nothing has changed since 16 February 2010 that would have to account for optimizing for changing market conditions. Unless I have missed something …
My point is exactly that some algorithm based system out of many will at all times make money – out of pure luck. The fact that you are making money for a few weeks doesn’t mean its proof of anything.
Will not risk my money on a few customer representatives to fiddle with the code of a super money printing machine.
Constant upkeep will not invalidate statistical laws of nature, or if it does they will get a Nobel Prize for alchemy!
This whole programme is a textbook example of a massive Internet marketing product launch. It is guaranteed to show up in some big hitting internet marketers “bragdeo” and that will not be about anything else except how to make a million in a day with your marketing process and prowess of what this big pay day is proof! (And they will not use the figures net of refunds, they will use screen shots of their account after a few days of the launch …
FRWC is Live, Dirk GO GO GO!!!!
I notice that Mr Du Toit uses the exact same marketing hype to sell his book “Bird Watching in Lion Country – Forex Trading Explained”
that he is decrying other marketeers for doing….Mre Du Toit is no different and actually charges as much as EA Marketeers. I wonder who is fooling who?
Gus
It is good that you bring this point up. There is a rationale behind putting up a website with the specific format that BWILC 2010 website has. In summary one can say: If in Rome do like the Romans do (and what the Romans would like you to do). The Romans in this case are the genuine Internet / affiliate marketers who in a majority of cases through their efforts of promoting different products, make it possible for Internet surfers to get access to web pages and products they are looking for. As the creator of such a product I considered ways to promote it and back in 2004 with the original version of BWILC I have made the choice to go the ebook and Internet marketing route. It made (and still makes 100%) sense for an industry about “online trading” in which I offer “online training”.
The reach of one website between millions are small and by utilizing the strength of affiliate marketing you leverage your reach. Affiliate marketers play a very important role in the working of the Internet as a market place to connect buyers and sellers. Affiliate marketers are not necessarily experts in different niche markets they operate in****. They are experts in marketing and they want someone like myself to pave their ways as much as possible.
An incredible amount of research has gone in online marketing and advertising and it is scientifically proven that certain concepts work better than others. Ignoring that would be stupid. Affiliate markets want to send potential buyers to a web page that comply with the correct scientific principles that will provide the best result on average. That explains why the webpage http://www.bird-watching-in-lion-country.com looks like that and has the specific bells and whistles it has.
Dirk
**** And this is what I essentially warn against, not only in the FRWC scenario but in all scenarios. You have to be vigilant in this “lion country” because your success depends on only one thing – your ability to turn a trading profit. Most of the people offering you all sorts of help or opportunities to do so don;t have a clue about how to turn a profit in a trading account and they have absolutely no idea if the product they promote have any real value. They are also not that much interested in that. Their interest stop generally when they have made the sale. Then they move on to the next product to sell because they believe that if you have bought once from them you are likely to buy again from them and on the other hand if some haven’t bought this time, well they will buy one of the next times one of the other products. In that sense you are wrong when you say I am just like the others. I am not an affiliate marketer. I am just promoting my own business utilizing what I believe is the best leverage available at this point in time.
I wanted to add here to the stream of comments, that the fact that FXCM are behind such a fraudulent endeavour talks loads about their professionalism. Thanks goodness, they aren’t my broker.
[...] post was inspired by a post by Dirk Du Toits post on the same subject. Theoretically Related PostsForex education: A new trading [...]
Well, I totally agree with u, as I happen to buy their robot & first it ate my alive account of $ 400 in 1 week. Then when I claim for refund, they tell me to show 1 months trading to FRWC. How can I show 1 month trading if the robot ate the account in 1 week? This Robot is supposed to be better than the robot that claimed to be 1st. In fact FRWC made a robot with every thing good fuction each robot had & I mean their invension lost my alive account. Now I have put the robot on demo, just to show then 1 month account. That too is loosing.
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I bought the original BWLC book and found it an interesting read and just that. There are also other books that you should read just so that you dont spend two years trying to understand the basics of technical analysis which will soon pass into generalisations. I am heavily into modelling and first started looking at markets way back. Post degrees and industy reality experience. This means that historically I have modelled and verified many different and major system and used a vazariety of resource and techniques to do this. The conclussion is that you can successfully model the financial market, but beware of folk spouting emotion against another camp, or high claims of success which are clearly rediculous irrespective of which show they have been on. There is no silver bullet just hard graft and that has to come from you. I personally believe experience and time is everything and from a business perspective margin is key. Again my view is that it is rediculous to suggest you could shrink wrap a product. By the time you have got to be a professional trader you could have easily graduated in another profession. I have always been interested in the subject area and so it’s not an issue for me. The problem with forums is that there are too many people who are desperate to make a quick buck. When I read about the robots I am appauled by the nievety. This actually means that if you have something that is worth marketing you shouldnt bother because it wouldnt be valued and secondly its not worth the hassle for the few $’s per month people would pay for it.
. Good luck if you enjoy the subject area and are treating this as one of life’s challenges.
Agree 100 % with you Dirk. Also got my greedy little paws on this huge MONEY PRINTING MACHINE. Turned out to be a MONEY EATING MACHINE. Stick to your own proven system and you might make it in the forex market. If there is anybody that make money with the FRWC i would like to see the proof of that.
I don’t comprehend how anyone buys from imbecilic moronic sales pages such as the FRWC. I couldn’t get halfway without feeling a strong urge to puke up. These guys are more IM’ers than R&D. As Dirk says they know nothing about trading and that was patently obvious to me before I finished their first page. Mind you I been full time manual trader for 15 years. I can spot B/S a mile away.
Forex EA’s = the IM’er wet dream come true.
Couldn`t agree more with the general trend here. My own trading is based on breakout strategies around market open in London. And I live in NZ…I trade manually and do Ok..I can`t conceive of an automated system that I could trust with my own hard earned dollars, this business is hard enough without leaving a robot in charge of your trading account. Any one wondering why George Soros doesn`t sell an Ea ?? And when will we see some proper descriptions of trading robots ?? What about `Forex Vacuum Cleaner` ( It`ll suck your account dry )or `Forex Poor House`( You`ll be there shortly )…I would caution people about Mark McRae who is currently online pushing the follow ups to the Forex world cup…He was bombarding my in box until I pressed the magic `Block Sender` button……….
I have downloaded the performance twice on all the robots at fxcm. When looking at the combined “win” for all the robots, you might consider this a robbery. I think there is a few traders doing the trades manually and some of them is not that bad, but not that good either. For example, would you consider a robot that on 400 trades during ttwo years made 0.67 pips per trade ? that will turn out to be a cost as the robot also charges 1 USD$ per trade. Then there is others which might start with a 2000$ (US) drawdawn. ( I have tried a demo account, but one thing is sure, I will never try that option with real money). Now I am just running a few on demo accounts to see how and when they make trades, to try to see if I can find something useful, but so far I found nothing.
Yes, one thing more, in one year all the robots are 1.430.000 USD down. So I totally agree with Dirk, or would go further even and call this what it is : fraud !