I have spent a lot of time trying to find a profitable expert advisor. I have searched the ins and outs of the internet, I have spoken to other reviewers, programmers, vendors, etc. I have seen the “turn 100 dollars into 5 million” promises, the flash, the whistles, I have seen a good deal of what the automated trading market has to offer regarding forex expert advisors. But I have, not even once, found an expert advisor that kept its promises. None of the commercial experts delivered exactly what they promised. Some of them were not profitable, some of them had larger draw downs than what they said, some of them exaggerated their risk to reward ratio. All of them had something untrue about them.
Making a profitable expert advisor is no hard task. Don’t get me wrong, it is being profitable in the long term that is difficult. I can program 10 different expert advisors, each based on a different set of rules and I can guarantee that at least one of the ten will be profitable for at least 2 months. With massive gains. Then, huge draw down. That is why the government has a mandatory disclaimer that has to keep company with every expert advisor offer. So that at least you know somehow that past experience is no indication of future results.
Making a long term profitable expert advisor is hard because for such a scheme to work, there must be a consistent set of conditions in the market that indicates pricing of a currency pair. This set of conditions must always be exploitable and must always repeat itself. In other words, the market has to be inefficient for automated trading to be successful. There has to be something not taken into account by the price that is foreseeable by the expert in such a way that it can predict the mistake in price and take a position to profit from it.
This does happen. It has been shown that the market is inefficient, the reason why some traders in currencies can be consistently profitable. But these inefficiencies are not enormous. They are also not a 100% accurate. So with this in mind, you will have figured out by now that a profitable expert advisor will not be extremely profitable.
The best possible real forex expert advisor that I can think of has some interesting qualities which could be regarded as “not as good” for many traders but ideal for experienced forex traders and the like. These qualities are:
- A consistent profitability for a period of at least 25 years
- A yearly profit of 25 to 50%
- A maximum draw down of no more than 10%
- A maximum open draw down smaller than 2%
It does not sound like much, but it is much better than an expert that makes 150% for a month every two years and hence loses money by a much larger amount for the rest of the time. These experts are based on temporary market inefficiencies which are caused by temporary fundamental conditions which will change with time and massacre the expert advisor.
Please, I beg you, be very meticulous with the experts you buy. Do not fall for promises of massive profits based on testing (forward or back). I assure you, no expert advisor that produces more than 5% a month is consistently profitable. If you disagree, the burden of proof is with you, show me I am wrong.