Forex Expert Advisors : The Trend Machine, an Unbiased Review

Yesterday I wrote what I believe is one of the most positive reviews I have ever written about a commercial EA. Although the EA is still not worth buying due to some problems with the live tests and the back/live testing consistency it did show substantial promise which 99% of all commercial experts do not show. Sound money management, lack of obvious backtesting exploitations, etc. Today I will write a review about another trading system available by the same company called the forex trend machine. Of course I will evaluate the expert advisor’s statements and the claims made by the authors and I will tell you if I consider this EA worth buying and testing.

It is obvious now to me that the people at the trend machine have put an effort in developing trading strategies that are at least likely long term profitable. Yesterday my analysis of the fade machine showed that they do use volatility adjusted money management and long periods of backtesting to proof the profitability of their trading systems. Their systems are then likely to be able to adapt to changing market conditions as the market evolves in the future.

The forex trend machine shows an interesting attempt to offer a (very) long term trading system which trades the EUR/USD and GBP/USD daily charts. Sadly, the system is just too infrequent in its trading and the number of results is just too limited for us to say anything about the possibility of this trading system to be profitable in the future. The fact that you have to wait at some point 4 years for a new equity high is also something that I don’t definitely like about this trading system. It is true that most long term profitable systems have extended periods of draw down but it is much better to trade and evaluate systems that are not as infrequent traders because the lack of trades makes the statistical significance of the expert’s achievements doubtful.

The fact that the expert trades on the daily charts is a plus since errors inherent to this time frame in backtesting are very limited unless some intentional exploitation is done. However there is also the problem that in order to evaluate if the system is live/back testing consistent we will need at least 5 years at a bare minimum.

I certainly applaud the efforts of the people at the trade machine to program and offer this long term trading system. However they should keep in mind that for a more statistically significant evaluation of a trading system at least 150-200 trades are needed and such an amount is not provided by the system (which takes about 5 trades every year).

For example, the fact that the EUR/USD only made a huge profit near 2003 makes us doubt if the trading system exploited a particular event in 2003 which will not be repeated under other market conditions. We need profitable trades under varied market conditions in order to know that the EA is able to adapt to changes in the market, something which is not provided by such a short number of trades (just near 40 for the 2002-2009 period on the EUR/USD). Since the number of trades is too reduced to make any conclusions about the possibility of this strategy to work in the future I will have to say that this expert advisor is not worth buying or testing. I would certainly encourage the people at the trade machine to design a system that trades a little bit more on the daily time frame such as to make evaluation more significant and the evaluation of future profitability more certain. However this is the first company I see with experts that use money management adapted against market volatility, congratulations on that.

If you would like to learn more about expert advisors that adapt to market conditions and how you can design and implement your own long term profitable strategy in forex automated trading please consider buying my ebook on automated trading or subscribing to my weekly newsletter to receive updates and check the live and demo accounts I am running with several expert advisors. I hope you enjoyed the article !

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