Mechanical Forex

On December 2009 I released a free expert advisor to provide my fellow traders with a likely long term profitable alternative from commercial expert advisors. My idea was to give everyone out there the chance to be long term profitable in automated trading by using a system which was built upon sound trading principles which they could use without having to pay a single dime. I named this system Watukushay For Everyone. Another objective of developing this EA was to document the whole development process and make it available within my Watukushay project, reason why the EA has the name of the project as part of its name. A month after its release and after a lot of work and research on the trading logic of Watukushay FE today I can say that I have achieved an improvement of the experts original setup in such a way that makes it, in my mind, one of the best free expert advisors available on the internet today.

I released Watukushay FE on December 25th with what I believed was a good profit to risk profile. The EA was able to make (according to simulations) approximately a 20% yearly profit with a 40% maximum draw down using an approximate risk of 5% per trade on the EUR/USD one hour chart. The only thing that I certainly did not like very much about the Watukushay FE expert advisor was the fact that the equity curve seemed to be overly centered over the years 2007 and 2008. The EA was able to adequately preserve capital on 2000-2007 with a very low profitability and then the profitability skyrocketed as we reached the years 2007-2008 something which made me believe that the EA may be in some way “curve fitted” to the “crisis type” market behavior which was characterized by very clear trends on very high volatility.

I however published the EA because I believed that the EA was able to adequately preserve capital on unfavorable market conditions so if it was indeed curve fitted to 2007-2008 market conditions then the EA would not be as profitable until a similar period arrived but it would also be able to preserve capital like it did between 2004-2007 on unfavorable market conditions (for the EA).

Nontheless, I am sort of a perfectionist and I knew that there was a lot more potential to the logic of watukushay FE. I had already done a careful analysis of the mathematics of the RSI indicator to develop the expert advisor but I knew that there was something else I could do to improve profitability. Then I realized that I had tied some variables on the expert together such that they depended on each other and tied the exit and entry criteria together. I decided to make the variables independent and redo all my analysis and coarse optimization process for the expert advisor. The results – which have been described in great detail on the ebook update released yesterday – show you how the Watukushay FE trading system was developed, analyzed and improved.

What came out of this process was an incredibly improved version of Watukushay FE. The new version is able to achieve an average yearly profit of 36% (calculated over initial equity) over 10 years with a maximum draw down of about 16% for a Risk 5 setting. The EA also achieves new equity highs every year, removing my fears of curve-fitting for the previous released version. As you see on the backtesting image shown below, Watukushay FE now has a much better risk/profit profile with a much higher quality equity curve (backtesting showed for Risk=1). Also note that Watukushay FE is still as hard to trade as all other long term profitable systems with draw down/break even periods that can last for several months.
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If you would like to trade watukushay FE on your live account, feel free to leave a comment here or on the Watukushay FE website (watukushayfe.blogspot.com) and join the 2 year live testing challenge of the EA ! Challenge yourself to achieve long term profitability :o). If you would like to learn more about the coding of Watukushay FE and how I designed, programmed and improved its profitability or if you would like to learn about other Watukushay experts I have programmed and how they too are likely long term profitable systems 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 !