Forex EA (Expert Advisor) specifically refers to automated trading systems that run on MT4/5 terminals. EA can automatically monitor the market and execute orders 24 hours a day, effectively avoiding the impact of time, physical strength, emotions and other factors on manual trading. For more details, please see the Appendix at the end of the article.
Almost every Commercial EA vendor will provide the corresponding backtest data. One should download or request a Demo Version to fully assess whether the data can be duplicated.
This is one of the most popular MT4 EAs in a third party Forex EA sales sites. Not only is it ranked on the front page, but all users give 5-star reviews. The vendor said the EA was designed with advanced algorithms and utilized deep learning technology, providing the MT5 Tickdata backtest report, the yield curve of EURUSD, AUDUSD, GBPUSD was a straight linear rise. (Tickdata is the abbreviation of Tick-by-tick data. It's a type of financial market data that records every individual transaction that occurs for a particular financial instrument, such as a stock, commodity, or currency pair. For currency pairs, the Tickdata currently available is based on M1 Timeframe.)
About the EA
Backtest of EUR/USD provided by the vendor
After downloading the demo version, we ran a Tiackdata Backtest on EURUSD in MT4, and the yield curve was basically the same as the vendor provided. (Default Setting, Spread= Fixed 1 pip, No Slippage)
Tickdata backtest from 2010
The price of this EA is $938, which is slightly higher than the other EAs on the site, but it is certainly a Holy Grail to have such a consistently profitable EA. Backtesting results show that an initial investment of $10k generated $130 Million after 13 years in EURUSD. The initial one-time $938 investment seems very cheap.
However, after the mood calmed down a bit, a new question arose: With such a stable and profitable EA, why would the vendor sell it at such a low price of $938 instead of trading it himself? In addition, in the spirit of being highly responsible for our own money, we tried to modify the timing of Tickdata and re-tested it with the exact same quote.
A miracle did occur at this time, and we saw that the results of all backtests were basically a steady decline in a straight line.
Tickdata backtest from 1975
Tickdata backtest from 1982
Comparing the backtest results before and after modifying the timing of the data, we have to think that this is a potential Scam EA.
Conclusion
1. Before purchasing any Commercial EA, be sure to run a Tickdata backtest.
2. It is necessary to modify the timing of the Tickdata for the testing.
3. Even if the results are satisfactory, it is necessary to think differently: From the author's point of view and psychology, assume you have created a stable and profitable EA through years of study and practice, why don't you make money by trading yourself, but sell this EA? Especially most No DLL EAs can be decompiled very easily within a few minutes. Then think about the various potential problems from that perspective.
Check our website to see this full trade copy service and other fully automated systems
Appendix
Forex EA (Expert Advisor) specifically refers to automated trading systems that run on MT4/5 terminals. In general, EA is based on proven manual trading methods and experience, built with various technical indicators and coded in MQL language. EA can automatically monitor the market and execute orders 24 hours a day, effectively avoiding the impact of time, physical strength, emotions and other factors on manual trading. EA is one of the most important trading tools for both professional and retail traders.
In addition, through rigorous and scientific backtesting, we can not only test whether the key logic of the EA is feasible, but also have a reasonable expectation of the risk and reward of trading performance in the future.
However, MT4/5 EA is not omnipotent. The MQL language is similar to the C language, the function is relatively simple. Some complex and/or advanced trading logic can not be expressed well. Then we need to use Java Script and other languages in eSignal, Reuters Eikon, CQG or other professional platforms to build the trading system.
The series of articles "Commercial EA Review by LinoCapital" aims to provide readers with some principled guidance in selecting a commercial EA through our knowledge and experience. Welcome to all kinds of feedback and discussion.
We hope all the traders succeed. Good Luck!
Promoted content
Editors’ Picks
EUR/USD trims gains, nears 1.1700
The EUR/USD pair eases in the American afternoon and approaches the 1.1700 mark. The pair surged earlier in the day after the ECB left interest rates unchanged and upwardly revised inflation and growth figures. The US CPI rose 2.7% YoY in November, nearing Fed’s goal.
GBP/USD returns to 1.3370 after BoE, US CPI
The GBP/USD pair jumped towards the 1.3440 early in the day, following the BoE decision to cut rates, and US CPI data, which was much softer than anticipated. The US Dollar, however, managed to regain the ground lost during US trading hours.
USD/JPY rises to near 156.00 ahead of US CPI data, BoJ policy decision
USD/JPY moves higher to near 156.00 in the countdown to the US inflation data. Fed’s Bostic sees inflation more worrying than the job market. The BoJ is expected to raise interest rates by 25 bps to 0.75% on Friday.
Editors’ Picks
EUR/USD trims gains, nears 1.1700
The EUR/USD pair eases in the American afternoon and approaches the 1.1700 mark. The pair surged earlier in the day after the ECB left interest rates unchanged and upwardly revised inflation and growth figures. The US CPI rose 2.7% YoY in November, nearing Fed’s goal.
GBP/USD returns to 1.3370 after BoE, US CPI
The GBP/USD pair jumped towards the 1.3440 early in the day, following the BoE decision to cut rates, and US CPI data, which was much softer than anticipated. The US Dollar, however, managed to regain the ground lost during US trading hours.
Gold extends its consolidative phase around $4,330
The bright metal cannot attract speculative interest on Thursday, despite central banks announcements and the United States latest inflation update. XAU/USD is stuck around $4,330, confined to a tight intraday range.
Crypto Today: Bitcoin, Ethereum hold steady while XRP slides amid mixed ETF flows
Bitcoin eyes short-term breakout above $87,000, underpinned by a significant increase in ETF inflows. Ethereum defends support around $2,800 as mild ETF outflows suppress its recovery. XRP holds above at $1.82 amid bearish technical signals and persistent inflows into ETFs.
Bank of England cuts rates in heavily divided decision
The Bank of England has cut rates to 3.75%, but the decision was more hawkish than expected, leaving market rates higher and sterling slightly stronger. It's a close call whether the Bank cuts again in February or March.
RECOMMENDED LESSONS
Making money in forex is easy if you know how the bankers trade!
I’m often mystified in my educational forex articles why so many traders struggle to make consistent money out of forex trading. The answer has more to do with what they don’t know than what they do know. After working in investment banks for 20 years many of which were as a Chief trader its second knowledge how to extract cash out of the market.
5 Forex News Events You Need To Know
In the fast moving world of currency markets where huge moves can seemingly come from nowhere, it is extremely important for new traders to learn about the various economic indicators and forex news events and releases that shape the markets. Indeed, quickly getting a handle on which data to look out for, what it means, and how to trade it can see new traders quickly become far more profitable and sets up the road to long term success.
Top 10 Chart Patterns Every Trader Should Know
Chart patterns are one of the most effective trading tools for a trader. They are pure price-action, and form on the basis of underlying buying and selling pressure. Chart patterns have a proven track-record, and traders use them to identify continuation or reversal signals, to open positions and identify price targets.
7 Ways to Avoid Forex Scams
The forex industry is recently seeing more and more scams. Here are 7 ways to avoid losing your money in such scams: Forex scams are becoming frequent. Michael Greenberg reports on luxurious expenses, including a submarine bought from the money taken from forex traders. Here’s another report of a forex fraud. So, how can we avoid falling in such forex scams?
What Are the 10 Fatal Mistakes Traders Make
Trading is exciting. Trading is hard. Trading is extremely hard. Some say that it takes more than 10,000 hours to master. Others believe that trading is the way to quick riches. They might be both wrong. What is important to know that no matter how experienced you are, mistakes will be part of the trading process.
The challenge: Timing the market and trader psychology
Successful trading often comes down to timing – entering and exiting trades at the right moments. Yet timing the market is notoriously difficult, largely because human psychology can derail even the best plans. Two powerful emotions in particular – fear and greed – tend to drive trading decisions off course.