Automated Forex Trading – First Look
You will notice that the system initially loses over $2,000 (or 20% of account equity) before increasing equity up to $43,000. This result was obtained after tweaking – if you just choose random systems, you will get a far worse result. The chart is over a limited time frame. This is because many of the systems did not have a track record before the beginning of 2008.
One concern is that the process of selecting systems is done in hindsight. If you choose systems with only a few trades, you run the risk of curve fitting the portfolio system – it performs well on paper, but may not do well in practice. At this point, this is easy to do as few of the systems have long track records. All that you can do is try to choose systems that have as many successful trades as possible, and diversify across systems and currencies.
There are some options to increase equity given to successful systems, while decreasing that for the less successful systems. My primary concern with this is with small accounts, it may not be possible to fine tune asset allocation to this level.
System performance on the weekend is ok without being fantastic. Even with a very fast connection, it is nowhere near the performance of a system running on your own PC but acceptable for a web application. I would like to see how it goes during the week in the busy times. The platform does take advantage of AJAX / Web 2.0 technologies, so it is interactive.
Overall, the system selector concept has promise, but I think that traders need to consider system selection carefully (targeting low drawdowns rather than the highest performing / highest risk systems) and carefully considering system track records and longevity. I shall see how it performs against the demo account over the next month.
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Tags: automated forex trading, Forex Trading, FXCM