03 Apr Do Mysterious Free Trading Systems Work?
Do Mysterious Free Trading Systems Work?
Apr. 3, 2019
The makers of trading platform are unbelievably generous.
For example, when you download the free MT4 platform, the platform comes loaded with two trading system ready to go.
Not only do we get a platform, but the creators gave us two different systems that can make us millions.
Free platform. Free profits. Can’t beat that.
Now here’s a question for you.
Have you ever tried the free systems? Have you ever even looked at them?
Because MT4 isn’t the only one who gives away systems. Both Tradestation and Multicharts do it, too.
Every platform maker wants us to be rich.
But, personally, I’ve never spent one second eyeballing them.
Because, obviously, they don’t work.
Free systems never work.
This week, I got curious. Instead of rolling my eyes how ludicrous it is for MT4 (and others) to give us free money-makers, I decided to find out the truth.
Here’s what I found.
First, let’s get the details on one of the free systems I tested. Here are the settings:
This is usually the part where I explain the Inputs. But I can’t do that. They might have given us a free system, but they didn’t give any explanation on what the heck this system is trying to do.
The setting at the very top is “TakeProfit”. I assumed this meant the profit target in pips. As you can see, it’s set to 497.0. I again assumed this meant 497 pips.
Not the case. The most recent trade taken (a winner) shows that the trade was taken out at 49.7 pips of profit. So maybe I have to move the decimal point one spot on JPY pairs?
The second Input is “Lots.” Pretty straightforward.
The third is “TrailingStop” set to 290. We now know that means 29?
Fourth is “MACDOpenLevel”. No idea what that is. I’m assuming that has something to do with MACD.
Fifth is “MACDCloseLevel”. No clue.
Last is “MACDTrendPeriod”. My best guess is that this is length of the MACD. Normally, that’s set to 26 anyway.
So, in summary, we don’t really know why trades are taken but it has something to do with entering on the strength of the MACD. Above the zero line seems to go Long and below the zero line appears to go Short.
Here’s a picture of that recent winning trade:
So how are we feeling at this point?
We have a free system from who-knows-where that comes with no explanation. Ready to trade it?
The answer, clearly, is no. Who would trade something like this?
Using the settings from above, here’s how this system did from 2003-2019:
Not terrible results. And, actually, the win rate is crazy good (over 90%).
I’ve seen way worse from systems that were well conceived and expensive. It would have almost doubled a hypothetical $20k account from 2003-2019. That’s almost as good as the market.
The problem lies in a big losing trade in 2014. It lost $14,094 and I’m not sure why!
That’s not good.
And that’s why understanding any system is critical. It’s hard to find a cure for something when we don’t know what caused it in the first place.
But since our system benefactors won’t give us the details, we’ll try to solve it by ourselves anyway.
In our next email, we’ll talk about how to make this system even better.
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It should not be assumed that the methods, techniques, or indicators presented in these products will be profitable or that they will not result in losses. Past results are not necessarily indicative of future results. Examples presented on these sites are for educational purposes only. These set-ups are not solicitations of any order to buy or sell. The authors, the publisher, and all affiliates assume no responsibility for your trading results. There is a high degree of risk in trading.
HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN INHERENT LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT ACTUALLY BEEN EXECUTED, THE RESULTS MAY HAVE UNDER- OR OVER-COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN.