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Normal Service is Partially Restored - MellyForex September Update

Latest NewsHaving witnessed several EAs struggling in drawdown over the last couple of months as I discussed within my August Update, I'm now pleased to report a modest upturn in fortunes during September. Although positions at the top of my Live Robot Leaderboard have rotated slightly from a month ago, the top slots are still occupied by the same half dozen Expert Advisors as have been there for a reasonably long time, and I expect that trend is likely to continue for the foreseeable future.

The difference this month, however, is that the top six EAs have now been joined in their ranks by a couple of additions to the Profitability Club, namely FxPowerCube and Forex Combo.

Although I've had Forex Combo in forward test now for well over two months, this is an EA that I haven't yet got round to analysing in any detail.

Despite my honourable early intentions, there is actually a very simple reason why I haven't yet got round to reviewing Forex Combo. To explain more, the EA started off very well in forward test but, after a couple of weeks (and in line with so many other EAs at the same time), it then went into drawdown which has so far peaked at nearly 23%.

As my current 'To Do List' occupies nearly a whole ream of A4 paper (I really should try harder to save trees ), the drawdown meant that my plans to review Forex Combo got pushed further and further down the list.

Forex Combo's recent move into the profitable part of my leaderboard, however, means that the time is probably right to revisit the idea of a review!

As for FxPowerCube, this is an EA which I had previously dismissed as I had been unable to carry out any long term profitable backtests as mentioned in other articles previously. To be honest, I'm not surprised to see it in the top half of my leaderboard now. The backtests I carried out certainly suggested that its performance was likely to be erratic and, similarly, I wouldn't be surprised to see it back in drawdown again at some stage in the not too distant future. Despite this negativity, I do hope that my assessment of the EA is wrong.

I took a screenshot of my leaderboard at the end of September so that readers could compare current performance with performance from previous months. I don't see any point in discussing the table further as, aside from the two EAs I referred to above, it doesn't look too different to last month's table.

September MellyForex EA Leaderboard

I also seem to have spent a bit of time recently trying to get my head around Forex Gale which I recently put into forward test. As I explained in this article, Forex Gale is not an EA that I'm ever going to be able to review, because all of its backtests are completely meaningless and aren't indicative in any way of the EA's live performance. As mentioned previously, this is due to the fact that the EA aggregates trades from other currency symbols in deciding when to simultaneously close a group of trades, and it's impossible to replicate this type of behaviour within the MT4 Strategy Tester.

It's probably best, therefore, to add a few more comments about the EA here and now, and to then just leave it to run in forward test to see how it performs over the coming days, weeks and months.

Firstly, despite taking around 90 trades within its first few hours in forward test, it seems to have now settled at approximately 350 trades per week. I'm not currently testing any other robots which trade as prolifically as Forex Gale trades!!!

Secondly, I'm concerned that the results as they appear on my leaderboard might be leaving users confused, because they undeniably look a little strange. For instance, Forex Gale tops the leaderboard in terms of the number of pips won each month (4,700 pips won), yet its monthly return appears as a negative value (-65%).

Forex Gale Performance

The reason for these seemingly strange statistics is that Forex Gale seems to be continually closing trades and banking profits from one of its three strategies yet, at the same time, there are plenty of other trades taken by other strategies of the EA which it isn't ready to close and which are in drawdown. The result is that the balance curve has been steadily rising, yet the equity curve has gone in the other direction. Forex Gale's MyFxBook screenshot shows that the equity is currently around 17% lower than the initial deposit.

If the EA gets to the point where it closes the majority of its trades out, and has either no or very few remaining open trades, then the equity curve will catch back up with balance curve and Forex Gale will most probably soar towards the top of my leaderboard on virtually all counts. That is, until the next time it starts to carry a large open drawdown!

Forex Gale MyFxBook

At the time of writing this article, the EA has no fewer than 51 trades open across all three of its strategies dating back various times over the last 8 trading days which are responsible for the high open drawdown. These trades are consuming just over 40% of the account's available margin although, to be fair, the trades are all of 0.1 lot size and margin usage would be considerably less if I had opted to use a microlot account for my forward test.

The two obvious questions are, therefore, will Forex Gale be able to successfully exit those open trades for a net profit? And, if it can exit those trades, is it likely to happen any time soon? I certainly hope that it can make a graceful exit, but I must admit that I do have my concerns! The developer has suggested to me that the EA can sometimes have as many as 60 open concurrent trades. If that proves to be the case, my demo $5k FXCC forward test account should be quite capable of withstanding the margin pressures, even if the resultant drawdown is higher than I would like to see. If, however, the EA gets up to as many as 80 open concurrent trades, I fear the account may start to come under margin pressure. We can only wait and see what happens.

Without any way of backtesting Forex Gale, however, I can only really categorise this EA as a 'Good Fun EA' which should only be used for enjoyment purposes as a gamble with money that users are fully prepared to lose. I think it could possibly give a great deal of pleasure under those circumstances, but users should be aware that its strategy is totally unproven. My recommendation is that readers regularly monitor Forex Gale's performance on my FXCC account to get an idea of likely drawdowns and margin requirements before using this EA themselves. Remember that FXCC's minimum lot size is 0.1 lots, so drawdown and margin usage would be considerably less on a microlot account.

Finally, it's my aim to get as many EAs as possible into forward test even if I'm not able to fully review each and every EA in test. My hope is that MellyForex can ultimately become a definitive resource for EA testing with its verified results and unbiased reviews. I've got the spare server capacity, and I may as well use it, so please say on the forum if there's a particular EA that you'd like to see in test at MellyForex. I'm always happy to ask developers for copies of EAs to test, even if some of my requests aren't extended the courtesy a reply!

On the subject of the MellyForex forum, can I ask you guys once again to not be shy and to please start using it in greater numbers? Contrary to popular opinion, the MellyForex business model does not revolve around IB and affiliate commissions. If that were the case, some of my reviews would be biased to help me earn more commission! However, I'd rather not go there, and I'll always try to remain impartial and keep my reviews unbiased, even if I don't always say what some people want to hear.

Instead, MellyForex's business model revolves around paid advertisers. To attract those advertisers, I really do need you guys to start talking to each other on the forum and help boost traffic on the site. It becomes a kind of self-fulfilling prophecy because, the more you guys talk to each other, the more likely it is that someone will reply and the site will grow.

So, if you are looking for an answer to anything Forex or trading related, don't hesitate to start a new topic and fire away with your questions on the forum. PLEASSSSSSE!!!

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