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Orange Forex Robot - Expert Advisor in Forward Test

Orange Forex RobotHere in the UK, we have a mobile telecoms provider called Orange whose advertising slogan used to be - "The future's bright, the future's Orange". I certainly hope that the future will be bright for the Orange Forex Robot, which is the latest EA to go into forward test at MellyForex.

Is it just me, or are the names of these EAs becoming increasingly obscure?

Anyway, I'm not the kind of person to allow a name to cloud my judgment, so I'll quickly tell you a few important snippets of information about the Orange Forex Robot.

First and foremost, it's a scalper which works 24/5 on the 5-minute chart timeframe of the EURUSD currency pair. I already have several EURUSD scalpers in forward test at MellyForex, but they generally apply extensive filtering which means they may typically trade only once a day.

What's different about the Orange Forex Robot, however, is that the backtests on the developer's website suggest that this EA is a reasonably high frequency trader. The strategy test from January 2008 to date shows around 12,000 trades in under 4 years, which equates to 10 or 11 trades each and every trading day.

The high frequency aspect of the Orange Forex Robot certainly offers the potential to increase account balances exponentially, and the aforementioned strategy test shows a phenomenal 100,000% return in under 4 years, but there are also trade-offs which are necessary to achieve these kind of results.

The first trade-off is that the EA seems to maintain its very high win rate (around 94%) by banking only very small profits. The average win size from the strategy tests is only 3.35 pips, so it's pretty clear that this EA is only designed for ECN-type trade execution. The likelihood of Orange Forex ever working with a fixed spread broker who also acts as a market maker is, therefore, pretty remote. What's more, from my discussion with the developer, I'm not entirely sure that the EA will work at all with brokers who charge a commission on their trades. The developer suggested to me that the EA be set up on a ThinkForex demo account, simply because they don't charge commissions.

When I looked closer at the subject of using the Orange Forex Robot with a 'commission broker', I noticed that the EA's expectancy per trade is a mere 0.7 pips. If I were to set the EA up on a raw spread FXCC ECN account, as I would normally use for my MellyForex forward tests, I would be subject to a 1.0 pip commission per trade. Depending upon how the EA has been coded, it's possible that the commission charges could result in a negative expectancy, conceivably as low as -0.3 pip per trade, in which case the EA would be loss-making overall. Regular readers will know by now that I generally counteract any broker commission charges by increasing the take-profit amounts by 1.0 pip and reducing the stop-losses by the same amount. This approach allows me to benefit from great execution with razor-sharp raw spreads without profits being affected by commissions but, unfortunately, there is no way of making these adjustments within the Orange Forex Robot.

The other sacrifice made by this EA is a rather high risk/reward ratio of over 12, so a few loss trades in quick succession are invariably going to impact heavily upon profits.

For the time being, I've followed the developer's recommendations and set the Orange Forex Robot up on a ThinkForex $5k demo account. Whilst claiming to be ECN, I should reiterate that this is not a raw spread account, and the ThinkForex spread appears to be padded by a pip or so to disguise the broker's commission.

The EA only contains one parameter relating to risk, and I have set its value to 0.35. Unfortunately, this value is arbitrary and doesn't really relate to anything as such.

As with my other robots in test, you can monitor the Orange Forex Robot's performance at MellyForex by clicking here. If the Orange Forex Robot performs well over the next month or so, that will be the point in time that I may conduct a more detailed review.

Discussion (1 comment)

  1. On 05/28/2013 at 00:39, David Joe said:

    I think that the profitability of a Forex robot doesn't depend only on the Forex robot itself, but also on the trader himself, he needs to have some trading experience to be able to use the robot in the proper way ...

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