Forex Megabot Logo
Price: $99

Forex Megabot

Added on February 19, 2013 03:25 AM
(4 / 5)
Trading style: scalping
Currency pairs: USDCAD
Time frame: M15
Money-back guarantee: 60-day
NFA compliance: Yes

The Forex Megabot was first introduced back in 2010 when it gained a reputation among traders as one of the most consistent EA’s on the market. But, in late 2011, the bot and its owners disappeared, leaving customers dismayed at the lack of support and guidance. However, after purchasing the code off the original developers, the Forex Megabot has been revived by a talented programmer known as Eddi. It is a good thing too, since this has always been a strong system and verified live tests show it is still performing impressively.

Strategy

In terms of strategy, the Forex Megabot employs pretty complex algorithms that are based on the concept of fractal mathematics. Without getting too bogged down in the technicalities, the term ‘fractal’ is used to describe the self-similar patterns that can be seen throughout nature - for example in cauliflowers and mountain ranges - and was first coined by mathematician Benoit Mandelbrot. Fractals have long been linked to the performance of financial markets and an excellent example of this is shown impressively in Mandelbrot’s book: The misbehavior of markets: A fractal view of financial turbulence.

In more practical terms, Forex Megabot is a scalper that trades USDCAD during the pre-Asian session, between the times of 22.00 and 23.00 GMT, and uses the 15 minute timeframe to open positions. Due to the limited trading window, the bot tends to open a relatively small number of trades per month which may not appeal to some traders. It is not uncommon for the bot to make fewer than 5 trades per month.

With a default stop loss of 50 pips and a take profit of 8 pips, the EA manages to capture small but consistent profits. In fact, win rate for the bot often approaches 95%. It is also important to note a couple of features that enable the bot to work at its best.

Firstly, the bot uses a maximum open spread limit of 3 pips, so it will never trade when the spread is larger than this. (For USDCAD therefore, it may pay to look around for a broker that offers consistently tight spreads on USDCAD).

Secondly, the bot uses an alternate time-based exit that closes positions before they hit their targets. This feature was obviously tested rigorously as it seems to improve system performance by a good margin.

There are other settings that can be changed on the Forex Megabot, including risk percentage, fixed lots, money management and recovery mode. However, the default settings seem to work the best. The recovery mode, in fairness, seems to have been included as more of a gesture than an important addition to strategy. In fact, Programmer Eddi suggests that it is actually better to reduce position size after a loss and cites the Kelly criterion as evidence of this fact. This is sound and reassuring advice and something traders would be wise to take on board.

Finally, there is also a stealth mode included in the bot which prevents brokers from seeing your stop levels while they are not near the market. The problem is if your server goes down, you will then be in the market without a stop which could be dangerous.

Past Performance

Once again, programmer and trader Eddi, of the Forex Megabot, reassures when he talks about the relative unimportance of historical tests when compared to live forward tests. Nevertheless, Eddi does include a number of impressive back tests that enable a good overview of how the system performs over certain conditions and the manner in which different parameters react to those conditions.

For example, drawdown was shown to increase during recovery mode and profit was shown to improve considerably using the time based exits.

During a back test from April 2007 and May 2012, the bot achieved a gain of 8012.77% with a profit of 3.16 and expectancy of 3 pips. The back test was all the more impressive for being tested on complete MetaStock tick data going back to 2007, (something that some other EA back tests fail to do).

Here the tick-data backtest without the High-Frequency option (High-Frequency = false):

And here the tick-data backtest without the High-Frequency option (High-Frequency = true):

Future Performance

While the Forex Megabot website is lacking in detail and there is concern regarding why the original developers abandoned the bot for over a year without explanation, the future performance of the Forex Megabot is second to none.

A live account verified by myfxbook.com shows consistent profits that go back as far as 2010, (although there are a few gaps while the EA was offline).

Between January 2010 and December 2010, the bot made 296.84% with a maximum drawdown of 18.81% and a winning percentage of 94%. The average win was 5.6 pips and the average loss -29.5 pips. It is clear then, that the exit strategy works well and is not only based on hitting the stop loss or profit target. Expectancy is 3.8 pips and profit factor an extremely respectable 3.78. Average trade duration was just over 2 hours. Risk was set to default on this test and spread set to 3 pips.

In a separate, verified live account between September 2010 and January 2013, the bot returned a monthly return of 1.41% with a drawdown of just 8.69%. This test was with risk set to the lowest setting.

 

Forex Monitor Forward Test

Conclusion

The Forex Megabot has to lose half a point for the uncertainty created by its predecessor’s early exit. This is unfortunate, since the new owner seems to know his stuff. Programmer Eddi ticks all the boxes when it comes to trading knowledge and the new look Megabot is based on impressive mathematics, far beyond the reach of most EA’s. Risk is based on conservative principles and the bot trades completely at odds to those bots that trade often and with a gambling type impulsion.

Impatient traders might want to trade more often or consider using this in a basket of other EA’s. What is clear though is that live performance has been extremely impressive for Forex Megabot. This is an EA, vastly superior to most of its peers.


Clicky