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Price: $127

FX Capitalist

Added on February 19, 2013 02:21 AM
(3 / 5)
Trading style: scalping
Currency pairs: EURUSD
Time frame: H1
Money-back guarantee: 60-day
NFA compliance: Yes
License: 1 real account

The FX Capitalist EA is a bot that scalps forex markets around the clock on a one hour time frame. The EA works best on EURUSD and utilizes a profit taking strategy that allows it to have more losers than winners but still end up nicely in front. The EA is put together by a developer and trader called James O’Reilly. James is knowledgeable and up front in his dealings and offers up a number of verified accounts to prove the potential of the bot.

Strategy

FX Capitalist is a scalper that trades EURUSD round the clock. It trades with a very tight stop loss of just 4 pips with a take profit of 13 pips and is thus able to make up for up to 3 losses with just one winning trade. In other words, one only needs to win 25% of the time in order to make a profit. This is a clever strategy for increasing expectancy and should lead to the long term odds being firmly in the traders favor.

When it comes to forex, it could be said that scalping offers perhaps the least risky of all strategies. Scalping trades tend to last only a short time so the chance of a big loss is reduced and by scalping, a trader need not have to rely on predicting market direction. Instead, the scalper picks up lots of small gains, building up the account as it goes. Of course, one thing all scalpers have in common, since they all typically make a lot of trades, is that they require very tight spreads with little to zero slippage, and this bot is no exception.

However, by trading the hourly time frame, FX Capitalist, trades much less than one of the many black box scalpers that trade by the minute. And since it trades on the hourly chart, noise is reduced and signals tend to be more reliable.

FX Capitalist also uses effective money management techniques which safeguard the account, while at the same time allowing the appreciation of working capital. And, by allowing the bot to invest a certain percentage of funds, the bot is able to exponentially increase in value.

FX Capitalist comes in two versions, ‘S’ and ‘L’. S was found to be much more aggressive in terms of risk taking. So L is the recommended choice. There are also a number of parameters that can be altered when running the bot, though some of these require buying an upsell product for $10 more.

Past Performance

The FX Capitalist web site contains links to a number of back tests that show what the bot is capable of achieving over a given period.

Between April 2007 and August 2012, the bot managed to turn an initial investment of $3500 into $677,153 with a profit factor of 1.95 and a maximum drawdown of just 18.03%. This back test was run over EURUSD on an hourly time frame and resulted in a win ratio of around 37%. Not bad considering the bot generates a profit with just a 25% winner ratio.

It is also noted that the back test from April 07 to August 12 produced quite an interesting equity curve. From the chart, it is clear that the EA had a fairly flat 2007-2010 and only in the last couple of years did it really kick into gear and start making big gains. It can be said, then, that this EA is working at its peak in current markets, which is a good sign for traders.

Future Performance

There are several future tests on live accounts floating around that show the FX Capitalist to have made strong gains over the last year.

One test, run on a standard Pepperstone account, from November 2012 to April 2013, shows a gain of 85.33%, which equates to an impressive monthly gain of 13.58%. Drawdown was significantly higher though, (when compared to the back test data), at 27.9%. The percentage of profitable trades was also lower at around 29%. Additionally, this test is yet to be verified by myfxbook.com

Another future test, although shorter and also unverified by myfxbook.com, shows pretty good results too. From Jan 29 to the present day, the FX Capitalist EA has made a steady gain of 5.36% with a profit factor of 1.34 and a maximum drawdown of just 6.34%. Average trade length was shorter at five minutes and the percentage of profitable trades was around 26%. Expectancy is decent too, at 1.5 pips.

Although both future tests show decent profits, some of those profits came from just one or two trades, with the average percentage of profitable trades down from what was seen in the back tests.

One possible explanation is that the live tests began with a higher risk setting by mistake which led to higher than expected profits. Once the bot was put back to the normal, lower risk setting, the EA went back to its usual performance levels.

Future Test

 

 

Forex Monitor Forward Test

Conclusion

In some respects, the FX Capitalist EA is a bit of an enigma. There is little explanation to the method by which the bot implements its scalping trades, and the web site comes with a fair amount of salesmanship attached.

The bot itself seems to be working reasonably well, especially in the live tests, where it matters the most.

But as with any scalping bot, success and failure can be a very fine line, with the difference often coming down to just one or two pips. With such fine margins of error, levels of slippage and the tightness of spreads, become extremely important considerations.  As always, picking a good broker and running the account on demo for a period of time is the essential first step.

Tags:
scalping, eurusd, h1

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