No Hype Forex Robot Review

Well, it had to happen sooner or later.  I came home from work tonight to find GPS Forex robotwhich I have been reviewing with both real and demo accounts,  with it’s first losing trade (in my experience).  But, despite the fact that this was on a real money account, and I hate to lose any amount of real money, there was something of a silver lining in it.

As you may recall from my previous review, I am trading this with a small account of about $500, and because that represents a small part of my trading capital, I was willing to give it a higher risk than I normally would, so I was running it with money management turned on and a 20% risk factor. But despite that risk, it acually only lost about 6 1/2 % ($33.41 out of a starting balance of about $516.).  On other demo accounts with a variety of trading parameters, it also did not experience the full loss that it might have.  One account had a 2% risk factor and lost about 1 1/4%.  Another account that was traded with a the default parameters (a fixed lot size of 1.00 lot with a $10,000) lost a little over $800.

The other aspect to the silver lining was that, in one of the demo accounts, it did exactly what Mark Larsen in his promo  said that it would: it recognized the loss and opened an opposite trade that actually more than made up for the loss.  The one demo account that lost $125 on the original buy turned around and entered a sell trade with a much larger lot size, and gained  $145, for a net gain of $20.

The question that interests me, though, is why it only did that in one of the 4 accounts that I had running it at the same time.  And, in fact, in one of the accounts, it didn’t make the trade at all.  It really baffles me why it gets such widely different results with what is pretty much the same data (granted, four differnt brokers, but the market is the market, right?).

Nevertheless, despite the fact that I wish it hadn’t lost money, the experience gives me more confidence in what it can do.

Stay tuned for more reviews of this robot.

There’s a relatively new robot on the scene that I’m rather excited about: The GPS Forex Robot.

I was drawn to this (as opposed to the dozens of solicitations I receive weekly) primarily because, while exaggerated, their claims were not so out of this world as to be obvious scams.

I bought the robot at the beginning of January, and brought it up on demo accounts on several different brokers.  I’ve had a few problems with some of the demo accounts (it seems like the brokers keep wanting to cut them off, which is completely counter productive IMO), but in a little over 3 weeks, it had made 40 trades on 4 different accounts. With ZERO losing trades!

That’s what impressed me.  Now, I’ll grant you, 3 weeks is nowhere near long enough to establish a track record, and 40 trades isn’t enough of a statistical basis for drawing solid conclusions.  But it was enough for me to want to risk a little bit of real money on it and see if it could do it in “real life”. So at the beginning of this week (January 31), I turned it lose on a $500 account.  So far, it has made 4 trades, all winners, and is up slightly over $6.

Now, I’m not saying GPS or its marketing is perfect.  Far from it.  The performance gains are still exagerated, but not nearly so badly as a lot I’ve seen.  He prominently claims in the head line on the site that it will return 30% per month.  Well, even the accounts he shows in the add are not returning 30% per month. But they are returning 11-22% (depending on which account and what time frame), compounded. (A side note: marketers try to pull the wool over your eyes when they extrapolate total returns backwards to get a “XX% each month” claim.  Because of compounding, you don’t arrive at a percent/month by dividing the total return over a period by the number of months, because for a true “percent per month” return, each month multiplies by the previous month, it doesn’t add to it.  This is one exageration that almost all Forex marketers use.)

11%/month seems to me to be reasonable and doable.  It figures out to about 1/2 of 1% per trading day, a number that I have repeatedly heard is achievable by a good Forex trader.  So if he has indeed found a solid system and reduced it to an algorithm, then that number is not outlandish. (BTW, that return, sustained each month would result in more than tripling your money each year – a return I could definitely live with.) Furthermore, it does seem to be possible, based on the results I’ve seen in my live and demo trades.  However, it does come at a cost: High risk.

Mark Larsen (the promoter) in his member web site, refers to not risking more than 10% of your account balance on any trade.  All the authorities on money managment that I have ever read think that number needs to be more like 2% if you’re going to stay in the business. The fact is that, because the GPS Robot places its orders without a Stop Loss indicated, you don’t have a way of really knowing exactly how much it’s risking, a fact that does make me very uncomfortable.

In the settings for the robots, there are two ways to trade – with a fixed lot size, or with money managment, which will set the lot size according to what percentage of risk you want, and your account size.  The manual recommends using the fixed lot size, and when I first turned it on, I used the default settings.  And the first 2 trades that it did had impressive returns; $61.00 and $48.71, on a starting balance of $10,000.  Over 1% the first day.  But then I started looking at the trades.  He obviously has some stop loss algorithm programmed into the robot even though he doesn’t show it on the trade, but you don’t know what it is. However, looking at the the chart action between the opening and closing of those trades, the price fell by enough that, had it been stopped out at the low, it would have lost 4 1/2%.  So he was clearly risking more than that.  That’s too much for me, at least on an untested account.

So I switched to using the money management with a 2% risk tolerance.  The gains were much smaller – more on the order of .05%.  Still, they were sustained, and they were consistent.  The robot doesn’t trade EVERY day, but it does trade most days.  You could argue that, if the win/loss ratio continues to be consistently high over a long period of time, then you could justify using a higher risk ratio.  In fact, on the $500 live account, I’m actually using a 20% risk ratio, rather than my preferred 2%, on the basis that the $500 represents a small portion of my actual trading capital.  So I’m willing to risk more of it in an effort  to get a more substantial return (translation – I’m greedy!).  But that means I can’t extrapolate the returns I get to the full balance, because I wouldn’t be willing to run a 20% risk factor if it were the full balance.

The robot comes with access to Mark’s “Members only” site which has some supplemental “bonus” videos and documentation.  The information there does fulfill some of the teasers that he holds out on the offer page, although the information is pretty basic and available elsewhere.  It is useful.

There are a couple claims he makes on the offer page that don’t seem to hold up.  For one, he claims

And the best part is – The robot does not involve any tricks like martingale, grid or no-stoploss trading that can easily blow your account.

But, as I’ve noted, he actually is running his trades without a stop loss, and this CAN blow your account.  I’m sure his algorithm has a stop loss programmed into it, but since he enters the trade without setting the stop loss, if you lose power or internet connectivity, you are, effectively, trading without a stop loss.  That’s dangerous.  And, like I also said, since you don’t know what the algorithm’s theoretical stop loss is, you don’t know what the actual risk is.

The other thing he says, in the FAQ (on the members area after you buy the robot) is this:

Question: When does it trade? Is it every hour, during certain sessions or at any time?

The GPS Forex Robot can have any of kind of trading operations, at any time during the trading day! It all depends on the indexes. The expert gets them when it analyzes the current market situation along with its parameters, which the expert uses.

Well, that might be true, but every single trade that has been placed in my experience (and also in the accounts he shows as proof on the offer page) is placed at exactly the same time each day: 00:00 GMT.  How that enters into his trading algorithm, I haven’t been able figure out, but it clearly does.

He also implies on his offer page that he’s going to answer some questions that he never really answers (at least that I’ve found), including these:

• How to get rid of black box robots and develop your own system in 2 days with no programming skills whatsoever? 

Well, sort of. He talks about developing a “system”, meaning a style of trading, knowing when to trade and when to get out, and what would be the foundation for a “robot”, and then says, okay, now go hire somebody to program it for you.  Good information, but not exactly what I expected given the teaser.

• How to choose the right broker and avoid the rip-offs with increased spreads, price spikes and commissions?

Again, sort of.  He talks about the fact that there are rip off brokers and how they rip you off, but doesn’t really tell you how to know which are which and how to choose the right one.  Again, good information, but not all that I was looking for.

• Which signal providers to choose and which you should avoid at all costs?
• How to choose the best VPS for forex trading that will really put your trading in a secure environment instead of traditional restarts, slowdowns and disconnections faulty vps providers have?
• Where and how to find great free trading robots?

I don’t recall finding anything on his site about “free” trading robots.  Maybe it’s there and I just missed it.

Nevertheless, shortcoming aside, I’m impressed.  The fact that I’ve committed real money to it should testify to that. The GPS Forex Robot sells for $149, and, in my opinion, will pay for itself in a few months.  It is marketed through Clickbank, and comes with a 60-day money back guarantee.  While I obviously haven’t tried to get a refund on this, I have on other robots (that didn’t live up to their claims) bought through Clickbank, and Clickbank makes the refunding process very hassle-free. (In case you’re wondering, yes, that is an affiliate link that I’ve included, and if you decide to buy the robot, I will make a little bit. I hope it’s obvious that I haven’t let that fact color my opinions or my writing.)

I’ll keep you posted on my live results.