Forex MegaDroid Review

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Update 7.20.09 :

I have just released a special eBook called Advanced Droid Tactics that introduces a new way to setup MegaDroid so that it trades more frequently and hopefully earns many more pips!

http://www.droidtactics.com

FX Robot Man Readers-

Many of you have been bombarded with promotional emails from every major forex affiliate promoter regarding the newly released Forex MegaDroid product. Since many of you have emailed me about my opinion on this matter I thought I would quickly type up my impressions. Hopefully this will be one of the more objective Forex MegaDroid Reviews you will read – some good comments and some bad comments.

Also, I went ahead and actually purchased Forex MegaDroid just now so that I could look under the hood and do some forward testing and back testing of my own. If it doesn’t return 10% within 90 days I will ask for a refund, but 10% every 90 days is enough for me to hang on to most products.

The 3 Criteria

As with any products I consider, I quickly analysis them using the 3 criteria I have mentioned elsewhere on the blog: 1) Back Testing, 2) Forward Testing, 3) Price versus Performance.

1. Back Testing

The Forex MegaDroid promotional page gives obviously back tested results for each year, year by year, from 2001 through 2009 claiming the robot returns anywhere from 300% to 800% per year in each of those years. You will immediately notice that back testing statements and the settings used for each year are missing. Whenever the strategy tester statements are not supplied, and the EA settings for the back testing are not revealed, I get skeptical – primarily because it becomes difficult for me to replicate their results.

2. Forward Testing

Unlike FAP Turbo and many other legitamate forex products, Forex MegaDroid provides no forward testing demo accounts or live accounts that you can follow. As many of you know, this is a real sticking point with me. If your EA makes a minimum of 300% per year and you aren’t willing to setup even a $250 live mini account and publish the live results – then I become skeptical.

So, as a service to my readers, I will be publishing my forward testing demo results from Forex MegaDroid for all the world to see. I just barely bought the product and got it setup on my forex computer, so no trades have been made yet, but you can follow my MegaDroid account here:

http://fxrmmegadroid.mt4stats.com

3. Price and Performance

If the MegaDroid actually delivers a minimum return of 300% per year – even if that requires very aggressive settings – then most people with at least $250 should be able to justify purchasing the product for $97-$149 dollars. In a quick back test I just finished, using 10% risk from Jan. 4th 2009 through today, the MegaDroid generated 77% return with a 16% draw down. So, I’m guessing this thing returns more like 50-150% per year if you were to use the conservative settings that most people would be comfortable with.

At 50% per year this would mean you would need a minimum of $149/0.25/0.5 = $1,200 in trading capital to justify the purchase. If it returns 100% per year, you could start with $500-600. For the purposes of this Forex MegaDroid Review, or any MegaDroid Review for that matter, you should probably discount the results to whatever you think an acceptable drawdown is. If you are okay with a 5% per month return, then you probably only need to risk 5% with this EA.

Conclusion

As with most new forex products on the market, this one seems to be over hyped, but the strategy itself appears to have some merit based on my very preliminary back testing. My advice would be that you are probably safe giving this one a try, but if this robot doesn’t return at least 10% by the end of June, you should probably ask for a refund.

By claiming it gives 300% per year, that is a high expectation to give people – so again – if it doesn’t return 10% per quarter – send it back.

-Ben aka FX Robot Man

P.S. Don’t forget to follow my forward test results that will accompany all of my Forex MegaDroid Reviews of this system at http://fxrmmegadroid.mt4stats.com

Gomega Xray Review

I have been receiving a couple of emails asking my opinion about the Gomega Xray Forex Autotrading product that is being sold this week by the folks at Quantum Research.

I have been following the products of Quantum Research since 2007, and I think this is a good opportunity to apply my new rules-of-thumb for evaluating forex products, to their GoMega Xray release. If you haven’t already done so, I recommend you take a minute to read the first half of my article “FAP Turbo Return Expectations, Part 1″ to learn more about my rules of thumb for evaluating forex product claims and pricing. After you have read the section called “Claims in the Forex World” come back to this article.

Quantum Research has released several products over the past two years, Gomega is just their latest system in development. Included in the family of forex robots they have released are ForexProfitPro AT (FXPP), GoMega v1.6, GoMega ITS, and now GoMega Xray.

As soon as you become a Quantum customer they give you access to all of their future updates and systems for free, which is a nice benefit of the way they handle their business. That being said, I would say that the performance of these systems has been underwhelming – especially in late 2007 and early 2008.

The Quantum Research Product Family / History

The ForexProfitPro AT system really struggled through 2007 and most of 2008 and didn’t really start making money until the financial crisis started around the end of August of 2008. Since Aug. 2008 the the FXPP AT v2 has actually performed quite well (especially if you only trade it the first half of each week).

The original GoMega v1.6 is an extension of FXPP AT, using some of the same types of signals, with an additional filter. The system only trades the GBPJPY 4-Hour charts, but has probably been one of the more pleasing systems Quantum has released. Many customers actually find themselves only trading this system rather than  the newer and more universal GoMega ITS and GoMega Xray.

I am not sure whether or not new GoMega customers will be allowed access to FXPPv2 or GoMega v1.6 or not, but that would be a nice bonus if they did since both of these systems seem to be performing quite well in the current market conditions.

The predeccesor to GoMega Xray was what the customers generally refer to as GoMega “ITS”. The ITS is the new custom indicator that is the foundation indicator of the system – this indicator combines the behavior of all pairs to assess the strength or weakness of each individual currency, and then combines them to determine the trend of any one currency pair combination. It is actually a pretty neat idea, and we are seeing more of these types of indicators popping up.

In practice GoMega ITS proved to a bit complicated and difficult to trade. Since you could trade so many time frames and pairs, with different settings for each time frame and pair combination, the whole thing was/is a bit of a headache to get setup initially. In addition to the logistical issues, many customers found that it was quite challenging to find the right basket of currency pairs and timeframes to trade that would actually give decent performance. Pretty much all of the lower time frames seemed to struggle, and only the 1-Hour charts and 4-Hour charts seemed to be favored by the customers I corresponded with. Even then, the performance wasn’t on the order of 500%  per year, although depending on the basket traded,  it may have met the 20% per year standard. But again, only if you could build the right basket of currency pairs and chart time frames.

The latest release, GoMega Xray, is the result of Quantums efforts to improve the inital GoMega ITS. They have reassessed some of the trade logic, postion sizing, stop losses and targets, additional indicators to filter out trades etc. They have also simplified many of the settings – not all of them – but it doesn’t appear to be as cumbersome as the previous version,GoMega ITS.

It is too early to tell how GoMega Xray will perform, but if I had no experience with Quantum or GoMega at all, I would apply my rules of thumb from the aforementioned article. Using that as a starting point, we can then ask under what conditions you might want to consider or not consider purchasing GoMega Xray for $4,997.

Evaluating the GoMega Xray Claims and Pricing

This new version, GoMega Xray comes with a new price tag of $4,997. Ugh.  The money back guarantee basically says that they will guarantee that you earn a minimum of 5% every 90 days (20% per year), and they also require you to prove with live trade statements or demo trade statements that you followed their instructions to the dot before they will give you a refund.

Compared to FAP Turbo with a price tag of $150, unconditional 90 day money back guarantee, and a 60-90% chance that you will make 10% in any 90 day period (based on my own analysis) – I think GoMega Xray becomes a hard sell for any trader with less than $50,000 of real money in their trading account right now.

So lets go to my rules of thumb one-by-one:

1. Backtesting
   GoMega Xray gives you a download-able Excel spreadsheet for their Top 5 performing currency pairs on the 5 and 15 minute time frames. This is pretty typical for Quantum research. They basically ran a 1 year back test for each pair and then merged the results into a spreadsheet so that you can manipulate the risk settings and generate a hypothetical equity curve. For the 15-minute time frame they claim a combined return of 550% over the course of the previous year while only risking 5% at any one time.

   First, 1 year is generally not enough for my tastes. That being said, I also know the complexity of back testing a strategy such as theirs that relies not just on the historical prices of each pair, but of all the pairs, as is the case with their ITS indicator. So, one year is probably okay given the feasibility. I am also confident that they haven’t done any hard coded curve fitting – they do curve fit by optimizing settings – but they probably don’t hard code different settings for different historical time spans just for the sake of inflating back test results.

   If you asked people who purchased the GoMega ITS system a couple of months ago, and asked them if their results matched the results they were told to expect based on these back testing Excel spreadsheets – I think they would likely say no. Although you may not earn 550% , there is probably a decent chance of making some money with the system, but not life changing money. Past performance is not indicative of future results, and this is likely the case here. I think it is more reasonable to peg my expectations based on their money back guarantee.

   If they are only going to guarantee 20% per year – I am going to be skeptical about making 550% per year. Not all systems perform great during all market conditions and years, so 20% is a good number to work with I think. Most systems over hype their results, and GoMega is probably no different, but at least they give us a baseline of 20% to work with. The fact that they actually guarantee some level of performance is nice – and that is usually the trade off with guarantees for every system: They either don’t guarantee any performance, and just have an unconditional money back – or they guarantee some level of minimum performance conditional on proof that you used the system correctly.
   
   

2. Forward Testing
   If I had to levy a complaint against Quantum Research and the GoMega family of products, I think it would come down to Forward Testing. I really feel like they shouldn’t release their products without providing any type of forward testing over at least 3 months (this goes for all system developers – not just Quantum). They probably do forward testing in-house, but if they do, they never seem to provide those account statements in their marketing. They have a community of customers that are perfectly willing to forward test the products, and I would like to see them not sell a system before it has had at least 3 months of forward testing and beta testing that they are willing to share with world in their marketing.

   I’ll say again, legitimate systems typically provide forward testing results on a daily or monthly basis. This standard is finally bleeding over to the the relatively cheap Clickbank forex products as evidenced by the live statements provided by FAP Turbo.

   Finally with GoMega Xray we see some evidence that they may move in this direction as they have just posted an FXDD statement with 13 days worth of trading. This is a move in the right direction, but perhaps too little too late for my taste. 13 days is not enough trading history to be relevant especially when the product is only on the market until Saturday. If they ever re-release GoMega Xray in 3 to 6 months, and at that time provide similar FXDD account statements for 3 to 6 months – that seems like a much better situation for the skeptical system buyer.

3. Price Matches the Results and Your Budget
   The Quantum products have always been priced in the range of $2,000-$5,000. When compared to systems that are $150, $500, or even $1800 these prices may sound outrageously expensive to you – but – the price is neither here nor there depending on what type of trader you are and how much money you plan to trade with. Quantum typically provides good customer service, and the system strategy itself can probably accommodate much larger account sizes than you can reasonably trade with systems like FAP Turbo.

   So, is the system too expensive for you? How should you approach trading GoMega Xray once you actually do purcahse it?

   If we base our performance expectations on their money back guarantee of 20% per year, and assume a comparable 25% performance fee per year for one to two years, you would need a starting account balance of $40,000 – 60,000 in order to justify purchasing GoMega Xray for $4,997. This probably disqualifies about 90% or retail forex traders.

   If the system actaully achieved half of the 550% claimed in the back test, then you could probably get away with a starting account size of only $5,000 – but I think this is a an unrealistic expectation and a very aggressive position to put yourself in.

   If you do in fact purchase the system, I highly recommend you DO NOT trade with real live money until you have done 3 months of forward demo testing. Setup a reliable demo account with FXDD that will only be running GoMega Xray, preferably on a VPS or other “always on” server setup, use exactly the same settings that they recommend (probably on the 15 minute charts), and then leave it alone and let it do its thing for 3 months.

   If it does not give you that 5% return during those 3 months, then save/print out a Detailed Account statement from the Demo account and use that as your proof of results to ask for your money back.

   If on the other hand you are satisfied with the results after 3 months, only then should you consider switching over to trading with real live money.

Conclusion

I really wish Quantum would provide forward testing results so that people could have a better idea of what to expect from actuall performance.

That being said, the folks at Quantum Research are in it for the long haul. They have been developing and releasing systems for many years, and are don’t seem to be a fly-by-night operation. They give good customer service, and they give all of their customers free access to all of their new systems and product updates.

If you are considering purchasing GoMega Xray I would highly recommend that you have at a minimun $20,000 in your live trading account, and probably more like $40 – 60,000 would be even better. If you do not have this kind of money to trade the forex market with, then you are probably better off considering other system whose performance and pricing are better suited for your budget.

Please just don’t slap $5,000 on a credit card thinking you will earn 550% per year on your $1,500 account and that all your problems will be solved.  Ask yourself, would I be okay paying $5,000 if it only returns 20% per year? If the answer is no, then you probably don’t have enough money to justify purchasing this system. If the answer is yes, then it may be worth a try given the money back guarantee.