Forex Kinetics – Professional Review
Before we released Forex Kinetics, we invited a small group of professional traders to beta test our new Expert Advisor and asked them to provide us with their feedback. Our most critical beta tester is a true professional and has seven years’ experience with automated trading systems. He is moderator, contributor and hero member of several authority websites. Read on how he easily managed to make more than 50% profit in just three months.
Note: Josef wrote this review originally for the donnaforex trading community, but allowed me to republish it here. Although, I am not 100% agree with everything he wrote, I did not change or censor it in any way.
Republished review starts here
Forex Kinetics – Simple and brilliant ?!
A couple of months ago, the Forexeasystems team released a new forex expert advisor called “Forex Kinetics”. Developers are usually very creative with product names. Most of the times, the names have nothing to do with what the systems are doing. But in this particular case, the name is not just a fiction. The main feature of Forex Kinetics is that it is not using any indicators. Instead of this, they managed it to implement basic physical laws. Sir Isaac Newton laws of motion, that he had published in 1687 under the title ‘Philosophiæ Naturalis Principia Mathematica‘, (https://www.gutenberg.org/files/28233/28233-pdf.pdf) are well known and we all learned about them in school. However, I never came to the idea to use them for trading. Though, it seems to be a simple and brilliant idea.
Momentum does not disappear
The algorithm takes advantage of the fact that once enough momentum is accumulated, it can’t just disappear. The price will keep moving. The direction itself becomes secondary because the money is being made by the money management. This fact excludes any attempts to predict the market and makes the algorithm very robust.
A lot of times I’ve heard the traders saying that the back tests are not valuable. My opinion is, it all depends on the quality of the input data. If the commissions, the slippage and the real spread are considered, then the back test results are very accurate.
Although, all the below tests are based on the realistic information, you have to remember that they are hypothetical. Well, I think you know the CFTC rule.
EURUSD 2007-2013 | Data source: Dukascopy | Slippage: Up to 2.0 Pips | Spread: Real Spread | Commission: 10$
EURJPY 2007-2013 | Data source: Dukascopy | Slippage: Up to 2.0 Pips | Spread: Real Spread | Commission: 10$
GBPUSD 2007-2013 | Data source: Dukascopy | Slippage: Up to 2.0 Pips | Spread: Real Spread | Commission: 10$
GBPJPY 2007-2013 | Data source: Dukascopy | Slippage: Up to 2.0 Pips | Spread: Real Spread | Commission: 10$
USDJPY 2007-2013 | Data source: Dukascopy | Slippage: Up to 2.0 Pips | Spread: Real Spread | Commission: 10$
Note that these test results are worse than the ones shown on the website from the vendor. It’s because I used high slippage (Up to2 pips) and commission of 10.00 USD per lot. (Vendor uses 1.6 pip max slippage and 7.00 USD commission per lot.)
+51.74% Profit during the live test
The vendor asked me to use the standard sets but after playing around with settings, I realized that the standard sets are soft washed, and adjusted the parameters a bit. (lower entry trigger, tighter SL/TP, higher max spread, default risk)
The test ended with a solid profit of +51.74%, max DD was 4.9%. However, in depth analyzes of simulated trades tells that DD can be in the long run as much as 20%.
Note: I pay a little less commission than most traders. With the standard commission (8-10USD), profit would be 4-5% lower. Html and trade list (.csv) is attached.
Test vs. Demo vs. Live results
I was curious to learn more about the exact difference between live, demo and test results. The blue line shows results of executed live trades. Red line shows demo results, and the green one – simulated trades.
We see that when we feed Metatrader with quality data, we get accurate results. Well, not exactly, but I believe they are as accurate as possible.
Win/Loss ratio of live trades is 5.5:4.4 (54.76% of trades won, 45.24% lost)
Win/Loss ratio of the back test (793 trades) is 5.3:4.7 (53.06% of trades won, 46.94% lost)
Now, the above graph is not only interesting because of the very constant win/loss ratio. What I like is that the number of losses and wins stays constant over time. I expected to see larger series of losses and wins as a reaction to changes in the volatility. BTW, al there is no correlation between wins/losses and volatility, there is an existing correlation between volatility and trade frequency. Probably, it is a good idea to monitor the volatility and adjust parameters accordingly. As the example: When the volatility drops, lower trigger values can be used. When the volatility increases, higher trigger values will be the better choice.
Looking behind the curtain is my favorite part. When I saw that the mql file is included in the installation package, I thought “hey, that’s cool…”. Well, it turned out to be not so cool because the mql is only used to pass data from the terminal to the dll and back. However, I still can share with you the entry conditions, and basic information about SL, TP and exit conditions.
New trades are placed when four conditions are met:
- The price moved significantly.
- The distance between ticks is not higher than the predefined value.
- The price is oversold/overbought.
- The spread is lower than the predefined ‘max spread’ value.
Trades itself are entered using sell and buy stops. The order type depends on the direction of the price movement and chosen trading mode. When “Trend_Trading_Mode” is set to ‘false’, it will trade against the trend and when set to ‘true’, it will trade with the trend.
Standard SL is 10 pips for pending orders and 10 pips plus order open spread for executed orders. TP is 20-60 pips. Exact value depends from the selected set file.
Approximately, 95% of trades are closed by trailing SL, trailing TP or max TP. Very few trades are closed by exit conditions.
- Can be used on 5 currency pairs.
- All settings can be adjusted by the user. It’s a huge advantage as it allows diversification and creation of a total return portfolio.
- Comes with responsive, graphical user interface. They GUI gives the system a professional look and is very convenient.
- Beside standard e-mail support, Vendor offers chat and phone support.
- Four digit platforms are not supported.
- Stop/Freeze levels of your broker should be lower than five pips.
- All settings can be adjusted by the user. The open parameter thing is a double-edged sword. If you change the parameters without being sure how it will affect the system, you might get yourself in troubles.
- Given guarantee is conditional.
This is a nicely done expert advisor that is carrying a lot of potential, since the algorithm is based on a clever idea. However, you have to understand that the full potential of it, you can only use when you are ready to sit down and do the required homework. Or, accept using 30-40% of its real potential.
- Change settings only when you are sure how the changes will affect the behavior of the system.
- Use it only with ‘agency model’ brokers, which offer trading based on a raw spread + commission.
- If you have the possibility, run it on a VPS.
I wrote the review to share my opinion. It is not to be considered as a “buy” or “don’t buy” suggestion. I believe the review can help those who are interested in this EA to make a more informed decision. If you’ve decided to buy this EA and make money with it – good for you; and in case you blow up your account with it…. don’t blame me.
Republished review ends here
Let’s trade like a BOSS!
First of all, I want to thank Josef his review and the provided feedback. Plus, if you are reading this in time, you have the opportunity buy Forex Kinetics with a crazy discount of 100 USD.
Using physical laws in trading is the future of automated trading and generates consistent and perfectly predictable profits regarding less the market conditions.