Today we'll concentrate our investigative efforts on the Expert Advisor (EA) Shark
, and, in particular, on its latest version – 7.0.
The team behind this forex robot seems to be well acquainted with psychological tricks, as yelling “Shark” has much better chances of creating a bustle than yelling “Barracuda”. Just remember the movie “Jaws”!
The price of the robot is not scary as its name is – the expert advisor costs $269, a sum which is not so high compared to the stunning sums of several thousand dollars that one has to pay for Tom's EA
or Limitless EA
. There is also a 60-day money-back guarantee for those of you who like to play it safe.
Meet the Scalper
This shark has teeth and scalps with them. Putting the joke aside, this expert advisor is the first among those we have reviewed that is a genuine scalper – it opens a number of trades simultaneously and keeps them open for a very short time (a minute or two) in order to profit from small market movements.
The key word underlining all scalping strategies is “discipline” - in trade sizes, take profit and stop-loss levels, etc. The creators of EA Shark 7.0 seem to be aware of this, as they promise the program would not risk more than two pips per trade.
But do not be left with the impression that scalping is a flawless, low-risk strategy! A scalper may suffer if the broker is not chosen carefully in terms of spreads
. Imagine that you use a robot that generates 50 or 60 pips per trade – then spreads of a couple of pips would not mean that much to you, would they? And now imagine that you win 3 pips per trade with a scalper, and the spread is 2 pips – you're done!
In addition, watch out for slippage
– the price difference between order and execution. Since this bot, as any other scalper, counts on small price changes, even a short delay by an evil-minded broker may ruin the trading.
Regarding different market conditions (whether the bot operates in a ranging or a trending market, for example), the team behind EA Shark 7.0 insists that the system is auto-adaptive thanks to neural networks. In simple words, neural nets allow the system to learn to operate in different environments and evolve - like a real shark. No market conditions are a threat for this EA, at least theoretically!
Backtests: Who Wants to Be a Millionaire?
The developers of EA Shark publish detailed backtests for the period from January 4, 1999 to January 13, 2012, using a 30-minute timeframe for the modeling. Please, keep in mind that the backtesting includes only trades in EURUSD, but the robot can also work with the GBPUSD pair.
Results show that after some 13 years of trading, the robot can make a millionaire out of a person who dares to make an initial deposit of $10,000, as total net profit is at massive $2,629,861!
The good news continues as the relative drawdown (which indicates the risk of losses) is at a very low level of 5%. Moreover, the percentage of winning trades (61%) greatly outweighs that of loss trades (39%), and the average profit trade ($3,517) is much higher than the average loss trade ($1,002).
Closer inspection of history of trades does not indicate anything obviously troublesome: to my relief there are no gambling strategies in sight!
The trade contract size rises gradually from 2.90 to 100 lots, as the account balance grows - nothing suspicious here either.
There is, however, one chain of 13 consecutive losses on May 31, 2006, which cost the account some $16,900. But I guess you would not worry about this sum once you are a millionaire!
Live results: Calm Waters
The builders of EA Shark publish detailed statistics of live trading
of a real ECN account with PrimeXM.
Since the onset of trading on Nov 27, 2011, the account (with deposits of $2,000) has amassed a total gain of 86%, a pretty solid result, though it's lagging behind the gain of 170% that Tom's EA has accumulated for the same period.
EA Shark's gain goes together with a relative drawdown of 6%, which is a very strong result, indicating a rather small risk of losses. The chart of trading shows no extended periods of drawdown and exhibits a very steady growth line.
The detailed history of trades (the robot trades EURUSD and GBPUSD this time) shows nothing shady. In contrast to backtests, the trade contract size is lower – it varies between 0.58 lots and 2.33 lots, as the balance grows. There are no series of losses, which leads me to believe that the developers really know how to make an adaptive robot.
The One and Only
EA Shark 7.0 turns out to be the perfect choice for traders who like scalpers. In scalping terms, this robot is a wonder of evolution – it trades, grows your profits, and adapts to trading environments so that it can perform better!
The single problem for this robot is a bandit broker – it can simply shoot this shark down with slippage and spreads! But with a careful choice procedure, you can easily avoid this trouble.
I am personally excited about this EA – in fact, I'm going to buy a hat like a shark's fin!
Know Your Keywords
Expert advisor (EA) – An algorithmic trading system for the MetaTrader platform; a trading robot. EA’s can either be downloaded free of charge or for a fee, or can be programmed in the MQL programming language.
Drawdown - A trader's biggest loss for a certain period of time, expressed either in pips or as a percentage of the trader's profit. The lower the drawdown percentage, the less riskier the trading strategy.
Let's say you start with a balance of $1,000, then make a profit of $1,000, and after that lose $500. Your drawdown will be 25% ($500/ $1000 + $1000 = 0.25 = 25%).
Backtesting – Testing a trading strategy on past time periods through a simulation.
Lot - The standardized contract size of a trading instrument. A standard lot consists of 100,000 currency units, a mini lot – of 10,000; a micro lot – of 1,000 units, and a nano lot – of 100 units.
If you are buying 1 lot EURUSD at 1.3000 for example, you are buying 100,000 Euro for 130,000 US Dollars.
Pip - The fourth digit after the decimal sign of a price quote. For example: if the EUR/USD moves from 1.3350 to 1.3351, that is one pip. Pips are used to measure price movement, profit and slippage.
Scalping – Opening numerous short-term or high frequency trades for the purpose for making profit off small market movements. A scalper can make 10 to a few hundred trades per day, aiming at realizing very small (let’s say 2-3 pips) profit off each trade.