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Expert Advisors Reviews

Cash Cow EA Review - is it scam or good forex system?

The Cash Cow EA is interesting not only fot the funny logo, which the developers have chosen. We will take a closer look at this system and reveal the basics of how it trades. The developers claim 98% of trading is automated, while the human element is still occasionally there.

 

Strategy

 

The Cash Cow EA is a mean reversion strategy. These systems are based on the theory that financial assets should retrace to their mean price after a market move. The simplest example will be a strategy in involving a Moving Average (MA). In order to get a glimpse of the idea, you can open your trading platform, open a random currency pair, set it to the hourly chart and plot a simple moving average. Choose a relatively small number of periods, like 9 or 15. See how often price fluctuates away from the MA, only to later return to it? This is what the Cash Cow EA is basically trading on, although we do not know the ways it determines which moving average to choose and how far away the price has to be for a new trade to be initiated.

 

The problem with this contrarian approach is obvious – price and the MA will eventually meet, but if the market is in a strong trend, they may meet at a point which is far away from the entry price (i.e. the average may catch up to price, instead of price returning to the average). 

 

That being the case, the Cash Cow EA uses a grid-like methodology to recover loosing trades. Here is an example:

 

 

As price continues to rally, the system enters new short positions. This is not a perfect grid, as the entry points are not separated by precise intervals. The system does occasionally increase the position sizing, but this is not done after every single trade. In the example shown above it did so on the fifth trade, which was also the one, which occurred after the market had a relatively calm period (which allows for the moving average to catch up). 

 

The risk management, this system utilizes is not as simple as one might expect. Furthermore, there appears to be an equity “hard-stop” level – when the account falls below a certain value, all the positions are closed. This mitigates the biggest risk involved with grid trading – blowing your account, when the market moves sharply in one direction.

 

Historical Performance

 

The Cash Cow EA is being tracked on two accounts at MyFxBook. We will focus on the one, which provides signals to followers of the system and is being traded at Fort Financial Services. It has been running for a year and a half, but its precise gains are hard to grasp. A lot of deposits and withdrawals have been made, which ruin the charts and the percentage calculations. This is one of the signs of a fake/manipulated MyFxBook account. Let's take a look at the growth chart:

 

 

The first thing which pops out is the fact the system has a massive jump in the early days. This is due to a deposit and not trading activity, which should be obvious if you follow the rest of the chart. Gains are smooth, with the occasional setback. In fact, they are too smooth to be true, suggesting the system has a risk of going bankrupt spontaneously. However, the built-in risk management appears to be working.

 

Taking a look at the drawdown chart, we can see it is very low (for a system of this kind):

 

 

With the peak being being just slightly above 13% this is a relatively safe automated trading system.

 

When it comes to the average pips per trade the Cash Cow EA scores poorly – only 0.9. We must point out the system has traded XAU/USD which makes this number unreliable. We recommend avoiding robots which have an expectancy (pips/trade) under 3 and proceeding with caution with all who score under 5. The Minesweeper EA, for instance, has a value between those two, so you shouldn’t really trust it too much (not to mention the other issues we have with it, which you can learn about in our review)

 

Pricing

 

There are two ways to invest in the Cash Cow system. You can join their managed account, at IC Markets, which has a 25% performance fee. However there is a minimum investment requirement of $10,000. Alternatively, you can follow the signals, which will cost you $75 per month or $199 for three months.

 

Bottom line

 

The Cash Cow system is based on a mean reversal strategy. It does utilize averaging down, when the predominant trend continues, but is by no means a strict grid trader. The lot size is occasionally increased, but this is also done in a specific way (not a classic martingale). The chief concern we have with this system is how much returns can it actually deliver? A lot of deposits and withdrawals have been made on the MyFxBook account which tracks it, which makes calculating them rather difficult. The overall profit appears to be close to 50%, for a year and a half. This may seem impressive, but is it worth the risk? The answer to that depends on whether or not you believe in the risk management mechanism, built within the system.

 

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