Watukushay For Everyone

What is Watukushay For Everyone ?

2010-09-01T12:45:00.000-07:00

Please read the disclaimer before going forward

The Watukushay For Everyone or WFE trading system was developed by me, Daniel Fernandez, as part of the development of my Watukushay Project at http://fxreviews.blogspot.com. The project aims to develop trading systems that are long term profitable which have all the development stages perfectly documented in order to let traders benefit from walking through the whole process of profitable system creation.

The expert advisors developed in the Watukushay project have to comply with several characteristics. They must be :

Based on sound trading and money management principles
Have dynamic SL, TP and lot size adjustment techniques to change against different market conditions. These values MUST adapt themselves the to market and equity as they change.
Trade only on indicator and price values of previously closed bars.
Have a large average SL and TP, at least 10 times the average spread of the instrument traded
Have profitable backtesting periods from 2000 to present.
Have live/back testing consistency (expert trades very closely in live trading and simulation)

The WFE trading system was developed with all the above concepts in mind. This trading system is based on sound trading and money management techniques and executes them on the EUR/USD. The system is totally free and allows you to benefit from a well designed, long term profitable system that delivers results in long term time frames. The system adapts itself to changing market conditions and provides the trader with a path towards long term profitability.

How much will you have to pay to get WFE ? Absolutely nothing. It is totally free, no catch. I developed this as my Christmas present in 2009 for my fellow traders because I consider that there must be a free trading system that anyone can use to profit in an automated fashion from the forex market. I make my money from trading, not from selling systems and my ultimate goal with my web pages and system development is to profit from the trading of my systems and to help traders progress.

Will this make everyone trade WFE and make it unprofitable ? This will not happen mainly because profitable trading systems are extremely difficult to trade and as Richard Denis said about his turtle trading system, even if everyone knows about it only a bunch will have the confidence to trade it successfully. I am giving you now the WFE trading system for free, with the hopes that some people will have the knowledge and confidence to trade it successfully. As most long term profitable systems, the WFE system has long periods of draw down before its profitable periods so DON'T consider it a short term profitable system and bash it in 2 weeks or 3 months when you don't get profitable results. It is a LONG term profitable system, which, given the time, will deliver the expected results.

If you would like to learn more about the Watukushay Project, long term profitable automated trading systems and how you can get the knowledge and confidence to trade them profitably please visit me at http://fxreviews.blogspot.com where you will find hundreds of articles on automated and manual trading.

Back/Live Testing Consistency

2010-07-03T04:52:00.000-07:00

One of the most important aspects when doing 10 year long simulations and testing a system on a live account is to establish the validity of the simulations by running a live/back testing consistency test. To do this we simply run a simulation for a period in which we have live testing results and we compare the gains/loses as a function of time side by side so that we can gauge if there is a general match or a total mismatch between our live testing data and our backtesting data. Of course, there may be some negative/positive differences between back and live testing results due to broker differences (such as the existence of Sunday candles and the general differences in feeds) . However the overall match or mismatch allows us to know the overall accuracy of our simulations and to validate our ten year simulation results for a particular broker's performance, making the profit and risk targets, adaptability and other characteristics of a trading system in fact realistic assumptions.

Watukushay FE was evaluated for live/back testing consistency from Dec 30/2010 to May 10/2010 after almost 5 months of live testing. June was not included (since at the time of the evaluation demo data feed corruption did not allow to do an accurate simulation of this month) but it will be included once this analysis is repeated in December to do a FULL year back/live testing consistency analysis. The best thing is that you CAN do this analysis yourself ! Simply log into the live account (shown on the tests page) using the investor access, save all the history and do a back test of a period you would want to evaluate using the same settings (remember that the live account uses a Risk level of 3). The results of the live/back testing consistency analysis are shown below :
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As you can see, the FXClearing results show a global match with the backtesting results letting us know that the Watukushay FE trading system IS back/live testing consistent and validating our ten years of simulation results. This shows effectively that the current profit and draw down targets are indeed realistic and that the market adaptation done by the EA through its ATR usage does work in the long term.

Therefore, Watukushay FE is now the trading system with the MOST honest and transparent evidence of long term profitability available online. There is NO other expert advisor that shows you more than 6 months of live testing on an investor access verified myfxbook account, 10 years of backtesting data AND a LIVE/BACK testing consistency analysis validating the very long term simulations done on the EUR/USD. Of course, the results of this section will be updated as the EA continues to trade showing back/live testing consistency analysis of the EA over longer periods of time. The next analysis will be done in Jan-2011 for the first YEAR of live trading results.

Disclaimer

2009-12-09T12:43:00.001-08:00

Although I provide the automated trading system and all the information on the site with good faith you should understand that my suggestions do not constitute investment advice and that any decisions you take to use the system provided in anyway is nothing but your own responsibility. I have made my best effort to program and prove the profitability of the trading system, however, you must understand that market conditions are impossible to predict and the possibility that the system may be rendered unprofitable exists, although I have done as much as I can to reduce this probability to a minimum. The trading system has also been programmed and tested in good faith and I made my best effort to make it as reliable as possible, however the system is provided as IS and I take no responsibility for any actions consequence of the software. It is your sole responsibility to test the system on your particular trading platform and broker and ensure that it works as you want it to.

Also as a final reminder, please understand that in general foreign exchange trading carries an enormous risk and that it should ONLY be done with money you are willing to lose. Trading forex with funds you cannot afford to lose is an EXTREMELY bad financial decision since it is one of the most difficult and harsh market places to trade and carries a real risk of total money loss.

Testing of WFE

2009-12-09T12:33:00.000-08:00

As you know, the most important part of expert advisor evaluation and the determination of long term profitability is to have backtests and forward tests done on an EA which can show that the EA is profitable regardless of market conditions. Although it is absolutely certain that we cannot know if an EA is profitable under ALL market conditions we can know if the EA has been profitable on market conditions from 2000 up until now (through backtesting) and from now on (through live testing). It is also extremely important to have live and backtests of the same period so that a consistency analysis can be done in which we can say for certain that the simulations are a good representation of how the EA traded for the past 10 years.

The WFE trading system will be traded on a LIVE fxclearing cent account from Dec 25th, 2009 until at least Dec 25th 2011. During this period we will learn how the expert trades and we'll be able to accurately evaluate the quality of the backtests we have from Jan 2000 to June 2010. Remember that this EA has already been evaluated to be back/live testing consistent (see the live/back testing consistency section). In order to access the expert's backtesting results please follow the links below :

10.5 year backtesting results, Risk = 1

10.5 year backtesting results, Risk = 5

You can also look at this same backtests and analyze them better through the following myfxbook strategy links :

http://www.myfxbook.com/strategies/watukushay-fe-risk-5/17

http://www.myfxbook.com/strategies/watukushay-fe-risk-1/21

The above links contains the backtesting statements of the EA. Live testing data is updated every hour (when the market is open) and is accessible through the myfxbook widget shown below. Account number and investor password are also provided so that you can verify that the account is a live account with real money on a real broker :

Login : 92417
Investor Password : zCv8zwp
Server : Fxclearing server (go to fxclearing.ca for more details)

Would you like to actively test the Watukushay For Everyone EA ? If you are willing to participate in the WFE challenge and test this system on a VPS during the next 2 years, please leave a comment with your email and I'll send you further instructions (please use the word PEAR instead of the @ symbol when you leave your email address to prevent spamming).

Using Watukushay For Everyone

2009-12-09T11:26:00.000-08:00

The Watukushay For Everyone expert advisor is meant to be used only on the EUR/USD one hour chart as this is the timeframe and currency in which the EA was designed, studied and optimized. The WFE gives moderately profitable results on other currencies, such as the GBP/USD, but only the EUR/USD yield highly profitable and consistent enough results to consider it a good alternative for long term profitable trading. This is due to the high liquidity of the EUR/USD against any other currency pair which makes its trending and market moves much cleaner and more technical than any other in forex trading.

The only thing you need to do when you use the WFE expert advisor is to set the variables according to your particular trading conditions. Please refer to the Profit/Risk section to set the Risk variable, set the five_broker_variable to true if your broker uses five digits, set the backtesting variable to true if your backtesting (false when forward testing). The initialbalance variable should be set to the balance amount of the account when Watukushay FE is first loaded and the Magic Number should be set to a random value different from that of all other experts loaded within the account (this is the expert's ID).

The backtesting true/false variable only allows or disallows the use of two decimals in trading. The mt4 backtester (on some versions) only accepts orders down to 0.1 lots while live trading accepts orders down to 0.01 lots. If you are demo trading in an account that does not allow trading 0.01 lots, please set the backtesting variable to true. In order for backtesting to use money management correctly you need to use a large enough account size. Please use an account size of at least 10,000 USD, preferably 100K if you are going to use Risk values lower than 3.

In order to trade this on a live account you need an account balance of at least 1000 USD and being able to trade down to a 0.01 lot size, any lower balance will not allow the correct trading of the EA on a standard account due to the lot size calculation which may require trading less than 0.01 lots on smaller accounts . If you want to trade with a lower amount you can start with 100 USD on a micro account such as those offered by fxclearing or IBFX. Please make sure that your account has a 10,000 USD contract size if you intend to trade such a small amount.

When loaded into the chart correctly, the EA will display data on the top left corner such as in the picture shown below. The EA trades in average once every one or two weeks so be patient since it won't be opening many positions. The EA will also only have ONE position open at a time.
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I do hope that the WFE expert advisor is the start of a profitable venture in realistic long term profitable trading in the forex market for many people out there. I made this EA with the idea to help my fellow traders make money in automated trading so I hope I will be able to achieve this goal. Please leave your comments if there is anything else you would like to know about using WFE !

What is WFE's logic ?

2009-12-09T10:44:00.000-08:00

Of course, it is extremely difficult to trade something you don't understand and trust and be profitable with it. My aim is for the WFE expert advisor to be a long term profitable EA you trade because you TRUST and UNDERSTAND, not a black box system you use to make money in the forex trading market. The key to being able to trade long term profitable systems profitably is of course the true understanding of how the logic works, its faults and its capabilities.

The WFE expert advisor is based on a simple, counter intuitive use of the 20 period RSI indicator on the EUR/USD instrument one hour charts. The EA enters short or long trades as the EA crosses from below the 28 line or from above the 72 line, however, contrary to the traditional use of this indicator the WFE EA enters short trades when the RSI crosses from below 28 to above and enters longs when the RSI crosses from above 72 to below. The EA also has an exit criteria which closes trades upon a second cross over and reentry to the below 32 or above 68 zones. This counter-intuitive approach works because the RSI maintains itself above the 72 and below the 28 zone on trends and "attempts" to exit on retracements so we actually get good entries almost at the end of retracements when the market is trending smoothly.
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The market exposure we pay for this approach is of course when we enter trades on ranging markets when the RSI is signaling overbought and oversold times and we are entering in the direction opposite to market movement. This is the cost of getting into the trend following trades. Bear in mind that most approaches that try to "filter" these ranging periods out will inevitably filter also the profitable periods to a great extent, the losing trades we get are the price for the profitability we get when the market works, such as the false breakouts on the turtle system or the trend reversals on the God's gift ATR.
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This is the best RSI only system I could come up with after deep analysis of the RSI and the EUR/USD trading patterns. Lot sizes, SL and TP are adjusted against the 14 day period ATR with the SL being 50% of the ATR value and the TP being 50% of the ATR.
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I also want to stress that most modifications that people would most likely try on this system decrease its profitability. For example, introducing trending filters such as an ADX indicator, a higher time frame confirmation, being above or below a high period MA in order to trade, etc. It is important to realize that the cost the system demands for the profit is the draw downs we suffer on unideal markets, there is no way around this market exposure. Probably there are still things to be done that could increase the system's profitability, I would be happy to hear your ideas on the subject. Please leave a comment :-). Note that all the indicator values, %ATR for the TP and SL, etc have all been optimized.

What are WFE Risk and Profit Targets ?

2009-12-09T10:15:00.001-08:00

The Watukushay For Everyone Expert advisor is capable of profitable trading in the EUR/USD according to the simulations carried out. The EA was designed to give a backtest as accurate as possible so the EA will most likely be, within broker feed differences, consistent with backtesting (of course, see the tests section for the current live tests aiming to prove this). The EA also has a broad TP and SL of 50% of the daily ATR for a 1:1 risk to reward ratio, however the actual risk:reward ratio is higher due to the exit mechanism cutting loses short in an effective manner. The EA also uses only values of the RSI on previously closed bars to make sure no exploitation of backtesting errors takes place. The buy/sell criteria on the RSI is also symmetric (same distance from the 50 line for the buy and sell threshold lines) which implies that there is no preconditioned favoring of longs or shorts on the EA.

The system's profit and risk potential is controlled through the Risk variable which is related to the ATR adjusted money management which takes into account the account's balance and the market's volatility in order to select the lot size traded. With a Risk value of 5 you can expect a maximum draw down of 18% with an average yearly profit (as a percentage of initial equity) of about 36%. You also have to take into account that this EA can have periods of close to break even or small draw down which can last anywhere from 6 months to 1.5 years according to back testing results. This is similar to results achieved for other profitable systems, such as the 4 weekly breakout or turtle trading systems.

Again, this is a long term profitable system and periods in which draw down exists cannot be eliminated. However the EA is adapted to the market and always returns to much higher profitability given its adaptive logic. Below there is an image of an equity curve using Risk=1 and Risk=5 for the period Jan 01 2000 to Jan 01 2010 (10 year backtest). You can obtain profit/risk targets for other periods of time by backtesting. Please make sure you do so with 90% modeling quality and NO mismatch errors. Please note that the Risk=5 backtest has more "noise" on the last years due to the compounding effect (larger lot sizes being traded due to the larger account size which lead to larger oscillations when compared with the first years). (for backtesting statements please go to the testing section)
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In order to help you better understand how the expert advisor performs I am also including a monthly draw down analysis using the Risk = 1 backtesting data from the chart shown above (note that access to the satements is available within the "testing Watukushay FE" section), you can click on the image to make it larger . You will see that in average Watukushay FE achieves profit during most months but draw down months usually lead to higher loses than the average profitable month. However the fact that profitable months are globally more frequent and the fact that highly profitable months appear every year, make Watukushay FE always reach new equity highs in simulations.
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Getting Watukushay For Everyone

2009-12-09T10:03:00.000-08:00

Thank you very much for being so interested in my WFE expert advisor. Now you are just a small 97 USD payment away from getting this wonderful EA !... Just kidding :-) This EA is and will always be available totally for free, that's it, you will have to pay absolutely nothing to get access to this expert advisor. As I said on the intro, I make my money from personal trading and account management and I have no intentions to profit from selling expert advisors. I am here to help my fellow traders and this is what WFE is all about, helping those out who cannot see the light out of that endless scam automated trading EA tunnel.

You can get access to the expert advisor by accessing the link below.

!! Download Watukushay FE Now !!

(latest version number is F1)

Important note : If you get a 0 divide error when you first attempt to use Watukushay FE please reset your trading platform or load a daily chart with an ATR indicator to fix the error. The error is not related with the EA but its a bug on the metaquotes ATR indicator which returns a 0 value on the current bar the first time it is initialized.

The EA has been updated to a functionally decomposed programming framework with enhanced error handling, broker digit and ECN broker detection to ensure that everything is as automatic as possible to the end user. The EA will now automatically detect whether or not you are using an ECN or five digit broker. Watukushay FE has also received a new and improved user interface :o)

Watukushay FE can now be traded with any combination of systems, however bear in mind that with any portfolio draw down risks are potentially additive so make sure that you can live with a draw down equal to twice the addition of the potential draw down of all the systems you are trading. As always, put capital preservation first ! :o)

I have decided to allow access only to the ex4 since I do not want anyone to modify the code and sell the EA on ebay or on another website. However if you are interested in the source code please leave a comment with the reason why you want the source code (be a little bit specific, what you would want to implement or do, etc) and I'll be glad to send it to whatever email you leave. I am also always glad to receive some visits at my website at http://fxreviews.blogspot.com.