money-blog

Intrinsic Motivation

Sun, 10 Apr 2011 09:37:09 +0100

Intrinsic Motivation. Er, it's sounds complicated. I know, but there is method to the madness. First of all let's define Intrinsic Motivation. The following comes straight from the Wikipedia web page:

Intrinsic motivation refers to motivation that is driven by an interest or enjoyment in the task itself, and exists within the individual rather than relying on any external pressure.

Man, that's a good explanation. I didn't even know there were different kinds of motivation. I always thought you had to be motivated and that's it. You know, go out there and do your best. Get good grades in school, get the university degree, work hard and be loyal to the company until you die. Motivate yourself the best you can.

Well, it turns out that it's more difficult than we think. How can you motivate yourself when, after you paid the bills, there is nothing left over. You need a new car but you know it's just about impossible to buy it if you look at the budget. Maybe you should start a second job. Maybe you should invest in those shares everybody is talking about. Maybe this, maybe that.

Let's get back to Intrinsic motivation. The definition says that it's the motivation that is driven by an interest or enjoyment in the task itself. Paying the bills is definitely neither interesting nor enjoyable neither is not having enough money at the end of the month. So what motivates and keeps me positive?

Whenever I get a mail from Be Motivated Today saying:

Congratulations Pieter!
You have a new 14-day Trial Member who joined your Be Motivated Today Matrix.....

or

Congratulations Pieter!
One of the members on your second or first generation, in your Be Motivated Today Matrix, has upgraded to Silver Member.

Now that is Intrinsic Motivation in the highest degree. When I get these emails I'm driven by the interest and enjoyment of the task itself which exists within myself rather than relying on external pressure. I'm not only trying to better my own financial situation, but I'm also helping other people to do the same. The more I do it the easier it becomes.

Do you need Intrinsic Motivation to be financially free? Then try this, join for a free 14 day trial at Be Motivated Today.

Have a great day.

Money Problems

Wed, 17 Nov 2010 14:58:39 +0100

What is money problems. Not having enough? How to get more? Where to get more? If someone asked me to define money problems my answer would be, debt. Yep, debt is the killer. You are slowly strangling yourself if you have too much debt.

Anyone can argue with me over this point. Look at whats happening in the world today. A year or so ago the whole world was in a financial crisis. Why?. The short answer, debt. We are still trying to get out of it. I have learned this the hard way.

Debt is not a complicated concept. Let me explain. You want to buy something for which you don't have the money right now. Well, not all of it and for some reason you need that thing now. So you apply for a loan at the bank and if your loan is approved, they give you the money and you pay them back. Easy enough.

So, whats the problem, you ask?. Here's the thing. If you only had to pay the loan amount back without any interest, then everything would be fine. But that's not how it works. You have to pay interest. This is probably old news to you and you are getting bored with this post and want to click away. Just bare with me a little longer.

Let's say you want to buy house. In South Africa they calculate the repayments over a 20 year period. If you do the math you will find that you could have paid off your house 3 times in the 20 year period. Hmm, this doesn't sound good. You see, the first 12 to 13 years of your mortgage payment covers the interest. If you look at your mortgage statements you will notice that your loan amount barely goes down. The reason, interest.

This is not only true for big amounts like mortgages or vehicles, it's also true for anything you buy on credit. You are making the banks rich. They want to be your friend cause you make them money. They like you if you take out huge loans. You are their best buddy. Only until the interest rate goes up.

Oooh, that darn interest rate. In the good times people buy more and more on credit. They make their payments and all is beautiful. The birds are singing the flowers are blooming, until the interest rate goes up. I'm not going to explain to you why and how interest rates goes up. My short explanation, a monster called inflation. I'll write a post on it one day. I get very angry when I talk about this topic.

With interest rate going up you pay the banks even more. They love you even more. Then one day you cannot make the payments anymore. You struggle to survive. Ugly unhappy people knock on your door and want to take your stuff back. You get blacklisted. The worst thing is, you start getting depressed. You might start to drink heavily and neglect your wife and kids. Some people start to gamble in the hope that would strike it lucky, and more often than not, loose everything.

Remember this. Banks don't care that you have a family. The reserve bank doesn't care that you have a family. They don't care that you struggle and are put under immense stress. In these ugly times people start to loose their jobs. Don't think it cannot happen to you, it did to me and let me tel you, it's no joke. I have learned my lesson. If I did not have any debt and I had an extra income, I would not have stressed as much as I did.

If I can give you advise, stay debt free. Don't buy anything on credit if you can buy it cash. Rather save the money and buy the item cash. You will save a lot of money on interest. I know if you buy a house it's difficult, but try to at least save some money and pay a big part as a deposit. Try to make the loan amount as small as possible.

I realized two things when I struggled with debt. One, get an extra income. Two, get rid of my debt. I'm not there yet, but I use a simple, yet inexpensive system that generates extra income so I can pay of my debt more quickly. You can too.

If you don't have debt and you have an extra income you can easily say, "Money problems, what money problems?".

Enjoy

Optimize for Google

Thu, 11 Nov 2010 11:22:47 +0100

Have you ever wondered about your websites setup in terms of getting traffic? Are you doing the right thing?. Should I use the meta tags? How many times should I use my keywords in the page? Will Google penalize me for using a keyword too much? What is too much? What is too little? What this? What that? Why this? Why that?

If you have a website and traffic is few and far in between, then you have probably asked yourself the above questions. To be honest with you, I don't know. Some people say they do know, but you have to pay them to get the answer. You have no guarantee that they will deliver on their promise. You have to pay and see.

Some say they have the answer for free. You download the free eBook, but most of the stuff you don't understand but implement anyway cause the book tells you to.

Then nothing happens. You still only get the stray visitor from time to time. Hmmmm, time to search Google, you think. You type in "Search Engine Optimization tips" or "SEO tips" or "How to get traffic to my site" or whatever you can think of to get some results.

Bam!, 2,000,000 hits. The first couple of pages is pure nonsense. (I don't know why, but I always find that the first 5 or so results is purely nonsense) You decide to click a couple of links, read a couple of pages and when you check the time, 3 hours has passed and you are still nowhere.

Does this sound familiar? If not, then click on one of my other blog posts, cause this is not for you.

This was my scenario for the better part of 1 and a half years. I got stuck with SEO and web design tricks and eBooks and I don't know what. I was irritated, seriously irritated. Then one day, while searching Google again, I found a link to a short 2 min video on YouTube. I cannot remember what I searched for that day, but the link really caught my eye.

So I clicked the link and what I heard on that clip changed the way I built my web pages. I cannot remember the persons name that made the clip and it wasn't a professional created clip. No, it was just a guy that turned his web cam on and said what was on his mind.

Again, I cannot remember word by word what he said, but it went something like this:

People often ask me how do I get all this traffic to my site? What super guru karate tricks I use? Where can we buy your eBook and implement your cool stuff? I looked at them and said, You need two things. Google and good content. That's it. Go to Google and use the help sections in Google on how to setup your web pages. Google has all the answers. They are, after all, Google. They are the search engine so don't you think they will have the best information?

The other thing you need is good content. You can try to optimize your website until you are blue in the face. You need good content. People want to visit your site cause they are looking for something. They need an answer to a question or a solution to a problem. Give it to them and they will come.

I only summarized what I had seen on the clip. I haven't a clue what I searched for that day but if I ever find that clip again I will post it on my blog.

So it's Google and good content. Since then I have used Google continuously and registered for most of their services. Whether you like Google or not, it's the top search engine at the moment. I also don't agree with stuff they do. It's just one of those things.

I don't rely just on Google for web pages or web sites. At the moment I'm using Site Build It and they have some really great tools for building websites. I will blog on my progress as I go along.

Keep building.

Beware of Online Casino's

Thu, 04 Nov 2010 18:58:41 +0100

The other day I did a search on Google to see what people promote to make money fast or quick on the net. Most of the hits that were returned was about online gambling or sports betting. The worst was that people promoting or selling these systems actually guarantee that you will make money with it.

I was dumbfounded. How can anyone guarantee that you can make money with gambling? The sad fact is, that they cannot. But for people that are desperate for cache, this is their escape. They don't think about what would happen if they loose. They don't care. Someone has made them a promise that they would make easy money with this and they don't care. It's a guarantee, after all.

My friends, take my advise. Stay away!. I mean it.

Casino's exist because they bargain on you loosing. That's it. If you start to win you will probably be thrown out of the casino. They don't care who you are. So lot's of people think that online casino's are different. No one can throw you out. You can apply strategies there cause the croupier cannot see you. He cannot see you making notes or counting cards or whatever people do to win. To be honest, online casino's are worse.

You see, with online casino's it's a program that runs. Yep, I know, you are not stupid, of course it's programs. The difference is that these programs know all the tricks. The programmers are not stupid and they will make sure that you loose. They might let you win a little just to get you to spend more.

Let's take black jack. The program can give you any card that it wants. It will evaluate your position, and your cards and based on the situation, give you crap cards so you loose.

Let's take roulette. Trying to win from picking a number is just about impossible. Whatever you select, the program will just spew out another number. "Come on", you say. "In a real live casino it's also difficult. I would rather play the colors." Ah, the colors red or black. Fifty fifty chance. Let's have a look. You bet $10 on red. The wheel spins and falls on black. You keep your money on red but double it. Now you have $20 on red. The wheel spins, it's black again. No problem, you have lost $30 to make it back you need to place $40 on red. The wheel spins it falls on red. Great stuff, you have your $30 back and made $10. Let's go again. This time you start with $10 on black. The wheel spins and falls on red. You get the idea. You basically double your money on a color until the ball hits your color. You then make your money back, plus $10. It looks like you cannot loose with this method.

Well, if you do this in a real casino, you will be thrown out before you even have time to celebrate. Remember one thing, casino's would not exist if they lost money. With this method they would. So, now you say let's go online. They cannot throw you out. Big mistake. You see, you are playing against a program. It will pick up that you double your money on the same color and then just continuously let the ball fall on the other color. That's just how it is. You cannot win.
There are other methods like the one I explained, but all of them fail at some stage. The program will pick up that you are winning and will adapt to make you loose.

It's not my place to slam casino's or methods that people promote. All I'm saying is, be careful. You will loose more than you win. Rather take your hard earned money and invest in a system like Be Motivated Today. With Be Motivated Today you can build a great passive income that will be there for life. You can even pass it on to your children.

There is no thing like getting rich quick. There is no thing like making money doing nothing. It does not exist. So please, think before you waste you hard earned money on gambling or online casino's.

Pieter

Know the facts of Network Marketing.

Thu, 04 Nov 2010 19:03:20 +0100

You could be part of a pyramid scheme and you don't even know it?. Most people think that Multi Level Marketing(MLM), Network Marketing(NM) or Automated Passive Income Creators(APIC's) are pyramid schemes. Heck, even my wife thinks it is.

Most times I explain the Be Motivated Today system to people they just frown and say, "Ain't that one of those pyramid scheme's". My question to them is, "Do you work for a big company?". About 90% of the time the answer is, yes. Well, I'm sorry to disappoint you, but then you are part of a pyramid scheme.

Let me explain.

In a big company you have structures. You have the CEO(Chief Executive Officer) or MD(Managing Director). It's the big boss that you seldom see, but only hear off. Below him you will find the Vice President, if the company is really big. Then usually you have divisional managers, managers and then right at the bottom is you. Yes, you. Right there at the bottom. "Oh come on", you say, I have a good job I get a good salary, I'm doing just fine. If you are doing just fine, why are you reading this page then? Let me tel you why.

All our lives we have been taught to do good at school, get an education and find a job that we try to do for the rest of our lives. I know, that's how I was brought up. What you are actually doing is making someone else rich. You are making the CEO of the company rich. He is leveraging of you. How does it work? Let's say you are contracted to a company to do some work. You are the best in your field and they charge the customer an amount by the hour. Let's say, $100. You then go to the customer and you work hard. You do your job and your manager is very happy that he has this great worker which is boosting the companies image... blah...blah...blah. We all know the song.

What happens to the money you actually make. Now, let's have a look. From the $100 your company charges the customer, you might get $10. Your manager gets $15. He must get $15, he's your manager, after all. The divisional managers get $20 and maybe the office staff gets $10. The rest? That goes to the CEO. Yep, that's right, the big boss. The guy which you rarely see and drives the BMW. He is entitled to the biggest cut, after all, he started the company, he put up the funds and he caries the risk. It's only fair that he should make more money. The fact remains that this is a classic example of a pyramid scheme. The guy at the top makes the most money.

Let's say you somehow start to make more than your manager. Is it possible? It certainly is. At some stage in my live I worked as a contractor for a large company doing technical computer training. I invoiced per day and some months my salary was more than the divisional manager's salary. What do you think happened? I don't even need to tell you this cause you already know the answer. I'll tell you anyway. I almost got fired. Not retrenched, fired. In the end to keep the peace I decided to take a pay cut, and that was that. You dare not make more money than your boss. That's the rule of a pyramid scheme, looks like.

That brings me to network marketing. What happens in a network marketing system? For one thing, if you are part of my down line, then I want you to make more money than me. Yes, I want you to make more money cause that means a percentage of your money comes to me. So if you do well, you are happy, and I'll be happy. I will even help you to make more money. I want you to make more money. Even more than me. Don't you think that's fair. Even more fair than what happens in a big company?

You see, people think that the person that started the MLM makes all the money. It's so far from the truth. In fact, you can make more than the person who introduced you to the system. If you do your work and become successful in the structure, you can potentially make more than the person who introduced you to it. The best thing is, you won't get fired. With Be Motivated Today, for instance, you will get a nice bonus if you perform well and introduce others to your matrix. Do you see where I'm going with this?

Don't just slam network marketing before you know the facts. Once you "get it" you will understand that this form of business is by far the best out there. Remember that an illegal pyramid scheme is where you give money to the person above you and you don't get anything in return. That's a pyramid scheme and it's illegal. Most MLM's are registered companies with long track records. Do your research.

The other great thing about network marketing is the fact that you don't have to employ staff. When you join a network marketing system, you are the CEO of your company. But instead of employing people you basically contract people to work for you. If they sell the product or service, they get a commission and you get a commission, and your up line gets a commission and so on. You don't need to worry about medical aids, pension funds, leave or any admin that goes with a big company. The best thing though is that you can decide when you work and how much you work. Little effort, little money. Big effort, big money. That's just how it works.

I'm part of a network marketing system. It's actually called an Automated Passive Income Creator(APIC) system. It works for me and also for my down line. I'm earning a good passive income from it and so does my down line. I have started my own company and I'm the CEO. I know people are skeptic about MLM's but get the facts before you just say, NO. Just give it a try.

Click here for a free 14 day trial of the system I use.

Pieter

My tips on Forex Trading

Wed, 13 Oct 2010 14:21:26 +0100

What is Forex Trading?

You can see it as the trading of different currencies. For instance, let's say you decide to go on vacation from South Africa to the USA. You have to take some dollars with you so you go to the bank and take your Rands in exchange for Dollars. At the time of buying the dollars the exchange rate is 7 to 1. For every R7 you sell you get $1. Let's say you bought $1000, at the exchange rate given you have to sell R7000. You go on holiday and spend let's say $900. When you return, you trade the dollars back to rands. While you were away, the rand weakened to 8 to 1. So instead of getting only R700 you now get R800 cause the exchange rate is now 8 to 1. So you actually got a R100 more. You have just traded forex without really knowing it.

Easy hey. Well not really. You just got lucky. But basically that's what forex trading is all about. You buy and sell different currencies and hope they either weaken or strengthen against each other. You don't have to physically travel to different countries exchanging money instead you work through organization called a broker. You basically put money in your account at the broker and they trade on behalf of you with your money. You just tell them what to trade, and they do it. Sounds simple, doesn't it.

A word of warning here. Lots of brokers advertise how you can make easy money and get rich. The truth is, is not that easy. I realized this the hard way. I'm not a seasoned trader like some out there, so I'm hardly one that can give out trading advise, but I have done my research and I've burnt my fingers. I can give you some tips here, but ultimately you have to do your own research and get to know the world of forex trading before you start trading live.

I'm not even going to try and explain everything about forex trading on my website. It's just to much. Have a look at my tips and visit a website called babypips.com. They have an excellent course on forex trading and the best of all is, it's free.

Here are some tips:

Tip 1 - Learn as much of forex trading as you can. Get to know the basics first. A good place to start is a website called, babypips. Go there and go through, what they call, School of Pipsology. They take you from the basics of forex trading to more advanced topics. Before I discovered this website I used to buy a course and babypips was actually better than the course I bought.

Tip 2 - Before buying any trading system or forex robot, go to a website called forexpeacearmy and see if they have a review about the system or robot. They also review brokers. Keep in mind that a lot of reviewers slam brokers and systems because they traded it incorrectly and give bad reviews. After spending some time on the site you will get a feeling about whats hot and whats not.

Tip 3 - Demo trade at least one year or until you know your system works before going live. I made a huge mistake in going live before I had tested my system thoroughly. I burnt my fingers big time. Don't make the same mistake I made. Most brokers offer a demo account for an unlimited amount of time. I use IamFX and they offer a demo account that you can take your time with. But there are others, of course. Do your research.

Tip 4 - Never trade with money you cannot afford to loose. It breaks my heart to see poor people in casino's wasting their money on a dream that will never happen. I'm not comparing forex trading to gambling, but if you start to trade forex with money that is destined to paying the bills, you are gambling. There is so much more pressure now to win some money, that you will start to take chances, and that's when you will start to loose.

Tip 5 - Use a good broker. This is a difficult one. I don't trust any of them but again do your research. I found that IamFX is quite good. I use them and so far everything has been as advertised. But do your own research and use forexpeacearmy to read the reviews.

These are just a couple of tips. Keep in mind that Forex trading is risky and you should do your due diligence before trading forex.

Pieter

How To Create Wealth Automatically - Free ebook

Sat, 25 Sep 2010 21:00:42 +0100

If you have been struggling to create wealth, then this FREE report will show you what you need to look for in an opportunity. This 21-page report will give you the 21 must-have keys, that make success on the Internet possible. It's FREE.

Remember one thing though, just reading about creating wealth will not make you money. You have to actually do something about it. You have to take the first step. Often people will say they don't have money for a new car or vacation or they cannot afford to move to a bigger house. We often complain that our yearly increase is not enough and that inflation takes the biggest cut.

I'm sorry to say this but, your boss doesn't care, inflation doesn't care and the bank manager doesn't care. One thing I've learnt from life is that you have to look out for yourself. No one else will. Don't just complain that you don't have money and life is unfair.

I'm giving you this report for free. I'm not going to ask your email to download this report. Just download it and have a look. Be motivated Today is an ethical company that has helped a lot of people, myself included. After all the bad products and scams out there I'm happy to say that there is indeed ethical ways to make money.

I don't want to sound like a sales page, but don't let this opportunity go by.

Download the report here

Regards
Pieter

Do expert advisers or Forex robots really work? Part 3

Mon, 27 Sep 2010 22:13:03 +0100

In this part 3 of "Do expert advisers or Forex robots really work?" I will show you what to look out for when buying an EA. In the first two post I showed you how the variables of a forex robot can be manipulated to achieve great results. I talked about the concept of curve fitting. In this post I will again show you screen shots of test results and how to read the MT4 reports displayed on the landing pages.

I just want to make something very clear, and I mentioned this in my previous posts. I'm showing you something that I discovered while programming my EA's. I'm not a consumer watchdog or anything like that. I feel that the people buying these robots have the right to know what to look out for. These posts might even help developers create better products that people will want to buy.

So, let's get started.
There are a couple of things that bothers me a bit about these robots that are sold. The first thing, and I mentioned this in the first post, is why you would sell an expert adviser that is very profitable, and why for only $97 or $79? I still don't get it but maybe some day I'll understand why.

The next thing is, why is there not a trial version of the robot. If it's that good then give me a 1 week or 1 month trial version so I can test it. It's possible to program a temporary license in the EA so why not? They might argue that 1 week or 1 month is not enough time, and I agree, but at least I can run back tests on it to see how it would perform over a long period of time.

Well, there's not a lot I can do about the two points I talked about, but what I can do is look at the sales pages which would help me in deciding to buy the robot.

The marketers of these EA's usually have reports that show you the performance of the expert adviser. There are a lot of information on these reports and you can use this to check how good the robot really is. I will use some figures to explain this.

In post 2, I showed you some reports created by running the back test for a specified period of time. Now let me show you what to look out for.

Report 1 normal run(Click image to enlarge)

The report looks pretty good doesn't it? Let me show you what to look out for. I marked all the important bits in red.

The first thing to check is the period. In the report above the period is from 1 January 2010 to 1 August 2010. If it's a back test, the period should be at least one year, or preferably, more than one year and the same parameters used for testing. Remember the EA is curve fitted for a period of time.
Check for the modeling quality. If you see "Open prices only" then it's not so good. Open prices only means the bar open and close prices are modeled and not the individual ticks. Look for "Every tick" this is the most precise method. In my report the modeling quality is "n/a", that's because I used open prices and not every tick. The reason why programmers sometimes use open prices is the optimization takes much less time cause only the open and close prices are used. If you use every tick the optimization can take hours, even days. This must be 90%. Anything less is unreliable.
Check the "Initial deposit". I used $10000 in the example. I don't know about you, but I definitely don't have that kinda cash to invest in a piece of software I hardly know. This is debatable, but I think $1000 would be a more realistic starting deposit. It all depends. The developers might just want to show you what you could make if you invested $10000. Look for multiple reports with different start balances.
Look at the "Profit factor". Anything above 1,5% is considered good. Again, this is debatable. The example report below show a "Profit factor" of 1.31% and yet the EA has produced a profit. If it's too high or too low be careful. If it looks to good to be true, it probably is.
Then check things like the "Draw down", "Gross loss" and "Gross profit". If the draw down is very high, let's say more than 50%, then it means you have lot's of losing trades and this might blow your account if you start with a small initial deposit. Make sure your "Total net profit" shows a decent profit. What's decent? Only you can decide that.

Now, look at the report below.(Click to enlarge)

This is my EA I created. Now let's have a look the points circled in red.

The period is a full year from 1 May 2009 to 1 May 2010. So this is a full 1 year back test.
The modeling quality is 90%.
The initial deposit is $1000.
The profit factor is below 1.5% but it still made a good profit.
The draw down is also not too bad at 33%.

All in all, not too bad. Remember what I said, there should be more than one year back test with the same parameters used. If it isn't the same, then it was curve fitted. You can check the parameters if you look at the "Parameters" option in the report.

The next report will show you that my EA does not so well with a different date period.

Second report, different date period. (Click image to enlarge)

Hmm, not too good for 2008-2009. The parameters are all the same, but the profit factor and draw down doesn't look good. I still manage to get a small profit from it, but $298 a year, is hardly getting excited over. If you look at the report there was a date period where the EA's profits just dropped and dropped, and then suddenly it picked up again.

I played around the EA and I had better results if I ran it with a 1 hour period, but I just wanted to show you what to look out for. There's so much I could have shown you but it's beyond the scope of this post. Use google if you are unfamiliar with the terms I used like, draw down, modeling quality and so on. It's just too much information to use in the post.

When you look at the sales pages, you might not see all this information I showed you. They might not use detailed reports like I did. Just try to look through all the information provided and use review websites to see what other people say about the product. I use a forex review website called forexpeacearmy. They have great reviews on trading systems and robots. Use the website and look at the reviews.

Last thing, if you look at the sales or landing page of the product there's usually a affiliate link. I have found lots of information about the EA on these links. Affiliate links are used if you are interested in marketing and selling the EA for a commission. You sometimes find information about upsells and other information about the product that you would not have seen on the actual sales page.

That's it!. I hope you found these posts useful. Just remember to try and look at all the relevant information before you buy. There are some good EA's out there you just need to find them. If the programmer has a profitable EA, he will make all the information available for you to look at.

May the force be with you.
Pieter Joubert

Do expert advisors or Forex robots really work? Part 2

Wed, 10 Nov 2010 12:09:33 +0100

In this second post of "Do expert advisers or Forex robots really work?" I will take you through some real live examples of what I meant in part 1. In part 1 of this post I talked about how the creators of these Robots curve fit the parameters to create a so called, profitable robot, that everyone wants to buy.

I just want to make one thing very clear here, I'm not slamming or discrediting anyone in these posts. I'm just showing how some of these results are generated. I program EA's as well, so I know what it takes to create a profitable EA and it's not as easy as these programmers make it out to be.

Anyway, to get started, I will use one of my own robots I created to explain how optimization works. The robot I created is profitable without the need to optimize it, but it won't make you rich. You might get a return of $2000 dollars for a whole years trading with a starting balance of $1000. That's hardly getting excited over, but still you won't blow your account. I will also make this EA available for download later. I just need to make it more user friendly before I post it.

So, I've created a robot that trades and I want to sell it. Like I said previously, it does OK, but no one will buy this for a $2000 return a year, so I need to sweeten the deal. I will make it look as if this EA is the best thing since they put flakes in ice creams.

In metatrader4, if you click on "View" then select "Strategy tester" you will get the strategy tester window. Here you can either just run a backtest on your EA or you can optimize you EA and run the backtest again. It all depends what you want to do.

In the below image is a screen shot of how parameters are optimized. (Click image to enlarge)

It usually opens at the bottom of the mt4 terminal. From here you can select things like the Expert adviser, currency pair, time frame, optimization tab and so on.

The next image is the actual optimization window where you can select which of your parameters you want to optimize for the specified date range. You will see that I selected all parameters.

Optimize window(Click image to enlarge)

So, lets run the optimizer with the date range set from 1 January 2010 to 8 September 2010. I've also selected automatic lots, which will increase my lot size automatically based on my account size. It's a feature I programmed into my EA and is not a mt4 setting. I will start with a balance of $1000.

The following image is the graphical results of the optimization.(Click image to enlarge)

This image shows the actual values(Click image to enlarge)

Not too bad. A profit of $2875.11 with a profit factor of 1.83% and a draw down of 25%. A profit factor of anything above 1.5% is considered, good. So the first run was not too bad. I then select the most profitable run and ran a normal back test to see how the EA traded within this period.

This graph shows the actual back test of the most profitable run(Click image to enlarge)

Does not look too bad. There are a couple of things on the previous chart that worries me a bit if I had to buy this EA, but more on that in my third post. I want to sell this thing so I'm going to sweeten the deal more. I'm going to firstly increase the starting balance to $10000 and move my end date to the 1st of August. August and September 2010 were not very good trading months for this robot so I took it out. Now let's look at the actual values.

Actual values run 2(Click to enlarge)

Wow, the best run turned my $10000 into $65267.65 with a profit factor of 2.41% and only 27% draw down. Let's look at the normal back test with the best run parameters selected.

Actual back test 2nd time around(Click image to enlarge)

Now this is a EA I would buy, or will I. Now, remember that the parameters have been optimized for a specific period of time. Now lets see what would happen if I run this back test using a different date range. Let's say the same period but a different year. Let's select 2009. So, now I'm running the back test from 1 January 2009 to 1 August 2009 with the same parameters as I did for the year 2010.

Actual back test for year 2009(Click image to enlarge)

Not so good this time. In fact I lost about $4725! I don't think I would even consider buying this EA. Even worse, how will it perform in the future. The robot might have done well from 1 January to 1 August 2010 but what about until the end of the year! It might even blow my account.

So, in the above examples, I showed you just how easy it is to manipulate an EA using the optimizer in mt4. There are still a lot of thing I could have done, but I hope you have a better understanding of how some of these robots achieve their great results. This is what is called curve fitting or optimizing parameters for a certain time frame.

But there is good news. In part 3 of this post I will show you what to look out for when buying an EA. They are not all bad but there are a couple of things you should watch out for when buying a Forex robot. Even my little EA I wrote doesn't do badly and again I will use it to explain what to look out for.

I hope you found this post informative and again, I'm not slamming anybody out there. I'm just posting my own experiences I've had with EA's.

Till the next post.
Pieter

Do expert advisors or Forex robots really work? Part 1

Sat, 25 Sep 2010 20:54:33 +0100

I thought of writing one post on this subject but it soon became evident that the post will just be too big, so I decided I will split the post into parts. This is the first part in a series of three. I will try and make this as informative and interesting as possible.

Right, so lets get started. One day you decided it's time you bought yourself a money making forex robot. You heard about this cool thing called an expert adviser that trades automatically and makes a bucket load of cash.

Before we continue, let's just quickly discuss the difference between a forex robot, expert adviser and program. They all are, wait for it, the same thing! Yes, my dear readers, they are all different names for the same thing. It's basically a program written in the Meta Quote Language 4 (MQL4) that you code to execute your trades automatically based on whatever strategy you might have. It's very similar to the C language. The nice thing about an expert adviser is the fact that it does all the trading for you. You don't need to sit in front of you terminal waiting for the right entry to trade. The EA does what you program it to do. I don't know why they call it a forex robot. It might just be a term used by marketers to sell their product. In my view it's not a robot, it's just a program. Like any other out there.

Let's get back to the post. You search google and thousands of results are returned. You read through the endless landing pages, and believe me they are endless, and finally decided on an EA. You read the reviews you look at the great back tests form the landing pages. Man, you think, this thing is wicked. Just look at the graphs! They go up and up. I'll be quitting my job in no time.

Let's stop for a while here. I know your heart is beating 5000 bpm's but lets think about this for a minute. First of all lets say that you are a programmer and you one day created this great expert adviser that doubles your money every month. So you start of with lets say $1000 and next month you have $2000 and next month $4000 and so on. A year later you are looking at over a million dollars.

Now I know you sit there and think, this guy is wasting my time, where does he get those figures from. They don't promise those kind of returns. My friend, go back to those landing pages. Look at the returns they are promising. Look at those percentages. They talk about 100% or more. Yes, I know not all of them promise those returns but a lot do and a lot of people will buy their product if the returns are big. The makers and sellers of these EA's know that so they try to sweeten the deal with these graphs and returns.

What I'm getting to is this, if you write a EA that is very profitable, why on earth would you sell it for $97? I use $97 because when you click on the, buy now button, it's always $97. I don't know why, but it's $97 or $79 or somewhere around there. Anyway, to market the EA, you would have to open a clickbank account or something similar. You have to create landing pages with endless explanations of just how good your EA is. This can take weeks or even months. Then, because you sell the product, you would need to give your customers some kind of support. That means maybe employing someone to sit and go through emails to resolve installation issues and such. Of course you don't have to employ someone, you can do all of that. After all, you coded the EA. The thing is why would you want to go through all that trouble just to sell the EA. It's going to make you rich anyway!

I also program EA's and to be honest with you, it's not that easy to program a profitable EA. The coding part is easy. It's the strategy that you have to program that's difficult.

So how come the graphs and live videos they show on their landing pages, show such great results?, I hear you ask. Like I said, I also program EA's and they use a technique called curve fitting. Curve fitting is when you optimize the EA's parameters, or variables, for a specific date and time range. I can just see the frowns on you faces after you read the last sentence. If you are familiar with these terms you know exactly what I'm talking about, if you're not, I'm here to explain.

When you code, or program, an expert adviser, you use variables. These are basically parameters that change while your code is running, hence the term variable. To give you an example, let's say you code the robot to start trading at a certain time during the day. You decide that 9am is a good time to start cause the London session is about to open. You run the program and everyday at 9am the program starts trading your strategy. But you see that it doesn't do so well and you would like to change the start time to 10am. So you stop the program you edit your program, recompile it and run it again. Again you see it's not really doing what you want it to do. You stop again, edit, recompile and so and so on. You get the picture. To automate this you create an external variable that you can change without the need to recompile. It's also called an input parameter.

I use the metatrader4 platform with my broker and with metatrader4 you can actually optimize these parameters. In part2 of this post I'll have some screen shots to explain this in more detail. Just bare with me for now. So, you attach the EA to a chart, let's say the 15min GBP/USD chart. Then, using the strategy tester from metatrader4 platform, you can optimize your external parameters like the starting date by specifying a range. Say from 9am to 15pm. You specify the date range to trade, say from 1 January 2010 to 1 August 2010. Then you run the program.

When the program execute, it's first going to trade starting at 9am. It will do this from 1 Jan to 1 Aug 2010. Then it will stop and AUTOMATICALLY restart from 1 Jan 2010 but this time the starting time for the trades will be 10am. When it's finished it will stop restart form 1 Jan 2010 and the start time will move on to 11am. Every time it does this, a optimization graph is drawn showing you how well the robot performed with the parameter change.

It will run through the whole time range, 9a to 15pm, and show you with a graph when was the best starting time, or when it made the best profit for a specific starting time. This is just an example. There are really a lot of things that you can optimize using this method. When you buy an expert adviser have a look at the customizable parameters you can change. You will be amazed. Some coders will have a lot, some just a few. The more there are, the more customizable the EA is and the more you can curve fit it.

So, curve fitting basically means that you curve the parameters to fit a specified date range. If it's still a bit confusing I will show in my next post with examples what I mean. I think then it may become more clear.

I hope you enjoyed this first part of the post. I do apologize if it was a bit technical. I will try my best to make it less technical in the next post. I'm going on here, I'm sorry I will stop.

Till next post
May the force be with you
Pieter