Forex Funnel Review
(8 votes, average: 3.88 out of 5)
Loading ...The following is a review of forex funnel. This review is an update of an older review and has benefited from the feedback of others who have commented on my previous review.
Word of Caution: Please don’t accept everything I write here blindly as being correct. Whilst I have tried my best to present my understanding of Forex Funnel, my understanding might be flawed. Therefore, you should do your own independent evaluation of Forex Funnel before forming your own opinion on it.
Forex Funnel
Forex Funnel is a metatrader 4 (MT4) Expert Adviser (EA). If you read their website you will see some aggressive marketing of their system with bold claims, like:
- “ANYONE can profit from the forex funnel system even with no knowledge and no trading experience“
- “This system has been designed so that even the most computer illiterate person can setup and profit from it. Even if the most you have ever used your internet for is browsing ebay or checking emails, you will still be able to use this system to funnel money”
- “100% Idiot Proofed”
- “No knowledge of the forex market required”
Ludicrous claims aside, if you look deeper, you will see they present a back test result over a four year period where you could theoretically have made over $462,000 from $50,000. They achieved this result with a mere 15% maximal draw down and what is more interesting is they present a back test equity curve which is so smooth it is almost at straight line. In addition to this they presented a forward test result where they also showed a $12K profit in little over a month and a half in live trading on a 50K account. With a result like that, I was intrigued, so I signed up to see to check it out.
Cost
The system costs $137. Compared to other commercial expert advisers, this is at the low end of the range.
The website has a claim on it warning that the “cost may go up at midnight”. While this statement is probably true, because the price could indeed go up at any time, but after visiting this site over the last few months I wonder if this is just a high pressure marketing tactic to get you to buy now.
The system, because it is sold through click bank, does come with a 60 day refund policy. I did try and get a refund for this system myself, but after two attempts at sending an email to the Forex Funnel guys and receiving no reply, I had to go back to Click Bank to get my refund. Once I did this step, Click Bank organized the refund in a mater of days. Once you ask for a refund the system is then disabled and your registered account is no longer able to use the funnel.
What do you Get?
When you sign up, you get a compiled expert adviser (no source), a DLL and a manual that tells you how to install forex funnel and what levels of risk you should use. The system also comes with another free indicator, that is not directly related to the system.
The system itself is licensed for a single account. They provide you with a web page to let you change which account the funnel works with. For example, if you start off demo trading and at a later date you want to change to a funded account, you just use the web page to update the account. I presume that the DLL that comes with forex funnel is used to support this feature, because this is not a regular feature of Metatrader.
The EA itself is highly streamlined with very few features that are setable by the user. The settings available to the user include the ability to set the preferred position size and the days of the week you prefer to trade. Again compared to other EAs, the number of things you can control about this system are minimal. I presume this has been done to minimize the support burden on the forex funnel guys.
Forex Funnel is advertised as a system which is designed to trade the USD/JPY pair on a 1 hour chart. Despite this claim, you can run it profitably on other pairs. However, when I back tested it on other markets it did not get the linear equity curve presented above, but it is profitable on a number of the major pairs. So there is some property of the USD/JPY this system is designed to exploit.
Who Wrote Forex Funnel?
I know very little about the people behind forex funnel. All the support provided is done completely anonymously. Because we know so little about the author of the system, we don’t know how much experience they have and we don’t know even if the author is prepared to risk a reasonable amount of their own money or not on forex funnel.
From what I have read on the internet, the same people who developed Forex Tracer also developed Forex Funnel. Both of these systems seem to be marketed by the same company, NC Media in Canada, and the layout is almost identical.
If you read the forex tracer reviews on Forex Peace Army (FPA) on Forex Tracer, they are not very kind. However, you need to take some of the reviews there with a grain of salt at times and you need to make up your own mind. Anyway, according to review on FPA, Tracer was developed by Peter Parsons and Tracer has had some what mixed performance over the years.
The other clue as to who the author of the system comes from the sign up process. When you sign up you use a web page by switch capital management, According to the website, Switch is run by Rachmand Gagahlin Soendoro and Stevanus Romy. They both have been involved in trading for 6 to 7 years and Switch Capital Management is 2 years old. Rachmand comes from an IT back ground and Stevenus seems to have come from a business background. Switch does run other people’s money (OPM), but the size of the fund is unknown.
Now, whether Funnel comes from the guys at Switch or if it comes from Peter Parsons is unknown. My best guess is the lads at Switch.
Uniqueness of the System
Based on comments I have seen on another blog, I don’t think this system is unique. It seems to be a variant of the FXProMaker and the free expert advisor Bliss. The key difference is FXProMaker is biased towards the long side and ForexFunnel is biased towards the short side.
Now who is reverse engineering whom, I do not know, but like most commercial EAs, I suspect it is a variant of one of the numerous free systems put up on the metatrader forums. The difference is some additional tweaking has been done.
Support
The Funnel only comes with an email based support. If you send emails to the support line, you do get answers, but the answers are usually very brief. Compared to other systems, the documentation is subpar. It does not tell you anything about the system, how it works, what kinds of market conditions it is suited to, etc. Also it does not come with a support forum or online community. There are no courses or mentoring for this system either.
Performance
If you read the discussion thread attached to this review, you will see a couple of users have reported quite good results. However, how this system performs long term remains an unknown as it has not been around long enough to determine that.
I have done some back testing on the system and limited forward testing. In my back testing, I did manage to reproduce their 4 year result. Here is my back test equity curve:
Others have reported a similiar experience to this. For example, see here.
I went back to the email support person and asked them to please explain. The forex funnel support person explained that I needed to use at least 200:1 leverage in order to keep the drawdown to a minimum on the account. I was using a 100:1 leverage on an Alpari demo, so naturally my maximal drawdown was much higher.
Account Size, Position Sizing and Leverage
When you set the system up, the documentation provides a guideline that you should use 0.01 standard 100K lots for every $2500 (or 0.1 mini 10K lots for every $2500). Because of the Martingale nature of the system, if you use more than that your equity curve will experience very wild swings and you will risk blowing your account up.
Based on the above, the minimum account size you can use for mini accounts is $2500. Anything less and you will also see wild swings in your equity curve.
If you do trade this system, you are going to need at least 200:1 leverage.
This means that even though they sent you an email recommending you download the Alpari platform to demo trade on, you cannot safely trade with the default 100:1 leverage. However, if you ask nicely, Alpari will give you 200:1 leverage.
The theoretical back test result they provide over 4 years may not necessarily be produced in real life without separate accounts with smaller amounts in it. This is because accounts with more than 100K or 250K in them usually have much lower leverage than 200:1. However, you can of course get around this problem by splitting the trades across multiple accounts.
How does Forex Funnel Work?
Forex Funnel is a grey box system, meaning that the logic is proprietary and the user has a few parameters they can set. Compared to other systems, the shade of grey on this system is closer to a black box than it is to a white box, because it is quite difficult to figure out what the system actually does.
How the system actually works, I must admit I have no idea. Fortunately, one of the readers of the blog, Paul, has gone through the trading logs and put together the following pieces of the puzzle:
- Funnel enters as soon as you start it up. It opens a Buy trade, a Sell trade, and a Sell Limit trade [Macrotactician: The system also places in a tight profit target and a wide stop].
- Funnel exits a trade when the TP of the open Sell trade is reached. If there are other Sell trades open, they are all closed at the same time (not the Buy trade, however) and a new Sell is opened with a lot size of whatever you have it set to. It also opens a new Sell Limit, again at twice the lot size of the current open Sell.
- If price reaches the Sell Limit order, Funnel changes the existing Sell trade’s TP to match the new Sell that was just opened and it immediately opens a new Sell LImit with a lot size twice as big.
Just looking at the rules the system seems to have a bias towards the short side of the USD/JPY market. However, users of the system report that the system doesn’t seem to loose money on the long side of the market, but it does not make much either. The USD/JPY also seems prone to gaps over the weekend. So, you can expect to see some bumpyness on the equity curve on monday morning. However, if you are appropriately position sized, you should be able to weather both the monday morning gap and the bullish trends on the USD/JPY.
Weaknesses in the System
Again because the system is somewhat of a black box to me, I am unsure was to where the real weaknesses in the system. However, due to the martingale nature of the system, there is potentially quite a risky side to this system. For example, in the back testing logs, I have seen position sizes in excess of 250 lots, so there is a reasonable downside risk to this system if your pockets are not deep enough.
The kind of scenario that is likely to create this kind of situation has been pointed out by one of the readers of this blog, Paul:
It increases the position sizes in a rising market. If the Sell Limit price is reached, it opens another Sell limit at 20 pips higher than the current Ask with a lot size twice as big. This is where it can run into trouble, but with a size of .01 it would take a long, extended rise in price with little or no drops.
The other thing to be wary of is your broker’s rules. For many accounts less than 100K in them your broker would never let you hold 50 lots open. As a result it is extremely unlikely that you would get to the stage in the back test result of having 250 lots open. This is why you should never trust a backtest result alone as there is always some catch.
How best to trade the system
If you do decide to trade the system, you need to beware of the wide stops and the martingale nature of this system makes this system a high risk system. As such, some prudent things you should consider include:
- Keep your initial deposit reasonably small, but still larger than $2500 US recommended by the developer, and never trade this system with a large amount of risk capital that you cannot afford to loose. If you do not have $2500 to risk - then do not trade this system.
- Pick a broker that will give you 400:1 or 500:1 leverage as this will allow you to ride out some bad trades
- Regularly withdraw a large portion of your profits from your trading account as one big loss will take it all away
- Avoid trading this system in a rising market
- Keep an eye on the escalation of martingaled positions in rising markets. If you catch it building up more than 4 - 5 martingaled positions, consider wearing the loss sooner rather than later.
- As much as you might be tempted by greed, do not exceed the developer’s recommendation on leverage setting as this will only accelerate your chances of blowing up your account
Closing Thoughts
Whether you buy forex funnel or not is completely up to you. I am not going to tell you to get it or not.
Based on feedback I have received on my blog, initial results with this system seem positive. However, the martingale nature of the system does raise some concerns as there is always an reasonable risk in such systems of blowing up your account.
If you are interested in this system, don’t be sucked in by the marketing hype. Like all things in life, this system is not an idiot proof / risk free cash machine that will “funnel money out of the markets”, so please go in with your eyes open and do your own testing on this system before committing risk capital to it.
August 29th, 2008 at 5:45 am
Unfortunately the market drives these ‘easy money’ products. The biggest demand for systems or education is from those with the least knowledge. It would be almost impossible to market a real trading system to such people because they could not accept the draw-downs and uncertainty that comes with real trading. No amount of warning people will keep them away from these schemers. Its just a natural cycle that each person must go through. Better judgement comes from poor experiences.
August 30th, 2008 at 3:34 am
Great article. I left a lengthy comment on the Forexhound.com site, but I don’t think it has shown up yet.
John
August 31st, 2008 at 5:17 pm
Hi jsp
Your comment does not seem to have appeared on forexhound. If you repost your question here, I can attempt to answer it for you
September 3rd, 2008 at 12:21 pm
MarcoA’s comment is right on. There is simply no amount of warning that will prevent the target audience from diving in. A few years ago a good friend of mine, who had an advanced degree in statistics mind you, blew a 20K account on one of TRO’s systems. He was a good sport about it. I warned him beforehand that the idea of the systems might be good, but they rarely perform longer than a couple of months because of faulty risk management and changing market conditions. He has since recovered from the loss and now trades his own systems. For every one of these guys who have a bit of education and recover, however, there are a hundred or more who just give up, never knowing if they may have succeeded on their own efforts.
September 3rd, 2008 at 12:24 pm
The gold rush is a great analogy, by the way.
September 4th, 2008 at 1:28 am
On the ForexHound site, I basically said Forex Funnel looked interesting, though I strongly distrust systems with viral marketing, paid review sites, etc.
What’s unique about the Funnel is that it trades the USDJPY (a tricky pair, IMHO) and had a 4-year backtest. During that time, the USDJPY had uptrends, downtrends, rangebound periods, etc.
By contrast, EURUSD EAs like Forex Tracer and Silicon appear to be based on the EURUSD’s uptrend. I looked at both backtests, and neither one included early 2005 (a 2000 pip drop for the EURUSD) or the recent drop. They also don’t include “live updates” like the Funnel. Most of the Tracer’s backtest trades were longs, and 100% of Silicon’s were long!
Back to the Funnel: your investigation of its high-risk Martingale approach isn’t too surprising. I figured there had to be some “catch.”
As a final note, I’ve seen some recent reviews of Silicon Forex that claim it’s done well recently. Maybe it would be worth a review in the future, since it’s also backed by Clickbank. Like you, I’ve found much better success going straight to Clickbank when vendors refuse to honor their “100% ironclad” refund guarantees.
Oh, and I also noted that your gold digger analogy was spot-on.
September 4th, 2008 at 11:22 am
thanks for your comments.
MarcoA is probably right that no amount of warning will prevent people from pruchasing forexfunnel, but if it prevents at least one person from blowing their account on it, then it was worth it.
jsp, I did back test forexfunnel on other currencies, including the EUR/USD, and it does return a positive result. My guess is the marketers behind funnel chose the usd/jpy because it had the straightest equity curve for the longest period of time. The impressiveness of the 4 year result in the USD/JPY is not so great when you read your way through the trade history. there are some trades that are held in drawdown for a long time until the system can make up for it with a win and close it out. If you run the back test for period shorter than 4 years you often get a 80% drawdown.
regarding forex silicon, I may get around to reviewing it, but it looks so similiar to forexfunnel, I am not sure I will get much out of it. I am tempted to have a look at the new version of FAP and pipboxer in the near future but until then though I am working on an article on fundamentals.
September 4th, 2008 at 2:26 pm
Macro,
Thanks for the reply. I enjoy this site and your articles on grid trading, EAs, neural nets, etc. You seem very fair and objective, which is a rare find in the FX world.
September 13th, 2008 at 5:40 am
I found your comments on fores funnel very enlightening. Do you
suggest any meta 4 forex auto trader software? What about a suggested forex broker?
What’s your thoughts on Forex Auto Pilot software?
What’s your thoughts on Forex Broker AKForex?
Or Ikon Forex Broker?
September 13th, 2008 at 8:07 am
Hi Lynn,
I can’t recommend any specific brokers. Probably the best thing to do is to look at the reviews over at forexpeacearmy.com and start from there. The other thing you can do is look at the CTFC website for complaints/legal actions. Also look at forexontop.com as it will give you an idea of how deep different brokers pockets are. Lastly, look at what country your broker is from and think about what protections their legal system will provide you if the broker is on the nose.
In terms of Forex Auto Pilot (FAP) it is on my to do list to review, but it takes me a while to get around to these things because family and work comes ahead of trading and blogging. So may be sometime in the future.
If you want to look at other bloggers recommendations for expert advisors, ck’s blog over at http://ckowyong.com/ is pretty good.
September 14th, 2008 at 1:11 pm
I read through your review of Forex Funnel with definite concern and some disappointment. Unfortunately I fit snugly into the category of Forex newbie that purchased the Funnel. I bought it a little over a month ago and ran it for two weeks on a demo account. The results were good enough so I opened a live account with an initial deposit of $3000. Earlier this week my balance passed $6000, so in less than 3 weeks it gave me a 100% return. Obviously I’ve been pretty happy with those results, but from your review and some of the comments, I won’t continue to see results like this?
I should say at this point that I’m not marketing the Funnel, I’m just a user of the software. One thing I’ve liked about the Funnel is it’s conservative approach. It doesn’t try to hit home runs, it makes a 20-pip profit and closes the trade. For me that’s been around $32. I will admit the drawdown has concerned me, but *so far* it hasn’t been a problem. The most drawdown trades I’ve had in a row is 4, with the 5th trade overcoming the losses. 2 or 3 trades is far more common.
So what to do?? Should I keep my fingers crossed and continue to let Funnel run? Should I take the profit and get out while the getting is good? Yep, you’ve scared me!
Paul
September 14th, 2008 at 1:56 pm
Hi Paul,
What you do is entirely up to you and I don’t know what your financial situation is and how important $6000 is to you.
If $6000 is really really important (i.e. pay your rent style important or feed your family type important), then I would withdraw it all and thank your lucky stars for a winning streak.
If it is not important and risking $6000 is not going to hurt you financially, then you could see if your winning streak continues and take a chance. If you are going to do this I would watch your build up of draw down like a hawk and maybe even move the money to a broker that will let you have 400:1 leverage. At some stage you should consider taking a profit.
If you are somewhere in between, then you could withdraw most of your money from the account and use some of your profits to spend on trading education and your next trading account. You may also decide to keep funnel running with a small amount of your profit to see if your winning streak continues.
If you do decide to keep on letting the funnel run, then I would encourage you to back test the funnel accross a range of different market conditions (i.e. pick slices of the market where the market is trending, ranging, high volatility, low volatility, etc). You should do this to build a solid understanding why and how funnel works and use it to learn when you should pull the pin on the funnel.
Any way you look at it, you should also use this as a really good opportunity to learn a whole heap about trading as this more than funnel or any other ea will be ultimately more valuable to you.
best of luck
September 14th, 2008 at 4:18 pm
Thanks for the quick response, I appreciate it. I’ll admit I’ve been pretty excited about the Funnel because of my results and your review took some wind out of my sails. A good dose of reality is never a bad thing, though.
I don’t need the $6000 to survive so it won’t be devastating financially to lose it. I’d rather not, of course! I’ll probably keep running the Funnel for a while and keep an eye on the draw down. So far it hasn’t left any lingering draw down. When the market hits a sell limit it adjust all open trades to the same take profit as the sell limit, so if it reaches the take profit it closes all open trades at the same time. Yes, all but one are losses, but the one win is large enough to overcome the losses by about $30. It’s how it works. I know I’m naive, but it’s been working so good I hate to stop it at this point.
Paul
September 14th, 2008 at 4:58 pm
ok - best of luck.
let us know how it goes. If it goes well I would love to go for a test drive in your new Ferrari. If it doesn’t go well, make sure you learn all you can from the experience.
p.s. greed is a very powerful thing. if you catch yourself wanting to add more to your account to get to that Ferrari sooner, go for a verrrrry long walk and think about it hard
September 15th, 2008 at 5:51 am
Funny you should mention adding money to the account … the thought has crossed my mind. I’m going for a really long walk now …
September 15th, 2008 at 7:04 am
Hi Paul
Here is something to think about on your walk: How would it feel IF you had a whole stack of cash in your trading account, so much that it matters to you a whole lot if you can withdraw it. Now imagine you are in 10, 30, 50, 80% drawdown and you cannot with draw that cash quite yet until the funnel makes up for the drawdown.
Ok - now you have that feeling in mind - now go back to your backtest trading logs or your current trading logs and look for anything that might create that situation
Now go for another long walk. Think about wether or not the funnel has an edge because of current market conditions? Think about how the funnel might survive a NFP style news event? Think about if the market changed direction very violently for a few weeks what would it mean if you were left holding a position? Think about what would happen if you were away from your computer and something bad happened? Think about what would happen if your server or your brokers server crashed (as ibfx did a few weeks ago)? Think about what would happen if the EA has a bug in it? Think about what it would mean if you got sick or hit by a bus going for a long walk? Think about all kinds of things that could cause you crap yourself
Ok - now that you have thought about these kinds of things you are now in the right mind set to know wether to add more money to your account
September 15th, 2008 at 8:14 am
Oh yeah, NOW I’ll have a nice, relaxing walk! Sheesh!
I had to let you know what just happened. The Funnel made me pretty nervous all weekend because when the exchanges closed on Friday it had 6 open positions totalling a loss of just over $1000. I don’t know if you’ve looked at USDJPY yet today, but it opened over 200 pips lower than it closed Friday. I just made almost $5000! I know it was lucky, the market could have continued the same direction and I could have been in trouble. Also because of the huge jump, I had to manually reset the T/Ps because they got missed! But … I just made almost $5000! So stick that in your review and snap it! (just kidding … I’m a bit giddy right now so you’ll have to excuse me).
Paul
September 15th, 2008 at 8:50 am
And what would of happened if the yen had gapped in the opposite direction?
September 15th, 2008 at 9:51 am
That actually happened last weekend. I had to manually reset the TPs then too, but I lost $300. The rest of the day was still profitable though, so I ended up ahead for the day.
September 18th, 2008 at 12:32 pm
If you have a system miraculous you sell for litle price?
September 19th, 2008 at 3:51 am
This is interesting.
Not to give official advice, but if I were in Paul’s (fortunate!) shoes, I’d take at least $3000 from the Funnel account. You could open another account (for a different FX system), move it to savings, retirement plan, take a vacation, whatever. But you could consider the remaining account pure “house money” and not worry if you blow it. If it continued to make money, you could take out profits here and there or shoot for a goal where you’d withdraw everything ($25,000, $100,000, ???).
I’m pretty sure it will eventually blow up, though, unless you adjust the leverage or manage the risk manually (i.e., close out the Martingale series after X amount of loss).
October 2nd, 2008 at 3:57 am
Paul here again … a more educated, wiser Paul
I’ve learned a lot about Forex Funnel and about EAs in general since I last posted. There is definitely a lot of risk with using Funnel, and I lost quite a bit of money when the rate climbed after the Feds announced the bailout plan. I still have about $4000 in my account, and that is *after* withdrawing $3000 to pay off my credit card. I’m still ahead, but that Martingale part makes it too scary to let run unattended.
Paul
October 3rd, 2008 at 2:02 am
Hi Paul,
I would like to know how you lost a lot of money on the day the bailout failed. I am trading the funnel too and whilst I lost $7 on one trade with a $2600 account, at the end of the day I was up around $30. I have never experienced the swings and drawdowns on the days you state, neither have I ever had to adjust T/P and I am trading the same system. I have also not made 100% in 3 weeks more like 20% but I am happy with that. I am really confused by how your results differ so greatly to mine when we are running the identical system.
Lisa
October 3rd, 2008 at 6:37 am
Hi Lisa,
I saw your review at forex peace army and I think the reason we’ve seen such different results is I’m using a lot size of .10, not .01 like I should be with the size of my account. Just curious, how long ago did you purchase Funnel? I don’t remember seeing the .01 per $2500 guideline in my documentation, but I could have missed it. When I started running it, I left the default settings, which was a .10 lot size. If yours had been set to .10, you would have seen $300 instead of $30 for that day.
However (and this is a huge however), I lost money because the lot size grew to the point that it used up my margin. I doubt it would have happened if I had been using a .01 lot size. It grew until my last open trade had a size of 6.40. It tried opening the next trade at 12.80 but couldn’t. I had 7 open short trades, so when the rate kept climbing, so did the losses and the 7 trades eventually consumed my remaining margin. When that happened, the broker closed all 7 and poof, $5800 gone.
The higher your balance gets, or the lower you set the lot size, the less likely that will happen. But, it will always be a possibility, and that’s the scary part. One thing I don’t understand is why the developer chose to leave the short trades open when the rate is climbing. I think they should have been closed when the next trade is opened. Funnel resets the TP to the latest trade anyway, so they will never make money. If they were closed, they wouldn’t be chewing up the available margin. Maybe I’m missing something … definitely a possibility!
Paul
October 3rd, 2008 at 7:39 am
Hi Paul,
I am really upset for you bcs you have not seen or read the instructions and that is why your account has been blown. When you received the forex funnel file, inside it is a document with instructions. It very clearly states use lot size 0.01 for every $2500. It says the default setting of 0.10 is for an account of $25k and if you are trading less than this change it accordingly and ensure you use a broker that supports 0.01. I think you are not the only one that has made this error and is probably a little confusing for newbie forex traders and people that are not used to MT4. I feel this product may be getting bad publicity bcs of this when it actually works extremely well if these instructions are followed.
I honestly believe that 2 days ago when the rescue package was rejected was a real testing day for this system bcs the market was swinging from side to side. JPY moved 300 points yet this system just rode through it and still made a small profit. I believe if it came through that it could probably survive anything but the lot settings have to be adhered to.
The reason why the short trades are left open and T/P readjusted is bcs when the market retraces and reaches T/P on the last trade in the batch this will close with a profit. Even though the other previous trades are losses the last trade which is a win will be bigger than the loss. That’s how the system makes money.
Tomorrow is non-farm payroll and the vote on the second bailout. It is likely to be a very wild day. I will let you know how the system performs.
Lisa
October 5th, 2008 at 9:54 pm
hi Lisa,
i value your input. please post more comments/ results/ advice.
thanks
October 6th, 2008 at 1:36 am
Hi there,
I am happy to keep posting and letting you all know how it’s going. Last week forex funnel made profit of $192 for me. I am on minimum lot size of 0.01. The system sailed through non-farm payroll and the bailout decision. My total drawdown was about $40 at worst but ended the day with profit of $36. The system seems to make more money when the market is short but still does make profit when it’s going long or sideways.
It is early days but I don’t see anything terrible with this system like others report. It is very conservative, trades only 1 pair and money management is very good.
Regards
Lisa
October 7th, 2008 at 3:30 pm
Hi Lisa,
Thanks for your reply to my post on Forex Peace Army. I checked through the documentation and you are absolutely right, I was using a lot size tens times that of what I was supposed to. Being a Newb to the whole forex scene I glossed over that paragraph but after you pointed it out its all become crystal clear.
The problem I’m having now is that I have tried to change my lot size to 0.01 but after I do so, the funnel doesn’t open any more trades. My account was down to $1600 at the time and I am thinking that I might not be allowed to make such small trades.
I am wondering if anyone could let me know how to reset my demo account so that I can start my testing again with a larger starting capital more in line with what I would intend to go live with and using correct lot sizing. Or is it a matter of completely uninstalling MetaTrader and downloading it again from scratch.
Thanks in advance
Brodie
October 7th, 2008 at 5:14 pm
This is just comical. I write a review about how poor the support for forex funnel is and now my website has become the defacto support site.
ok Brodie: Go to file -> New Account in Metatrader and it will allow you to create a new account. Fill in the form and create a new account. Then go to the email the nice unsupportive forex funnel guy sent you and log into the account registration page. Put your new demo account number in here to activate funnel for this account.
October 8th, 2008 at 12:18 am
Hi Brodie,
I agree with macrotactician that email replies are not exactly overflowing with information. The couple of times I emailed I also got few word responses but my questions were answered. Obviously it would help newbies if they rcvd more detailed info.
I trust you now have the info above to open a new account. You need to make sure your broker supports 0.01 as not all of them do. If no trades are being generated then the broker you are using does not. Some start at 0.10 and you would therefore need a $25k account. Try Alpari, http://www.alpari.co.uk they support 0.01. I have been using them and have had no problems. Hope that helps.
I am $450 in profit in 8 days starting with a $2500 account so I’m not complaining right now.
Lisa
October 8th, 2008 at 9:40 am
lot size: 0.01
deposit:1000USD
date commencing: 2-Oct-2008
date ended: 8-Oct-2008
ending balance: 1264.02
Gross profit: 264.02
floating: -30.51
Actual net profit: 233.51
*Demo account
happy with the result.
if this ea works well until the end of this month, i might consider going live in november.
joshua
October 8th, 2008 at 9:53 am
Another demo account ive been testing on
lot size:0.01
deposit: USD2000
date commencing: 23-Sept-08
date ended: 8-Oct-08
ending balance: 2678.59
Gross Profit: 678.59
Floating: -16.54
Actual net profit: USD662.05
thanks
October 8th, 2008 at 11:40 am
ok - I know a number of you are willing to trade any system based on a few weeks of forward testing, but for me I never like putting cash on on the line for something I don’t understand.
Can someone tell me:
1) How does forex funnel decide to enter? I know it brackets the price action with two orders, but when does it decide to put on a bracketed pair of orders? what is the entry rule?
2) How does forex funnel decide to exit? I know it is based on profit tight targets and wide stops, but why it moves stops around baffles me?
3) Under what conditions does forex funnel increase position sizes from the initial value you put in? I noticed that over long periods of time you can be left holding some very large positions. How does this occur?
4) What is the average and maximum time you can expect to hold positions?
5) What kind of market conditions suit forex funnel? Yes I know they say trade the USD/JPY, but why this pair in particular? What is special about this pair that makes the funnel work well on it?
6) What kind of markets are dangerous to trade forex funnel in?
If anyone can enlighten me on these I would be happy to update my review.
October 8th, 2008 at 4:03 pm
Try perform a backtesting from 5/5/08 - 8/10/08 on Forex Funnel.
Turn off Friday tradings. this is just a personal choice due to high volatility on those days. my choice.
Back Testing requirement:
Deposit USD1000
Lot Size: 0.01
have a look at the result.
thanks,
joshua
October 8th, 2008 at 4:11 pm
I am sorry, but my license for the funnel is no longer valid, as I asked for my money back
you will need to let me know what the outcome is.
October 9th, 2008 at 12:05 am
liza,
does you forex funnel has an expire on it?
i am not aware of this at all.
please clarify
macrotactician, please send me your EA which has the expire on it. thank you.
Regards,
Joshua
October 9th, 2008 at 6:09 am
Hi Joshua,
There is no expiry on the funnel. We paid a one off fee to use it indefinitely. We registered our account no. and that’s all that has to be done for it to keep going. If you request a refund then they obviously disconnect your account.
I note that you are demo trading with $2000 and $1000. YOU NEED TO USE 0.01 for every $2500. That is what the instructions says and I keep saying it so people use the correct funds to support the correct lot size and don’t blow their account and say afterwards that the funnel is crap.
Lisa
October 9th, 2008 at 6:19 am
Mr Macro,
You have so many unanswered questions yet you decided that the funnel was no good and requested a refund. Did you leave your demo running for the 60 day trial and suffer a loss? I really find it hard to believe bcs if you left it running you probably would have more than doubled your account and you would have been able to see for yourself how it works and why it works.
I am not quick to give praise to a product and I know there is a huge amount of forex crap around but people need to understand the product first, try the bloody thing out and then make an informed decision whether its rubbish or not.
Lisa
October 9th, 2008 at 6:41 am
Lisa started to say what I was thinking … you wrote a negative review of the funnel, yet you don’t understand how it works?? I’m afraid that’s not very ethical, Mr Macro. Yes it uses Martingale, and I agree back testing is essential, but you obviously didn’t forward test at all and watch how it works. It’s not that complicated. Now that I’ve gotten that off my chest, I’ll answer your questions … feel free to add anything, Lisa.
1) How does forex funnel decide to enter? I know it brackets the price action with two orders, but when does it decide to put on a bracketed pair of orders? what is the entry rule?
Paul - Funnel enters as soon as you start it up. It opens a Buy trade, a Sell trade, and a Sell Limit trade. I still have no idea why it opens the Buy trade … Lisa, do you know? The Sell LImit is used in a rising market, it the price reaches it, Funnel changes the existing Sell trade’s TP to match the new Sell that was just opened and it immediately opens a new Sell LImit with a lot size twice as big.
2) How does forex funnel decide to exit? I know it is based on profit tight targets and wide stops, but why it moves stops around baffles me?
Paul - Funnel exits a trade when the TP of the open Sell trade is reached. If there are other Sell trades open, they are all closed at the same time (not the Buy trade, however) and a new Sell is opened with a lot size of whatever you have it set to (I had mine set to .10, it’s now at .01 thanks to Lisa). It also opens a new Sell Limit, again at twice the lot size of the current open Sell.
3) Under what conditions does forex funnel increase position sizes from the initial value you put in? I noticed that over long periods of time you can be left holding some very large positions. How does this occur?
Paul - It increases the position sizes in a rising market. If the Sell Limit price is reached, it opens another Sell limit at 20 pips higher than the current Ask with a lot size twice as big. This is where it can run into trouble, but with a size of .01 it would take a long, extended rise in price.
4) What is the average and maximum time you can expect to hold positions?
Paul - It depends on how the price moves. If it’s moving down, positions won’t stay open for long. If it’s moving up, they’ll stay open until you get an approximately 20-pip drop, then all open Sell positions will close.
5) What kind of market conditions suit forex funnel? Yes I know they say trade the USD/JPY, but why this pair in particular? What is special about this pair that makes the funnel work well on it?
Paul - definitely a decreasing market. Up and down is fine too, as long as the down ’spikes’ reach 20 pips, or enough to close the current Sell position. I don’t know why USDJPY is specified but that’s what it said to use so that’s what I’m using.
6) What kind of markets are dangerous to trade forex funnel in?
Paul - A long extended upward swing with little or no drops.
- Paul
October 9th, 2008 at 3:15 pm
Hi Liza, Paul and Macro,
i value your inputs and information.
thank you so much.
i am now much more confident with funnel.
thanks.
October 9th, 2008 at 4:36 pm
Hi Paul and Lisa
Thanks for your feedback. I value it and getting feedback like this is one of the reasons why I started this blog because it helps me.
Regarding the funnel review you are probably right. I probably didn’t let the forward test go long enough to jump to the conclusions I did in the review.
I jumped the gun on the review when I found that the system blows up accounts under certain back test conditions (for example, running a back test a few days longer than the forward test results they used to market their system on their website). I probably also jumped the gun a bit when I realised the link between funnel and tracer and read the mountain of negative reviews on tracer. Lastly, like most of the reviewers out there who contribute reviews to sites out there like forexpeacearmy, I am no less susceptible to jumping to conclusions.
I will look at enhancing the review based on the excellent input I
have gotten from the comments on this site. However, I still doubt I
am going to heap praise on a system provider which aggressively
markets a system on the basis of a back test result, does not disclose to you what kinds of market conditions the system is not suited to and refuses to answer emails when you request a refund.
Please keep in touch and let me know how it goes, so I can update the review from time to time. I particularly keen to know if the big
draw down I saw on the backtester actually happens in forward testing
or not.
regards, Marcotactician
October 13th, 2008 at 9:00 am
Very good! I am even in phase of test but I have two doubts. First, they did not say to me if it is 0,01 lot in a standard or mini account. You know? Secondly I am not certainly I must do Sunday when the system begins with a great difference of pips and the EA remains without answer. Please, if you have the answers.
October 14th, 2008 at 12:32 pm
Hi Julian,
If you look at the PDF doc that is inside the Funnel folder it states 0.01 for every $2500.
When I asked about Sunday trading the reply was that the system should run whenever the market is open.
Lisa
October 14th, 2008 at 5:15 pm
hi everyone,
can anyone explain to me what happenned to the trades today?
huge loses incurred today. the amount is insignigicant.
i just need an explanation for this incident.
appreciate it guys.
thanks.
regards,
Joshua
October 14th, 2008 at 8:23 pm
additional info: today as in 14 October (Malaysian time)
October 14th, 2008 at 11:45 pm
lisa,
can you please kindly answer my questions.
thanks.
regards,
joshua
October 15th, 2008 at 5:26 am
Hi Joshua,
As explained previously, the funnel works best when the market is trending down. Yesterday USDJPY was trending up to the tune of about 200 pips. So, in other words when the marketing is trending up you will get a much larger drawdown then when it trades down. I was watching my own account whilst it happened but with the right money management you will ride the storm. When the trades finally closed they closed for a small profit. So bear in mind, downward trend equals less drawdown more profit, upward trend equals more drawdown less profit but still profitable.
Hope that explains it.
Lisa
October 15th, 2008 at 5:50 am
Why does the Funnel have a bias for shorting? Usually, these kind of Martingale systems do best in range-bound markets. They’re more dangerous when a strong, one-way move develops in either direction. But this one seems to favor the downside. Does anyone know why?
Since the USDJPY had a huge run-up in the backtesting period (2005-2006), I’m surprised it did so well.
October 15th, 2008 at 8:26 am
Lisa:
Thanks for answering Joshua’s questions. You are a champ and should be paid by forexfunnel guys for doing their support for them.
jsp:
I don’t know why there are three orders in forexfunnel and why the system has a shorting bias. I suspect that when the system designer built the system they started off with a more pure concept of a system with just a buy and a sell order and the additional short limit order was added later when the system did not perform so well on the short side. However, I am just guessing. I really don’t know. Paul seems to understand the system much better than me. Perhaps he can help.
October 15th, 2008 at 8:29 am
btw. I just got the following from the funnel guys:
“We recently became aware that alpari have changed their quotes system from a 5 digit one to a six digit one, which unless you realised would have messed up the trades on the forex funnel system.We have since revised the EA so it detects whether the broker is using 5 or 6 digit quotes automatically and adjusts accordingly, please swap the .ex4 file attached with the one in your experts folder to prevent this happening again with other brokers, we apologise for the inconvenience if you have been affected.”
October 15th, 2008 at 10:41 am
Hi Guys,
A few things I want to clear up for you folks so everybody doesn’t go bonkers!
1. You can get 200:1 leverage with Alpari - they don’t give it to you automatically but if you ask for it you will get it.
2. Your biggest problem should be when your account reaches $100k and you may not be able to get 200:1 anymore. Problem solved by withdrawing a shed load of money and starting again. We should all have these headaches to look forward to.
3. I don’t know why this system does better in downward market I just know it does. The great thing is even when it doesn’t do its best in an upward market it still makes profit and doesn’t kill your account.
4. The reason why there is a buy trade is bcs it acts as a hedge for the sell trade. The third trade is only generated when it needs to start doubling up.
5. You should have all rcvd a revised EA from Support. Pls note Alpari have changed to 6 figure pricing on their demo only right now not on live accounts. However, if you replace this file with the old one in your experts folder then it will automatically detect whether your broker has 5 or 6 digit pricing.
Chat with you all soon.
Lisa
October 15th, 2008 at 5:13 pm
Hi Lisa and Jsp,
Hi guys.
I appreciate both of you for answering my questions.
You explained previously, downward trend equals less drawdown more profit, upward trend equals more drawdown less profit but still profitable. Can you please share with us the setting required in order to achieve that result?
regards,
Joshua
October 15th, 2008 at 6:08 pm
As per the instructions 0.01 lot size for every $2500.
Lisa
October 15th, 2008 at 9:27 pm
Lisa,
What do you think of the new version of the review? is there anything you would change?
thanks, Macrotactican
October 16th, 2008 at 12:36 am
hi lisa,
thanks for answering my question.
i will keep that in mind when going live. =)
another question, is there any indicator or forecast website to tell whether UJ is trending upwards or downwards?
thanks
joshua
October 16th, 2008 at 5:22 am
Hey all,
First, I’m REAL new to forex, and have been reading 3 different dummies books (currency trading, candlesticks, and tech, analysis), to try and get a grip on what I’m doing. While I do want to learn more about how this works, I am interested in a program such as this. One question: MUST i start out with $2500 in order to get going with this software? I had hoped to just start a mini account with only $500ish dollars in it (after I demo some more), but I would love to give this software a go. Any thoughts?
Thanks for your time! Bill
October 16th, 2008 at 6:05 am
I wanted to thank Lisa and the others for the insightful comments as well. I may try this as well–but probably on a demo account first. I’d like to see how it handles a strong, sustained uptrend in the USDJPY…something we haven’t seen lately.
October 16th, 2008 at 6:14 am
Hi Macro,
I think your review is pretty fair and balanced. This isn’t for everyone but if you become familiar with the system there is potential to do well.
Regards
Lisa
October 16th, 2008 at 6:21 am
Hi Josh,
Put candlesticks or bars into your USDJPY chart so you can see how it is trending.
Regards
Lisa
October 16th, 2008 at 6:28 am
Hi Bill,
I believe that the minimum amount is $2500 to start. Try emailing support to confirm. You may not get an elaborate answer but you will be told either ‘yes you can’ or ‘no you can’t so you will know.
Happy to help all you guys whenever I can with your questions.
Regards
Lisa
October 16th, 2008 at 8:03 am
Lisa:
Thanks for your reply. I tried to make it a bit more balanced. I am glad it reads better now.
Bill R:
You could trade it with less than $2500, but because of the martingale nature of the system your risk of blowing up your account and having wild swings in your equity curve will be significantly higher. This is why the recommended minimum is $2500.
In terms of learning to trade, funnel probably wont be that helpful because the system is a pretty much a black box. If your objective is to understand the ins and outs of trading, my recommendation is that you try 6 to 12 months of discretionary trading using a number of different methods/system on small accounts (<= $1000) using Oanda. Oanda is great for this as they allow much smaller position sizes than any of the Metatrader brokers do. Now this doesn’t mean you shouldn’t evaluate funnel in the back ground on a demo account or on a $2500 account,
The other thing you can do is start a blog and write about your experiences. The act of writing helps clarify your thinking and some people will come along and give you pointers along the way thru comments like the ones here.
October 16th, 2008 at 8:13 am
Got the answers I expected. Thanks all for quick responses. This is truly a wonderful site!
October 16th, 2008 at 11:28 am
Josh:
Have a read of http://www.macrotactics.com/2008/03/06/characterizing-trends/
October 16th, 2008 at 2:22 pm
btw. If anyone is interested, duyduy on his blog has translated an Indonesian review of funnel.
you can read it here: http://feeds.feedburner.com/~r/AutomatedForexReview/~3/421576803/forex-funnel-ea.html
He forward tested here and got a margin call when the market spiked against him on the 13th. However, I noted that Lisa did not have the same problem - so I am not sure what is going on.
Duyduy also noted that the system is effectively the reverse system of FxProMaker and seems very similar to a free EA called Bliss. Now I have no idea about who is reverse engineering who here, but it they all seem a bit to similar to me
October 16th, 2008 at 9:10 pm
Was this account set to 200:1 leverage?
October 17th, 2008 at 2:59 pm
Hi, Lisa and others. I am currently testing Forex Funnel on a demo account as well (IBFX mini). Only been running a few days, but so far, so good. It has had up to four sell orders opened at once but never any more.
For you mathematicians: Using .01 lot for $2500 and leverage of 200:1, how many losing positions could you have open before getting a margin call? How about with 400:1 leverage? Just curious.
October 17th, 2008 at 5:41 pm
Hi Scott,
I have seen it go up to 7 sell orders and it has come out of it with a few dollars profit. The average is between 2-4 orders.
If you can get 400:1 leverage that’s great if your broker will give it to you. 200:1 is the minimum but not all brokers will give you even that.
If people want to be really conservative with this they should perhaps start with a slightly higher amount than $2500 and just keep it on 0.01 forever that way the more profit you build up the less chance of blowing the account if you don’t increase the lot size.
Lisa
October 17th, 2008 at 10:20 pm
Lisa,
Are you still on demo with FF, or have you gone live? Would love to correspond with you privately about this robot, if possible. Send me an email [thehenryfam AT gmail DOT com] if you don’t mind.
Cheers,
Scott
October 17th, 2008 at 10:27 pm
hi Lisa,
i appreciate your feedbacks and answers to all our questions.
good on you mate.
regards,
joshua
October 17th, 2008 at 10:28 pm
lisa mate,
may i know what are the magic numbers used in your FF EA?
thanks
October 17th, 2008 at 10:46 pm
Josh, you should just leave the magic number at what it was originally set to. Really the only things to change are the lot sizes and whether or not you want the robot to exclude certain days from trading.
Cheers,
Scott
October 17th, 2008 at 11:04 pm
I agree with Scott. The magic number should not be touched. Support has said there is not even any need to exclude certain days from trading just leave it running from Sunday to Friday.
Lisa
October 17th, 2008 at 11:19 pm
Scott asked the crucial question. Sooner or later, all systems–Martingale, trend-following, etc., are going to have a long run of losing trades. Plan to have 10 or more at some point. This even happens to systems with a good win/loss percentage. I know of a breakout system with a very good long-term track record that had 19 losses at one point.
That’s the main thing that scares me about the Funnel. Some other Martingale (and similar systems) will end a losing series at some point to save the account. It doesn’t sound like the Funnel does. Lisa’s idea sounds reasonable, though. The odds are very good that you’ll be profitable for a while before a big string of losses hits. It’s probably best to hold your trade size (or increase it even less than the FF support recommends).
October 17th, 2008 at 11:26 pm
Scott
the answer depends on the size of the lots you are using and the leverage your broker offers.
For example with Alpari the lot size is 100K per lot with a 100:1 leverage (but you can ask for upto to 200:1). With IBFX it is 10K per lot for a mini account and 100K per lot for a standard account and they offer any where between 100:1 to 400:1.
so for a 100:1 alpari account. the absolute most you can trade is 2500 * 100 or $250000. Which of course is 2.5 standard 100K lots
For a 200:1 alpari account, this is around 5 lots
For a 400:1 IBFX mini account, this is 2500 * 400 or $1,000,960 or 100 mini 10K lots
However, here comes the BIG differences. If you trade Forex Funnel using a 0.01 lot starting position and a martingale strategy which doubles every time, how long will it take for you have a margin call?
On an Alpari account with 100:1 leverage and 100K lots, the answer is about 7 bad trades in a row (i.e. 0.01 + 0.02 + 0.04 + 0.08 + 0.16 + 0.32 0.64 + 1.28 = 2.55)
On an Alpari account with 200:1 leverage and 100K lots, the answer is about 8 bad trades in a row (i.e. 0.01 + 0.02 + 0.04 + 0.08 + 0.16 + 0.32 0.64 + 1.28 + 2.56 = 5.01)
For an IBFX account with 400:1 and 10K lots, the answer is about 13 trades (i.e. 0.01 + 0.02 + 0.04 + 0.08 + 0.16 + 0.32 + 0.64 + 1.28 + 2.56 + 5.12 + 10.24 + 20.48 + 50.96)
As you can see the IBFX account will last longer, but because the lot sizes are only 10K and not 100K you will make far less money.
October 17th, 2008 at 11:53 pm
the other thing I was going to add, was that because this is a martingale system, doubling your leverage only increases your breathing space by 1 bad trade.
As you can see above moving from 100:1 to 200:1 only gives you 8 bad trades in a row and not 7.
The other things I was going to add is the funnel documentation does not tell you if the lots are mini 10K lots or standard 100K lots.
October 17th, 2008 at 11:53 pm
I think maybe there are two things that would help. 1) Use smaller lot sizes than even FF recommends. I’m not necessarily sure you would have to keep it at .01 lot forever, but perhaps make .01 per $5,000 instead of $2,500. 2) Take some profit out of the account at regular intervals. This would eventually produce a “free trade” where you are only risking house money.
I found out that IBFX allows for 400:1 leverage, but frankly that scares me to death. With such high leverage, there is always the chance that price could move so quickly that not only could you lose all your balance, but you could end up owing the broker additional funds, which would not be good.
Cheers,
Scott
October 17th, 2008 at 11:55 pm
scott, using a smaller lot size only delays the inevitable by one bad trade.
The real question you need to ask is what is the probability of a long run of bad trades.
Since I don’t have a funnel licence any more I cannot answer that one. Some one will have to do a frequency count of runs of loosing trades to help us on that one
October 18th, 2008 at 12:10 am
Macro, thanks for taking the time to do that math. I will be glad to sum up the frequency of wins/losses for everyone after I get more time in with the demo. This is only my 3rd day running. Maybe Lisa or someone else has more data.
I would think having the robot exclude NFP Fridays from its schedule would help the odds as well.
Scott
October 18th, 2008 at 7:36 pm
hi Lisa,
did you survive the trades on 13th oct? if you did, how did you manage to do that?
is it recommended to use E/U as a hedge against any uptrend or vice versa.
thanks.
regards,
Joshua
October 19th, 2008 at 4:35 am
Hi guys, First time posting here.
I have been testing a similar EA (check http://www.fxpromaker.com) for the last 1 year. I got some news for the who trade the funnel with 0.01/$2500. Sooner or later you will get a margin call. I got a margin call on .02/$10K acccount in February. Luckily it was a demo account.
martingale strategies are extremely risky. Martingales designed to use for betting. Somehow forex traders who look for the easy path adopted the martinglae strategy into forex.
However I’m still using this EA, but on my manual trading. After I confirm the trend fom 4h charts I manually activate the EA.
If you use this EA as “set & forget” becareful.
I have sent 3 emails to the funnel develper, asking him to show a real money statement, but still waiting for a reply. The chances are , they them self do not use this EA to trade their real money.
October 19th, 2008 at 8:50 am
Hi Angelo,
Are you able to pls post the link to the statement showing your margin call? I am very surprised that happened with 0.02/$10k. Was the leverage at 200:1?
I thought the funnel only became available to the public in June yet you say you got your margin call in February.
Lisa
October 19th, 2008 at 11:39 am
Lisa,
Angelo said he uses a similar EA (http://www.fxpromaker.com), not the Funnel. It’s also based on Martingale. I don’t know what the difference is, but Martingale strategies all carry the same type of risk…unless they close positions at a max loss point or do something else to end the progression before an account blowout.
The FXProMaker is considerably more expensive than the Funnel, for whatever that’s worth. Interestingly, the peformance on its website doesn’t indicate a margin call, but it does say “BEST RESULTS of previous months.” Best results? Since when do systems get to test many variations and only post the “best” results?
October 19th, 2008 at 12:00 pm
Regarding Angelo’s margin call, this is an apples to oranges comparison. How is fxpromaker similar to FF other than that it uses a martingale type strategy? For starters, fxpromaker trades lots of different pairs, while FF only trades USD/JPY. Second, you mention trading fxpromaker manually only after you have discerned the 4-hour trend. FF actually does best in a non-trending type market, though it seems to do OK as long as there are occasional pullbacks, which there always are. So, other than to sound a general warning about martingaling, which has already been done here, not anything you’ve said is really a strike against FF.
I received an email from the FF authors yesterday. I don’t know if they can be trusted, but they claim that they have never had a margin call using the recommended money management settings. Does it mean it’s impossible? Certainly not. But I have been searching long and hard, and I have yet to find anyone who has experienced a margin call with FF when set up this way. I think the bottom line is… is a margin call probable? No. Is it possible? Yes (maybe less than a 1% chance, but certainly possible in a “perfect storm” situation). I figure the price would have to rise between 150 and 200 pips without any 20 pip or greater pullbacks in order to get a margin call. That is highly unlikely. Again, I figure one could mitigate some of the risk by opting out of NFP Fridays or days when there might be other really tumultuous news. I will continue forward testing and talking to others who are live, such as Lisa.
Cheers,
Scott
October 19th, 2008 at 11:54 pm
Forexfunnel review without getting into detail:
Negatives:
- the risk is unusably high in that you can lose almost your entire account on a single bad trade. The type of market condition that produces this maximum loss losing trade is very rare ( years in between), but they have happened before, so it’s safe to assume that it will happen again, and it can be worse then the past.
Positives:
- Forexfunnel works hard and does make money consistently.
[Important Guideline]
- You must understand thoroughly about margin requirements and lot size. With brokers having different specifications about standard, mini and micro accounts, the number of lot size is not the same.
-You must understand the maximum lot size allowed. For example, IBFX and FXDD’s maximum is 50 lots. This puts intereting combination of lot sizes that can be used with Forexfunnel, so that you can choose how many trades you want it to open. For example, the vendor recommended 0.2 lot will open 8 trades - 0.2, 0.4, 0.8, 1.5, 3.2, 6.4, 12.8, and 25.6. Next double is 51.2 and since it is over 50, it won’t be opened if your broker’s maximum is 50 lots, which I believe most of them are. 0.1 lot will open one more trade as it starts from 0.1. Getting kind of detailed here, but opening more trades is not necessarily a good thing. FXOpen’s maximum lost size is 1000, so it will keep on opening more trades as needed. It means that you will have bigger losses on larger lot sizes on subsequent doubled up size trades if the forex pair continues to trend up, and will require higher margin than opening smaller number of trades. But, if it opened too small number of trades - using 5.0 lots, you will only open 4 trades, and it is not enough to turn all trades into a winner. Each series of trades of Forexfunnel must be a winner. It is black and white.
FXOpen’s 1000 lots maximum changes the margin requirement completely from having the 50 lot maximum. You will require a lot more margin. I believe this is why on another Forexfunnel forum site, the guy got stopped out on massive uptrending 10/14/08 timeframe, because he had an account at FXOpen. It turned out that opening 6 trades was enough to take out this uptrend drawdown. His FXOpen account opened 10 level trades, which would require a lot more margin to support. This is why others have not been stopped out. A close call, giving a glimpse of what a bad trade can do for all Forexfunnel users. All this is saying here is, Know your Risk.
- You must do the backtest, if you are going to put real money to work. You owe it to yourself. The potential loss of the rare but real risk is too high.
- Since Forexfunnel may trade for years without running into this risk, it will be profitable. I advice you to take money out regularly to keep the potential risk amount small. This way, all you can lose is what is in that account. By then, you may already be in profit, so you won’t be hurt too much if that losing trade comes along to wipe you out. Whatever you do, do not put your entire amount on Forexfunnel. It would be a sure way of wiping out your account including not only gains but also your original capital at some future point. It would be devastating.
- A little mitigation idea that I came up with. I yet have to see this work live. I was not able to test it completely, but I did partially tested it in demo during this 10/14/08 close call. As a trader, you would have to make a decision when, but definitely before your margin goes to zero, close your largest losing trade. This will free up some margin required for your account to stay alive and buy some time for the other losing trades to come back. In the mean time, Forexfunnel will realize that it has one more trade to open, and issue a limit order for this largest lot size trade at a higher price point than the one you closed. (I have to go back to the trade log to verify this) This will help winning this set of trades, as the market is expected to retrace down at some point, and if it does, you escape with less damage than what it could have been.
Good Luck.
October 20th, 2008 at 12:13 am
thanks lucky johny for your explanation
October 20th, 2008 at 9:01 am
LuckyJohny,
in regards to mitigation, would it help if E/U combined with U/J as a way to hedge against huge loses?
thanks.
October 20th, 2008 at 12:48 pm
I don’t see how putting forexfunnel on a different pair would work as a substantial hedge. Maybe a small one. The amount at risk is much greater than any potential gain on another pair, and also introduce the risk on that pair.
October 20th, 2008 at 9:08 pm
Scott,
you are wrong about Fxpromaker. I own the system. While it is true that they have in the past used more than one currency pair, for many months now they only use and recommend the JPY/USD pair just like FF! There are a couple other strategies that one can test, but this is the one that is recommended to trade live.
Also please reread Angelo’s post. Fxpromaker is the same as FF in that it requires no manual intervention. The only reason Angelo uses manual intervention is b/c he doesn’t feel comfortable leaving it alone, so he uses it as a tool. Most of the customers don’t do this, they leave it alone just like FF which is what is recommended. It is autosystem.
Many Fxpromaker customers have reported margin call Oct. 6 when there was big down move in USD/JPY of about 400 pips without retracement! Wiped out many account even with recommended settings!
FF customers didn’t receive margin call Oct. 6 b/c as I understand is that it can handle down move.
However, Oct. 13th there was a big uptrend of about 300 pips without retracement. This was trouble for FF. Some customers got margin call as well!
The bottom line is this move will happen again, it is just a matter of time! What if the next time it moves up 500 pips without retracement?
It will wipe FF accounts too!
Be careful!!!
October 21st, 2008 at 12:48 am
I’ve been testing the funnel religously for a couple of months on my blog, http://www.forexfun.net and i even post my detailed weekly results. So far, Lisa is right, most people make the lot size mistake and give up, bad idea.
Yes, it is risky to trade funnel but ****newsflash****, it is risky to trade forex. There is no system that takes the risk out, its just not going to happen. The best thing you can do is know your limitations and risk tolerance then extrapolate your money management techniques from there.
Honestly though, i’ve just let the funnel run on my demo account. I’m trading very conservatively with a 25k account at .01 lots. So far its been great even though each pip is only worth .0912 cents, hehehe.
Matt
October 21st, 2008 at 1:30 am
Leo,
If FF and Fxpromaker is not recommended EAs to use, can you name one or a few EAs that is worthwhile to use regardless whether the market is trending or consolidating?
thank you.
regards,
Joshua
October 21st, 2008 at 6:05 am
Leo, the fxpromaker website (in the FAQ section) says that the robot works on any pair. That is a fundamental difference. The FF authors have only ever recommended UJ for their robot. Another thing is that FF only has ONE long position (but multiple shorts) open at one time. Does FxPro do that? The point is that this thread is about FF, and introducing comparisons to other robots, no matter how similar, just confuses the issue.
October 21st, 2008 at 6:10 am
You nailed it, Matt. Forex is risky, period. If my demo continues to go well, I plan to run FF live and just periodically pull the profits out of the account. Then once I’ve doubled the investment and am playing with house money, I will consider upping the balance and lot size used by the robot. In short, there are ways to deal with the high risk and still be successful.
October 21st, 2008 at 8:41 am
Joshua: You are expecting too much out of a system. It is hard enough for an experienced trader to spot when a market shifts regime between trending, consolidating, reversal, etc, let alone to get a computer to do it. Almost all indicators will tell you the market has changed long after the fact. Those that claim to spot a shift ahead of time are right much less than half the time.
You are far better off finding a couple of good systems for different market conditions and managing your risk, so that when the market does shift regimes you don’t get hurt too bad and you can then switch systems.
October 21st, 2008 at 10:21 pm
Matt, I’m curious, with a 25k account at .01 lots, what kind of percentage return are you averaging on a monthly basis?
October 23rd, 2008 at 10:44 am
I’ve used the funnel since July live. Been margined out once, once almost, my fault though. This does make money but you need to supervise it. Owner sent me a broker sheet of his live account(how to know for sure?) shows about $40k from 10k since July. Works, but be careful.
October 23rd, 2008 at 2:52 pm
Hi, TW. Thanks for the report. What strategies are you using to protect yourself when running FF? When you say you’re supervising, do you mean you’re manually closing everything if it opens up too many trades?
Scott
October 23rd, 2008 at 5:20 pm
Yes, that is what I do anyway. I suggested to a him put a risk percentage feature that will limit how many orders so It doesn’t get out of control. Maybe he will add that.
October 23rd, 2008 at 6:39 pm
Hi TW:
I am also live with the funnel for a month now, about $1500 in profit from a $2500 account. Worst drawdown was 40% on 13th Oct but otherwise I’ve let it run and it’s been fine.
You said you got a margin call once, when was this? How many positions did it build up? Why was the margin call you almost got your fault, what happened? Would be interested to know.
I noticed the system took out a buy position at a small loss that had been there for a month. Did anyone else have the same?
Regards
Lisa