As part of my ongoing set of reviews in Project 10, I thought I would have a look at FAP Turbo. FAP Turbo is one of the latest in a series of heavily hyped expert advisors to hit the market. In a previous review, I looked at its predecessor product Forex Auto Pilot System (FAPS), and in this review I will unpack the genesis of FAPS.

Word of Caution: This is a preliminary view of FAP Turbo. It is highly likely that I may have made some mistakes in this review. So please read everything I say with a skeptical mind and form your own opinion. If you see an error or have some suggestions for how to improve the review, please let me know.

Claims

The makers of FAP Turbo claim to have turned $370 into $7300 in 2 months, $2500 into $8700 in 45 days and $5100 into $25100 in 30 days. With claims like that it is worth a deeper look.

Unlike most commercial expert advisors, FAP Turbo does not make huge claims on the basis of a back test result about how it is a money making machine which will funnel money out of the market while you sleep and will enable you to buy lifestyle items of the rich and famous like fast cars, mansions and yachts. Most of the claims revolve around their published performance in forward testing. This is somewhat of a refreshing relief.

What Do You Get For The Money?

At the time of writing this article for $149 US you get:

• The FAP Turbo MT4 Expert Advisor (deployed as a precompiled mql file (no source) and as a DLL). FAP Turbo is actually 2 systems in one EA. It consists of a refined version of the previous FAPS strategy for trading the EUR/USD and a new trading system for scalping the crosses (EUR/GBP, EUR/CHF, etc) ;
• A 64 page PDF manual; and
• Access to an online forum for support

The website claims that in the future the price may rise to $349 US (per month?). I don’t know if that is the case or not, but it feels like a bit of a high pressure sales tactic to me.

As far as I understand FAP Turbo can be used on an unlimited number of demo accounts and a single live trading account. FAP Turbo is updated on a monthly basis, so you will need to download it regularly to ensure you are using the latest version.

Refund Policy

As this product is sold via clickbank, there is a 60 refund policy. I have not tried to get a refund myself for this product. but I do know that those who have tried to get a refund on similar products have had more luck getting the refund directly from Clickbank, than from the providers of the software themselves.

Who Wrote It?

If you read the FAP Turbo website, the story is that Marcus Leary (the creator of FAPS), laid out a challenge with his FAPS system, which was that he was willing to provide access to the source code for FAPS (under a non-disclosure agreement) if you can demonstrate that you are able to improve upon the original FAPS. If you did make a major improvement, he would then let you keep the source and then he may consider marketing it and cut you in. Apparently a team of three guys rose to the challenge:

• Steve Carletti (lead developer of FAP Turbo and a professional programmer)
• Mike (a wiz with “complex numbers” and old university buddy of Steve’s)
• Ulrich (an open source programmer and old university of Steve’s)

Out of all of them, Steve and Mike seems to be quite active on the support forums.

Support

FAP Turbo comes with a reasonably good manual compared to other expert advisors. The manual still does not top pipboxer’s manual, but it is still pretty reasonable. There are also some online video tutorials which show you how to set up and install FAP Turbo. In terms of actual support, there are a number of alternatives open to you, including: a support number, an email address and a support forum that comes with FAP Turbo.

If you read the forex peace army website, the phone number just leads to an answering machine, which is full and cannot accept any more messages, so don’t waste your time there. I haven’t tried the email address, but if it is like the FAPS one, my best guess is they are flooded and they probably wont answer your question properly. The FAP Turbo forum seems to be very active, so if you have any questions about FAP Turbo, I recommend you start there with your questions.

If you want to talk to other FAP Turbo users outside the FAP Turbo forums, you can seek support through the FAP Winner website (not free) and the Forex Auto Pilot Forum website (free). Support via FAP Winner can be heavily moderated, which is good (keeps the trolls away) and bad (the forum is biased). Unless you want to discuss how FAP Turbo should be used with FAPTS, I would recommend you try the Forex Auto Pilot Forum, as the moderation is not as heavy handed.

Uniqueness

Scalping the cross rates, which is what FAP Turbo specializes in is not unique.   There are a number of other products on the market which were launched at a similiar time as FAP Turbo.  Examples include: FXGTC’s Xtreme Product, Piptronic, Forex Bull, Forex MetaRobot, Stomper, BankingFX and probably numerous others I have missed.  Who is copying whom, I do not know.  Mike, from FAP Turbo, indicates below in a comment that FAP Turbo was in testing in summer of 2008.  Given a large number of these systems listed above did not appear on the market until later, I suspect a number of them are riding FAP Turbo’s wave of popularity.  However, having said that internest in scalping the cross rates was made popular about 2 years ago, when some of the better performing systems in the automated trading championships exploited a similiar strategy.

How Does FAP Turbo Work

Like all EAs that I have reviewed so far, FAP Turbo is a “grey box” system, meaning that the internal logic of how it trades is proprietary, but the user can adjust some of the settings. If you read they documentation, there is little clue as to how it works, but comments on forums provides more insight.

As mentioned above FAP Turbo consists of the original FAP strategy (the “long term” strategy) and the scalper (the “short” term strategy). I have already gone through the original FAPS system in some detail (see link here), so I won’t waste time covering it here. I will just go over the scalper here. There are some differences between FAPS and FAPS Turbo. These seem to be improvements around the kinds of parameters you can set and the availability of a built in hedger and other additional features to help manage trades.

Now lets unpack the FAP Turbo scalper.

Markets (the scalper)

The FAP Turbo scalper is designed to trade EUR/GBP, EUR/CHF, GBP/CHF and USD/CAD on a 15 minute chart. Internal logic prohibits you from trying this system on other pairs or time frames.

Entries (the scalper)

Even though the short term strategy in the manual is described as a “scalping strategy”, according to the manual the scalper is not a traditional scaler which does high volume of small trades around the spread, instead it aims to make 1 – 5 trades per day using a tight profit target of 6 to 15 pips.

The manual does not describe how the system decides to enter the market, if you read the FAP Turbo forums, you will see the system described as a “range bound scalper” which is looking to make quick profits off of ranging markets.  If you look at the settings for FAPTurbo, you will also see that it applies a number of filters for entering into trades:

• Look for entries between 2100 GMT to about 0200 GMT (i.e. from the close of the new york session and into the asian session).
• If the brokers spread is too high, e.g. 2-4 pips for the EUR/GBP pair and 5 – 6 pips for the other pairs, the system will not make an entry.
• If the last fifteen minutes of trading has been too volatile do not enter today (controlled by the scalper_simple_height_filter setting)
• Only open trades in the direction of the trend (determined by a moving average – which is settable by the user)

As I mentioned above, the documentation does not provide much information about how it actually works. My best guess is the edge in FAP Turbo relies on a relatively well known feature of the forex market, which is that the Asian session is very quiet and markets tend to range during these times, which makes it a good candidate to trade. The slower moving nature of the pairs used by FAP Turbo means that the scalping trades are less likely to be stopped out by a sudden market movement, thereby enhancing the edge described above.

Exits (the scalper)

Again there is no real documentation about how the system exits trades. From what I have seen discussed on forums there are three major exit conditions used in the FAP Turbo scalper:

• A profit target of 6 to 15 pips is used (the target is based on the pair used and potentially some other property such as the recent price range movements);
• The “custom levels” filter (which I don’t know how it works) is some kind of profit taking filter;
• A stop loss is used which varies between 53 and 112 pips (the target is based on the pair used and potentially some other property such as the recent price range movements); and

The system comes with a feature to actually hide the read stop loss and profit target from the broker. The system will actually trade with a much bigger fake stop and fake target set as part of the order, but the internal logic of the system will still use the exits described above.

Position Sizing (the scalper)

The user has the option of setting the position size manually, but they can also rely on setting a risk factor variable (called the “Lots Risk Reductor (LRR)”) and then let the system calculate the lots automatically for them.

The auto lot feature simply calculates the number lots based on the LRR as a percentage of the free margin left. For example, if you have $10,000 left as part of the margin available and the LRR is set to 5%, then the system will open a $500 position. The system contains some logic then to calculate how many lots that is based on the type of account. Note that this is not the same as risking 5% of your account on a trade as the system does not use the width of the stop loss to calculate the size of the trade. So, if a trade fails, you can loose significantly more than 5%.

In terms of recommended settings, Charles from FAP Winner, has provided some recommendations. He recommends that:

• For conservative traders, you should trade only 2 pairs with the EUR/GBP LRR = 20 and the EUR/CHF LRR = 10
• For traders with a moderate risk tolerance, you should trade only 2 pairs with the EUR/GBP LRR = 30 and the EUR/CHF LRR = 20
• For traders with a high risk tolerance, you should trade 3 pairs with the EUR/GBP LRR = 40, EUR/CHF LRR = 20 and GBP/CHF LRR = 30

Note that, you are trading a leveraged market, and even the conservative settings can blow up your account in some conditions. If you want genuinely conservative settings, you may want to lower the LRR to 1.5. If you do this of course, you won’t see the spectacular profits either.

Performance

As mentioned above, the makers claim to have turned $370 into $7300 in 2 months, $2500 into $8700 in 45 days and $5100 into $25100 in 30 days. There are others out there who have also published their live statements, which achieve similar results. For example Mark over at ForexTester.com, traded $5000 up to $35000 over the period of a month (see statement here). However, not everyones results are the same. For example, FX Robot Man, traded $10 000 to $12 000 in a few weeks and he then proceeded to loose all his profits and is now only $873 up (see statement here). I have traded it on a demo account myself and over the period of a month it traded $5000 up to $8000.  I then traded a live account and proceeded to make 20% and then loose 50% of my account (see the blog entry describing my loss here).

Obviously the system is good but far from perfect.  In analyzing the statements, the key differences come from a number of sources:

• The amount of leverage used. The LRR can range anywhere from 5 to 75. This is why some accounts return significantly more than others.  For example, the spectacular results on the FAPTurbo.com web page, which traded 370 to 7300 in a couple of months was achieved using a LRR of 75.  The owners of the system did this obviously to attract the attention on would be punters like you and me.  Since making their cash, they have now eased back their risk settings considerably in order to preserve their extremely profitable result and hence keep the draw card for the punters.
• The long term strategy on the EUR/USD pair, which is based on the original FAPS, is profitable in trending markets, but if the market reverses, you can loose a significant chunk of your account. For example, in FX Robot Man’s account, this is exactly what happened
• Trading the short term scalper has varied results between pairs. Trading the USD/CAD yields the poorest results (even a loss in some cases) and the best performance can be seen on the EUR/GBP pair.

It seems that if you want the best results out of FAP Turbo, trading the EUR/GBP pair is the most productive during the period the FAP Turbo was released. )

Weaknesses

If you read the documentation, the acknowledged weaknesses of the system are as follows:

“Scalper strategy does not work well on crazy market conditions. When the currency pair has an unusually strong trend or very high volatility (It is recommended to avoid trading on such days. We tried our best to filter out such days automatically but still do not recommend trading on high volatility days.)”

I am not sure I understand why this is the case, because so much of how the system actually trades is not transparent, so we will need to take their word on it. However, I have traded FAP Turbo through one of the biggest trends I have seen on the EUR/GBP in a while, and it seemed to perform ok. So I am not sure how much stock to put in the thing about not trading it during unusually strong trends. The system is capable of trading a trending market where the trend is in a well defined channel. It is when the volatility picks up and the market spikes or suddenly retraces is the thing that is likely to kill you.

In addition to this kind of weaknesses, there are a number of other weaknesses to be careful of. In particular:

• As the entry has a filter based on spread, if the broker’s spread is too high, FAP Turbo will not make any entries. This is not a bad thing, as it just costs you profits, rather than making a loss;
• The FAP Turbo scalping strategy relies on fixed profit targets and stops. If your broker is prone to misquotes (something that can be quite common on the crosses traded by FAP Turbo), then there is a real risk your profit target and stops will not be honored. This could leave you with a nasty hanging position if you are unlucky; and
• As the strategy relies on wide stops (relative to the profit target), if you adopt a moderate to high Lots Risk Reductor, you could end up with a major loss if the stop is actually hit. Therefore you need to be careful with the LRR setting in choppy markets.
• As mentioned in the section on performance, the performance of the scalper seems to be related to wether or not the market is trending or not

How Best To Trade It

Trading is risky business and if you do decide to trade FAP Turbo, you need to be willing to accept the risk of potentially loosing everything in your account. Therefore, you should only trade FAP Turbo with money you can afford to loose. Given the significant chance of loosing money, FAP Turbo is not for everyone.

Now that I have established that, if you do decide to trade with FAP Turbo, to get the most out of FAP Turbo there are three things to keep in mind: adjust your risk profile to match market sentiment, broker selection and spread settings.

LRR Settings

Getting your LRR settings right is crucial.  Too much leverage and when you have a bad trade go against you you will wipe out your account.  Too little and your will die of old age before FAPTurbo turns a profit.  Where you set the LRR is up to you. At the moment I am trading using the conservative settings described above.  Trading with more than that cost me 50% of my live account.

Broker Selection

Probably the next most important thing with scalpers is broker selection.  As different brokers use different spreads, you will get very different mileage out of FAP Turbo on different brokers as the spread is part of the entry filters. If the broker’s spread is too high, FAP Turbo will not make any entries. Similarly, scalping relies on fixed profit targets and stops. If your broker is prone to misquotes (something that can be quite common on the crosses traded by FAP Turbo), then there is a real risk your profit target and stops will not be honored. Also, scalping EA’s are not particularly well received by dealing desk brokers due to their 90% plus strike rate and the ability to make gains rapidly against the fixed low spreads offered by these brokers. Some of these brokers will actually shut down your trading account.

Given these issues, it is worth your time to read around the forums and see which non-dealing desk brokers are not prone to misquotes and don’t tend to increase their spreads just because of FAPTurbo. According to the documentation, they recommend FXDD, Forex.com, FXCM and FX Pro.I have tried trading FAP Turbo with IBFX, but my results have been pretty mixed.  Most of the better results that have been reported by others have been achieved using FX Pro,  FXCM and FXDD.  FXCM requires a $5000 deposit, so it might be a bit rich for some to use, so a number use FX Pro or PXDD instead.  Between FX Pro and FXDD, FX Pro seems to give better results.

Spread Settings

The third  most important thing with scalping is getting your spread setting right for your broker. Due to the Global Financial Crisis, and an increase in volatilatility accross all markets globally, most brokers have increased their spreads.  This in turn adversely affects FAP Turbo’s performance.  Some FAP Turbo users are now increasing their “maxspread” filter settings to ensure FAPTurbo continues to trade.  The maximum suggested setting is 10 pips, but currently the suggested settings at the moment include:

• EURGBP- 6 (7 for very high risk)
• GBPCHF- 7 (8 for very high risk)
• EURCHF- 6 (7 for very high risk)
• USDCAD- 6 (7 for very high risk)

Adjusting your risk profile to match Market Sentiment

Some traders like to adjust the LRR setting based on market sentiment.  The theoury being that when market conditions are right you can increase your risk profile to increase your profits and you can scale back your risk or turn FAP Turbo off when market conditions are not appropriate.

That is is the theory anyway.  The problem is knowing when to increase/decrease your risk.  If this was a trend trading system, I would say that this is the right kind of strategy.  However, this is a scalping system with a lot of filters already built into it to avoid bad trades. Therefore, manual intervention may actually harm your overall performance. I don’t do this myself as I prefer to let FAP Turbo do what it is designed to do.  If you want to give this a go on your demo account there is some guidance in this space:

1. Look at the price action for each pair. FAP Turbo works better in markets where the price ranges in a narrow channel less than 60 pips. If the market is too volatile / choppy, it is probably best to stand aside or trim your risk.
2. Look for major news announcements which may occur during the times FAP Turbo trades.  If a major event is coming up you may want to stand aside or trim your risk;
   

Other things to think about

In addition to the above, some other things you might think about to improve the performance include:

• Some traders don’t trade the USD/CAD pair.  This pair is probably the most problematic for FAP Turbo and is the most likely to give you a loss.  Others take this one step further and only trade the EUR/GBP pair as it is “theoretically” the safest;
• Some traders mess around with the “custom levels” and “simple height” filters.  Turning these off seems to increase the number of trades made by FAP Turbo, and therefore the profitability.  However, these trades are lower quality trades and put you at greater risk of taking a big loss;
• Some traders who FAP Turbo actually don’t trade the long term strategy any more and just focus on the scalper as it is more profitable and lower risk. You don’t need to be that radical. The longer term strategy works well in a trending EUR/USD market, so you should consider just switching it on then.

Parting Thoughts

I am not going to recommend you buy FAP Turbo. That decision is yours and yours alone. If you do decide to buy it, make sure you do your due diligence on it before you buy it and make sure you do adequate testing on it before committing any of your hard earned trading capital on it.

Out of the many expert advisors I have reviewed, I must admit this is one of the better ones. If you are looking at automated trading, you may want to spend some time investigating this one.

This entry was posted on Monday, December 29th, 2008 at 10:14 pm and is filed under Product Reviews. You can follow any responses to this entry through the RSS 2.0 feed. You can skip to the end and leave a response. Pinging is currently not allowed.