FPA Introduces Managed Forex Accounts Performance Testing

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It is not a very good idea to test managed accounts and rate them on raw results only. It s obvious that some of those managers take crazy risks with their strategy and, occasionally, some of the accounts will litterally skyrocket at least for some time.

What will you do then ? Give them a 5 stars review ? I d still not give them one penny of my money to manage because the account can collapse at any time and faster than it climbed the chart. If I was just another crooked money manager, I d cleverly use 2 companies and use 2 high-risk options strategies in opposite directions. One of my managed account would collapse in shame and one would be highly profitable. Then I d get money from the suckers with my successful demonstrator.

Dont forget that even a blind pig finds a truffle occasionally.
 
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It is not a very good idea to test managed accounts and rate them on raw results only.

Hey Michel, I completely agree. We love the Forex Peace Army testing, but it lacks one thing - equity drawdown. I have a great example here:

ForexVerified - 4xSureSmart Test

Since we've been testing 4xSureSmart on February 10th, they've made 80% gain. The balance graph looks great. The problem is one little stat that you won't see anywhere else: equity drawdown. During that time they had a max drawdown of 58% (equity, not balance), which is why our proprietary scoring system only gave them a "1.02". It's a red flag that this company "could be dangerous, despite the great results."

Unfortunately, equity drawdown is the ugly monster that's easy to hide. Metatrader 4 doesn't tell you anything about it. You have to watch the account for an extended period of time to see it. I have a feeling that Forex Peace Army will end up going the route that we did: a big ol' database with a statistics-recording EA that continually monitors everything from equity drawdown, margin usage, spreads, trade duration, etc. Combine this data with a good test duration (6+ months) and you have a pretty reliable trading history to base decisions on.


Scott Wang
Forex Verified
 
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