[Update Feb 17th 2010: the statement mentioned in this post is offline now, for two reasons: 1. the statement provider stinks 2. Um, I'm too much of an aggressively intervening idiot for it to be worth eyeballing anymore. I've been leaving it alone for some time now, just letting the robots do the excellent work they do on the recommended settings without my intervention - but I've also moved brokerages from FXDD (not recommended anymore) to I AM FX.]

It’s time to let this puppy out of the bag.

I’ve blogged a bit here about experiments in the stock market, which I’ve been successful at.. not losing money in. Not losing much money, anyway. Relatively. I’ve had a few astonishingly good plays (one with 100% return in 3 days), following the swing and day trading recommendations of a newsletter, which newsletter (and associated “direct line” service) has also helped me in learning options and “scalp” trading.

The problem is that I’m human, and my impatience for high returns has interfered, and I’ve tried tweaking the recommendations of the pros or trying my own thing which inevitably.. you guessed it.. blows up in my face. If I followed recommendations with conservative scrutiny to the letter, I’d be breaking far above even.

(And this seemingly incessantly sideways market that has every sign it should be a bear market has been driving me batty. The market can remain irrational longer than you can remain solvent.)

But you are wondering what the headline is about. I’m getting to that.

What I’ve learned is that when I stick with what a pro says, I make money. If I tweak it or place my own (intemperate, more aggressive high-return seeking) speculations, the odds of my failing are better.

And I’ve learned that with these robots, too.

What robots?

There are programs that monitor and respond to live, streaming market data, and which respond to the data by sending (or not sending) buy and sell commands to your trading account with a broker. You run these programs in an environment (application) that you can host on a computer connected to the internet (the buy or sell commands are sent over the internet).

These programs that execute automatic market trades are referred to as Expert Advisors, or EAs, or more simply robots, or Forex robots.

These robots have been programmed with all the ingenuity and detached observation of seasoned investment professionals who have long histories of avoiding losses (or cutting them early if they must), letting their winners run, and bringing in high returns on investment.

Or, depending on who made the robot, they can exhibit all the sloppy oversight, inordinate aggression, or simple wrong-headed-ness of an overly risk-tolerant buffoon who doesn’t know when not to enter a trade or cut a loss off early.

But among all these robots, those that work really work.

For me it’s the discovery of a lifetime. So deceptively simple, so obviously awesome.

I closely examined the claims of many of the programmers of these robots, examining their published historical and live investment account statements, and thinking: if these robots really work, they have no reason to fudge these statements to lie to me, just to get me to buy, because they’re already making a killing doing automatic trading with their own robots. The robots could really be worth the thousands of dollars they’re claiming, and a hundred or a hundred and fifty bucks for one of these robots really could be a bargain in the face of the potential the robots harness, and they’ve well earned the right to sell these robots to bring in extra cash to throw into their grossly fattening investments.

And if the robots don’t work, they’re telling me how to set up an account that will let the robots run against live market data, the very same markets and data that people trade real money on, except that I’m using pretend money to see what the robots would do with real money. If that is the case, then I can avoid all risk by seeing that it doesn’t work, and being refunded what I spent for the robot.

You can run the robots on historical data as well, emulating how the robots would perform in any period with known data (to a large degree, with admitted limitations).

I ran the robots through a lot of back-tests ranging over many years (on historical market data) and forward-tests (on live market data, with pretend money). That means exposure to a wide variety of market conditions, volatile and non-volatile, ranging, trending, bull, bear, sideways, dropping, spiking – everything.

They work! They take money, and make more of it! Sometimes a lot more of it!

A high proportion of the trades they make are winners. There are small and big losers here and there – which are far outweighed by the winners. And among the losing trades, the robots are good at cutting losses early, further limiting losses.

By far the weight of the scale goes with wins.

I’ve given these robots real money. And they’re running with it and bringing back more money, and how.

In tests and live trading I have tweaked the settings of the robots outside of what their programmers recommend, and when I do this by and large the robots blow up my money (lose it). When I leave the settings as the pros recommend them, by and large they bring back consistent positive returns.

As the title of this post says, these Robots have returned $1,884 in 5 days – only the first trading week of this year! Here is my live investment account statement to prove it. This statement updates automatically with every trade the robots place. Look at the “Profit” column. The “Closed P/L” (Profit or Loss) total below it shows the total profit (or, when applicable – and gratefully not here – loss).

These robots brought that in while I did nothing. Nothing besides stand aside, waiting on tenterhooks, because I’ve learned I just need to sit back and let the robots do their job, and wait it out, and watch the returns come in.

Starting out even on this live money account, I tweaked the robot settings in ways I obviously shouldn’t have and saw substantial losses. I was so terrified after that I was tempted to throw in the towel, but said to myself: No, I can see a direct cause and effect here of my meddling with the settings and the robots losing money. I’ll learn this lesson for the last time, put the settings back to what the pros recommend, and just sit, watch, and stop meddling.

It is after I made that choice that I’ve seen the robots fall into a longer-term pattern of bringing in more consistent and high returns. And the live statement begins near to where I made that decision, showing a start amount of zero, which of course isn’t true. It’s only showing the amounts invested and returned in each trade. In fact at this writing I have yet to climb back into the “black” above the substantial losses of my meddling with the settings. I am confident these robots will climb back above that loss and then well above and beyond it.

I have simply believed the robots will work, and been proven right. I could have been wrong. And although I don’t believe I’ll be shown wrong, it’s possible I could be. You must realize that. As you drool over my gains. And watch them seriously amass over the long term. If you aren’t watching your own returns amass by then.

I’ve averaged the returns over all the days since that decision (more than 5 days) – taking the percent gain per day, and dividing it by the number of days – right now the average is 2.33% returns per day.

If these robots continue at that pace unabated for an entire year (and my back-tests give me excellent reason to suspect they will), the return on investment will be 40,884% percent!

You can look at the math rundown in a spreadsheet I’ll provide here, or in .pdf file printouts from spreadsheets:

1. The spreadsheet source file. Open Office Calc is required to view this – Excel doesn’t know these functions. It shows how $7,523 would turn into $100,000 in a year at that rate.
2. .pdf export of spreadsheet showing how at 1 percent return compounding for a year, $250 turns into +$3,000!
3. .pdf export showing how ~$2,200 turns to ~$30,000! ..
4. or how ~$7,500 turns to ~$100,000 ..
5. or ~$37,250 turns to ~$500,000 ..
6. or ~$372,000 turns to ~$5,000,000 ..

That’s not on the settings that “came out of the box”. My guess is the default settings return 1 percent or less per day. Also, this assumes continuously increasing lot sizes to invest one percent of capital as capital grows.  I found the web site of someone whose avocation is investment, who has found amazing success with his own custom settings, which I bought from him and am using.

How can you get your hands on these robots, and these settings? I haven’t put together the materials to show this yet, and I’ll update this post when I do.

[Update 01-13-10: Because I am an unbearably human human, yesterday I again made manual interventions I should not have, and much of the account blew up in my face again. Despite this, now that I have stepped aside and let things work by themselves, the robots resume a pattern of consistent, steady gain. Because I am leaving things alone. Like the robot-programming professionals told me to. To my very great displeasure, I again learn the wrong way that the robots can consistently defy odds a human can very seldom defy - if the humans leave the robots alone. I solemnly pledge under penalty of terror and insolvency to leave the robots and their money alone. Until they make enough money that I want to withdraw some. That will be my only, and most pleased, intervention For all this, and to hide the less beautiful part of my account history, the online statement now begins post-human-idiot-intervention-number-2, to represent consistent robot power, not debatable, fallible human power. May the Cylons teach the humans yet. Amen.]