Forex Robots World Cup - Review of the Rules

Welcome back Forex Fans.

Well the Forex Robot's World Cup competition hype- machine is in full swing.

Yesterday, they blasted out e-mails about a "Top Secret" report which can be downloaded for free here: http://www.forex-robot-world-cup.com/.

I read the report and I don't think any "shocking truths" were revealed. But it did expose some of the rules of the competition which are worth a read if you haven't seen them already. Let's go through the interesting ones here:

B(13) - The ownership and Intellectual property rights of an EA will remain with the entrant. At no time will the FRWC organization assume ownership of any EA submitted.

Okay, that sounds pretty good.

B(14) - Should the entrant of a submitted EA be announced as a finalist of any prize category, said entrant (as the acknowledged owner), hereby agrees to unconditionally grant to the FRWC organization sole, exclusive rights to market the EA as it sees fit and for its own exclusive benefit for a period of 6 (six) months from the end of the competition - this is deemed to be 14 days from the end of the live trading phase.

So there's the catch, the FWRC gets the rights to sell the EA and bank all the profits for 6 months! The robot authors get the prize money and bragging rights but thats all!

B(16) - At the end of the 6 month exclusivity period, the FRWC organization shall acquire the non-exclusive rights to market the EA for its own benefit in perpetuity. With the commencement of the non-exclusive period, the owner shall thereafter be free to do with the EA as they wish (sell it, market it, license it), save that the owner may not sell or dispose of any rights to the EA if such sale or disposal would infringe, in any way, upon the rights previously granted to the FRWC organization - for example, the entrant of a winning EA could provide marketing rights to a third party on condition that such provision would not restrict the FRWC organization from continuing to commercialize the EA.

I think this means that at the end of the 6 month exclusivity period, the FWRC has the rights to market the robots themselves "in perpetuity". The EA developers can also market the EA along with the FWRC, as long as it doesn't interferes with the FWRC's rights to market the robot themselves.

B(17) - Any improvements to a winning EA at any time after entry into the competition shall be included within the scope of the marketing rights granted to the FRWC organization.

This one is just plain unfair to the EA developers. FWRC gets the right to future improvements in the EA?

B(18) - The FRWC organization may use any information and/or methods disclosed by competition entrants in any way, shape or form for its own gain.

More of the same.

B(25) - All disputes that cannot be resolved will be governed by the laws of Sheung Wan, Hong Kong.

B(26) - If a dispute arises regarding the rules of the competition then entrants agree to first attempt to resolve any issue(s) with the help of a mutually agreed-upon arbitrator in the following location: Sheung Wan, Hong Kong.

Looks like this matter has been carefully researched for the benefit of the FWRC!

C(2) - Entrants must submit the raw MQL code of each EA within the submission period. If DLLs are required by an EA then entrants must also submit the source code and compiler project files for the associated DLL files.

Talk about handing over the keys to the kingdom!

Okay, enough about how the FWRC gets all the rights and most of the money and let's get on to more specifics about the robots and testing parameters.

D(1) - The Forex Robot World Cup (FRWC) organizers will conduct a back-test of each submitted EA on historical data using the MT4 (MetaTrader) platform.

D(2) - The back-test will have a starting balance of US $1,000 and 200:1 leverage.

D(3) - Money management is permitted in the back-test.

D(4) - If money management is *not* enabled and no recommended fixed lot size has been specified in the submission notes by the entrant then the back-test will be made using 0.01 lots as the initial position size.

All looks good and reasonable here. We learned how to do money management earlier in my blog and its well understood at this point.

D(5) - The back-test will be run over a 12 month period which is specified on the Submit EA page within the Developer area of the website. Please be aware that we will perform our own independent back-tests over the same and additional, random date ranges between January 2005 and the current date to prevent attempts at "curve-fitting".

D(6) - The back-test will be a "straight run" approach (the entire 12 month period), rather than "month-by-month".

I would rather go with Daniel Fernandez here and look at an entire 10-years of back testing. I agree with no parameter changes and no optimization during the test period.

D(7) - Any EA demonstrating a Relative Drawdown (floating loss or actual draw-down) in excess of 50% during *any* back-test period will be automatically disqualified.

D(8) - Any EA achieving less than $500 net profit will be automatically disqualified.

Okay, looks reasonable.

D(10) - No EA may contain code which has the sole objective of avoiding specific (losing) trades. An example of this rule, but not limited to, is "do not trade on Wednesdays at 18:23 GMT" when it can be shown that one Wednesday during the back-test period would have resulted in a large losing trade and dramatically affected the final result.

Wonder if this would disqualify EA's like the MegaDroid which never trade on a Friday.

D(11) - No EA can place fewer than an average of 2 trades per week, every week, for the entire back-test period.

This would definitely disqualify the Forex Godfather!

Okay, the next step we are all waiting for is the phase at which the EA's will be offered for sale.

Personally, i'm a fan of the one called "Simple" which had a slow and steady rate of gain during the competition and put in an 8% gain with a 4% drawdown. Will they sell those robots as well?

We'll find out! Stay tuned for more fun with Automated Forex Trading!