Meta-Trader - A Tale of 4 brokers

Welcome back Meta-Traders.

It was another solid week in the land of the Forex Robots. Also, I have some interesting results to share running my favorite scalping robot on some other brokers. But first, let's do the numbers.

God's Gift GBP/USD was the winner on the week picking up 28 pips in a scalper-like fashion. This robot is up 25.4% year to date. Its cousin God's Gift EUR/USD is up 11.6% for the year and picked up 11 pips on the week.

Next up was Megadroid Live which picked up 22 pips on the week and is now up over 20% on the year. Last up was Megadroid Demo which picked up 9 pips on the week and continues to lead the pack up 31.6% on the year.

The performance between Megadroid Live and Demo along with a few other observations have led to the conclusion that the performance of Megadroid is being limited by 3 items:

• Spread widening which cases the 'droid to not trade at all
• Wideness of the spread which causes trades to sometimes go into drawdown which would otherwise escape with a narrow profit
• Error 133 which means the broker simply refuses the trade

To attack these problems, I setup 2 new Megadroid demo accounts, one with FXCM and IamFX. These are both 5-digit brokers with FXCM taking their cut out of the spread and IamFx charging a 50-cent per trade commission, but with a very narrow spread, sometimes less than one pip. Both brokers trade only in lots of 0.10, so I set the accounts up with $2000 each to keep it similar to what I would do in reality. I also set the risk to 0.05 so it would trade o.10 lot.

I hit pay dirt right away on Monday when both the FXCM and IamFX accounts took a quick 10-pip profit. Both 'bots then put on another EUR/USD sell and this one didn't go as well. What was interesting is that the IamFX account escaped with a 2 pip profit while the FXCM account ended up with a 50-pip loss! So in this case, paying a 50-cent commission made the difference between a $1.90 profit and a $50 loss. Is the 50 cent commission worth it? You bet it is!

I'm now tracking performance of the Megadroid on these 4 brokers and the chart in the upper left of the blog shows the performance each each broker in pips by day of the week. So far IamFX is clearly the winner and it will be interesting to watch this going forward. Also, this was a rare week when Forex.com live Megadroid outperformed my FXDD demo.

The fact that these brokers trade only in lots of 0.10 is a bit of a bummer since we loose the additional compounding caused by increasing trade size as the account grows. This problem goes is minimized with accounts of larger size.

Another interesting thing I learned is that on 5-digit brokers, 10 pips equals 1 pip with a 4-digit broker. So while Megadroid won't trade with a spread over 5 pips, that becomes 50-pips on a 5-digit broker. Megadroid adjusts for this automatically.

Another interesting item is that the Experts tab shows that Megadroid also did not trade at times due to too of wide a spread in the FXCM account. IamFX also widened the spread beyond 50 pips just at about 5PM EST (start of the Megadroid window) just to lower it a few minutes later.

One last observation was how different the trades and results were across the different brokers. I know that under the covers Megadroid uses an CCI and RSI with an 8-bar lookback on a 15-minute bars. Its hard to believe the values could be so different across 4 different brokers but the evidence is clear.

The overall conclusion is that the broker makes a huge difference in the performance of Megadroid. Also, when scaling up the trading to add more funds, it probably makes sense to run the Megadroid across multiple brokers to spread out the risk and increase the opportunity to trade.

That's all for now, check back later and have a fine weekend.