Today we concentrate on a really unusual expert advisor — the GPS Forex Robot, developed by Mark Larsen and his team.
Now, whatever I will say in the following lines would perhaps not matter to those who have heard of Larsen before. Every time a forum participant mentions his name, it is usually followed by a story of ruined accounts, neglected refunds and crappy software.

Still, I believe it is worth exploring this GPS Forex Robot for the sake of developing a habit of digging deeper into complicated matters — things that look bright and shiny on the surface, but are spoiled on the interior.

Let's start with the fundamentals.

The developers of this GPS Forex Robot (version 2) offer it for sale for $149, and there is a 60-day money back guarantee. Thus far so good — for this cost, we may expect the expert advisor to match the performance of the Forex Growth Bot, or FGB, which costs $129, and the Forex Invest Bot, or FIB,- $197.

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Don't Go Chasing Waterfalls

The cheesy website promotes the GPS Forex Robot as a real miracle maker. As soon as you apply it to a Metatrader 4 (MT4) account, you will just have to wait for the wonder of 98% winning trades to happen. If this seems too good to be true, that is probably because it is not.

But let us examine the block-buster asserts further. According to Larsen, a reverse strategy allows fast compensation for losses incurred. Say the robot purchases EURUSD and suffers a loss. As a result, it will immediately open a reverse trade (market ) — a strategy known as stop-and-reverse. Actually, that's something very simple to implement in a software — even by newbies — so there goes the"genius" of the two programmers (Ronald and Antony) responsible for the bot.

The fascinating part about this bot is its strategy to improve trade contract sizes. When the EA reverses a trade, it raises steeply the trade contract dimensions — from 5 to 9 times.

Does this remind you of something? To me, this resembles a Martingale strategy, which is a gaming method, in which you begin with a specific bet size, then double it every time you lose and keep doing this until you win, when you turn back to the original bet size. What is dangerous about this strategy is that it can guarantee certain profits only to gamblers with infinite wealth and there's absolutely not any limit on the maximum bet you can make. But if your wealth is limited, which generally is the case with forex trading, or there is a maximum amount you are able to trade (again — the situation with trading), then you may end up buried under the weight of constantly rising bets without a genuine possibility to return your losses. That is to say, if you lose more than once, your accounts will most likely fail.

Let's explore the backtests to determine how the peculiar strategy of GPS Forex Robot works.

At a first glance, the picture is rosy, as this incredible robot makes drives a first deposit of $10,000 to a net profit of $100,952. Adding to the sequence of positive news, profit trades (89%) outnumber the losing trades (11%). Pay attention, however, the average profit trade ($219) lags behind the average loss trade ($824)! That's troublesome because a series of losses can get you into a really deep trouble.
The history of trades is really enlightening, because you can see the odd trading strategy of the robot in action. For example, on May 27, 2009 there's a heavy loss of $919 after buying 1 lot of EURUSD. The robot immediately reverses the strategy and opens a sell trade but with trade contract dimensions of 6.8. This time it is a winner — there is a profit of $904, but such lucrative trades cannot be guaranteed.

Forward tests: Cradle of Loss

A true account on, to which the GPS Forex Robot is implemented, provides us with additional insight concerning this EA. The trade is with EURUSD and began on May 21, 2012. Since its activation, the account has registered a gain of 153%, which, given the first deposit of $100,000, represents a whopping sum.

The account has not registered one month of declines since its launch, although the growth rate is slowly declining.

A worrying sign is that typical pips per trade are at 4.6, which hints at vulnerability to fluctuations in market behavior. By comparison, FIB's Synergy FX account appreciates average pips per trade ratio of 13.6, while the ratio stands at 6.6 for FGB's account with ThinkForex.

The risk is low, but since drawdown is at a good level of 10%, the same as that of FIB and much lower (which is good thing) than the 42% recorded by FGB's account.

The curious part is from the background of transactions as once again we experience the stop-and-reverse strategy and the specific version of the Martingale method. The robot applies both approaches when there are especially heavy losses. By way of example, after a losing trade (the loss is $10,230) on June 8, 2012, the robot reverses the plan and increases the trade contract size from 11 a lot to 75 lots. In case the robot had suffered another loss like the previous one, but with the increased commerce contract size, the total loss would have shrunk to $71,088.

If you're acquainted with Isaac Asimov's work, you ought to be aware of that the First Law of Robotics — that is, a robot cannot harm a human being. Well, the GPS Forex Robot clearly violates this law. It could be not harming the traders, but it's harming their accounts. It's like the Rosemary's baby sleeping in the cradle of loss. You just don't know when the baby is going to awaken and unleash hell.

The funniest thing is that Mark Larsen seems not to care at all about the strategy used by the GPS Forex Robot. In actuality, he is the only person to have rated this EA with five stars, in his own review of this software. Way to go, Larsen! Even if that's the best way to hell.

Know your keywords

Expert advisor (EA) — An algorithmic trading system for the MetaTrader system; a trading robot. EA's can either be downloaded at no cost or for a fee, or can be programmed in the MQL programming language.

Backtesting — Testing a trading plan on past time periods through a simulation.

Drawdown - A trader's biggest loss for a certain period of time, expressed either in pips or as a
Percentage of the dealer's profit. The lower the drawdown percentage, the less riskier the trading
Let's say you begin with a balance of $1,000, then make a profit of $1,000, and following that lose $500. Your drawdown will be 25% ($500/ $1000 + $1000 = 0.25 = 25%).

A standard lot consists of 100,000

If you're buying 1 lot EURUSD at 1.3000 for example, you're purchasing 100,000 Euro for 130,000 US Dollars.

Pip - The fourth digit after the decimal sign of a price quote. For instance: if the EUR/USD moves from
1.3350 to 1.3351, that is one pip. Pips are utilised to quantify price movement, profit and slippage.