The strategy downloaded and compiled successfully and I was able to start back testing straight away. The strategy uses a conservative Lot size of 0.02 (a positive) and allows for no more than 10 orders in any one session. However, the strategy does not employ a stop and those who like to tinker around with their EAs may wish to add a stop loss.
Expert Advisor Setup
A Starting account of $10,000 using 0.1 Lots on a 15-minute timeframe for EURUSD. The strategy is already built to go Long/Short, but Optimization was switched off from the default 'On'.
Comparative Test Period
Three 12-month periods randomly selected between Jan 1st 2000 to January 1st 2010 are used for all Expert Advisor tests to offer a standard which one EA can be compared with another. These were:
March 31 2000-2001
June 29 2003-2004
May 17 2001-2002
Comparative Test Period
The Expert Advisor performed admirably, if a little erratically. While it enjoyed a significant advantage in Profit/Trade over Forex MegaDroid, it wasn't able to compete on other metrics. For example, the Relative Drawdown of Rubberbands ranged between 5% and 37% compared to the more consistent 17-21% of MegaDroid over the same period. Much of this is to do with how the Backtest exits positions at the end of the run, but the lack of a stop loss - even a large one - does hurt.
A positive aspect to this strategy is its lack of overtrading. There were only a handful of trades (with mixed results) over 2003-2004, but even in a busy year it wasn't over committing.
The Cash-Equity curves for the three, 12-month period show the vulnerabilities of the strategy as existing holdings exit at the stop point. Remember, the strategy can hold up to 10 'separate' positions at any one time; some of these will be profitable, others not.
When Optimization was employed there was no difference in the results. For example, in the May 2001-02 period, net profit was $214 Optimized vs $207 non-Optimized.
Random Test Period
For the purpose of robustness, a further three 12-month period set was selected. The following dates were randomized:
Feb 19 2004-2005
Dec 17 2010-2011
Nov 10 2008-2009
Random Test Period Results
The Random results were not as good as the Comparative period. Two of the three test periods reported a slight net loss.
And the Cash:Equity curves show how the losing strategies generated very few trades. While the one winning period only showed a modest profit from 219 trades.
Conclusion
Rubberbands_2 is not the worst EA out there. As a free strategy it offers the beginner something to start with and perhaps build on. It runs a relatively consistent 70% win percentage, so if the losses can be managed more effectively it might be able to turn the minor losses into consistent - if small - gains.
As it stands, Forex MegaDroid hasn't been knocked off its perch, but it's still early days.
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P.S. Updates to this blog have not been as regular as I would have liked, but it's a goal of mine to build a resource pool of EA reviews from the freebies to the robot scamsters. Perhaps one day I delve into building strategies of my own on MT4. If you are not familiar with my long-standing (equity markets) blog of 7 years, you can find it here.
