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Why people generally prefer to buy EA instead of managed account service?
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Wallace

Biedrs kopš Sep 18, 2009  86 ieraksti Wallace Apr 16 2010 at 03:36
Dear all,

Recently, I have come across an interesting observation. I am currently testing some EAs and have been approached by traders expressing interest on my works. In fact, I don't plan to sell any EA. For private EA, I am only interested to offer them through managed account service (MAS). Most of the traders have hesitation or express no interest on (MAS). This phenomenon makes me feel interested. I set up this thread and would like to invite both traders and EA developers to share their views.

From Trader's Viewpoint

From a traders' perspective, I somewhat understand their views. It is natural that people love possession and hate uncertaintly. So, whenever they see a potential EA, they will try to possess it and take full control of it. Also, they will feel secure if they really own the EA.

From EA Developers' Viewpoint

There must be a purpose for people to do a thing. Normally, if peolple spend a lot of effort to develop an EA which is truly profitable, he will not share or sell it unless:

1/ there is a need for quick cash or the offered price is so attractive, he wants to realise the gain now rather than taking risk to trade the EA
2/ he is generous
3/ he just want to show off programming skill

Provided that decompilation of EA is very easy and common nowaday, it doesn't make sense for EA developer to take risk in selling or sharing a profitable EA. The most sensible way for the developers to make long run profit is to provide managed account services through PAMM or MAM platform.

Questions:

As we all know, most commercial EAs selling in the Internet are not work. That explains a fact that truly profitable EA is seldom sold to public. Most of the commercial EAs only show an optimized backtest result or live demo result attracting people to buy. The selling prices are uaually ranged between USD100 to USD300. Here are my questions:

1. If an EA is truly profitable (as what the seller havs claimed on his website), why he wants to sell it at a low price?

2. Demand driven supply. There are still ton of new commercial EAs launch everyday implying that there is still a market. Why people still continue to spend money on these commercial EAs?

3. Why people hesitate to try managed account services (MAS) despite it is the most logical form of co-operation between EA developers and traders? If we ask ourselves what is the initial motiviation to engage in forex trading, most of us should be 'making profit'. It is that simple. How to make profit is not the most important concern. Ironically, depsite most of the MAS providers provide live trading result for proof, people are still hesitate to try. Instead, they will continue to risk their money in buying and trading with commercial EAs or free EAs shared on the Internet. However, it is a fact that most of them are not profitable or still under development.
   
I would like to invite both traders and EA developers to share their view on the above questions.

Kind regards,

Wallace

  

Wallace Forex Laboratory conducts research on profitable EAs. Our ultimate goal is to create a portfolio of EAs which can provide consistent profit.
dailyforextrades

Biedrs kopš Oct 20, 2009  11 ieraksti Daily Forex Trades (dailyforextrades) Apr 16 2010 at 04:43
I have been intrigued with this same issue. I run 2 live account 1 with commercial EA, which went and down like seasaw and is not profitable. Other account is with my own EA, which gives around 15%-20% a month return, it is live online. Everyone wants to buy it for couple of hundred bucks. Why would I sell it so cheap ?

bestforexea

Biedrs kopš Oct 29, 2009  75 ieraksti Casey Lim (bestforexea) Apr 16 2010 at 07:21
Yes mighty interesting topic indeed.

I have done both... and here is my personal experiences. As a trader it is much for fun to put the 'robot' to work and 'toy' with it. If it does not work it does not mean it is broken. It's just that it was not used properly.

As a trader, putting money into manage account does not allow me to do anything other than watch and see. No fun. No control.

It's like a remote car... It is much more fun driving the little bugger than seeing another person having that fun.

But hey... that is just me.

Furthermore, most traders does not have $5000 or rather $10,000 to begin with a manage account. Trading EA gives them not only control but also a minimum entry deposit to toy around with forex. And like all human being... most of them feel like superman and trying to be a hero and suddenly overtrade their account because they wanted to achieve the sort of results as displayed by the developer.

Bad mistake if you ask me... I know... Because I tried being a Superman before... and I know believe I can't fly smiley

Most 'superduper' EA are just plain marketing hype... Sell on Senses as the marketing world would say...

Sorry... I digressed.

Manage account requires heavy or higher minimum deposit. And I believe not many people or retail forex trader has that sort of money. Most manage account managers I come across or read about in forums go on word of mouth referral. Friends of friends kind of referral and not over the internet sort of referrals.

And these sort of referrals are people who have deep pockets.

On top of that, there is a general bad stigma about doing biz over the internet for manage account... While they don't mind separating themselves with their $99 bucks over some hyped up site, they are however more reluctant to put up $10k for someone to manage. Even though... their money is relatively save with the broker.

It's just my opinion actually.

But for me... it's the fun and control part... that is why I don't think I re-try manage account again in the near future. Maybe when I have more $10 to risk then maybe I will... until then... it's toying with EA for me.

NEVER say DIE!!!
Wallace

Biedrs kopš Sep 18, 2009  86 ieraksti Wallace Apr 16 2010 at 08:37
Hi Casey,

Thanks for your comment. It is actually a very interesting and good feedback.

In my opinion, most of the traders spending their money on commercial EAs might have been confused on why they engage in forex trading. For me, from the outset, my sole purpose to trade forex is to make profit and try to earn a living from forex trade. However, when I bought my first commercial EA, I become addicted to it and spent a lot of money to buy and test them. Frankly, most of them doesn't work. I later realise that I am indeed 'playing' forex not 'trading' forex.

I start to learn coding EA now because I don't believe in commercial EA anymore. I think people should re-think why they engage in forex trading. If you're serious in making money but not interested in developing EA, then they should save their money to invest in managed accounts rather than buying those USD99 EA.




Wallace Forex Laboratory conducts research on profitable EAs. Our ultimate goal is to create a portfolio of EAs which can provide consistent profit.
robw135

Biedrs kopš Jan 17, 2010  140 ieraksti Robert (robw135) Apr 17 2010 at 00:53
Something that has puzzled me ever since I heard about EAs.

Never used them myself, don't believe in them, probably never will.

Just keep hearing about a new one from every corner, its like people are deaf to what is happening around them.

Please wake up!

There must have been gazillion variations of EAs developed in the past few years since forex opened up and so far I don't believe any of them works for any considerable period of time (please prove me wrong).
Its only my belief that the only ones that may seem to work probably require constant attention and adjustment and if so what is the point of it anyway.
People waste months and years of their life trying to develop that holy grail EA instead of learning to trade themselves. If it fails and 99.9% of the time it doe, they just try to develop another one still learning nothing about trading and with lack of such knowledge any EA is doomed to failure.

Same thing for the buyers of EAs, they think that will eventually find a money printing press - please listen carefully: There is only one and it belongs to the FED.

I think this EA phenomenon has something to do with willingness/ability to learn, by buying the EA the buyer does not need to put forward the effort to learn how the market and economy works and only how to adjust the settings and if it does not work they just buy another one and on and on without the need to learn anything without any pain. The cheaper they are the better the more they can go through.

On the other hand manual trading requires constant learning, thinking and understanding of economic and political concepts, it requires time and dedication. Its just like any other business and in order for it to flourish you have to invest some sweat into it.
 
Unfortunately I see much more people looking for the EAs then for knowledge and therefore I'm not surprised we have 95% failure rate and its probably even higher then that.

Its a market driven in great part by emotions of fear and greed and hope and you cannot automate those.

On the positive side all this buying/selling of EAs must be helping the economy at least a bit so please keep doing whatever you like, I really don't care. Just writing this so maybe someone will wake up, even if its just one person.


Good Trading

Definite Goals & Burning Desire To Achieve Them
compuforexpamm

Biedrs kopš Aug 20, 2009  202 ieraksti kennyhubbard (compuforexpamm) Apr 17 2010 at 05:47

robw135 posted:
Never used them myself, don't believe in them, probably never will.


Everyone has the right to express their opinion, but by your own admission, you have zero experience with EA's, so what makes you feel your opnion carries any weightconfused

This is not directed at you personally, unfortunately, your comments are symtomatic of the naivety that permeates automated trading fueled by lack of knowledge and understanding of automation.

I am pretty confident that manual trading strategies have the same dismal failure rate as many EA's but when a manual strategy fails, it is the trader who has failed, whereas if an EA fails, it is empirical, the EA has failed.




Wealth Creation Through Technology
thulfaqar

Biedrs kopš Apr 16, 2010  19 ieraksti Thulfaqar A Ayyad (thulfaqar) Apr 17 2010 at 10:27
Whether it's EA or Mannual at the end it's your own money dude, control risk and play safe you will reach your limits use compound mathematical equation to lead you to where you wanna reach with your goal, just money managment and profitable small trades will do magic.

I know you all are experienced but some time reminding is not bad to tongue

To reach a great height a person needs to have great depth
robw135

Biedrs kopš Jan 17, 2010  140 ieraksti Robert (robw135) Apr 17 2010 at 13:38

compuforexpamm posted:
    


Everyone has the right to express their opinion, but by your own admission, you have zero experience with EA's, so what makes you feel your opnion carries any weightconfused


Your whole response is based on my first two lines, while the point of my posting is in its entirety.
Just proves my point that people always take the easy/painless way. your response was probably aimed at starting some pointless argument but I'm not going that route.
I said what I wanted to say, take it as you like it.
THE END

Definite Goals & Burning Desire To Achieve Them
pc8multifx

Biedrs kopš Sep 04, 2009  860 ieraksti pc8multifx (pc8multifx) Apr 17 2010 at 14:34

robw135 posted:
    
compuforexpamm posted:
    


Everyone has the right to express their opinion, but by your own admission, you have zero experience with EA's, so what makes you feel your opnion carries any weightconfused


Your whole response is based on my first two lines, while the point of my posting is in its entirety.
Just proves my point that people always take the easy/painless way. your response was probably aimed at starting some pointless argument but I'm not going that route.
I said what I wanted to say, take it as you like it.
THE END


I agree on most of what u wrote on your first post. Only on one point I see it the other way around. To get rid of the emotions, which kills you on the long run, to trade with (self developed) robots is the way to go for many seasoned traders to prevent hart attacks after some years of manual trading... especially when they are old furts (like me) grin

bestforexea

Biedrs kopš Oct 29, 2009  75 ieraksti Casey Lim (bestforexea) Apr 17 2010 at 15:05
Hmm.... interesting debate....

Let see if I can contribute....

I agree with Thulfaqar... whether manual or automatic trading (EA) it's a matter of money management.

Manual trading or automatic trading... what is so different between them?

Manual trading...
1. Have a trading plan
2. Follow the plan

Within the plan... you have money management, strategy, system, charting, entry and exit and trading time.

Automatic trading...
1. Have an EA
2. Just click 'Enable Expert'

Within the expert... you have money management, strategy, system, charting, entry and exit and trading time.

While manual trading, one needs to click the button to either buy or sell... Automatic trading... well.... it's automatic.

So EA = Trading plan and trading plan = EA.

How many times has a trader change it's trading plan? How many times has a trader change it's EA? Well... my best guestimate is that an average manual trader change it's trading plan... so does an average automatic trader changes an EA.

Most if not all manual trader learns a system and adapt a trading system from somebody... most if not all automatic trader learns a system and use an EA from somebody...

So Robert... I do not think that there is much of a differences between manual trading and automatic trading or using an EA.

Like any newbie manual trader... they believe that forex is the way to 'print money' and technology magnifies these desire to find the holy grail with the invention of EA.

As you quite rightly put it... ppl are looking for their cashcow... So... these ppl needs to pay their tuition fee... by buying ea after ea and understand that an EA is just a trading plan... Thus, I disagree with Robert on the notion that automatic traders or trading with an EA does not require learning. And that trading EA does not require effort and sweat.

Those people who believes that trading EA does not require effort and sweat deserve to lose their money.

Gurus of all gurus says that trading plan is just 5% of being a successful trader... so that is how arbitrarily the figure 95% people will fail... they only have a trading plan... or an ea... Thus even trading with an EA... one still requires another 95% of stuff that needs to be done or perfected before one can become a completely successful trader.

Well... there are many books on that for manual traders... there are none for automatic traders which I believe that these 95% thingy.... is different between manual and automatic.

As to whether EA is doom to fail? Well... if there is ever a book that I would suggest one to read is the book call the Tipping Point by Malcolm Gladwell.... EA will not fail... the only thing is that... with time and technology... it might be bound to be replace. Just as how Forex EA that are sold on the internet has replaced Forex System strategies that were sold before on the internet. While it is still being sold... I do not think that the reception is as great as Forex EA.




NEVER say DIE!!!
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