Forex InfoBook team has completed its analysis of the Best Scalper MT4 EA based on its five years live trading history. In this review we present a unbiased analysis of the trading history as per Forex InfoBook’s standards and rules. We explore the things that went right, things that went wrong and what the future holds for this interesting automated trading strategy.
Best Scalper MT4 EA has been in live trading since September 2014. The EA was very popular with huge gains of over +3800% on the vendor’s reference account seen in May 2018. Most traders would have trusted their money on this MT4 EA which had at that time four years of impeccable live trading history – with unimaginable gains.
Then reality struck, Markets realized it was the King after all and the reference account has been down losing about 50% of the equity.
Traders who had hoped they had found the holy grail, faced huge losses not knowing when to stop or hoping the gains would start coming in again. As of June 2019, Best Scalper is not the trader’s choice and most consider it a sinking ship. It certainly does look that way from the equity curve and the money it lost in a period of one year.
Best Scalper EA Website : http://bestscalper.com
The vendor has not provided any description about the strategy used by the EA. The website of the vendor does not provide any useful information. The site confuses the trader with different accounts running MT4 and MT5 versions with non standard settings – none of these are long enough to be considered for analysis. Only e-wallet payment options available for Best Scalper are PayPal and Skrill. There are no standard payment options like ClickBank or 2CheckOut which have clear refund guidelines.
Best Scalper MT4 EA : Strategy and Trading Style
Based on the data derived from the main reference account, the following trade information provides very useful information about the strategy.
The EA trades EURUSD and GBPUSD pairs during Japan market open session. Less than 2% of total trading is seen at other times of the day.
The EA places Buy or Sell limit orders. Target Price and Stop-loss is set on the broker side once the orders are filled. About 50% of the limit orders remain unfilled – such orders are cancelled within 2 hours.
As always, for any scalper to be profitable low spreads are very important. In the case of Best Scalper, being only active during the End-Of-Day hour, traders will also need to ensure their brokers do not widen the spreads by too much. This will typically result in either orders not being filled or ending with a smaller gain/larger loss than the reference account. This would not be a problem for strategies with higher gain targets – but for Best Scalper, the trader should ensure the best possible trading condition is provided. Low spreads need to be seen during the Japan opening hours – Just average pips of the broker would not be good enough to make a judgement. For example, the broker may show average typical spreads to be 0.1 for EURUSD and 0.2 for GBPUSD, but during the Japan open session, the spreads may be 0.7 for EURUSD and 0.8 for GBPUSD – This will result in under performance. Commissions on trading will also need to be as low as possible to ensure overall profitability.
The trading lot size in the account seems to be based on price action or market condition rather than on the account size. The risk per trade works out to between 5% for EURUSD and about 8% for GBPUSD. At such huge levels of risk, just 10 pips would move the account equity by almost 2% – this explains the stupendous gains of +3500% in just 2 years.
In money terms, what this means is that on a $10000 account, a single pip will mean a move of ±$20. As long as the system is gaining, the quick profits of between $20 to $100 will be a joy ride. When things get the other way the stop-loss hit will mean a loss of -$500 to $800. At such risk levels, failure was only waiting around the corner.
Based on the five year trading history, Best Scalper EA has a success rate of 74% with a win:loss ratio of 3.7 pips : 6.5 pips. Best Scalper sets Target Price and Stop-loss are the broker server as below:
Target Price : 5 pips for GBPUSD and 4 pips for EURUSD
Stop Loss : -40 pips for GBPUSD and -30 pips for EURUSD
The strategy has a negative risk:reward of 8:1 – This is normally considered very bad, but the EA closes over 99% trades within 3 hours – average trade duration is just one hour which very good. Only about 3% of the trades go on to hit full stop-loss of -30 or -40 pips. All the other trades are closed either for a small gain or losses less than 20 pips. Since February 2018, the target price on trades are being set at +10 pips – this is a deviation from the historical live trading with no supporting tests or explanation being provided on the vendor website.
Best Scalper had gained +500 pips during its first and second years. After that a two year period when the strategy gained +1200 per year – A bulk of the stupendous gains seen on the vendor’s reference account was seen during the period between May 2016 to April 2018. Since May 2018 the pip gain has been flat to mildly negative – with the reference account reflecting a drop in equity of -50%.
If the strategy was not losing pips, why was there a loss in capital?
The above pip chart is based on a the assumption that there is no other trading cost involved. But for any low spread account, brokers charge a small commissions on every trade transaction which ranges from $5 to $8 per lot.
You may not expect any swap charges when trading with a scalper with short trade duration. Trades made by Best Scalper are almost always involving interest (paid or earned) for holding a currency spot position overnight. This is because the strategy is based on placing a limit order just at the start of a End-of-Day hour. Trades are closed during the next hour which according to brokers mean a new day – Even though the trade was only open for just an hour, the interest is being paid for over night position. This is another hidden costs that are taken away from the pip gain. While swaps can be positive or negative, the overall costs of swaps add up to almost 25% of the commission charges paid and is a significant part of the trading cost.
Accounting for commission + swaps into the pip gain is a good way to see where the strategy’s performance more clearly.
What changed in May 2018? While nothing obvious was visible on any of the lower time-frame, the weekly EURUSD price charts do seem to provide some clues as to what kind of movements Best Scalper EA would be able to produce gains. Since May 2018 there is a definite drop in the weekly trading range of EURUSD. It is indeed surprising that a weekly price action would have such a profound effect on a scalper with targets just 4 pips. Large moves of 2014 and the ranging price action of 2015/2016 were also not the best of days for Best Scalper.
Is Best Scalper a sinking ship?
Maybe not. It had such low performance periods before the huge winning run. It probably had many such periods had it been running prior to 2014. Vendor provides reference to tick-data back-tests for the period 2009 to 2016 which were conducted using a spread of 1 pip – While the tests show profitability, the validity of the back-test gains remains be highly questionable without taking into account the real spreads (Asian Session), commissions and swaps.
But Best Scalper may not yet be written off. This is a classic case of the “vendor making hay while the sun shines” – Very high risk level per trade was used and was lucky to catch a winning streak of 2016 to 2018. With better risk management and a more transparent money management, the strategy would still be trading with enough capital to ride out such low performing periods.
Normally good trading practice is never to risk more than 3% per trade. Traders with very high risk tolerance may choose to trade with 5% per trade – especially when they trade with low capital and high leverage. The aim here is make some quick gains. With such high risk, traders can gain about even 1000% during good times. But losing periods can take away over 50% of the account. If the trader is starting out with a losing streak they will be extremely disappointed with the EA at such risk. In case the trader was lucky and caught a winning streaking making some quick gains, then the losing periods would be easier to handle. A lot depends on the traders luck and the trading strategy’s performance cycle – There is not much help to be obtained from data or strategy analysis except prepare the trader to mentally accept losses of over 50% as normal. On average, in the longer run average returns of about 200% to 400% may be expected from trading Best Scalper MT4 EA – but with possibility of blowing account if the draw-down period persists for two years or more.
While it may not be sustainable in the long run, some traders do manage to catch a good streak of winners. Good traders realize and expect the risk of draw-down and loss when trading with such high risk. They usually have enough resources to refill the account to make up for the losses and readjust their trading strategy or try to catch a winner with some other EA. This requires a tremendous amount of luck to work every time.
Based on five year real trading history, Best Scalper can have periods of low to under performances for duration of at least two years. The cost of trading will cause a drop in equity even when Best Scalper manages to breakeven pip wise. It should be normal to expect draw-downs of between 20% to 30% when trading with reasonable low risk of 2%. With this kind of risk, traders can gain about 100% during good time. On average longer term returns of about 30% to 50% may be expected from trading Best Scalper MT4 EA.
Best Scalper could catch a winning streak again – but will it survive this rouge wave?
The vendor’s banner says “Scalper is the only EA on Fx Markets!” would have been convincing enough for anyone watching it gain in 2017.
Time have changed, markets have changed. “A speed boat caught in rough sea” is more in tune with the current situation. As always, markets are ever changing – good times never last and bad times never last. Good strategies and good traders following proper money management will survive through the bad time to reap benefits from good time.
The pip gain chart of Best Scalper does not show any cause for alarm – the loss in equity is largely due to cost of trading. For big traders running on low cost trading accounts, the draw-down even at high risk would be lower than what is seen on the reference account.
Best Scalper EA’s money management is not clear – this makes it impossible for most traders to know what exactly to expect from the risk level. The scalper is also dependent on spread widening during End-of-Day hours. The cost of swaps being paid for trades of less than an hour is a major disadvantage and adds to the cost of trade.
For smaller traders facing higher trading costs, the high risk used on the reference account would be impractical. It will be highly impossible for any traders to ride out such periods without quitting with a loss. Using lower risk would mean lower return which may make Best Scalper less attractive.
Best Scalper may be an excellent strategy for traders looking for consistent gains over longer term – especially when it is run at lesser risk level than used by the vendor account. Gains may not be as spectacular, but when it wins it will be great going and losing periods will not kill the account.
Forex InfoBook recommends it to be part of trading portfolio for traders who fully understand the downside limitations of this scalper and the potential benefits it can offer during its good times.
Best Scalper EA Website : http://bestscalper.com
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