Forex InfoBook team has completed its review of iProfit HFT MT4 EA based on six years of real trading history. It is surprising to see a MT4 EA continue performing well for so many years without any hype. iProfit is not the regular “run-of-the-mill” EA and promises to be a great tool for serious investors and traders. This review presents an unbiased analysis of the trading history as per Forex InfoBook’s standards and rules.
It is very rare for a good strategy with proven real trading history to be available for review. The developers of iProfit HFT EA have provided excellent strategy details, tests results and significant amount of information on their website (http://iprofitea.com). This review aims to provide some additional insights into how the strategy works, analyze the performance history, find its strengths/weakness and estimate the risk/reward of trading this EA.
iProfit HFT EA has been in live trading since August 2013. While the results are not spectacular like some of its peers, the strategy has survived several different market cycles on a variety of pairs and has made decent gains in the process.
About the developer
The strategy has been developed by Phibase Technologies – A software firm specializing in Forex trading research and development. Phibase has been in the field of strategy development since 2011 and their product line includes several automated strategies like Cabex, Raybot, Index and iProfit.
Phibase have had their share of failures with Synergy (2012-2014), Ray Scalper (2012-2015) and Turbit (2014). It must be said that Phibase Team is very professional in their developmental approach and have been around to provide high quality support. It is rare to find professional EA vendors with live trading history to prove that their strategies work in real trading.
iProfit HFT MT4 EA website
iProfit HFT EA Website : http://iprofitea.com
iProfit HFT MT4 EA website provides ample details about the EA’s strategy, back-test results and risk analysis. There is no marketing gimmicks or the typical Forex Robot vendor feel about the iProfit EA website – This is a welcome change. The site design and information seems to be aimed more at professional and experienced Forex traders.
iProfit license is available as annual subscription (US$ 375) or one lifetime license (US$ 780) – The pricing is not cheap and only traders with larger account size may be able to afford this EA. Payment processing is done by 2CheckOut.com which is a highly secure and popular payment processor. Any iProfit license purchase comes with a 30-day refund period facilitated by 2CheckOut.
iProfit HFT MT4 EA : Strategy and Trading Style
iProfit strategy is active at most times of the day, with European and US sessions seeing relatively more trade entries. Less than 10% of the trading is done during low liquidity hours when the spreads are likely to be high.
The EA trades pairs with different correlations : EURUSD, EURJPY, GOLD, GBPUSD and AUDUSD. The system has a positive risk reward with win-rate of 60%. Average gains is +25 pips and average loss is -27 pips. The real trading history data is perfectly in tune with the 13 year tick-data back-test results provided by the vendor.
Trades are always executed at market price (No limit or stop orders are placed). The stop-loss of -120 pips and target price of +120 pips is set immediately after the order is placed. Geometric money management used by iProfit EA ensures that the maximum equity at risk on any particular trade is always limited to the risk set by the trader (for example : 2% per trade). Trade size is increased when the account size grows and trade size is lowered if there is a drop in the account balance. This money management system is widely used and recommended by many trading professionals since it ensures there is no possibility of blowing the account under any circumstances.
Risk of Ruin analysis shows that there is less than 0.01% probability that the EA would lose 50% of the capital – For this to happen, it would require about 188 consecutive losses. Maximum consecutive losses seen in last six years is 15 (Maximum consecutive wins is 14).
iProfit runs on five pairs, so sometimes it is possible to have up to five open positions at the same time – The EA opens one trade per symbol. There is no grid or martingale position sizing methods involved.
The developers claim that iProfit is powered by a self-contained, self-learning Neural Network (NN) algorithm. The strategy does not try to outsmart the markets but aims to keep generating small gains while keeping losses low – This is indeed the principle of HFT.
High Frequency Trading (HFT) strategies are used by large investment banks, hedge funds and institutional investors who have access to powerful computers which can make a large number of transactions at high speeds and low cost. They typically make a very small gain or loss on each trade – the goal is to make a net profit for the day after accounting for all costs involved. Large investments firms may use proprietary algorithms which are usually closely guarded secrets or even some simple strategies like moving average cross overs. Such firms employ many different strategies simultaneously – some of which generate a large number of trades and while other strategies may not trade that frequently, but may aim for larger gains.
It is impractical and unprofitable for retail traders to consider use of such HFT strategies since the spreads, cost of trading and execution slippage/speed are enough to guarantee loss over a period of time.
So what does iProfit HFT for retail trader mean? While HFT strategies function on price data in second or minute time-frames, iProfit EA is based on price from hourly time-frame. Basically the concept appears to be the same – make a large number of trades for small gain-loss and take a net profit at end of trading. iProfit HFT trades about 15 to 20 times per week and tries to make a net profit by end of the week. All trades are closed before market close on Friday.
As per the developers of iProfit, the neural network model is a simple model which is designed to just predict the High and Low of the next hour. The EA uses this prediction to make its trade entry and exit.
The good thing about iProfit EA is that it is MT4 back-test compatible. With live trading history of six years, we get a fantastic time period to compare the live trading results to the back-test results. The vendor has confirmed that the period between January 2015 to May 2019 was run with no changes (in January 2015, USDCHF pair was replaced with GOLD).
The real trading results for the period between January 2015 to June 2019 is very similar to the tick-data back-test of the same duration. The back-test was conducted with spread of 2 pips due to which the over all results is slightly lower than the real trading results. The IC Markets real account has low cost per trade (less than 1 pip including the commission and swaps).
The advantage of iProfit is that it trades frequently, but still is not a scalper. The average trade gains almost 30 pips which is much higher than any other frequent trading EAs. The average trade duration is just 3.5 hours. About 90% of the trades are closed within 6 hours and about 9.5% of the trades are open for up to 24 hours. Less than 0.5% of trades extend for more than a day – In any case, all trades are closed before the market close on Fridays. This is an excellent feature of the strategy which means there is zero exposure to weekend news risk and gaps openings.
Closer inspection of the data shows that less than 1% of the trades close at Target Price or hit the full Stop-Loss, both of which are placed 120 pips away from the trade entry price. Almost 90% of the trades are closed by iProfit in the range of +60 pips to -60 pips – This appears to be the operating range for the EA’s trade management.
The equity curve is the most common piece of information that attracts any traders to an automated trading system. This is one of the fatal mistakes which often ends up to be a very expensive learning lesson for the trader. Equity growth can be deceiving and is only reflective about the good or bad stints of the strategy. Equity growth can be manipulated, hides behind risk management which has a tendency to hide the strategy’s weakness.
Forex InfoBook does not consider the equity curve/capital/risk used by the vendor or third party reference account. The EA’s trading history is used to derive the pip gain/loss and used in all analysis – this provides a consistent basis for strategy analysis and removes all other factors that could mask the actual performance of the strategy.
The Pip gain graph of iProfit looks good with short draw-down periods. Since 2015, there have been three losing periods of between 2 to 4 months. There are no long periods of draw-down or under-performing periods with this EA.
For frequent trading strategies to be successful, traders must provide good trading conditions to the EA. It is good to remember that retail traders start off with a disadvantage and are competing against larger, better equipped players. It is very important for traders to choose good brokers who are offering the lowest spreads, commissions and excellent execution.
In the case of iProfit, the effect of swaps is negligible since over 86% of the trades were closed within 6 hours and did not incur any swap charges. About 8% of the trades had negative swaps and 6% of the trades had positive swaps – This resulted in negligible net swap charges.
Trader only need to ensure tight spreads and commission for lowering their cost of trading. iProfit is a high frequency trader which makes between 50 to 80 trades a month. Every cent saved is a cent earned – Most brokers love traders who can churn out good trading volumes on their accounts. Broker reward higher volume traders with rebates, cashback offers and other benefits. Traders can squeeze hard to lower the trading cost and make this EA work to their benefit in the long run.
Anomaly in Reference Account
An unusual spike in January-May 2018 was the result of vendor reference account switching to 2x the risk used before. This resulted in a sharp gain and subsequent sharp fall. This is one of the disadvantages of judging performance based on equity curve – such factors are not easily visible and may not even be part of the EA’s strategy.
Traders should expect draw-downs of about 15% when trading with iProfit EA with a risk of 2% per trade. The EA is capable of making steady gains of 2% to 4% per month at this risk. In the long term, consistent average gains of 25% per year seems to be very much possible even with low risk.
Traders with higher risk tolerance may prefer trading with risk of 4% per trade but the drawdown of 30% should be expected – stopping the EA during such losses would be an emotional decision. Such losing periods are short and the EA has already demonstrated recovery from such losses. The reward for higher risk would be gains of 4% to 10% per month. The average annual gains at higher risk is upwards of 50% – but the ride would be choppier.
iProfit V3.1 Improves Performance
iProfit was updated to V3.1 in June 2019. As per our review rules, upgrades or new EA are nor taken up for analysis. In the case of iProfit, the update is just a continuation of the earlier strategy with minor improvements based on six years of live trading. The update does not change the strategy or any of the characteristics of the original EA. As per the vendor, the improvements seen in the new version are :
- The NN model of Profit V3 generates trade triggers only when the success rate of its prediction has an accuracy of over 75% – This increases the quality of trades and overall win rate. In the previous version the prediction accuracy was only 60%
- The strategy improvements based on real time trading results has reduced the maximum draw-down from -1100 pips to -800 pips. This will allow setting of higher risk level for the same expected draw-down.
With the back-test and real trading results matching up very well, we have no doubt about the performance improvements in the new version.
Higher License Cost
Most MT4 EA vendors sell their “Holy Grail” for $199 or even $99 and disappear. The license pricing of iProfit MT4 EA look relatively expensive – but this shows that the vendor is serious about their product and have the required track record to prove it.
For traders with accounts larger than $5000, iProfit is a safe choice for making consistent annual gains of 20% to 30%. The maximum margin utilized by iProfit would be about 20% even with a low leverage of 1:50. This leaves the trader with sufficient margin to run other strategies or trade manually.
iProfit HFT EA may not be suitable for traders with account sizes less than $3000 since the gains will not justify the cost of the EA.
For traders with smaller account size, trading with brokers offering bonus on deposit would be a great way to use this EA to rake up the required trading volume and qualify for withdrawing the bonus. Most traders who obtain bonus over trade and lose the original amount invested. iProfit can achieve the required trading volumes while delivering gains at the same time.
Who should trade iProfit HFT EA?
iProfit is most suitable for traders who want to have a safe, proven frequent trading strategy in their portfolio. The EA will deliver small gains on a weekly or monthly basis which quietly add up to grow your account in the background. This is how large investment firms use HFT to make small gains on a segment of their portfolio.
iProfit HFT EA is not for traders looking for “Forex Robots” that promises to “double money every month”. It would also not be suitable for traders with account sizes less than $3000 since the gains will not justify the cost of the EA.
If your Forex trading account size is over $5000 and your broker provides leverage of 1:50 or above – then this is a great way to get started with this retailer version of High Frequency Trading.
iProfit HFT EA Website : http://iprofitea.com
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