A Breakthrough Into Forex Expert Advisor | Automated Forex Trading System

Dreambuilder-FX Trading System

by admin on 26/05/08 at 12:12 am

Hi I’m gonna discussed Dreambuilder FX Expert Advisor, please feel free to comment and add suggestion. Thank you.

“Lin, Just want to say that I really appreciate what you are doing with EA’s.
You once again have proven that your EA works! I have tried numerous other EA’s over the last
few months (partly because of the long period of ranging market which wasn’t great for Point Break),
but to be honest, every time I end up coming back to Point Break!!
It is so far the only EA that has proven to work long term in live account!
Others do great for a while, but then they crash! Keep up the good work!
Again, thanks for all the great work!” ~ Tobias

Two years ago I invented the PointBreak trading system and conducted lots of seminars introducing my unique trading strategies in many cities. Until now PointBreak expert advisor has been downloaded more than a thousand times from our website itself, not including our affiliates and partner websites.

Since then I also conducted countless hours of researching, reprogramming, recalculating, back testing and forward testing PointBreak trading system to find new ways to improve the performance. Investigating and analyzing many ways of using different methods has been a very long and thorough process.

• I will try to explain the logic behind Dreambuilder-FX (DTS-1) as simply as possible.
• If you are not familiar with our PointBreak trading system and our unique way of using the pyramiding technique I suggest to read my PointBreak trading strategy first.

Do I make consistent profit using PB5 ?

I meet with hundreds of people every week through our forex seminars and managed funds program. There are additional videos on our website about our forex seminars. Every week I open my personal trading account in front of them, and we have more than a hundred clients in our managed account program (and until today no one has lost money).

DTS EA on Perfect Forex Arbitrage Seminar

Download an example of one of our client’s live reports here.

Brief comparison between DTS-1 and PB5:

The logic behind DTS-1 solves the drawdown problem of PB5 in choppy/sideways and reversal markets. It also reduces the maximum drawdown period of PB5 from 5 months into 2 months (based on Jun 2004 – Aug 2008 data history):

	DTS – System 1	Point Break EA
Trading Technique	Pyramiding Technique Moving Starting Point (MSP) Technique Inverted Technique Contrarian Technique Breakout/Breakthrough Technique	Pyramiding Technique Moving Starting Point (MSP) Technique
Best Performance	Trending Market	Trending Market
Worst Market	DTS-1 works in every market condition	Choppy Market Sideways Market Reversal Market
Drawdown Period	2 months maximum	3-5 months depending how long the choppy/sideways market continues
Note: Based on 2004 – 2008 Data

Market Conditions

For simplicity, I categorize the forex market into 3 kinds of market conditions:

• Trending Market (Uptrend and Downtrend).
• Sideways/Choppy Market.
• Trend Reversal.

Usually markets move from one condition to the next: from sideways market to trending market, from trending market to trend reversal, then back to sideways market before continuing to trend again.

The main problem for most traders or trading systems is how to detect correctly:

1. Is the market changing? (e.g. from sideways to trending, or from uptrend to reversal) OR
2. Is the market still continuing the current condition? (e.g. continuing an uptrend or still moving sideways)
3. How long will the current market condition continue?

How do I detect a Trending Market, Sideways Market and Reversal Market on DTS-1?

I use 3 main indicators in PB5 and DTS-1: Simple Moving Average, Keltner Channel and MACD on the Daily chart:

If you have PB5, you can set up your chart like below using the following indicators:

Fast Moving Average (Period=9) – Yellow Color
Slow Moving Average (Period=50) – Aqua color
Keltner Channel (EMA=50, ATR=50) – Grey color.
MACD (12,26,9) – I modify the MT4 original MACD.

You can download all indicators and the template I use below at this link.

I define:

• Sideways market in PB5/DTS-1: when price and both MAs (Slow MA & Fast MA) are inside the Keltner Channel.
• Trending Market in PB5/DTS-1: when price and Fast MA (Yellow MA) are outside the Keltner Channel.

• If Fast MA (Yellow MA) is ABOVE the Keltner Channel: UPTREND Market
• If Fast MA (Yellow MA) is BELOW the Keltner Channel: DOWNTREND Market

• Reversal Market in PB5/DTS-1: when price is starting to enter the Keltner Channel followed by the Fast MA (Yellow MA), especially if there is a divergence on the MACD (Magenta Line) before the reversal begins.

When PB5 is in drawdown condition:

PB5 produces very good performance on trending markets, but produces drawdown when the market is changing from trending market to trend-reversal or enters a sideways market.

The PB5 user needs to be patient when the market is in a sideways direction (e.g. period Apr – Aug 2008, see chart below). The drawdown started on the June cycle and stayed with us until the market started to trend in first week of August when PB5 finally returned to profit.

The important keys to using PB5 are:

• Do you have enough margin to cover you when PB5 is in the process of solving the drawdown problem ?
• Do you have enough patience to wait the process out? Sometimes the sideways market can continue for several months.
  From my experience, not all PB5 clients have the patience to wait, especially if one uses the risk setting too high.

How can DTS-1 solve the drawdown problem better than PB5 ?

As you know PB5 uses C-cycles for trending markets and uses MSP techniques to solve the drawdown in sideways/choppy markets.
DTS-1 adds 3 cycles (B-cycle, I-cycle and R cycle) in addition to the C-cycle and MSP techniques on PB5.

Sideways market condition:

When DTS-1 detects there is a sideways market, DTS-1 starts 2 additional new cycles:

• Breakthrough Cycle (B-Cycle); and
• Inverted Cycle (I-Cycle).

Reversal market condition:

When DTS-1 detects there is a trend reversal, DTS-1 starts a new additional cycle:

• Reversal Cycle (R-Cycle).

What do those 3 cycles actually do ?

Contrary to the M-cycle on PB5 which works separately from the C-cycle; B-cycle, I-cycle and R-cycle work together to support the C-Cycle.

C-Cycle:

Initially when a C-cycle opens, it will open the trade as below:

BUY	these positions are correct for a trending market, but they will cause a drawdown in a choppy market because the C-cycle will continue to add more BUY and SELL positions.
BUY
BUY
BUY
SELL
SELL
SELL
SELL

On a trending Market the C-cycle will become:

CLOSE PROFIT	or
…..
BUY		BUY
BUY		BUY
BUY		BUY
BUY		BUY
BUY		SELL
BUY		SELL
BUY		SELL
BUY		SELL
SELL		SELL
SELL		SELL
SELL		SELL
SELL		SELL
		……
		CLOSE PROFIT

In normal conditions the C-cycle will work most of the time. The C-cycle is enough to give us consistent profit, especially in a high volatility market.

What will happen when choppy and sideways markets come ?

B-Cycle, I-Cycle and R-Cycle:

When a sideways/choppy/reversal market comes, B-cycle , I-cycle or R-cycle will be activated.

• B-Cycle will be activated when DTS-1 detects a Breakthrough market is happening.
• I-Cycle will be activated when DTS-1 detects a Choppy market happening.
• R-Cycle will be activated when DTS-1 detects a Reversal market is happening.

Note:
Some define ‘breakthrough’ the same as a breakout market; I define ‘breakthrough’ as a breakout within a sideways area, but not a breakout outside a sideways area.

What they do is replace C-cycle positions, from:

BUY	Which are the wrong position for choppy/sideways/reversal market
BUY
BUY
BUY
BUY
SELL
SELL
SELL
SELL
SELL

into:

BUY	Which are the wrong position for choppy/sideways/reversal market
BUY
BUY
BUY
BUY
SELL
SELL
SELL
SELL
SELL

The B-cycle, I-cycle and R-cycle will add and close some positions on the C-cycle, and continue to correct those C-cycle positions until the cycle makes profit.

During Very Choppy market conditions in which the trend is not clear:

In a very choppy market, in which DTS-1 detects several market conditions (e.g. the market is changing all the time from trending into reversal, from reversal into sideways), DTS-1 will open simultaneously combined cycles from C-Cycle and B-Cycle, C-Cycle and I-Cycle, or C-Cycle and R-Cycle, and so on.

It will continue to run on two or more cycles until a clear market trend is established, then DTS-1 will stop unnecessary cycles from running and continue with the rest until the EA closes the cycle with profit.

Sounds easy?

YES… Didn’t I mention above that I will explain as simply as possible ?

But the programming was not so easy!

For every step, the system must maintain and recalculate all positions, calculating every possibility that will happen if market conditions suddenly change.

As you may know, trading systems that are based on averaging, martingale or progressive strategies will cause big drawdowns in trending markets that move against your starting positions. In very strong markets those EAs will blow up the account.

For your information I wrote two thousand lines of code in the PB5 EA; DTS-1 is five times as complex as PB5.
It needs several days to complete a back test for DTS-1 on EUR/USD (4 years data, test on every tick using 90% data modeling).

Now, for those who are confused with all those cycles and don’t understand what I am talking about…
Don’t worry, no more ‘tech talk’…

Now pay attention to the section below…

How good is DTS-1 compared to PB5 ?

Take a look at the latest sideways market in EURUSD 2008 below:

In 2008: EURUSD went sideways in Jan and Feb, started trending from March to April, then the sideways market began again around April 24 until Aug 05 before continuing to trend in August and September. I know many EAs on the market produced losses in August 2008. Some EAs even blew up when the market suddenly went back to trending again, while PB5 and DTS-1 made profit and took big gains on this trending market.

When you use PB5 (Apr 1-Sep 19, 2008):

The drawdown started on a cycle in May and stayed in drawdown between June and July until the market reverted to trending (when PB5 finally resolved the drawdown) on the first week of Aug 2008.

I ran PB5 using Risk=3 with 2 cycles and 100 pips between the cycles.

PB5 produced $2,789 PROFIT from $10,000 (+27,89%). The drawdown in that period was -48%. This is considered the biggest drawdown for the past four years. That’s why I recommend Risk=1 or Risk=2 for initial capital.

The drawdown started on May 16, 2008:

and continued in June and July:

until PB5 closed the drawdown on Aug 7, 2008:

As you see from the charts above, PB5 needed 3 months to resolve the drawdown by taking profit in up and down markets, little by little, bit by bit.

Now we run DTS-1 on the same period (Apr 1-Sep 19, 2008):

I ran DTS-1 using Risk=3 with 4 cycles, 50 pips between cycles and I disabled the watermark calculation.

DTS-1 produced $4,721 PROFIT from $10,000 (+47,21%).

From the equity chart above, you can see that there is no serious drawdown during the sideways market, even if I run Risk=3. There are only 3 short term drawdown periods with a maximum drawdown of -15.04%.

The following charts show how DTS-1 resolves those drawdown periods faster than PB5:

From May 8 – May 20, 2008: DTS-1 resolved the drawdown in 2 weeks.

From July 14 – July 30, 2008: DTS-1 resolved the drawdown in 2 weeks.

From Aug 18 – Sep 4, 2008: DTS-1 resolved the drawdown in 3 weeks.

As you see from the charts above, DTS-1 needed a maximum of three weeks to resolve the drawdown in that period, compared to PB5 that needed 3 months.

Note:

Next time I will make additional back testing video available at our website.

DTS System 1 – 4 years Back Testing Results:

It’s time to test DTS-1 using 4 years data (Jul 2004 – Sep 2008).
I use historical data from Alpari website which it can produce 90% data modeling.

Using DTS-1, we can finally activate all C-cycles (C1 through C4) working together to produce more profit without the worry of causing very large drawdowns.

First Setting:

Using Risk Setting=3; All cycles (C1-C4) Enable; with SP Distance = 50 pips between the cycles; no watermark calculation.

Notice that DTS-1 produces a very consistent profit return (the equity grows smoothly over time).

The Equity grows from $10,000 to $108,000 in 4 years (+980% profit return).

Maximum drawdown:-37.47% (happened 1 time in 2005) ~ compare to PB5: -55% (Risk=3).

Maximum open positions (in 1 cycle): 172 positions.

Maximum total open positions at once (from 4 cycles): 351 positions.

Next Setting:

To reduce the drawdown and the open positions, I ran the EA with several settings below:

Note:

Not every broker allows you to open 350 positions at the same time.
I checked with FXDD, they allow up to 200 positions (which we can run on 1 or 2 cycles).
Interbank-FX allows up to 1,000 open positions; so IBFX would be my 1st choice for DTS-1.

- 1 cycle only (C1) with Risk=3.

The Equity grows from $10,000 to $34,501 in 4 years (+240% profit return). The maximum DD: -24.89%

- 2 cycles (C1 & C2) with SP Distance=100; Risk=2; No Watermark Calculation.

The Equity grows from $10,000 to $39,100 in 4 years (+290% profit return). The maximum DD: -21.06%.

- 4 cycles (C1-C4) with SP Distance = 50; Risk=1; No Watermark Calculation.

The Equity grows from $10,000 to $32,854 in 4 years (+228% profit return). The maximum DD: -18.55%.

- New risk management (Risk 88):

I use a new risk management (Risk 88), the purpose of which is to limit the drawdown to less than 30% of your initial capital. The EA starts with the Minimum Risk Setting first, then increases the risk setting as your capital grows.

Example:

DTS starts with Risk Setting=1.
After DTS makes a profit of 20% from your initial capital it increases the Risk Setting to 2.
After you make a profit of 30% from your initial capital it increases the Risk Setting to 3.

Based on 4 years back testing on DTS-1 & PB5 (Jun 2004 – Sep 2008):

	DTS – System 1	Point Break EA
C-Cycle Number Running together	4 C-cycles (with B-cycle, I-cycle and R-cycle running)	2 C-cycles only
SP Distance	50 pips	100 pips
Watermark Calculation	No need for watermark calculation. Each C-cycle works separately producing bigger profit.	The watermark calculation always needs to be turned ON to avoid longer drawdown. This results in PB5 closing all remaining open positions as soon as the equity increases.
Drawdown Period	2 months maximum	3-5 months depending how long the choppy/sideways market continues.
Maximum Drawdown: Risk=1 Risk=2 Risk=3	-19% -28% -38%	-28% -43% -55%
Compounded Return: Risk=1 Risk=2 Risk=3	+230% +520% +980%	+170% +230% +350%
Note: Based on 2004-2008 Data

Gino Poe-Head Forex Division (Ciptadana Security / Man Financial)

Gino Poe-Head Forex Division (Ciptadana Security / Man Financial)
“Intellegent Team… ! The Balancing Method for the arbitrage, I think it’s unique and special, especially combining the fundamental and technical together in one system.
I think we need more workshop like this one !”

Where do we go from here ?

I learned from my PB5 experience that not everyone can appreciate the potency of PB5.

PB5 has been downloaded more than a thousand times from our website alone and I understand that not everyone has the patience to learn how to use it correctly.

Some overtrade PB5 until the drawdown becomes too big; some only run it for 1-2 months in a bad market and say negative things on various forums. Others want to find the holy grail: a trading system that they simply load into their computer and expect to make money every day without even bothering to understand the logic, the system requirements or their broker conditions…

…If you are still reading this far, you are definitely not one of those…

So, for the DTS-1 program I tried to make a different solution:

I will send the EA that work on your demo account, and I will run DTS-1 from our dedicated servers directly into your Live account.

Download statement report from LIVE account that use DTS-1 (Risk=1) here.

You do not have to rent a VPS to run DTS-1, and I will setup DTS-1 with your account using the correct risk setting according to your capital.

We have many dedicated servers for our managed account program, so basically you use our DTS like our managed account clients but without having to share your profit with us.

… please, do not tell our managed account clients…

(actually most of our managed funds clients are more than happy to pay me a percentage of profit as long as I generate more and more profit for them).

Note:You have option to run DTS-1 on your own VPS later.

Ok, all you need to do is: subscribe to our DTS-1 program for a very small fee.

And I include a 100% money back guarantee…!

If DTS can not make money on your live account, I will refund the subscription fee 100%.

You think I’m crazy offering a service like this one…

I have to spend my time, my resources (servers, staff, money, etc) and if DTS-1 does not make money for you I get nothing.

This is my way to show you how confident I am with my trading system.

There are lots of subscription-based trading programs that cost ten times more than our service. They do not have a money back guarantee, and they don’t even make a consistent profit.

… I hope you think it’s a fair offer. I’m sure you can’t find this kind of service anywhere else….

Why so cheap ?

I want everyone to get the opportunity to use my trading system. But it will be first come first served because I only have small slots to offer.

You know, our company has a hedge fund program in Singapore that needs a $50K minimum deposit before anyone can join us.

If you want to know more information how to start with the DTS-1 program or how to upgrade your PB5 into DTS, send email to support@forexhope.com with “DTS-1 information please” in the subject.

Final Note

Although DTS-1 is better than PB5 in performance and risk factor, I will continue to develop PB5 using C-Cycle / M-Cycle and re-release PB5 with some improvements every 2-3 months.

The main difference is that PB5 (SE Edition) will not use B-cycle, I-cycle and R-Cycle.

On our new membership area, on a weekly basis, I will post comments on what DTS-1 is doing compared to the basic C-cycle used in PB5, and give my special analysis on the EURUSD market.

By subscribing to the DTS-1 program and running PB5 on your computer, you will learn more about how to run your PB5 efficiently.

You can run your own version of PB5, compare it with DTS-1 and learn how DTS-1 solves drawdowns faster with its strategies.