Does GPS Forex Robot Really Work

Today we concentrate on a really unusual expert advisor — the GPS Forex Robot, developed by Mark Larsen and his group.
Now, whatever I will say in the following lines would perhaps not matter to people who have heard of Larsen before. Each time a forum participant mentions his name, it’s generally followed by a story of ruined accounts, failed refunds and crappy software.

Still, I believe it’s worth exploring this GPS Forex Robot even for the sake of developing a habit of digging deeper into complicated matters — things that look bright and shiny on the surface, but are spoiled on the interior.

Let us start with the fundamentals.

The programmers of the GPS Forex Robot (version 2) offer it for sale for $149, plus there is a 60-day money back guarantee. So far so good — for this price, we might expect the expert advisor to match the performance of the Forex Growth Bot, or FGB, which costs $129, and the Forex Invest Bot, or FIB,- $197.

More Details:

Don’t Go Chasing Waterfalls

The cheesy website promotes the GPS Forex Robot as a real miracle maker. As soon as you apply it to a Metatrader 4 (MT4) account, you will only have to wait for the wonder of 98% winning trades to happen. If that looks too good to be true, that’s probably because it isn’t.

But let’s examine the block-buster asserts further. According to Larsen, a reverse strategy allows fast compensation for losses incurred. Say the robot purchases EURUSD and suffers a loss. Because of this, it will immediately open a reverse trade (market ) — a strategy known as stop-and-reverse. In fact, that’s something quite simple to implement in a software — even by newbies — so there goes the”genius” of the two developers (Ronald and Antony) accountable for the bot.

The fascinating part about this bot is its approach to increase trade contract sizes. When the EA reverses a trade, it increases steeply the trade contract dimensions — from 5 to 9 times.

Does this remind you of something? To me, this looks like a Martingale strategy, which is a gambling method, where you start with a certain bet size, then double it every time you lose and keep doing this until you win, when you return to the first bet size. What’s dangerous about this strategy is that it can guarantee certain profits only to gamblers with boundless wealth and there is not any limit on the maximum bet you can make. But if your wealth is limited, which generally is the case with forex trading, or there is a maximum amount you are able to trade (again — the situation with trading), then you may wind up buried under the weight of constantly rising bets without a genuine chance to return your losses. In simple words, if you lose more than once, your accounts will probably fail.

Backtests: Oh, Sweet, Sweet, Martingale!

Let’s explore the backtests to see how the peculiar strategy of GPS Forex Robot works.

At a first glance, the picture is rosy, as this unbelievable robot makes drives an initial deposit of $10,000 to a net profit of $100,952. Pay attention, however, that the average profit trade ($219) lags behind the average loss trade ($824)! That is troublesome because a succession of losses can get you into a really deep trouble.
The history of transactions is really enlightening, as you can see the odd trading strategy of the robot in action. By way of instance, on May 27, 2009 there is a heavy loss of $919 after buying 1 lot of EURUSD. The robot immediately reverses the strategy and opens a sell trade but with commerce contract size of 6.8. This time it’s a winner — there’s a gain of $904, but such lucrative trades can’t be guaranteed.

Forward tests: Cradle of Loss

A real account on, to which the GPS Forex Robot is implemented, provides us with additional insight concerning this EA. The transaction is with EURUSD and started on May 21, 2012. Since its activation, the account has registered a profit of 153%, which, given the initial deposit of $100,000, represents a whopping sum.

The account has not registered a single month of declines since its launch, even though the growth rate is gradually declining.

A worrying sign is that typical pips per trade are in 4.6, which hints at vulnerability to changes in market behaviour. By comparison, FIB’s Synergy FX account enjoys average pips per trade ratio of 13.6, while the ratio stands at 6.6 for FGB’s accounts with ThinkForex.

The risk is low, however, since drawdown reaches a solid level of 10%, the same as that of FIB and much lower (which is good thing) than the 42% recorded by FGB’s account.

The curious part is from the history of trades as once again we encounter the stop-and-reverse strategy and the particular version of the Martingale method. The robot applies both methods when there are particularly heavy losses. By way of example, following a losing trade (the reduction is $10,230) on June 8, 2012, the robot reverses the plan and raises the trade contract size from 11 a lot to 75 lots. In case the robot had suffered another loss like the preceding one, but with the increased commerce contract size, the whole loss would have amounted to $71,088.

If you are acquainted with Isaac Asimov’s work, you ought to know the First Law of Robotics — that is, a robot cannot harm a human being. The GPS Forex Robot clearly violates this law. It may be not harming the dealers, but it’s harming their accounts. It is similar to the Rosemary’s baby sleeping in the cradle of loss. You just do not know when the baby will wake up and unleash hell.

Don’t Care about Bad Reputation

The funniest thing is that Mark Larsen seems not to care at all about the strategy used by the GPS Forex Robot. In fact, he is the single person to have rated this EA with five stars, in his own review of the program. Way to go, Larsen! Even if that is the best way to hell.

Know your keywords

Expert advisor (EA) — An algorithmic trading system to the MetaTrader system; a trading robot. EA’s can either be downloaded at no cost or for a fee, or can be programmed in the MQL programming language.

Backtesting — Testing a trading strategy on previous time periods through a simulation.

Drawdown – A dealer’s biggest loss for a certain period of time, expressed either in pips or as a
Percentage of the trader’s profit.
Let’s say you begin with a balance of $1,000, then make a profit of $1,000, and after that lose $500. Your drawdown will be 25% ($500/ $1000 + $1000 = 0.25 = 25%).

Lot – The standardized contract size of a trading tool. A standard lot consists of 100,000
Currency units, a mini lot — of 10,000; a micro lot — of 1,000 units, and a nano lot — of 100 units.
If you’re buying 1 lot EURUSD at 1.3000 for example, you’re purchasing 100,000 Euro for 130,000 US Dollars.

Pip – The fourth digit after the decimal indication of a price quote. For instance: if the EUR/USD moves from
1.3350 to 1.3351, that is 1 pip. Pips are used to quantify price movement, profit and slippage.