Did you know there are services which allow you to copy professional traders for free? There are a few free signals in your MT4 platform which are best avoided, but we recently had a look at some of the free signals available on the myfxbook Autotrade platform and were presently surprised. With the Autotrade service, you don’t pay any upfront fees or monthly subscription costs, you just need an account with a supported broker (like Vantage FX!). You get to copy the signal for free and the supported broker then compensates myfxbook and the signal provider for the trading volume they are bringing to the table. This means a mutually beneficial situation for all involved!
Risk tolerance & profit goals
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Risk tolerance and profit goals vary a great deal between individual investors. One particular investor might be looking for slow and steady returns that beat the market whilst keeping risk to the minimum, while another investor might be looking to multiply their account balance over a relatively short period of time. In general, the more risk an investor is comfortable with, the more profit they expect in return. This tends to be reflected in actual system performance as well: systems with greater returns tend to experience larger drawdowns. Bearing this in mind, rather than just selecting one system and declaring it the ‘best’; we are going to select the best system with less than 10% drawdown and the best system with less than 33% drawdown. We will use Average Annual Return to decide which is the best system in each drawdown class is.
The Best free Forex signal: Drawdown less than 10%
Looking for a signal that offers consistent returns with minimal drawdown? The NinjaTrainer system may be just what you are looking for. This signal has been live since August, 2015 and has returned an impressive 119.77% since inception with only 8.29% drawdown. Let’s take a look at some of the key performance metrics:
- Win Rate: 68%
- R-Factor: 0.69
- Best Trade (Pips): 154.7
- Worst Trade (Pips): 100.2
- Profit Factor: 1.65
- Total Return: 119.77%
- Maximum Drawdown: 8.29%
- Average Monthly Return: 4.36%
- Average Annual Return: 52.32%
- RoMaD: 6.31
As you can see the NinjaTrainer system has some quite impressive stats. The system wins the majority of its trades (68%), but the R-Factor (average win / average loss) is below 1 at 0.69. Having said that, the best trade is larger than the worst trade, so the system does not always risk more than it could potentially make (likely employs a trailing stop). The system’s gross profit is 1.65x larger than gross loss (Profit factor) and its average monthly return is 4.36%. The system’s average annual return is 52.32% and when we compare this to its maximum drawdown of only 8.26%, we get a Return over Maximum Drawdown reading of 6.31 (RoMaD). RoMaD is a risk adjusted measure of return commonly used by hedge funds and is very handy when comparing different forex systems. All in all, the NinjaTrainer system is a solid signal, delivering an impressive rate of return with limited risk.
Best free Forex signal: Drawdown less than 33%
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Willing to take on more risk in order to reap the benefits of increased return? Take a look at the Elite PAMM system. This system has been live since May, 2014 and has realized a whopping total return of 661% with a drawdown of 30%. Let’s crunch the numbers:
- Win Rate: 66%
- R-Factor: 1.3
- Best Trade (Pips): 110.6
- Worst Trade (Pips): 89.1
- Profit Factor: 1.83
- Total Return: 661.22%
- Maximum Drawdown: 30.01%
- Average Monthly Return: 6.17%
- Average Annual Return: 74.04%
- RoMaD: 2.47
The Elite PAMM system has a great win rate of 66% and even has a positive R-Factor of 1.3. In other words, the system wins more often than it loses and on average, it wins more than it risks per trade. The best trade is 110 pips compared to 89.1 which is roughly inline with the R-Factor. The Profit Factor is solid at 1.83 and its average monthly return is 6.17%, both of which are an improvement over the NinjaTrainer system. The total return of 661.22% in just under 3 years is very impressive, though when we compare the system’s average annual return of 74.04% to the maximum drawdown of 30.01; we get a RoMaD reading of just 2.47. This is still a good reading, but much lower than that of the NinjaTrainer system.
Comparing the two systems using RoMaD, NinjaTrainer is the superior system. If you could find a way of running NinjaTrainer with more risk, it would actually outperform the Elite PAMM system. This is actually possible with a little know-how and trade copying software, but goes a little beyond the scope of this article. If you don’t know how to use trade-copying software, it all comes down to risk tolerance and your profit goals – are you happy to risk a 30% drawdown in return for an average return exceeding 70%? Or are you a little risk averse and you’d be more comfortable earning over 50% year whilst risking only 8-9% drawdown?
Another thing to remember is the limitation of predicting future performance using historical data. Though live account results are much more reliable than back-test results, there is still no way of determining how a system will perform in the future. Both systems could experience greater drawdowns at some point in the future and realized returns may fall short of the historical averages. There are also other things to consider like slippage, crowding out, commission charges etc.
The Best Free Forex Signals Conclusion
We hope you have enjoyed this analysis of the best free Forex signals on the myfxbook Autotrade platform, we were pleasantly surprised at just how good some of these systems are. Always remember to test a system on a demo account before taking it live and only trade with money you are prepared to lose!