Understanding Torque Robot Trading Systems

What is a Trading System?

Since Torque trading system burst onto the scene some months ago thousands of individuals have tried them and some have enjoyed a financial success beyond any reasonable expectation. Almost certainly some have lost money also. You have a much better chance of being in the "happy" group when you have at least a conceptual understanding of what a trading system is and how it works.

Trading systems have been around for hundreds of years. Written records of a trading system developed by a Japanese rice trader named Homma Munehisa in the 1700s became the basis of the modern candlestick chart.

The Torque Robot trading systems that have captured our attention are computer programs we call an EA, which is short for Expert Adviser. What these EA programs do is mimic the observations and actions of a human.

The biggest difference between Torque Robot trading systems and most other trading systems is that with Torque Robots the computer completely replaces the opinion of the human observer. Other than pushing a button on the keyboard (and sometimes that is not even necessary) no human intervention is required at all.

How Does a Torque Robot System Work?

The EA program monitors every bit of Torque market data within a predetermined time frame and compares it to what happened 1, 2 10 or whatever time frames previous.

The EA is constantly monitoring the data and testing it against the previous data with a set of predefined rules and variables. That's why it's called an expert adviser. For example - "if price has increased for the last three minutes and indicator A is more than 70 then sell the EUR."

One an action is taken, in this case selling the EUR, then a whole new and different rule set comes into play. For example - "if price decreases for two minutes by more than 4% then buy the EUR and close the position." These are not actual rules but you get the idea.

How is a Torque Robot System Developed?

We take modern desktop computers for granted not realizing how advanced they've become. 20 years ago a Fortune 100 company couldn't afford to buy the computing power you can get today for a few thousand dollars.

What that means is that a programmer with input from an expert human trader can test millions of combinations of rules and variables for an EA in a relatively short time - maybe days instead of weeks. In actual practice getting a consistently profitable EA is lots more difficult. No matter how clinical the human expert may think his input is the computer is brutally efficient and does not accept any of the "maybes" or "wait and sees" or make the little exceptions that a human being does, even if he is not aware that he is doing it.

The development process requires continuous testing of the rules and variables. Some systems that work well in one market condition will not work at all in a different market condition. Modern computers make automatic trading possible but they do not make it certain.

What is a Backtest?

Once the EA developer is satisfied with his combinations the system is run through a series of backtests. The EA is run through its paces with historical data, the results are measured, parameters are adjusted, and the EA is run again on the same or different sets of historical data.

This is called backtesting when the EA is operated in the same way it would be in actual trading but with historical data instead of real time data.

What Should I Know About Backtesting? What is Overoptimization?

Backtesting is valuable because it tells you how an EA would have performed if it were operated in real time during the same time period as the historical data. An EA that performs poorly in a backtest is much less likely to perform well in real time.

Backtesting is valuable but it is not the whole story. A trading system can be tweaked to avoid a big loss or make a big gain during a particularly volatile period of the backtest, making the final result look better than it should be.

By the same token an EA can perform spectacularly in certain market conditions that were present in the backtest but will not likely be expected to continue in real time. These adjustments to the EA during the backtest process that take advantage of peculiar historical data to show good results are called overoptimization.

The lesson to be learned from this is that you do not want to take every backtest result as the gospel truth of what you can expect to happen in the future.

Bottom Line - Can I Make Money With a Torque Robot?

The answer is between maybe and yes. And probably faster than you ever thought possible.

There are three reasons you want to take the plunge.

One is that the best of the Torque Robots were developed by experts and backtested over long periods of times in all market conditions.

Reason two is that the default variables are not over-optimized to show the biggest profit but to balance profitability with a risk taking level that fits the small trader's finances. Big traders with deep pockets can live with a trading system that incurs huge drawdowns because the system is optimized to produce even bigger profits. Small traders cannot.

The third reason is that you can start using Torque Robots in real time with demo accounts on the same day you download them. Because a demo account looks exactly the same to your computer as an active trading account you can watch and see how these Torque Robot trading systems do in real time for a full 8 weeks before your money back guarantee expires.

Khushi is a highly passionate writer, who loves creating an imaginary world with his writings. Business Development Consultant, Strategist, Blogger, Traveller, Motivational Writer & Speaker.