FOREX DIAMOND（EA）- Review＆Examination
FOREX DIAMOND（EA）Basic Information
|Currency Pair||GBPUSD, USDJPY,
|Trading Method||Scalping-Day Trading|
|Money Back Guarantee||60-day money back guarantee. There are no refund conditions.|
It is developed by FX automater, and Wall Street Forex Robot is also famous as EA of the developer.
Many EA are high-risk and high-return martingale EA or scalping EA with small target pips.
On the other hand, FOREX DIAMOND does not belong to either of them. Therefore, it is easy to handle.
FOREX DIAMOND is not a type of EA that leaves a stunning impact. However, it is targeting profits of 10 pips or higher while cutting loss. It is a well-balanced EA.
Profitability / Drawdown
Broker：IC Markets（Real account）
|(Information as of 2020-05-09)||Date||Balance|
|Lot Size||Fixed 0.01 lot|
|Total rate of return||+66.8%|
|Monthly rate of return (compound)||+4.4%|
|Monthly rate of return (single)||+5.6%|
|Profit trades (% of total)||74.0%|
Since the forward test started in April 2019, it has good results in real accounts. Although there is a period of stagnation, it is good to evaluate that showing rising profit curve in total.
With fixed 0.01 lot, the average monthly profit rate (single interest) of about 5% is a good level. The maximum drawdown value is about 20%, which is within the allowable range.
There are periods of drawdowns and stagnation, but overall good results.
Trading Method Analysis-Entry
FOREX DIAMOND is not simple because it uses multiple trading logics.
If dare to categorize, it’s a “short-term contrarian” type EA
It is not an EA with positions only in the direction of the trend.
The left side of the MT4 transaction history chart below shows relatively strong uptrend, but you can see that it is making both buy and sell entries.
Also, in the range market on the right side, it make entry both Buy and Sell.
■GBPUSD 30M White＝BUY Red＝SELL
In addition, the following MT4 trading history chart shows the trading on the downtrend. (The channel line is drawn in blue)
■GBPUSD 15M White＝BUY Red＝SELL
Buy and sell entries are repeated along support line and resistance line of the trend (though they do not match neatly).
Trend follow EA generally make entries only in the direction of the trend.
On the other hand, FOREX DIAMOND also targets the rebound from the trend and make entries in the opposite direction of the trend.
Therefore, even in the trend market, it is targeting for both upward and downward price movements by the short-term contrarian strategy. So, the transaction frequency is high.
In addition, even in the range market, it make short-term contrarian entry.
In the MT4 transaction history chart below, you can see how it is responding well to the range market and making profit.
■GBPUSD 15M White＝BUY Red＝SELL
As for the contrarian EA, the range market is better than the trend market, so it can be said that FOREX DIAMOND is also better at the range market.
Trading Method Analysis-Grid trade
There is no answer to the question of which is better, trend-following EA or contrarian EA. Both have advantages and disadvantages.
Generally, trend-following EA tends to be weak in the range market, and contrarian EA tends to be weak in the trend market. Therefore, both have good and bad periods.
Grid trading has been adopted for FOREX DIAMOND, probably to increase the win rate and reduce the bad periods.
Grid trading is a method of repeating additional entries in the direction of the first entry when the price moves unfavorably.
With additional entries, it can make profit even if the price does not return to the first entry point. Therefore, the winning rate goes up.
Also, if wait until the point where profitable for first entry, it can increase the profit.
The following MT4 transaction history chart shows that it is making additional entries.
You can see that even if the price goes backwards from the first entry, additional entries make profit in total.
■GBPUSD 5M White＝BUY Red＝SELL
However, although the grid trading can increase the winning rate, the number of positions increases, so the risk naturally rises. If prices move in negative direction, relatively large drawdown will occur.
There is a high-risk grid trade EA that repeats additional entries until the account collapses.
On the other hand, in the case of FOREX DIAMOND, although grid trading is performed, loss cut is executed relatively early. So the series of trades is not high risk.
In the MT4 transaction history chart below, you can see the loss cut after making several Buy entries.
■GBPUSD 5M White＝BUY Red＝SELL
Also, the maximum number of additional entries is 4 (that is, the maximum number of positions is 5). Nor is it a martingale EA, that the lot size of the additional entry increases.
Therefore, it does not lead to excessive lot size.
Moreover, it does not mean that grid trade is done every time.
In many cases, loss cut is executed with a single position without additional entry.
It seems that additional entries will be made only when it is determined by the EA logic that the winning rate is high.
On the right side of the MT4 trading history chart below, the price has risen after a Sell entry, but it have executed loss cut with single position without additional entries.
■GBPUSD 5M White＝BUY Red＝SELL
Judging these comprehensively, the risk per trade is not too large.
However, it is better to be aware in advance that if it execute loss cut with multiple positions, relatively large drawdown will occur.
Trading Method Analysis-Take profit / Stop Loss
FOREX DIAMOND position closing (take profit / loss cut) is executed by internal logic. It is not exit with fixed pip width.
Therefore, the take profit and loss cut pips distances vary depending on the situation.
As for many patterns, take profit is about 11 to 15 pips and loss cut is about 30 to 45 pips.
However, although rare, it has track record of take profit of 100 pips and loss cut of 220 pips.
Average profit trading is around 12pips and average loss trading is around -24pips.
Therefore, this EA aim to make total profit with high winning rate, although there is larger loss cut than take profit.
The balance of all the factors of take profit, loss cut, and winning rate is important. FOREX DIAMOND is profitable in the long run, so there is no particular problem.
However, it is worth recognizing that loss cut is about twice as large on average as Take Profit.
Trading Method Analysis – Frequency
Simply calculating, about 2100 entries per year, 175 entries per month, 8.8 entries per day.
Even if you think of grid trade as a series of trades, trade about 4 to 5 times per day
Regardless of the trend market or range market, it will make entry both by Sell and Buy, so the trading frequency will be high.
The number of transactions for each currency pair in the forward test is as follows.
■ Number of transactions / profit and loss by currency pair (2019-4-8 ~ 2020-4-29)
|Currency pair||Number of transactions||Percentage of transactions||Pips||Profit and loss(A$)||Win rate(%)|
About 80% of the number of transactions is GBPUSD, the remaining 20% is USDJPY
EURUSD and USDCHF are also eligible currency pairs, but they have not been traded so far in the forward test.
Forward Test Environment
FOREX DIAMOND’s forward test environment is the result of a real account.
Even though the price movements look the same, there are differences in the execution such as slippage.So even if the same EA, the results may be different between demo and real.
Since FOREX DIAMOND has published the results in real accounts, it can be considered that it has been proved that profits can be made in real accounts as well.
However, it is must to operate with narrow spread and low comission broker.
Back Test Result
|Lot Size||Fixed 0.1 lot|
|Total rate of return||4645.0%|
|Monthly rate of return (compound)||1.7%|
|Monthly rate of return (single)||19.9%|
|Relative max drawdown||15.8%|
|Maximal drawdown||1,887||Ratio to initial balance75.5％|
|Profit trades (% of total)||78.1%|
It have back-test record of about 20 years.
With initial balance of $ 2500 and fixed 0.1 lot operation, average monthly profit rate (single interest) of about 20% and maximum drawdown of about 16% are excellent results. (It’s just a back test)
In other words, on average, operating with 0.1 lots will generate about $ 500 per month, and operating with minimum 0.01 lots will generate about $ 50 per month.
(Because it is only an average, the result will vary depending on the time)
However, the maximum drawdown of 16% is the result after profit has been made and the balance has increased.
The absolute maximum drawdown is $ 1887, which is about 75% of the initial balance. In other words, if this drawdown occurred immediately after the start, the account was in a slightly dangerous state.
Therefore, it is safer to operate with smaller lot size than back-testing, although the profit rate will decrease.
By setting the lot size to one-third of the back test, the maximum expected drawdown can be reduced to about 25%. (About 0.03 to 0.04 lots with balance of $ 2500, that is, minimum 0.01 lots with balance of about $ 700)
The expected average monthly profit rate will fall to around 5%, but it is still good enough.
Based on the backtesting results, if the ratio is 0.01 lots per $ 700, you may choose to increase the lot size according to your balance.
Summary of FOREX DIAMOND
It is a high-frequency trading EA that makes profit through short-term contrarian entry regardless of the trend market or range market.
Trade for profits of 10 pips or more while executing loss cut. Therefore, it is a good part of FOREX DIAMOND that it is easy to operate mentally.
It is important to recognize that a large loss cut may occur because it have multiple positions due to grid trading. However, if you set the lot size appropriately, it is unlikely that your account will be seriously damaged.
At the moment, some big loss cuts have been implemented, but the high win rate has made a long-term profit. So it’s a promising EA.
However, in the short term, fluctuations in profit and loss are large. Therefore, this EA will not make a profit unless it is operated for a long time.
Assuming long-term operation, it may be worth using.