Overview

ForexAutoPilot (FAPS) is probably the most popular Metatrader automated trading system out there. (Please be aware there is another web site selling completely different software with a very similar name - Forex-Autopilot-Systems.com by Mark Copeland).

Like all of the robot systems, it runs on Metatrader 4 (MT4).

Marketing Claims

Like many of the over-hyped Expert Advisors (EAs) around, FAPS has its fair share of outlandish claims.

"According to history backtests from 1999-2008 and live trading results, the FAP EA makes 96% winning trades ".

“Since its inception 18-months ago FAPS has been responsible for the creation of 8 millionaires with an additional 3,000 clients reporting earnings in excess of $100,000 per year.”

Cost

Forex Auto Pilot System (FAPS) costs $399.50 US, but everyone is offered a 75% discount which brings the cost down to around $99 US.

The Package

• The Forex Autopilot Robot
  
  According to the manual, the trading system used by Forex Autopilot is based on more than 20 well-known forex indicators such as Alligator, Fractals, DeMarker, William’s Percent Rate, etc.  Based on what I’ve seen so far, the system always uses a 20 pip Take Profit limit, but does not implement a stop loss strategy and depends on its own internal signals to close losing trades.
  
  
• The Bonus Non-Farm-Payroll Robot
  
  The monthly announcement of NFP figures in the US is one of the most volatile moments in the Forex market, and you can make hundreds of pips within 1 hour if you trade it correctly.  An Expert Advisor is great for this because it can make decisions in an instant, which is exactly what you need in order to profit from NFPs.
  
  
• The Bonus Ultra Trend Indicator
  
  The Ultra Trend indicator is a combination of indicators that seems to be very accurate in finding the direction and strength of the trend, as well as key support and resistance levels.  It comes with a detailed instruction manual and sample setups that you can use to start trading.
  
  
• Documentation
  WIth the Forex Autopilot package you receive detailed documentation for each of the above 3 systems, as well as a 74 page advanced Forex trading guide for those who wish to learn more about things like Scalping, Martingale, Money Management and many others which is worth reading.

Related Products

There are 2 related products to FAPS:

• FAP Winner 
• FAP Turbo 

FAP Winner provides additional support and other related services for FAPS and FAP Turbo. For more info on FAP Winner read the section on Support.

FAP Turbo is an extension of FAPS that includes a scalper for some of the crosses.

Refund Policy

As the system is sold through clickbank, it automatically comes with a 60 day refund policy.

Who Wrote FAPS?

According to the FAPS web page the system was developed by “A Highly Ranked Industry Insider and a Mathematician”.  If you read further, the FAPS web goes on to say that Marcus Alexander Leary developed FAPS along with his programmer buddy with an “unbelievable head for figures”, Steven Strauss. We presume Marcus is the “Highly Ranked Industry Insider” and Steven is the “Mathematician”.

Support

FAPS comes with email based support. I have tried using it and they do respond eventually, but I found that they didn’t really answer my questions. The standard response seemed to be to point you to the introductory videos, which don’t answer my questions either. If you persist you can get an answer via email.

FAP Winner

Where there are problems, there exists opportunity. In order to improve the support, in April 2008 a FAPS user, Charles A Floyd II, created a FAP User Group Yahoo Forum to provide free support to other FAPS users. Since the forum's inception. Charles has also set up a commercial FAPS support service called FAP Winner, which promotes a modified version of the FAPS EA called the Forex AutoPilotTradingSystem (FAPTS). Charles and Marcus both respond to questions on the free Yahoo forum, but they are now increasingly pushing participants to the commercial FAP Winner service.

FAP Winner comes with two levels of membership: Monthly - US$99 up front + US$49 per month and Supreme - US$599 for 12 month membership. The main difference between the levels is access to better, more timely support, additional mentoring and access to additional non-FAPS EAs. I did sign up for the silver level of membership before it went to the monthly fee. For the silver level or monthly membership you receive:

• FAPTS EA
  
  This is FAP preloaded with the FAPTS Optimized settings, so all you have to do is adjust your lot size. Unlike FAP, Charles recommends trading with the trend so in a down you take only short trades and vice versa for an uptrend.
  
  
• Trading Plan
  
  This is a calculator that shows you how to calculate lot sizes depending on your account balance, and how many successful trades are required for you to make a million dollars (the plan makes the rather poor assumption that 100% of your trades will be successful).
  
  
• Online Forum
  
  Chares publishes his weekly trading setting for FAPTS on the forum. The forum also covers a wide range of topics relating to FAPTS and FapTurbo as well as reviews of other EAs. The FapTurbo developers seems participate more in the FapWinner forum than the free FapTurbo forum.
  
  
• Support Line
  
  Access to a support line (a web form which sends an email)
  
  
• Documentation
  
  A PDF document describing how to set up and trade FAPTS
  
  
• Trading as a Business
  
  A 3 page PDF document, by Joe Broadhurst, which talks about “trading as a business”

I have tried the FAP Winner support line for a few questions and I found the team to be prompt with their responses. However, on both the FAP Winner forum and the Yahoo forum, you are expected to follow Charles’s lead. Exploration of alternative ways of how FAPS might be used or open critical thinking about Charles’ methods is pretty heavily moderated, and outright dissension is not tolerated.

If you are interested in free "non-Marcus / non-Charles affiliated" support for FAPS products you can also go to another forexautopilotforum . This group explores a much wider range of ideas about how FAPS could be used and moderation is not nearly as heavy handed. What I really like about this group is they have an ongoing back-testing competition to find the best settings to get the most out of FAPS and FAP Turbo.

How They Work

Like all the EAs that I have reviewed so far, FAPS and FAPTS are “grey box” systems, meaning that the internal logic of how it trades is proprietary, but the user can adjust some of the settings. If you read their documentation, there is little clue as to how it works, but Marcus’s responses to questions provides more insight.  

Markets

According to Marcus, FAPS is really only useful for trading the EUR/USD on the 1 minute chart: Having said that, you can still trade FAPS on any market that your MetaTrader 4 broker supports. Some forum members report that FAPS has been traded effectively on GBP/USD, USD/JPY and the USD/CHF.

The ForexAutoPilotForum community have found that you can also successfully trade FAPS on a 5 minute chart. In back test, the performance of FAPS actually improves as the entries on a 5 minute chart are better quality. However, if you increase the time frame again, performance seems to degrade as you are sacrificing a larger number of entry opportunities for a further minor improvement in entry quality.

Entries

When asked about entries for FAPS, Marcus’s response is that:

“The Trading system of the ForexAutoPilot expert advisor is based on several modern Forex indicators such as Alligator, Fractals, DeMarker, and William’s Percent Rate. The system detects a good trend and confirms it using internal indicators, then opens the trades to make maximum profit for you. “

As described above, the systems is pretty much an intraday trend trading system that is designed to trade a one minute chart. The entry as far as I can tell is pretty much what Marcus describes:

Enter Long if the Alligator indicator shows a trending market (default of a 13, 8,5 set of three smoothed exponential moving averages), the Williams %R is not showing an overbought or oversold market, the Fractal Indicator is lower and the Demarker indicator was recently high.

Enter Short if the Alligator indicator shows a trending market, The Williams %R is not showing an overbought or oversold market, the Fractal indicator is higher and the Demarker indicator was recently low

If you sign up for FAPTS from FAP Winner, they make a number of further refinements on the entry:

• FAPTS is set up by default to only trade the London session between 7 am to 12 pm
  
  
• At the start of each week, Charles will indicate the major trend on the market (based on weekly / daily charts) and will ask you to set up FAPTS to trade in the direction of the market. Charles seems to use some technical analysis for this.
  
  
• FAPTS uses a “one and then done” philosophy and it comes with an additional feature to ensure only one trade is made in a 24 hour period.

Probably the main difference between FAPS and FAPTS is FAPTS will take far fewer trades than FAPS, but trading tends to be more consistent because the trades are opened during a volatile session on the market (the London open) and the trades are made in the direction of the dominant trend. Charles publishes his results on the Fap Winner website.

Exits

When asked about exits in FAPS, Marcus’s response is that:

“The system does not use a fixed stop loss parameter to prevent losing trades. ForexAutoPilot advisor monitors each open trade carefully and closes it if it reaches the takeprofit limit when the trade is successful. This “no fixed stop loss” approach showed great results in numerous backtesting and straightforward live tests. FAPS makes 96% winning trades.”

Out of the box, the default for FAPS pretty much does what Marcus says. It comes with a default 20 pip profit target and no stop loss set. The default for FAPTS is similar except they also use 500 pip stop loss and a 15 pip trailing stop. On the FAP User Group forums, sometimes it is suggested that you use a tighter 300 pip stop loss.

FAPS trades with an internal stop loss and therefore the stop loss is not entered at the time of order entry. Marcus’s reason for this is he believes that if the stop loss is placed as part of the order the broker is more likely to hunt his stops. So you need the stomach for large drawdowns.

Marcus also indicates that the system has an additional stop built into the system where all negative positions are closed at the end of the month. According the the FAPTS FAQ, the reason why the EA is designed to close bad trades at month-end is that:

• Traders are able to take a fresh start going into the new month and thus prevents traders from holding on unnecessarily to losing trades
  
  
• Their tests have shown that once the draw-down has been exited, the loss taken at month- end close can be gained back within 2-6 days of the new month.

There are apparently 2 other stops that FAPS supports based on its own internal indicators. According to posts I have seen on a couple of different forums these stops include a “disaster stop” which is triggered on a sudden spike of a 100 pips or more and a “whipsaw stop” which is triggered if the price immediately moves against the entry position. These stops are triggered very rarely, so you cannot rely on them to protect your account.

Position Sizing

The FAPS material does not give you any advice for position sizing.  FAPS does have an auto-lot feature which will calculate the position size based on the size of the account. How this works is not explained, but it seems to be a function of the maximum number of orders, lot sizes and the lots risk reductor.

On the FAP Winner site, there is a trading plan which is much clearer in terms of lot size calculation. It simply presumes 1 mini lot per $1000 in the account (or 0.1 standard lot per $1000 in the account). Therefore for the same $5000 account, 5 mini lots would be traded. .

Performance

If you read the FAPS website, you see a number of claims around performance such as:

• A back test result which over a 5 year period which traded $1000 up to $46,638 using a fixed lot size of 0.1 lots. In this test we see 91% of trades are profitable and there is a maximum drawdown of 13.47%.
  
  
• A forward test result with real money where $2,910 was traded up to $8,916 using 1 mini lot over a period of 2 months. In this test we see that 92% of trades were profitable and the maximum drawdown was 1.41%

I have been not been able to reproduce the back test result myself. My attempt resulted in the account blowing up after 25 trades.

Click on the link for the live results on FAPS with FXDD.

Weaknesses in the FAPS System

In reflecting on the performance of FAPS, it achieves its results because it has tight profit targets (20 pip target) and no stop loss. Over a 4 year period, it is not surprising that we are seeing a 95+% success rate, because the EUR/USD is 96% likely to revisit an earlier price level in that time frame. However, in some market situations where the market has a massive retracement and your pockets are not deep enough to handle the drawdown, there is a risk of loosing a reasonably large chunk of your account if you are using 300 to 500 pip stops, or nearly all of your account if your are using no stops at all.

In terms of other potential weaknesses in this system, there are weaknesses in the trend trading nature of this system. FAPS is highly likely to go through periods of extended drawdown in a ranging market. This is because the FAPS system probably has no filter built into it to avoid congested ranging markets.

How Best to Trade the Collection of Systems

At its heart FAPS is a trend trading system with tight profit targets and either wide or no stops. The width of the stops means that, despite the high win rate, there is a chance that the market may turn against an open trade at any time and leave your account in tatters. This makes the system a high risk system. If you are unwilling to tolerate such a risk in your trading, then this system is not for you.

If you do decide to trade this system, make sure your demo trade it for a while so that you get a handle on how it behaves in different market conditions. In trading it there are a few things you should consider and, in particular, I think the FAP Winner guidelines for trading FAPTS are on the money (first dot point below).

• Generally you should trade FAPS with the dominant trend. If you see the daily chart approaching a major trend line or a S/R line and the price action starts to congest, consider standing aside as the market may change direction. If you are holding open positions and the trend definitely ends and changes direction, you should either consider closing your open trades and wearing the loss, putting a stop on your open trades or hedging open trades. If you are uncomfortable doing this kind of analysis yourself, you should consider signing up to FAP Winner as they provide this kind of information on a weekly basis
  
  
• Follow the Forexautopilotforum discussions, as they have an ongoing back testing competition and they are continuously identifying the best settings to use
  
  
• Consider withdrawing a portion of your profits regularly. That way if your account does suffer a major loss you may still have something to show for it.

Conclusion

It is obviously your choice as to whether you trade FAPS or FAPTS. 

I am trading FAPTS live and I intend to continue to do so as long as the results continue to be profitable.  I am a member at FAPWinner and I follow Charles' recommendations on the trend direction.  The performance with these system appears to comes down to your ability to know when to turn them on and off.  So far Charles has done a good job of calling the end of the trend.

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