Million Dollar Pips (MDP) EA Review and Performance -- 198% Return!!!! pt. 1

[pharoh777]

Million Dollar Pips "MDP" (clickable link to vendor page) PART 1 OF 2

In this thread, I will be reviewing the infamous Million Dollar Pips. Oh how this EA exploded on the scene and caused much controversy in those that traded it. Debates and hundreds of pages of discussion are contained within almost every major review site you will see. This one made a lot of noise. There are essentially two camps: The first is those who made money with it and they made A LOT! The second group are people who either lost a bunch of money or broke even. The first group usually keeps to themselves and the second group is very vocal. I was fortunate enough to be in the first group and the headline is not a mistake, I made a 198% using the EUR version of the EA!!! Huge! I have taken part in much discussion about this EA and have seen almost every issue related to its operation. This EA tends to creates a lot of attention because of the way it trades. It is sometimes like a sleeping giant. It won't trade for a week and then all of a sudden take 50 trades in minutes!! I know it sounds like an insane way to trade, but the more you find out about it, the more method there is to the madness; and as long as you follow the rules, and I mean ACTUALLY FOLLOW some rules, this EA can make a boatload! We will get to all that later but let's see what this controversial EA is all about first.

What is Million Dollar Pips EA??
Million Dollar Pips also known as "MDP" is an Expert advisor for the forex market. Expert advisors known as "EAs" are programs one can use to take trades automatically following a set of rules. This product was created by a gentleman by the name of William Morrison. Million Dollar Pips trades what's known as "volatility expansion" or in simpler terms: price spikes. When a huge amount of volatility is created, usually around news, price can fluctuate very wildly and Million Dollar Pips attempts to take advantage of this. (In my early days of trading, I saw price start to run quickly up and would attempt to catch the move by going in the same direction. No sooner did I do that, it always seemed to reverse and go quickly the other direction and I would have to close out for a loss!!) Usually when there is high volatility, price tends to swing in both directions quickly and it can be very hard to "have your finger on the trigger" ready to make a trade when you're not really sure when a good spike is going to happen. Then, you would have to pay very close attention to when it started to turn, THEN you'd place the order (assuming you could click fast enough to get it executed at a decent price). After that, you'd have to set a very tight trailing stop and try to figure out a t/p. This all in a matter of a few seconds. Sound tough?? YUP! Here is a GREAT example of how and EA can COMPLIMENT a trading strategy. You can't pull this trading off well even under the best conditions (not to mention literally staring at the screen for hours and hours waiting for a 2-second opportunity), so let a program do it for you!! MDP comes available to trade either the Eur/Usd, the Gbp/Usd or the Jpy/Usd. You need a separate license for each pair. The first license is available for $99.00. After the first license purchase, additional licenses are only $77.00. I recommend ONLY using the EUR/USD Version!!!!! I cannot stress this enough. We will get to the reasons later. From my first experience with this product I realized that this is NOT a casual EA for traders just learning the ins and outs of the market. Let me explain:

Risk and Risk Settings: Ok, it is VERY easy to adjust the risk settings wrong and EASILY blow 30% or more of your account in a matter of minutes. You have several risk settings that all work in harmony together and if you mess up a couple of them, there is a dramatic impact in how much risk you're taking. To the more experienced trader, this will be seen as a wonderful thing since you can tailor the EA to your risk tolerance and broker. It is also a little hard to truly calculate true risk because it essentially plays the market as long as the conditions are right and can essentially take an unlimited number of trades within a short amount of time. It is what makes it risky that makes it profitable though and harnessing the power of this EA carefully can make it a very, very sweet weapon in your arsenal.

Broker Sensitivity: I cannot stress this following point enough: YOU MUST USE THE RIGHT BROKER!!!!! The correct broker is ESSENTIAL!! This EA only works under certain conditions profitably and the RIGHT BROKER makes all the difference. Did I mention you need the correct broker to use this EA?? Ok, so what's the right broker then?? My humble apologies but I cannot share which broker to use. I can only tell you the conditions in which your broker must perform in order to make this profitable from my experience. The broker I used last year has kicked me for being a US client and out of respect for all the people that trade MDP there, I can't tell you the name. When I used to share my broker information in forums, I used to get emails from people asking me not to share that information (and some were quite angry). The reason is that when MDP trades, it floods the broker with requests to open trades, and modify trades. It can open up many trades all at once and modify them all, constantly. It does so very quickly and in HUGE volume. If too many people trade MDP with the same broker, performance suffers. This brings me to my next point. What are we looking for in a broker?

1. STP/ECN conditions. Not just called "stp/ecn" conditions. You CANNOT use a market-making broker for MDP. Period. Your broker must only be the middle-man in order processing, NOT the counter-party in the trade. They will find out how you are fleecing their trades and make you lose through many methods.
   
2. Execution: This is HUGELY important. Remember, spikes move quickly back and you need to get into the top or close to the top of the reversal to make money. A difference of a second can mean the difference between 20% equity gain and 10% loss. I recommend opening trade execution of NO MORE than 1000-1500ms and a modify time of 500ms or LESS. I have heard of 2000-4000ms executions working, but was not my experience I saw from people that discussed this (I have followed one thread more than 600 pages!).
   
3. Low Spread: Very important. If you are not getting average spreads less than 1.3 pips (I wouldn't trade on anything more than a broker (commission based) that gives me more than 1) on the EUR during strong volume, you cannot use this product. Period. If you are using a non-commission broker then that number becomes less than 2.0.
   
4. Price Feed Stability: There is no number to put to this but you cannot use a broker that freezes up or disconnects during high-volume and high-volatility periods. Your broker must use good servers that don't get overloaded during volatility.

Complex Settings: This goes along with risk settings but not purely. There are a few settings that need to be tweaked to make sure you work in harmony with your broker. I will be discussing these in detail in my post later this week that deals with the settings thread for MDP. Marc will also be setting his live, test account to my settings and we will have two different accounts and brokers to make comparisons with. That way we can see how live conditions at two different brokers can affect the results.

Trade Frequency: Like I mentioned before, this EA doesn't trade all the time, but when it does, it tends to place a lot of orders. For many traders at the beginning of their adventure, they want action! Also, it is difficult to calibrate settings on program that you don't really know when it's going to trade. Are your settings wrong and that's why it's not trading?? Is my broker doing something funny?? Oh, well, I better "loosen" up the settings and make it more aggressive so I can see some trades!! BOOM, account vaporized by 30% in minutes. Then the immediate reaction is "this product is a SCAM!! How could I lose so much??" I will tell you right now, MDP is NOT, and I repeat, is NOT a scam. This software should sell for much more than it does. But settings matter!! And one cannot get dissapointed if it doesn't trade for a week or two. If you have it set right, then whenever it does trade, it USUALLY more than makes up for lost time. But that takes patience to appreciate and it also takes time to get it tuned right because you have to wait for several sets of trades to take place to see the effect.

So now that you've seen what we need to be careful for, we will move on to specifically what to expect from trades and why it made the portolio in pt. 2 of the review tomorrow. Heres the link to the vendors page if you wish to check out their claims: Million Dollar Pips Forex Robot

[noiseman]

Great information. It is becoming clear to me that EAs are not the "set and forget" solution as the adverts say! Seems some people are happy using MDPs on larger accounts but this has to be due to their experience/management of the EA. Looks like it will be another learning experience before seeing any meaningful results.
I will be interested to see how you manage the settings etc because as you say it is hard to tell if you don't know how or when it will trade
Glad to hear you do not think it is a scam!

[pharoh777]

Now that we have an understanding of what Million Dollar Pips does, I will cover my actual experience with the product, why it made the portfolio, and actual 2011 performance from a live account.

How Million Dollar Pips Worked for Me:

When I finally got the settings correct after a couple months of tweaking, I was very impressed by this product right away. MDP uses around a maximum stop loss of around 8-10 pips BUT because of the types markets it trades and what can happen to spreads and the speed of the market during these extreme spikes means that live trading will not always work according to the plan with the EA. My maximum stop loss achieved was -24.6 pips. Keep in mind this type of loss only happened twice I think and loss was not bad because MDP didn't go "full bore" (MDP doesn't always take many trades, sometimes just takes one or two) and the losses were not bad on a % basis.
The AVERAGE loss out of 409 trades in 2011 was -4.83 pips and the AVERAGE win was +7.45 pips. By comparison the best trade was +38.9 pips and worst loss was -24.6 pips. Now I know it may not seem like these are huge numbers, BUT if you only have a planned stop of 10 pips, AND the way the risk is calculated (each trade in a basket of trades has it's own risk %), the total lot sizes can get VERY big. Brings us to a good point to talk about the way risk is handled in trades.

When MDP recognizes a spike it wants to trade based on it's internal rules AND settings placed by the user, it enters a series of orders as close to simultaneously as is possible between the computer, broker and market. When you assign risk percentage in settings, this is risk PER trade. You can set maximum orders and then it works like this: Let's say you set 2.0% risk per trade and a max order of 6. That means that when MDP trades it will trade UP TO 6 trades all at once. So REAL RISK is 2%-12% per "basket" of trades!! And during NFP or big news announcements, it may open SEVERAL SERIES of these "baskets" of trades!! Considering almost ALL positions are closed within 1 minute, can you see how this thing could get out of control under the wrong settings??? Here's the warning again: DO NOT loosen settings up and get aggressive just because it is not trading enough to your liking! The best approach is to start VERY conservative work your way out. We will of course, get to all the settings and why I chose them in my "settings and live performance" thread I will create later this week.

Yes, I said the dirty word.....NFP. It goes against everything I learned. But guess what? There have been NFPs I made an almost 20% equity gain in a matter of minutes! I would NEVER touch NFP myself, but the way MDP trades, it's perfect. A wild, swinging market with high volume. You can use MDP to trade all big news announcements during good volume BUT it GETS KILLED with government intervention during thin liquidity (a horror story of what the BOJ did to JPY MDP traders will be posted in a thread sometime in the future, probably here). So it needs to be used wisely. NEVER start MDP before early European session at the start of the week.

That being said, the average trade usually went like this: Depending on the size and strength of the order MDP attempts to open trades against the spike anywhere from 1 trade to your maximum set amount # of trades. As soon as the orders are open, Million Dollar Pips floods the system with modify order requests and dynamically adjusts the stop loss and take profit to minimize loss and maximize profit. This is one of its strengths: if the market goes in your favor, you almost never take a loss. It will continue to open "baskets" of trades when one basket closes as long as the conditions are still favorable. A strong set of swings over the course of 15 minutes to half an hour can trigger as many as 50+ trades. MDP has a built in circut breaker that if it continues to lose it will stop trading after 50% of the equity is lost (I found this out during BOJ intervention). Yes, that's scary, but at least it does have a "catastrophic loss" plan. There are many EAs with no such protection and they will continue to trade according to their rules until margin call. If this EA is traded on the EUR and during favorable volume periods, then there is no reason this should be hit, BUT you must always realize that this is a REAL possibility. From my experience, MDP functions well enough for the good to outweigh the possibility of catastrophic loss. My gains from winning baskets are almost always way bigger than my losses from losing ones.

As far as how much it trades, it TOTALLY depends on the markets. There are some weeks it trades every day because there is so much movements, but in slow, flat markets, it stays completely silent. If you want to have a good chance of watching it at work, find some "high impact" or "red" news on the EUR or the USD during higher volume (London open through late NY usually) and if the market spikes, it will most likely trade. It can be very exciting to watch MDP in action and I enjoy seeing it be successful at a style of trading I could never do manually.

Why Million Dollar Pips Made the Portfolio:

1. Reward/Risk Ratio: Average win was +7.45 pips to an average loss of -4.38 pips for almost 2:1
2. Smooth Equity Curve: When examining this we see that it rises nicely and doesn't have many big zigs indicating a large loss.
3. Number of Trades: If we have a positive R/R, then what we need to make money is trades! 409 total trades for 2011 (and that's from 8/15/2011 to 12/21/2011!!!)
4. As the headline said, 198% return: This probably should have been #1 on the list but without the first 3 items, I wouldn't be as happy with it. Oh yeah, did I mention 198% return was from ONLY 4 MONTHS of live trading??
5. Trades a Style I Can't: I don't ever have to feel like I'm missing out on trading opportunities related to volatility or news.
6. Rebates Galore: If you are offered rebates based on how much volume you trade, then MDP will make a side income even if it breaks even because of how large the lots it uses are
7. Numbers Don't Lie: MDP hits almost all my preferred "sweet spots" on analytical numbers. I love the profit factor, R/R ratio, max win vs. max loss, and the win %.

Million Dollar Pips Live Results for 2011 (8/15-12/21)

Net Gain: +198.57%
Total Trades: 409
Total Win %: +53%
Total Pips: +701.5
Average Win: +7.45 pips
Average Loss: -4.83 pips
Best Win: +38.9 pips
Worst Loss: -24.6 pips
Max Drawdown: -19.74% (only number a little high for my liking)
Profit Factor: 1.93 This seems right on considering an almost 2:1 r/r coupled with an EA that wins slightly more than 50% of its trades.

So considering the numbers with these settings, all we would need is for this EA to trade as much as possible according to its rules and money should keep accumulating. There is A LOT of information to be discussed with this EA and I'm very sorry if I missed anything. If anything is unclear, or I forgot to discuss it, please bring that up in this thread. Also any respectful debate, questions or comments for discussion are VERY welcome. I will be getting my particular settings later this week that produced the results and Marc is going to harmonize the live test account with those settings and we will compare how that works in 2012 with my own live account. So stay tuned!!!

Also, I am not an affiliate of the vendor of this product and I certainly do my very best to give you the most unbiased, honest and comprehensive reviews for all products discussed here. Please remember to make your OWN decisions when purchasing ANY forex product and do so with careful thought and consideration; after all it's YOUR money. That being said, if this review helped you understand the product better and you would like to purchase MDP, please do so here: Million Dollar Pips Vendor Site. Purchasing through our link does help support this site so we can bring you the best reviews, honest forex education and advice; as well as top-notch customer service.

[noiseman]

Bit concerned about the 20% drawdown or catastrophic 50% but you seem happy enough (so would I with that return!). Are you turning the EA off at the end of the week then re starting after the European open each week. Do you turn it off overnight due to thin Asian session

[pharoh777]

Yes. It is a concern. You are 100% correct. My goal with all my reviews is to look at realistic scenarios that we might encounter during trading with any product or EA. I want to be 100% honest because I'm risking my real money too and there is no reason to avoid any potential pitfalls.

The 50% blowout happened during BOJ intervention during the Asian session shortly after market open. My rule with MDP is never to start it before early European session of the Monday trading day (after initial Asian session of the week) and only trade the EUR pair because of liquidity reasons. After that, I leave it running until one hour before market close on Friday. I DO NOT trade holidays with MDP. That should protect from any catastrophic loss but there are NO guarantees in forex. We are just risk managers who are trying to give themselves the best opportunity to succeed.

And regarding the 20% drawdown, it only happened once in the 4 months I traded MDP last year, and prior and subsequent performance was wonderful enough to let it hit the equity curve BUT not disfigure it.

I HIGHLY recommend if you are using this EA on a larger account, periodic "harvesting" is necessary to make sure you have reserve capital away from the capacity of the EA to trade just to be extra cautious. That way, if a larger loss is taken, it affects the overall trade plan minimally. Even if that isn't done though, this EA used under the correct conditions can easily handle a 20% loss every once and a while. As we can see from the numbers that after more than 400 trades, average win is almost double the loss AND it wins more than 50% of the time. That's what truly matters, but we must always keep in mind what COULD happen in a "worst case scenario". That way we make INFORMED risk decisions and in the end you must have a trade plan that suits your RISK TOLERANCE. So we don't expose MDP to our life savings that we are going to pay the mortgage out of just as an example (although I guarantee you will always find a story of someone who "bet it all on black" and won). But more than 99% of people who play the lottery don't win either.

Thanks again for the question and comments Noiseman!!!

[raa]

How did you guys survive today?

[capsmart]

Marc's account had many losses today.

[pharoh777]

I'll un-bundle the trades I had and do it that way

Group 1) -38 pips (9.5 pips x 4 trades)
Group 2) +12.5 pips (2.5 pips x 5 trades)
Group 3) +6.0 pips (6.0 pips x 1 trade)
Group 4) +1.5 pips (1.5 pips x 1 trade)

Total: -18 pips

Not insanely bad but I'm with a new broker and I'm worried MDP won't work there. I'm going to post my settings later in the day in a new thread and continue to post my live results there.

[raa]

I have heard reports of -14 to -18% on equity today with some popular brokers. I am in a mild plus myself today.

[pharoh777]

WOW. I have been scouting around and it seems that people have generally lost today with MDP. 18% loss is a tough one to deal with but it's happened to me with MDP and I still ended up pretty well with it last year. I certainly hope the next time it trades, it is "ideal" and we all get a good jump on the year with this EA!