DiCo Watchdog EA Review, Live Trade Results and Settings

[pharoh777]

DiCo Watchdog EA Purchase Link

DiCo Watchdog EA Review and Testing:

Howdy Folks!! When searching for EAs to use, sometimes there are hidden gems NOT plastered all over the place, stuffing your inbox with 30 people emailing you about how "this EA is going to change EVERYTHING about the entire human race!!". Sometimes "the good ones" are found through word of mouth. Does DiCo Watchdog EA belong in that group?? We get to find out by testing it!!!

The creators of this EA are two fellows by the names of Oleg and Julian and they have been VERY helpful in getting our tests going. Big thanks for allowing us to check out your product here!! So what is DiCo Watchdog EA all about?? Let's Find Out!


What Is DiCo Watchdog EA (DCW)?

Watchdog EA is an expert advisor (EA) for the forex market. An EA is a program that opens, manages, and closes trades based on internal rules, without any intervention from the trader after initial setup. Here is some basic information that everyone should know about DCW:

• Pair Traded: Eur/Usd
  
• Timeframe: 1-hr
  
• Price: $99.00 for a year of subscription
  
• Accounts: Unlimited LIVE accounts (accounts must be under same name) and Unlimited Demo accounts. This is pretty rare these days and I found this to be a nice feature
  
• Refund Policy: 60-day full refund policy provided an account statement showing no profit is produced
  
• Payment Options: Paypal, skrill, credit cards, or web money
  
• FIFO Compliant: Yes, completely since it only takes one trade at a time

Well, yes Omar, very nice and all.....but.....what is the strategy and trades like?? Well, I'm glad you asked!!!


DiCo Watchdog EA Strategy and Trades:

I have been running this EA on a demo account for a few weeks now and I would like to start out by saying that this EA takes long-term trades and goes for bigger moves. The vendors have been kind enough to provide us with links to real-money, LIVE accounts with more history for comparison. This is very useful since this EA takes an average of a little more than one single trade per week. Since it trades infrequently, it takes longer to establish what the overall long-term prospect is for the EA. Julian and Oleg have also been kind enough to provide me two backtests, one that even covers TWELVE YEARS. Here they are:

DiCo Watchdog EA Backtest 1 (Feb 22, 2000- April 27, 2012)

DiCo Watchdog EA Backtest 2 (Jan 09, 2009 - April 17, 2012)

When we trade systems that trade infrequently and hold trades open for a while, it is a good idea to look at as much data as possible to make the decision whether to risk real capital.

For overall strategy this EA uses what is called "MACD Divergence". This is a popular technique with professional traders. MACD is an indicator related to volume and imbalance of buying vs. selling and tends to indicate how much "power" the move had. As the market moves higher, the power of the market should increase to illustrate momentum and volume increase to support the move. For every wave higher in price action, the MACD should make a higher wave up as well to indicate the trend is still intact for the move. If the price goes higher, but MACD goes lower, it indicates that there wasn't enough conviction in the move and price should at some point in the near future reverse. The same is true in reverse on the sell side. Exact same principle though. So this EA trades short when price goes up in a higher wave, but MACD wave does not match and buys when price goes lower but MACD does not mirror the move and creates a lower wave compared to the last. Do a google search or even ask around this forum and you will find many traders far more intelligent and experienced to explain better than I but at least that's a rough outline so you can understand why this EA takes the trades it does. Now that we know WHY it takes a trade, here are some important stats:

• Reward/Risk Ratio: Positive @ approx. 1.57. As you know by now, I love figuring this out first and we ALWAYS desire a positive R/R whenever possible as the higher it is, the less win % we need to be profitable and therefore much less pressure to be "perfect". Remember that a number higher than 1.0 means that we only have to win more than 50% of our trades to be profitable. At 2.0 (our wins are double our losses) we only have to win 34% or higher to make profit. At 3.0 (our wins are triple our losses) we only have to win 26% or higher.
  
• Max Stop Loss: -140 pips. This is a fixed s/l and becomes around what we get as an average stop.
  
• Max Take Profit: +240 pips. The average win is between 200-220 (depending on data used) and from this compared to our max/average stop-loss is how we get a positive R/R. The trade will close early if the market changes but the s/l stays fixed. That being said to get an average of +220 pips profit means that this EA rarely if ever strays far from it's +240 t/p on winning orders
  
• Trade Frequency: A little more than 1 trade per week on average
  
• Win %: Approx 55-60% which squarely makes this profitable based on R/R
  
• Average Trade Length: 4-8 Days (depending on data used)
  
• Max Drawdown: -35% based on vendor recommended risk (taken from longest-running LIVE account provided)
  
• User Manual: VERY organized! It is clear and consise and explains everything pertinent without being confusing or overkill.

Risk Optimization:
The vendors recommend that 0.10 standard lots be used for every $1000 dollars in the account. This makes the per-trade risk at 14%. For example a $2500 account would use a 0.25 standard lot for a total risk-per-trade of ($2.5/pip * 140 pips = $350 (14%)). Seem a bit high?? Well, the reason for that is that since we are only averaging ONE trade a week, the risk is actually appropriate since many EAs use maybe 5% risk per trade but trade an average of 5 times per week. Assuming a complete loss of all trades in one week, the latter would actually be risking 25% in one week, while our single 14% risk-trade is only risking that in a week. So the bigger-picture has to be observed sometimes to get a apples-to-apples comparison. Do you have to use that amount of risk?? OF COURSE NOT!!!! I'm not even sure that I would use that much on a live account, BUT to give the EA the very best chance of performing the way the vendors designed it to (we don't get to fiddle till later, and ONLY if we have to!). It is only fair to be objective and run the EA the way the vendors designed. Again, when it comes to your own money, YOU are the BOSS, and YOU make the call! Speaking of risk management, there are three very nice options:

1. Standard Mode: FIXED LOT. The method I am currently using and adjusting trade size after every win/loss based on the 0.10 standard lots per $1000 in the account per the vendor recommendation
   
2. Conservative Mode: Risk % Based on BALANCE (closed trades). This will calculate lot size based on % of actual account balance
   
3. Aggressive Mode: Risk % Based on Floating Equity (closed trades + open trades). This will calculate lot size based on the current state of the Equity of the account. For example if you have a trade(s) open that are in profit, it will open a lot size higher than the relative % of just the balance. If you have orders that are in drawdown, it will calculate a lower lot size than if just the balance was used.

And Now the Trades:
As promised here are the accounts that are running this EA. The first one is our own Forex-Fxtrader.com DEMO account that is operated by yours truly. The second two are both real-money LIVE accounts run and managed by the vendors themselves:

Forex-Fxtrader.com Demo (OLD with OLD Settings, NO LONGER USED)


Forex-Fxtrader.com Demo (NEW account with modified risk settings CURRENTLY TESTING)



Golden-Boomerang Labs Live Account 1 (Started November 2011)



Golden-Boomerang Labs Live Account 2 (Started April 2012)

Pretty Darn Impressive No???? Yeah, WOW!! Let's hope these results continue!!


Of course, as always, I am NOT an affiliate of ANY product we test, BUT if you DO decide to purchase this EA, please do so through the links on this thread as it helps maintain the site and allow us the chance to give you the absolute, very best in product reviews and tests!!!

DiCo Watchdog EA Purchase Link

[pharoh777]

​settings coming soon!!!!

[capsmart]

Hi Omar, this looks very promising. Watching the boomerang 1 we notice that price kept going up and down for some time and it was after March 15 that it started making some decent profits. Nevertheless it managed to stay above water for the whole period despite the ups and downs. The back tests show a much "healthier" equity curve.

[pharoh777]

Thank you for your amazing analysis as ALWAYS Vassilis!!! You're awesome buddy!! We got our first loss this week and a couple of open trades that are currently in profit. We are still 7% up on the account after the whopper of the first trade we got. You are absolutely right about the way this EA looks like it trades. I think that the reason for that is one win can eat up almost two losses, and any consecutive wins really pull the account up quickly. This is the power of a positive R/R!! It's what we focus on in manual trading many times and it translates well into EAs!! I'm hopeful this test will go great.

How these trades play out will either push us back into healthy profit or bring us back to b/e most likely. Stay tuned to see what happens!!!

[pharoh777]

Hi Everyone!!! Looks like we took a bit of a wallop with the last 3 trades all losing. Keep in mind though that with the R/R the way it is ONE winning trade at this point will put us back into profit. As Vassilis pointed out, we may have to deal with some heavy fluctuation before "liftoff". So far drawdown from the highest point is almost 40%. I am not too keen on this figure as I'm sure will come as no surprise to any of you who follow my reviews.

In complete fairness though, and considering the other accounts are still up a great deal, we simply must let this test continue and see what happens next!! This could be a rare occurence and a "worst case scenario" followed by great gains. Only time and more trades will tell. We have only seen 4 so far.

[pharoh777]

ZOINKS!!!! Wow, this test took a massive beating and I scrapped it. Does that mean that DiCo Watchdog gets a "final report"??? OH HEAVENS NO!!!!

There was some real promise with this system from what I saw and the biggest flaw was the lot size management. Using 0.10 standard lots per $1000 of trading capital was just too risky for my blood and it proved fatal to the account. BUUUUTT, if we are not risking 14% PER ORDER then we have much more room for the usual bumps along the road of trading forex, ESPECIALLY in the current manipulated markets.

So I have now used risk I AM comfortable using at 3% per trade. That way, even if we get 10 losses in a row, we will only blow 1/4 (approx.) of the account. I am much happier this way. So even if the trades are infrequent, we won't ever have to open up the MT4 and see a major blowout. Shall we get to the new account link? Here ya go!!!

Now let's see how the test goes!!!! We already have some open trades going!

[pharoh777]

Well, the new much more modest risk settings are proving to let this EA "do its magic" without risking the account to a catastrophic loss resulting from just a few consecutive losing trades. We are now in positive territory and the R/R is looking good, but we will have to see what happens next.

I have noticed the losing orders come from the market NOT respective MACD divergence lately. It has impacted my own trading and coupled with the lack of movement or clear movement lately, this has been a difficult period for this system to trade.

I think Watchdog EA should be "watched" for a while and see if it can produce some nice gains. I think this system has potential and the right markets with enough movement should allow it to function normally. Let's see what happens!

Stay Tuned!!!

[pharoh777]

Well, here we are more than 3 weeks since the last post and we have a few trades open STILL that look like they may hit s/l. That would bring us down quite a bit. Hmmmmmmm. It hasn't closed a trade in a very long time, so I'm not sure what to think about this system anymore. The market conditions have been horrendous lately and I think that is partly to blame. A good system should be able to survive most market conditions without blowing the account. On top of it, I have severely reduced the risk from the recommended settings to what we have been using. But I will give this the benefit of the doubt for now and see how these trades work out.

[pharoh777]

Methinks this is heading down the road to rejectville. This EA has politely removed almost 20% from the demo account using the VERY CONSERVATIVE money management settings after the vendor recommended settings account debacle. And it only took two sets of trades to do it. Things that make you go hhhmmmmmmmmmmm.......