Cashflow System Review
Published April 23, 2012
(See the October 25, 2012 update with a detailed explanation of how the Profit Targets work.)
Forex Product Review
CashFlow system isn't a very popular or heavily advertised service, but we just started testing it a few weeks ago. Since it has risen to the top of our charts, I felt a review was in order. Here is some information about the service that you might want to know.
We have set up the CashFlow System performance testing here:
We are only trading the EURUSD but it can work on other pairs too (such as GBPUSD and EURJPY). We're only trading 1 currency pair because of a compatibility issue with the automated signals on multiple pairs on the same account. [Edit: this is fixed now]
About the Strategy
The CashFlow System concept started as a money management and risk:reward management strategy for manual trading. However, for those who want pure automation (like us), there is an EA that delivers signals. This is what we're using for purpose of performance testing.
The signals appear to be using a type of market reversal strategy. We have ours set up to use a 25-pip SL and 50-pip TP on all trades.
The EA was a bit more complicated to set up than a normal EA because MT4 scripts are used to set some of the parameters (these parameters are still in effect while manually trading, if you choose to use that option). Here's what you get:
It took me a little time to figure things out and set up the EA but once I did, it has been working fine.
Risks and Rewards
Users are encouraged to find settings and preferences that work for them. Our $10,000 demo account is using the following settings:
This creates an automatically generated lot size of 0.20 lots for the initial trade in each sequence.
- Profit target: $100
- Stop Loss: 25 pips
- Take Profit: 50 pips
Using these settings, I estimate we can suffer 6 consecutive losing trades before having a 40% drawdown. I don't think the account would be able to take a 7th order. So far our max consecutive losses has only been 3 but we've only been trading this for 3 weeks.
For this reason, it is EXTREMELY important to capture your profits. I believe this is the type of strategy where you "double the account as quickly as possible and pull the money out before it crashes".
So why on earth would I write a review about this type of strategy? It's simple: High-Risk Forex trading gives me an adrenaline rush and is fun to trade, as long as you know what to expect and you can deal with the outcome. :) It's much more exciting than slow-and-steady profits.
They have a variety of statement screenshots on the site, but nothing that shows the actual trades or dates and nothing that's verifiable. Since the original focus was manual trading, it's hard to show 'proof' since everyone's results will be different. The screenshots are from a mix of manual and automated trading.
Forex Verified test:
Pricing and Availability
Cost is $99 per month via ClickBank.
Customer Service and Support
Tony has been very responsive and helpful getting us set up with the demo and answering my questions about the system.
The Bottom Line
It's a risky system because of the martingaling lot size but losses are kept small because of the 25-pip SL. As long as you can have less than 6 losers in a row you're OK. I enjoy trading high-risk systems like this because they're fun, but I would not trade a large sum of money with it.
P.S. It is important to state that I am not necessarily endorsing or recommending the above-featured product. This is simply a review of a product that has obtained a high placement on our site and contains educational material and candid comments. I am not trading it on a live account at this time. If you purchase the EA using our link we will receive an affiliate commission that helps pay for our servers, hosting, websites, programming expenses, and time. We are very thankful to those who use our links.
[Edit: I started trading this product on a live account on September 20, 2012.]
Update October 25, 2012 Regarding Profit Targets
Cashflow works a little differently from most EAs which makes it impossible (or difficult) to trade other strategies in the same account. It's extremely important to understand how it works.
These are things you may not need to know prior to purchasing the EA, but you definitely need to know them prior to using it!
- An MT4 script is used to set the Profit Target (for example: $100). This profit target is saved as a global variable (a list of settings stored within MT4).
- If the Balance is $9000 and the Profit Target is $100, the EA will set the "Target Balance" at $9,100. This target balance is used to calculate the lot size.
- If the current balance is $9000 and the target balance is $9100, and a 50-pip Take Profit is used, the EA calculates a lot size of 0.20 lots. Therefore if the trade hits the TP, then the target balance will have been reached.
- If you take a $50 loss, your balance is $8950 but the target is still $9100. Therefore the next trade will be 0.30 lots so if the TP is hit, the target balance is reached.
- If you're trading a different strategy or have manual trades in your account, and you take a loss of $500, the balance would be $8500 but the target balance is *still* $9100. Therefore the EA will try to make a $600 profit on the next order (with a 50-pip TP, that's 1.20 lots)
This is why you don't want to trade other strategies on the account. The Cashflow EA will end up raising its lot size to try to make up for losses taken by *other* strategies. (Actually, this may not be a bad thing as long as you're aware of it...)
- With Turbo Mode on, the Target Balance is increased after *every* trade, whether they win or lose. For example, let's say the balance is $9000 and the Target Balance is $9100. You take a $50 loss. The new balance is $8950 but the new Target Balance is still increased to $9200 so the next trade will try to make $250.
Setting a Profit Target of $100 with Turbo Mode enabled basically says "I want to make $100 profit for every single trade that is placed, whether they're profitable trades or not."
Setting a Profit Target of $100 with Turbo Mode disabled basically says "I want to make $100 at a time, whether it takes 1 trade or 10 trades to get there. When I reach it, we'll start over with a new $100 goal."
With Turbo Mode off, growth is a lot slower but the lot sizes increase more slowly and you can survive more consecutive losses. With Turbo Mode on, growth is significantly faster but you may not be able to survive as many consecutive losing trades.
- Lastly: withdrawals and deposits affect the balance too. If your balance is $9000 and the Target Balance is $9100, what happens if you withdraw $2k? The balance drops to $7000 but the Target is still at $9100. The EA would try to earn a whole $2,100 on its next trade (big lot size). After any changes to the balance (deposit, withdrawal, etc.) the target needs to be re-set by re-running the Profit Target script in MT4.