Forex Freedom Rocks scam ? Lets discuss this program.

[HornedGod]

Just a quick note to say that I've updated my article on correlations based on feedback that I've received.

Hopefully it's a bit more balanced, and also looks at another way in which correlated pairs can be used to trade forex.

Latest version of the article is here.

[FrankTheTank]

Hi HornedGod,

Very nice article, I really enjoyed reading it. So it appears that FreedomRocks is built on the assumption (at least for now) that the EUR-CHF pair will continue to trend up and the times when it does not is when members experience drawdowns in their account. Is this generally correct?

If so, I am thinking about waiting for a big negative trend in EUR-CHF, then waiting for the start of a reversal back to a positive trend and join FR hopefully right at this point.

I don't mean to step on the toes of HornedGod who has posted such great material but I do want to make a comment.

FreedomRocks is not predicated on the EUR gaining on the CHF nor on the GBP gaining on the CHF. The basis of the system is that the EUR/CHF and GBP/CHF remain unchanged over the next 6-months to one year. That is why the correlations are so important. It also assumes that in this "perfect world" each currency trades within a fairly consistant statisitcal range.

This isn't a perfect world so allowances need to be made for trend and changes in volatility. This is what the software attemps to do. Trends in favor of our positions need to be exploited and negative trends need to be protected against. Allowances must also be made for the individual currencies exhibiting constantly changing volatility. This is all done statistically. One thing about statistics is that you need a large number of trials to see the effect. That is why FreedomRocks is a long-term program.

Mark has always said that this current uptrend is NOT what we should expect and is a "gift from the market". I always fear that it will go on so long that folks will come to expect it. They shouldn't. It isn't part of the program.

[FrankTheTank]

Does FR currently buy more lots when EUR-CHF are in a downtrend in attempt to buy while the pair in onsale so to speak?

I thought I saw something to that effect in the video.

I agree that answering these probability questions with historical data would be very helpful to freedomrocks traders. I think it would lead people to trade more conservatively. If a person took their lot allocations, and put it in a calculator and the calculator showed the historical drawdown in dollars, they could lower their percent margin until they are comfortable with the drawdowns relative to the size of their account. I did this with end of day data going back 8 years in Excel. I can see how the value of the hedge swings around, assuming no change in lots, interest or trading profits, and then I can add back in a fixed amount per day for the interest FreedomRocks already calculates if I want to. Basically I lowered my percent margin to what FreedomRocks recommends which is 1/2 to 1/4 what most people are using. Those people may not have had a margin call yet and are racking in the bucks now but this past year has been in an upswing since July 2006 and previous down swings at their percentages could be larger than their account balance minus their margin if they trade too high a percentage. In my case the historical swings are less than my account size over the last 2 years and are probably survivable with interest and trading profits over the last 8 years. I would really like to see some sort of probability calculator to help people assess the risk of a margin call. It would be great. The best place for it would be right under the allocator, but on a separate web page would also work. I hope the idea catches on.

Originally Posted by FrankTheTank

Yes. That does help. Thank you.

I guess my next question is what is the probability (using historical data) of a margin call using 400:1 leverage and 10% margin verses the probability of a margin call using 400:1 and 20% margin, etc.?

I assume that the probability is equal using 400:1 no matter what your margin percentage is. However, people with higher margin percentages risk loosing more of their account.

The next question would be: what is the probability of a margin call using 200:1 vs. 400:1 and 10% margin?

These are questions that would help a lot of traders determine the risks of this system and I have not seen the answers posted anywhere. I realize that using past data is not a good way to predict the future, but, at least it can help.

As a side note, I am able to make some very cool calculators using a Crystal program (shown here: www.funcalcs.com )

If anyone can help me figure out the formulas for calculating interest returns based on currency pairs, margin, and leverage, I could make an interactive calculator for FR that might help a lot of people determine their ideal settings.


Note: this discussion is continued on the next page -
http://www.forexnewstrade.com/index.php?topic=11.5

[FrankTheTank]

Thanks James,

Using FR recomended leverage and margin, what type of returns should someone expect? Also, when you say this past years has been in an "upswing", are you refering to the EURCHF pair rising?

For all those interested, FreedomRocks has announced a new official broker, InterbankFX. They WILL have an Expert Advisor designed for FreedomRocks but you still need to feed data from the Portfolio Manager into it manually. That is not likely to change due to the proprietary nature of the program. It will have lots of neat features, however. More information will be available over the next few days.

[EricGondek]

Ok...I know what all of you guys are saying because I said it myself…another investment strategy MLM. Not quite!

My dad showed me FreedomRocks about a month ago. I had been researching the forex market for about six months and trying to develop a trading system that worked for me. Unsuccessfully might I add.

I hesitantly watched the FreedomRocks videos (MLM meets investment SCREAMS scam to me). After I watched the video and googled FreedomRocks I decided to sign up, intending on proving the system wrong within a month through demo trading and back testing. Perhaps I would gain some valuable knowledge about the forex market, who knows. When you’re talking forex, $189 isn’t bad, (worldforex.org wants 500 for your first month and 800 every month after that).

After I signed up, I kept reading posts like these to figure out what the "experts" were saying was wrong with FR. I am not the kind of person who would just blindly throw my money into an investment without understanding ALL of the risks. Before I get into what I figured out let me explain a little about FreedomRocks.

For those of you who don't know, FreedomRocks trades 2-4 currency pairs. For example I have been trading the EUR/USD and USD/CHF. When either pair goes up or down, (around 70-100 pips) you buy or sell around 2% of your total investment in that pair. (You do this by trade orders, you don’t have to sit there and watch it, you check it once or twice a day)This changes your basis as the currency moves up and down. The intent is to hedge your trades with a correlating trade to minimize risk and earn interest or swap rates. Now I’ll tell you exactly what I did.

All over in these posts forex "experts" are saying that the correlating EUR/CHF is in a bullish trend right now and FreedomRockers will be losing their money WHEN that changes. I know it will eventually change and I was a little scared about it, so I decided to back test this theory; history repeats itself right? I went back to Jan 1 1997, why you might ask? It is one of the highest point in the EUR/CHF chart in the last 10 years, and it's followed by a long deep downtrend. I looked over my daunting task and decided to start with a month, (I'm back testing by hand because the FR Strategy includes buying and selling small lots sometimes daily and your buy/sell rates have many variables) I picked January of 1997.

Here's what happened in January of 1997 with the EUR/CHF Open-1/2/97 @ 1.4495, Open 2/12/97 @ 1.6734 a NEGATIVE 301 pip change! Almost no one's forex portfolio could handle that, FreedomRocks portfolios DID!(although they weren't around in 1997) The result of that -301 pip change was only -$1,145.10 and the portfolio recovered to a positive $247 by close of the same day! That is just on the trades and your basis. Your interest on that trade in today’s rates would bring you another $200-300 for the month! I guess the “experts” either don’t understand the system or didn’t do their research.

Now I know what you’re thinking, this guy just picked the one downtrend in the last 10 years the FR software would have withstood. NO! I picked this randomly, it took me about 4 hours to do otherwise I would have continued. These results are based on trading with a 10,000 account on 200:1 leverage and trading 15% of your account. And it’s the system that did the magic, I just kept putting the numbers in.

I am still looking for a time when I would have had a margin call using the FR software. If you have any ideas for me to back test, or you would like to see the results of my back testing in Excel, or you're curious about FreedomRocks, please contact me. I am still trying furiously to prove this system wrong before I put any of my own money into it.

PS. Yes it is MLM, you don't have to sign up to be a rep though. The trading system is WELL worth $100/mo...compare other systems at $800+ per month!

[FrankTheTank]

Hi,

In response to your post, it looks like EUR/CHF continues to nose dive after February 1997 down about 1300 pips until it reaches February 1998.

I assume two things:

1. That would wipe out any FR account
2. Point #1 is irrelevent since FR would not have been in "buy mode" in that market since EUR/CHF was in a downtrend during that time period.

Perhaps a better test would be March through July in 2004. During this time EURCHF was in a uptrend, yet, the price fell about 700 pips.

[EricGondek]

Dear Frank The Tank,

Thank you for your response! I can reply as follows:

Because it took me about 4 hours to backtest that one month, I decided not to continue on to the entire year between Feb 1997-1998 because I figured if FreedomRocks could survive a 300 pip loss (with a profit of $400+) in one month, surely a 1300 pip movement over one year wouldn't be a problem. The main reason that FreedomRocks works is because the UDS moves against both the EUR and CHF faster than they move against eachother. According to the FreedomRocks system you buy a small portion of your position when the market is low and sell a small portion when it is high. This is constantly lowering your basis in both pairs at the same time, allowing your portfolio to sustain large moves in the CHF versus the EUR over a period of time.

With that being said, I will do two things. First, I will backtest March through July in 2004 because I am looking for a time when I would have a margin call on the FR system. I should have that done either tomorrow or Tuesday. Second, I will backtest the time period between January 1997 and February 1998. This might take me a couple weeks to do, but I will post the results as I finish them.

Thank you again for your response.

Eric Gondek
http://www.freedomrocks.com/information
cell: 651-303-3439
email: forexmn@gmail.com