What is Vicktor Flagënhein (VF) Automate?

VF Automate is a software designed to process an enormous amount of data from the financial market, such as the top companies stock prices, the political scenario, inflation rates and GDP of influential countries, climate patterns of vast farming areas, the price fluctuation of the main currencies, and based on a complex analysis, to take a crucial decision: to buy or to sell? That is the question.

The birth of VF Automate

VF Automate has been created by a multidisciplinary team spanning computer science, mathematics, economy and geology. It took over 100.000 (one hundred thousand)  work-hours1 to be completed. This solid platform is capable of processing hundreds of algorithms that interact with each other, in order to achieve the best deal in the market at the right time.

1 Sum of work hours of our staff involved in the VF Automate Project.

How does it work?

Basically, VF Automate works with two platforms: The first, called the “Brain” is specialized in data mining. It searches for relevant information in this sea of data. After that, the Brain decides whether to buy, sell or stay out of the market. As soon as one decision to buy or sell is made the second part of the VF Automate is activated: The Hand.

The Hand is a solid and ultrafast communication platform directly linked to the bank or broker. It is able to send an order to the market in less than 0,002 second (two milliseconds) . This incredible feature is vital in an environment as volatile as Forex.

Both the Brain and the Hand run in a high availability cluster, assuring over 99,999% ‘uptime’. This means that even if an error occurs in part of the system, the redundant backup mechanisms make sure VF Automate keeps running smoothly. Even so, we keep a highly specialized IT team working 24/7.

Why does it work?

In order to be integrated to VF Automate, a strategy must yield over 70% success rate. All VF Automate’s strategies have been extensively tested by scientific statistical analysis.

Backward testing in over a 100 years of Dow Jones index, 30 years on DAX-30, CAC-40 and FTSE-100 were performed. Moreover, Victor Flagënhein’s strategies had their consistency proven in more than 20 years of forward testing on the above indices and also commodities, options, and the main currency pairs, EUR/USD, GBP/USD, USD/JPY, USD/CHF, among others.

Why are the results so amazing?

Traditional financial institutions and managers, generally compare their performance with indices like Dow Jones, SP 500, inflation rates, etc… You probably heard something like: “SP 500 lost 10% in value this year, but our performance was better in comparison, much better. We only lost 5%.”

However, when analyzing the whole fluctuation of prices in the period, we realize it is by far not the best result possible. Stock, currency and any financial asset traded in the market always show great oscillation between the minimum and maximum price, in a given period. Potentially we have all the way between the minimum and the maximum price to profit.

We decided to look at the market in a different way. We look at it and think: “From the minimum to the maximum price, what is the maximum profit to make?” Trading under this new paradigm is one of the reasons why VF Automate gets results so superior to the ones found in the market.

What is Drawdown?

Drawdown is the biggest sequential loss in one period of time.

With that in mind, SMC programmed the VF Automate to make a strategical use of the margin (the amount of money in your account required to keep an open position), by increasing the volume of trades only after a cycle of 100 pips (read more) of real gain. This minimizes the effect of drawdowns and keeps trading a much safer place.

After +19.270,3 PIPs profit, in 253 weeks (from january 4th 2010 to december 24th 2014), the worse drawdown VF Automate suffered was -498,0 PIPs, which happened (from April 20th 2010 until May 24th 2010).

What is Mathematical Expectation?

Mathematical expectation is the expected gain, expectancy or expected profit per trade. It is defined as the long-term average profit or loss that a trader can expect to make, per trade. It can be calculated as below:

ME = (PW x AW) – (PL x AL)

ME = Mathematical Expectation

PW = Probability of Win

AW = Average Win

PL = Probability of Loss

AL = Average Loss

For instance: VF Automate has a strategy with 73,2% Probability of Win and 26,8% Probability of Loss. The Average Win is +56,2 PIPs. The Average Loss is -30,9 PIPs. Putting these values in the formula we have:

PW (73,2%) x AW (+56,2 pip) = +41,1384 PIPs

PL (26,8%) x AL (-30,9 pip) = -8,2812 PIPs

41,13848,2812 = +32,8572 PIPs

A positive mathematical expectation means the strategy in question is lucrative on the long run. A negative mathematical expectation means the strategy is a loser on the long run.

In a casino for example for each dollar bet on the roulette the house has a mathematical expectation of +$0,0526. For the player, the mathematical expectation is negative, and is of -$0,0526.

That is why, even if someone hits the jackpot in a lucky night, in the long run, the house (casino) always wins.

As demonstrated on the example above, the VF Automate has a mathematical expectation of +32,8572 PIPs by trade. This means that for each dollar put in the market, the VF Automate gets approximately +$0,33 in profit by trade.

Comparison between the mathematical expectations of VF Automate X Casino (roulette)

VF Automate +$0.3347 X Casino (roulette) +$0.0526.

VF Automate has a mathematical expectancy 6,36 times superior to a Casino (roulette).