I was asked a while back to review the Bullpips trading system by the Bullpips website so here it is in all its glory.
So what is Bullpips?
Bullpips is a trading system for MT4, which in my opinion, sides more towards discretionary trading rather than being a mechanical trading system. This is made clear in the 14 page document outlining the trading method. Bullpips says: “you will need to work a few things for yourself which we have no control over. These include exact stop loss and profit levels…”
Where the system is mechanical is in its entry method. The system is based on the commodity channel index (CCI) and comprised of two mt4 indicators based on the CCI along with moving averages. Entry is determined by these various indicators all pointing in the same direction at the same time. This makes for a fairly clear entry method. However, it is not a method that you would necessarily have to take every trade signal although Bullpips claims it “handles ranging markets well”. The system is said to work on most forex pairs and is based on the 15 minute time frame.
Whilst entry is clear, what you do afterwards is not so clear. Stops are set and a profit target suggested but moving your trade to breakeven and at what point is discretionary. Whilst this is not unusual for trading systems it makes it very hard to evaluate its profit potential. Some systems you know exactly what the process is as far as managing trades which means that every trader will (should) get the same trade entries and exits and thus the same profit. With a method like this, different traders will get different results.
Another feature of Bullpips, that makes it more discretionary than mechanical, is that it allows re-entries within a trend. I like this concept in trading. Some traders who always like to catch tops and bottoms will find this part of the method hard to follow through on. However, this is probably where a method like this will make its money. With the initial profitable trades and initial loses canceling each other out.
The document given with the system contains some example trades although I feel the actual method is very easy to follow and most traders will be able to pick up the concept within minutes. More experienced traders maybe a little disappointed in the fact that the method is based on freely available indicators (albeit maybe not in this format) but I feel Bullpips makes it clear you are buying the method rather than the indicators.
Whilst this system is designed with MT4 in mind you could probably take the method and find indicators to replicate it on another trading platform.
So how does it perform?
Given that it is not purely mechanical it makes it difficult to make an absolute call on whether you WILL make money with this trading method. You definitely could make money using this method.
As suggested in the documents I looked at EUR/USD as a starting point. I quickly saw that you will have to make some trade selection choices but overall you should get a decent number of winning trades. But the key with all trading systems is trade management. And whilst you could say you will have more winners than losers with a 1:1 risk to reward ratio, there is still the obvious point that your loses could be bigger than your winners even though both trades are 1:1. This is because the target price is based on the stop level which is based on the chart rather than a fixed amount. So in short, different trades will have different stop and target levels.
Again this is nothing new in trading but it is worth noting as this is what will determine how much profit you make.
Obviously, the most volatile period for the EUR/USD is during UK and US trading hours and you may only get one or two decent trades during that period, the rest will be small re-entries – which if you are trading big and using a proper direct access forex broker can be quite expensive in spread/commission.
The one thing I did note is that you always seem to want to be in the bar before you get a signal. Again this can happen with systems that filter out noise by using multiple indicators. This shows me there may be further improvement one can make to the system. It is certainly something I would look at and you could definitely take what is in the Bullpips method and turn it into some completely mechanical with a bit of time and a lot of historical chart crawling.
Unfortunately I can’t say whether or not you as a trader would make money from this method but I certainly feel it is possible to do well from it but it will come down to you and would advise (as always) demo trade it until you get the hang of it and are confidently in your trade selection and trade management. MT4 is perfect for demo trading so make the most of it. Further Bullpips offers for the purchaser to contact them should they struggle with the psychology side of trading but I did not take up this offer so I can not really comment on how good or bad this service is.
It was tough to rate this system as it is so discretionary but considering it is so straight forward, the document is quite clear, and no outlandish claims are made I have given it a 3 out of 5 rating, or as we call it a 3G rating.
It is worth noting, it has been brought to my attention that Bullpips.com website and trading method is currently up for sale. I am not involved in this and nor do I have any financial interest in writing this review and was not paid to review the system and I am not an affiliate of Bullpips.
