Black Box Trading from NetPicks – Review
NetPicks is one of the most well established trading signal provider services, having been in business for almost ten years. Unprofitable or dishonest trading system vendors tend to get found out pretty quickly, so the relative age of NetPicks means they must be doing something right.
In fact, their results suggest they are doing a lot of things “right”, so I decided to take a closer look. I was especially drawn to their new auto-trading service (regular readers and users of TSim+ will know I’m a fan of black box trading!), but I’ll come to that a little later, first I want to cover the service in general.
Mechanical Trading System
In a nutshell, NetPicks offer a mechanical trading system. You sign up as a member, and they do the thinking for you – telling you when to trade. Each day they send you what they call their Key Numbers for the session ahead. These numbers tell you where you will be entering your trade, and are accompanied by an exit target, stop loss, and reversal points. In other words, you are told exactly where to buy and sell – there is no discretion involved.
There are two flavours of system on offer – the EMini Day Trader, and the Forex Trading system. The EMini service actually covers the S&P, Nasdaq, Dow, and Russell US futures as well as the Dax and EuroStoxx which are popular in Europe and are gaining popularity in the US. With a good variety of different priced contracts to choose from, you don’t necessarily need a big account balance to get started (Mini Dow contracts are $5).
Both the EMini and Forex systems work in the same basic manner. Two lots are traded, with a fixed target for the first, and a trailing stop for the second. This gives a good balance between trying to catch average size moves, whilst still being in a position to profit from the longer trends when they happen.
The EMini version is a true day trading system, with positions closed out before the end of the session. Forex is slightly different because it’s a 24 hour market, but there are clear rules as to when you should be trading or not, and so essentially it is also a real day trading system.
Mechanical trading systems by their nature, expect periods of drawdown. What separates the winners from those that come and go are the frequency and depth of those drawdowns.
By that measure, NetPicks is impressive indeed. The Eurostoxx contract for example, has suffered only one drawdown month in over a year of trading. It has to date averaged 180 points per month. That might not sound like a big deal, but bear in mind you can easily increase the number of lots traded as your account balance grows, and you see that with returns like that month in month out, you can do very nicely indeed.
The Forex version of the system hasn’t been trading as long as the futures, but it’s already showing good results. For example, the USD/CHF (Swiss Franc) pair has not had a single losing month, and is averaging over 150 pips a month.
The largest drawdown the system has suffered in one month is 2%, which is modest by any standard.
Automated Currency Trading
The advantage of a mechanical trading system is that you don’t have to think about what to do – the system tells you. However, you still have to pull the trigger when the system says Buy or Sell – a problem for some traders, who hesitate at the vital moment. Now NetPicks have taken mechanical trading to it’s logical conclusion and have introduced automatic trading for their forex product, thus eliminating this final hurdle.
Actually is not quite “automated” in the sense that, say, TSim+ can automate trades. Rather, you sign up with one of their two partner brokers, and the broker trades the signals for you. This costs an extra $100 a month over the standard service, for account sizes of up to $10k. Once your account balance grows to exceed that, there is a sliding scale for the management fee. If you want your trading signals taken care of by someone else, this really is the ultimate in “set and forget”!
There are two partner brokers – forex.com (part of the huge Gain Capital Group), and RobbinsFX (WorldCupAdvisor.com). Opening a new account with the former has the advantage of earning you a free month of the autotrading service.
NetPicks offer a tried and tested mechanical trading system that makes money. Like all mechanical systems, it will see some drawdown, but this is relatively small, and can easily be balanced out by trading multiple Emini contracts or currency pairs.
I can see several ways of using the service - a steady income whilst learning to trade, a “hedge fund”, or simply a set-and-forget investment offering a higher return than any bank account can.
A good discretionary trader can of course make more money than any mechanical system, but for those struggling with their trading, or wanting some return while learning, NetPicks offers a proven solution that will provide income.
A two week free trial shows the confidence NetPicks have in their product, and it’s justified confidence. At under $200 a month for the system, this will for many be the easiest way to make money from trading.