The Problem
Expert Advisors (EAs) and signal services are sold with screenshots of rising equity curves. Almost anyone can produce one: a backtest can be tuned until it looks perfect, a demo account carries no real fills, and a grid or martingale system can show months of smooth gains before one bad move wipes out the account.
This guide is a checklist you can apply to any EA or signal - including ones we offer. If a product cannot pass it, do not put money behind it.
Step 1: Is the Record Real?
| Evidence | How much it proves |
|---|---|
| Screenshot or seller's own table | Nothing - trivially edited |
| Backtest, even "99% modelling quality" | Only that the rules fit the past; says nothing about the future |
| Demo account, third-party tracked | Some - but demo fills are better than real ones |
| Live account, third-party verified (for example an MQL5 signal on a real account, or a Myfxbook record with verified track record) | The minimum worth considering |
Also check: how long has it run (at least 6-12 months), how many trades (at least 100), and were there deposits or withdrawals that distort the growth percentage?
Step 2: The Numbers That Matter
Ignore "total gain" on its own. Look at:
- Maximum drawdown - the deepest fall from a peak. A 60% gain with a 50% drawdown is a dangerous system.
- Return / drawdown ratio - annual return divided by maximum drawdown. Above about 1 is decent; below 0.5 means you took a lot of pain per unit of gain.
- Profit factor and expectancy - see the Trading Statistics guide.
- Average win vs average loss - a system that wins 90% of trades but whose average loss is 10x its average win is one bad day from disaster.
- Floating (equity) drawdown vs balance drawdown - if the equity curve dips far below the balance curve, losing trades are being held open.
Trading Scenario
Worked example - two signals
Signal A - live, third-party verified, +48% over 14 months (about 40% a year compounded: 1.48 to the power 12/14 = 1.40), 410 trades, maximum drawdown 12%, profit factor 1.6, every trade has a stop loss. Signal B - demo account, +190% over 5 months, 96 trades, 94% win rate, balance drawdown 3% but equity drawdown 41%, no stop losses, lot sizes grow after losing trades. Return / drawdown for A = 40 / 12 = about 3.3. Which do you take further?
What would you do?
Knowledge Check
A signal shows a 3% balance drawdown but a 41% equity drawdown. What does that usually mean?
Step 3: Red Flags
- Martingale / grid: position size increases after losses, many trades opened in the same direction at spaced prices, no stop loss.
- "Never had a losing month" over a short period - often means losses are being held, not avoided.
- Very high win rate with tiny average wins and large rare losses.
- Backtest only, or a backtest period that conveniently ends just before a bad market.
- Too many parameters tuned to history (curve-fitting) - performance collapses on new data.
- Guaranteed or fixed monthly returns - no honest trading system can promise these.
- Pressure to deposit more or to use a specific broker without a clear reason.
- Martingale73 trades71% win rate-$3,750 net$6,250 final$6,350 max drawdown7 losses in a row (max)
- Fixed 1% risk73 trades45% win rate+$1,940 net$11,940 final$600 max drawdown5 losses in a row (max)
- Martingale: doubles the size after every loss. It won 52 of its first 66 trades and climbed smoothly to $12,600 - the screenshot these systems are sold with.
- Then 7 losses in a row, each twice the last: $6,350 gone in a few trades, and the account ends at $6,250. One more loss would have needed a $6,400 position risk.
- Fixed 1% risk: won only 45% of its trades, never risked more than $100, worst drawdown $600, and ends at $11,940. A lower win rate, a far better system.
Knowledge Check
Which is the strongest single piece of evidence for an EA?
Step 4: Test It Yourself
Before any real money, run the EA or follow the signal on a demo account with the same broker type for 4-8 weeks. Compare your results with the published ones. If your forward test is much worse, find out why (spread, slippage, execution speed, VPS) before going further. Then start live with the smallest size the broker allows.
Knowledge Check
Your 6-week demo forward test is far worse than the seller's published results. What should you do first?
Demo exercise - score a real EA or signalHands-On
Pick one EA or signal you have seen advertised (or one listed in the MQL5 Signals directory). Do not subscribe or pay. Use only its public statistics, and if you want to test it, a demo account.
Your Tasks:
1Record where the track record is hosted and whether it is live or demo, and verified or not
2Write down duration, number of trades, maximum drawdown, and profit factor; compute return / drawdown
3Compare balance drawdown with equity drawdown; note any lot sizes that grow after losses
4List every red flag from this guide that applies
5Decide - reject, watch for 3 more months, or forward-test on demo - and write the one reason that decided it
If you cannot find the maximum equity drawdown or the number of trades, that absence is itself a red flag.
A strong answer names the evidence level (e.g. "live, third-party verified, 14 months, 410 trades"), computes return/drawdown, checks equity versus balance drawdown, and makes a decision tied to a specific finding - for example "Rejected: lot size doubles after each loss (martingale) and equity drawdown reached 41%."
Key Takeaways
1Only a third-party verified live record over 6-12+ months and 100+ trades is worth considering
2Judge risk before return: maximum drawdown, return/drawdown ratio, equity versus balance drawdown
3Growing lot sizes after losses, no stop losses and very high win rates with tiny wins point to martingale or grid systems
4Anyone promising fixed or guaranteed returns is not describing trading
5Forward-test on demo and start live at minimum size - apply the same checklist to every product, ours included
This guide is education, not financial advice. Past performance, verified or not, does not guarantee future results.