KangarooEA Review
My readers have knocked me about Kangaroo EA almost a month ago and I was not in a position to deny their requests. Although too much information and statistics were not available in that page except a forward test and some basic information, still it caught my eyes. As a result I could not resist but contacted with the author of this EA. And I was amused to find out that the developer has used the methods described in my tick data article extensively. So he was agree with me and promised to send a review copy. I got my review copy as soon as the EA released in the market. And again I am delighted to find out that they have mentioned my tick data page in their user manual. Tulipfx.com, the Kangaroo home page which I have been following, is mostly look like a blog site where lot of interesting articles are posted. I read them thoroughly and from then I always visit this site time to time to read articles that are newly posted. From my point of view they have some very important articles that touch both the old and new topics and explain the problems in a different but easier way. And I have to admit that their postings are more frequent than others.
Now let’s talk about the EA, it exclusively trades on AUDUSD M5. And strategy is also different than existing EAs. According to the author this EA works combining different strategies like scalping, grid, trend and replacement trading. Although I am not successful of confirming it as their security measures are well developed and it also fails to decompile with the Purebeam software. And most of all, it has a large and encrypted DLL which denies such attempts. But I hope the developer of this EA will forgive me because of such activities which are not performed with malicious intent.
Still I have been called as a ‘professional cracker’ by a developer, to whom I have requested a review copy. And I want to say strongly that this is not true. I am not here to spread the products on random forums, so the developers and EA authors who are reading should be aware about it. I can assure you that, any EA which is given to me will never leave my hands and I will not use it otherwise than reviewing it. At the same time I want to put an alert for those who write me often for the copies of miscellaneous EAs. I am very far from such trading and probably you should know that I have successfully created a distance between the EA education scene and myself. And I am happy to keep things that way.
So let’s come to the topic again. Kangaroo EA is surely different from others and most interesting point about this EA is how it deals with news. At least I can tell you that I have not seen too many EAs which are as well equipped as this about news handling. There is also a news file containing historical news for backtesting provided by the developer. Surely it is an achievement of this Kangaroo EA because I have not seen any other EA that could be backtested with news. But I am dying to see the impact of such news avoidance on my own backtest after I have found an EA whitepaper couple of weeks ago.
Strategy
Several strategies are utilized by Kangaroo EA during trading. Among the visible strategies, there is a down-averaging grid of up to 6 trades. This default setting allows the traders to minimize the risk when the market is moving opposite direction. That means, when the market is moving opposite, the EA will open a trade and it keeps opening until the number reaches the maximum which is 6. Trades that share the same direction were closed together by this EA. Usually the take profit target of the existing orders are moved to perform this action as the newer trades opened.
The entry signals are prepared based on the retracement trades of AUDUSD trend. At this point, it attempts a scalping trade with 20 pips as take profit and 60 pips as stop loss target. Now new trades are opened as the market starts heading toward the SL of the position. Trades are opened at different levels and at the same time the TP moved closer to the market. Even if the TP is hit, there is always profit which is worth 20 pips at the initial lot size. You may be wondering about the fact that, what will happen if it hits SL? Well, although there are distances between orders, still the result will be a drawdown. There is a thumb rule to estimate the drawdown in their manual, which is- to calculate the potential drawdown in percent, just multiply the configured risk by 4. This is only applicable when the market condition is similar as above. Now from our back tests result, we found some truth in this thumb rule.
Edit: Here the profit target is adjusted by the spread. So initially it was a bit lower. To be exact, it is 20 minus the spread.
This EA utilize the spread during setting the SL & TP. Therefore it will perform better when the AUDUSD spread is lower. Therefore spread is important in this case. Although the result may varies from one broker to another which is clearly noticeable from my back tests, still with spread 2 and spread 3 it works fine. So at one word, your trades will close faster and the chance of hitting stop loss is lower if your spread is better.
This EA is not a friendly one with NFA rules, because on several occasions I found it taking hedged trades. But that does not bother as I am also not very friendly to the NFA and probably there is no such trader or broker who is. If you want to run it on brokers who enforce NFA rules, then MT4 terminal is the best. But chances are there that you might miss trades often.
Trades are not available all the time in this EA. Sometimes you may find 2 trading positions, each having up to 6 trades per week. And there are also times when you will have no trades in a week. In most of the cases, the positions remain open for 24 hours or less. But there are exceptions because on several cases I have found trades are open for 2-3 days. Another peculiarity of this EA is that here you will have no trading session. This concept is totally absent here. Positions remains open around the clock, fewer exceptions are found at Fridays and early Mondays.
At this moment, this EA trades exclusively on AUDUSD. There is no clear indication about other pairs. But an article from its developer has mentioned that there is a possibility that in near future it may include other pairs.
Website
At tulipfx.com you will find some interesting articles about both the EA and the development process of the forex robots. These articles are worth reading because here you will find some information regarding EAs and forex which will explain a lot of things to you. It is easy to judge this website from these valuable articles because it is not possible to put all these together in a short time. Therefore a solid effort is behind this. There is a page about Kangaroo EA and it is really attractive. There are so many noticeable things here, articles are also a little funny in several places but free from marketing bullshit. Therefore if you do not appreciate aggressive marketing websites like me, then this website will surely amuse you.
Registration is free for the visitors. There is also whitepaper link for the detailed backtests, charts and basic information about EA. But this may not be available to check for the unregistered person (I am not sure about it). And with it there is also a Myfoxbook widget which is for a forward test demo account:
Edit 08.12.2010: From 05.11.2010 a live account is also available on the website. The myfxbook widget for this account is posted below for your convenience:
Edit 20.12.2010: The author has sent me an updated whitepaper actualized with v4.1 info. The good news is that all the links in the article have also been updated to point to it.
Upon the first look, it makes an impression that TulipFX intends to stay on the market for a while. And I think Kangaroo EA is the first EA from the series of EAs which are waiting to be released.
Now the whitepaper provided in their website contains both winning scenarios as well as difficult times when things go wrong. There are also detail discussions with each of them which reveal inner workings and some good analysis. Surely it is an improvement because in most of the EA websites you can only see the winning scenarios.
Parameters
The delivery package, which is a zip archive, contains a manual and a setup file. The setup will also install several files in the existing MT4 folder with the EA itself like- a DLL, indicators, set files, news archive and updated news files. The news archive is available for backtesting just after install. There is also an hourly update option which downloads recent news files regularly.
The manual is very descriptive and several topics including the parameters are discussed here. It has enough information that you can leave other files aside. Here you will have three preconfigured set files. Each of them has default risk values. Although it is better to leave the current settings intact after loading of this EA but if you want to play with it or try to judge it with backtests then you are welcome. Several parameters are there which can be changed like the number of orders to be open at a time, stop loss values etc. It is better to use the tick data during backtesting. And don’t forget to open the chart while EA is running because you can’t trade in backtest otherwise. I am saying it from my experience because I did that mistake and end up almost mailing the author. But hopefully, you can find this issue in the manual.
Like other EAs, risk setting options, fixed lot settings, manual and auto GMT configuration and a slippage parameter are also available. But none of them are as unique as the news options. You can configure the trade blocking period within a minimum of one minute timeframe just before or after the news. Although a nifty setup is present but it should be avoided for better result. As a user you can also configure the news setup about which news is to be dodged. It can be performed by currency or by impact. But some general news events are preconfigured for example unemployment data announcements.
When Kangaroo EA is trading you can watch the cute display if the Visual Mode is selected (which is by default). Once it is attached to the charts, at the lower left side a small display appears showing the upcoming and passed news events. As long as the bar is green it is safer, but when there is any news which may halt the trading it will turn into red. At the same time another display window will show you details configuration, authentication etc. Configured risk, next lot and account equity etc are also displayed at the same time. To be exact the color selection for the status area is not so attractive but it is not so important as long as it works. The visual mode of this EA presents most necessary features to trade and that is what important to note.
During evaluation, I noticed a small bug at the display area. It is that the “next lot” is not displaying correctly and only updating after first five minutes bar, when it is attached to the chart. I have informed the author about it and he assured me in return that it is no big deal, just a visual issue. And surely he will correct it in the next version.
Now this EA is not trading between 22.12 and 05.01. The documentation clearly mentioned that, so it is not possible to use it during holiday season.
Backtesting
The results available in the record section are obtained with Metaquotes data and we all know that it is not well enough which is also mentioned in the manual. Anyway I went for backtest using the 1999-2010 data with spread 2. For most of the brokers it is higher because they are comfortable to have the AUDUSD spread below 2 pips. But I took the risk as some brokers also have it above 2.
Here I made a small mistake about the risk setting. The default risk setting was at 5. May be I thought I know better and EAs are usually over leveraged, so set it at 3 during my tests. Like I mentioned, it was a mistake and I did not have much of a bang. So if you are going to do the same, it is better to leave the default setting. So after this back testing, I configured the risk to 5 for my live account. You will find it below.
I didn’t change other parameters except the above. Remaining parameters were set to the default. I have to disable the Visual Mode several times because the chart is actually decreasing the speed of my backtests. And the news filter option was sometimes enable and disabled in other times. Go Markets terminal was used during the backtests. For the Metaquotes data the GMT offset was set to 2 but in case of Dukascopy tick data, I set it to 0.
Errata: Later, after completion of the tests, I found that by accident the spread was set to 2.2 instead of 2.0 pips for the Metaquotes data. This was a lot more than the average. But I did not go for another test as the performance of this EA was satisfactory and the slight differences may happen. Later edit: Here is interesting news: surprisingly some tests were completed with fridayendhour parameter set to 6 which was supposed to be 1 by default. As long as I remember I didn’t change it so there is no clue how it happened. There was also a hotfix which was set to 0 by default.
Recently I have received a beta version of this product and I am testing it at this moment. It will be available in the market soon. It has OrderReliable broker and the two issues that I have mentioned above, calculation of the initial lot and news filter disable options during news log entries.
Now as it turns out that the fridayendhour setting which was set accidentally, has a large impact on the backtests. Therefore I have to start the tests again from the beginning with all scenarios and post updated review according to the result. This time I will use spread 2.0 for the Metaquotes data. But there will be link between the older backtests and the next backtests. I hope it will be easier to understand.
The first test was on the Metaquotes data. It was performed with the fixed lot which was 0.1 and the news filter was disabled. The initial backtest with spread 2.2 and accidental fridayendhour settings is also available here if you are interested.
KangarooEA 1999-2010, fixed lot 0.1, news filter disabled
It may not be breathtaking, but good looking. Kangaroo EA started very good performance around 2007 which can be observed there. But there is a small problem. The backtest journal displays messages even though the news filter is disabled. So I go for further investigation and found that the news events are ignored even though they are displayed. I have notified the author about this issue so let’s see what happens.
Edit: I have reported about this issue and issues which I have mentioned few paragraphs above to the author. And the good news is that they were hotfixed immediately within that day.
I have also attempted the same backtest with risk set to 3 for the drawdown. At the same time the initial tests with spread 2.2 and faulty Fridayendhour setting is also available.
KangarooEA 1999-2010, risk 3, news filter disabled
This EA actually starts to be noticed after 2007 and it is visible from the available data. There is a drawdown record of 21.4% which probably between 1999 and 2006. To make sure about this fact, I test again but this time with two segments. One is up to 2007 and another one is after 2007. Now the drawdown was a bit higher as the spread and fridayendhour parameters were incorrect and it was over 33%. But after I have fixed this, it improved and this is the reason why I prompted to split the backtest. So this gives me the actual drawdown which is 21.4%.
But the initial backtest result with spread 2.2 and previous fridayendhour setting from 1999 to 2007 is also available here.
KangarooEA 1999-2007, risk 3, news filter disabled
So you can see that it is just after 2007 when Kangaroo EA impresses everyone. I guess all these bouncing up and down at the balance curve probably the reason behind the name Kangaroo of this EA. And the 21% drawdown was lurking just there.
Also the initial test result of 2007-2010 with spread 2.2 and initial fridayendhour setting is also available here.
KangarooEA 2007-2010, risk 3, news filter disabled
Just from 2007 things are becoming better and better for this EA. It earned a well balanced curve with 18% drawdown rate. The drawdown rate was 13% on the initial test which is almost near the line as described at the manual (which says- 4 times than the risk that is 12%). I don’t have any idea how I find the rate a bit higher after correcting the parameters. But I am not going to jump the gun to say that it is a curve fit by the Kangaroo because of their 2.5 months forward test. And their no-bullshit marketing policy is also impressive. From my point of view, it is because the EA is designed for the current market behaviour but still there is no indication about how, when or if that will change.
There was a warning in the manual about DST change in Metaquotes data, but I ignore it once again as the data archive started from 2007. I also enabled the news filter at the same time just to find out the difference.
And the 2007-2010 backtest result with spread 2.2 and initial fridayendhour setting is also present here.
KangarooEA 2007-2010, risk 3, news filter enabled
You can see that there are still some stop losses but the balance curve is smoother than previous as the hiccups are absent here. I think the author probably aware about this SL hits and that’s why there is a warning about Metaquotes data and DST change.
So taking a lesson from the above, I proceed according to the manual to test with the tick data. There is a little problem here as the size of the tick data file is almost 4GB for AUDUSD but the MT4 regulation does not allow more than 2GB. So I split it into two. Again I have to cut the end of November 2008 from the 2007-2009 tick data just to fit it in. Then I proceed with the test without the news filter just to observe the outcome.
Initial backtest result with incorrect fridayendhour setting and spread 2.2 is still present here.
KangarooEA 2007.03-2008.11, risk 3, news filter disabled
The result of the above test is somehow satisfactory but not too wonderful. Here I run the test without news filter and there is SL hit for three times. But the relative drawdown is around 17.8% and you could see that the first two SL hits were very close. So it’s a decent performance shown by the EA.
The initial backtest with spread 2.2 and incorrect fridayendhour setting is also available here as the one below.
KangarooEA 2007.03-2008.11, risk 3, news filter enabled
The result with the news filter enable is just impressive. The balance curve is smooth and perfectly shaped without any SL hit. Surely it is beyond the expectations, because I never thought it would be such better.
Although it is not a long time, just less than a couple of years but it will be interesting to see the test for 2008.11 to 2010.12.
Also the initial backtest with same settings like below with incorrect fridayendhour setting is available here.
KangarooEA 2008.11-2010.12, risk 3, news filter disabled
Once again I find a nice result even when the news filter is disabled. This time there is only one SL hit and the drawdown was 12.7%. It was just according to the manual where this was estimated. So it makes me curious about what would happen if the news filter was enabled. Here you should remember that the initial version of this test had 2 SL hits which were not present once the fridayendhour settings were corrected.
The initial backtest with the same settings as the one below but with an incorrect fridayendhour setting is still available here.
KangarooEA 2008.11-2010.12, risk 3, news filter enabled
So the SL goes away again like the previous test and probably you could remember that there was one SL initially as the trade was on a Friday. But it just amazing that I wish there should be more EAs like a news filter. I am just obsessed with it, particularly with the backtesting ability avoiding news. If only it had a DST feature to work effectively with Metaquotes data and news database stretched past 2007 then I never wish for anything else.
Edit: The author contacted with me just few hours after I have posted the review, about the problem I have mentioned. According to the author I got the SL in the above backtest just because it was trading on Friday at 1AM. The release version of this EA has a 1 instead of 0 for the Friday end hour and that caused the problem. It is because the EA is not designed to trade on Friday. And I find it very true, because the SL doesn’t appear if the Friday is avoided correctly. So a hotfix has been released about this problem and hopefully it did not warrant all the backtests to remake. And another information is that, the color which I was dissing previously is meant to be ‘kangaroo brown’. Well, somehow it should have escaped me. However, it is almost ugly to be spit at each other.
Update: It is surely outdated for the retesting but it still will be here for a complete disclosure.
I performed two tick data backtests with spread 3 just to see its performance on higher spreads. The news filter was enabled during the tests. Here I start with spread 3 because it is likely the highest. And my live account also reveal this below.
Initial backtest results with same settings like below with incorrect fridayendhour settings is also available.
KangarooEA 2007.03-2008.11, risk 3, news filter enabled, spread 3
The initial backtest with the same settings as the one below but with an incorrect fridayendhour setting is still available here.
KangarooEA 2008.11-2010.12, risk 3, news filter enabled, spread 3
The returns were lower as expected but the balance curve was smooth and just like the one using spread 2. I was also expecting some SL hits, but hopefully I got nothing.
Here I noticed that the returns are not as spectacular as I am expecting with a risk of 3. So I test again with risk set to 5 on a live account. At the same time I ran backtests with tick data with the same risk. And the result is posted below just to show you what happened:
The initial backtest with the same settings as the one below but with an incorrect fridayendhour setting is still available here.
KangarooEA 2007.03-2008.11, risk 5, news filter enabled
The initial backtest with the same settings as the one below but with an incorrect fridayendhour setting is still available here.
KangarooEA 2008.11-2010.12, risk 5, news filter enabled
Here we find that the drawdown per position SL is increased slightly though it is expected. TulipFX has mentioned that this should be around 20% with risk 5. But from my backtest I could tell it around 17%. Of course there is no guarantee that it will not go lower than this. However, it is really appreciable that the user can calculate the potential drawdown according to the formula provided by the developer as a function of risk. And I like this feature. Although there is no theory that can say that SL hits will not occur at short distance but, according to the backtests result I think it is pretty good and acceptable.
Edit: We have found a valid issue from Denis posted on the forward tests page. How much return we could expect from Kangaroo EA? And what will be the minimum funding that a user needs to pay the monthly fee from the earnings? Surely these are some basic questions and it makes me look deeper by merging the two news filter enabled tick data backtests. I use a standard lot size of 0.5 and MT intelligence for the merge and this was constant for all trades. I was trying to setup a target with risk 5 and 10000 initial balance. I moved to the chart of gross profit or loss and the result was shown below:
Gross banked profit/loss 2007.04-2010.12 using 0.5 lots
Then I export this data to a CSV file. And my calculation shows that for 0.5 lot size, the average return is 623 per month. So the average return is 6.23% but it is without compounding. The risk was set to 5 during this calculation. And when I did the same for risk 3, I found the average return would be 3.74% per month. Initial balance was same for each of the case which was 10000.
So let’s assume a subscription cost of $40.5 per month (30 EUR*1.35):
- Average return for risk 5: 6.23% per month.
Balance required to cover the subscription cost for risk 5: around USD 650. - Average return for risk 3: 3.74% per month.
Balance required to cover the subscription cost for risk 3: around USD 1100.
Version 5
It was released on 31.01.2011 but I was not in a position to write this update because I was busy at that time. So I have posted it after a week. The author kept his promise by launching it in January. But the release was not a smooth one. It was slight problematic which was also admitted in their blog post under the title “Bite off too much…” I believe they were in rush about this release and for that reason a couple of patches appear immediately. But I have to give them credit as they solved these issues in a record shortest time. Their 5.11 version was released after couple of days of the version 5.0. And in between these two versions, there was also an intermediate hotfix. So they are very keen to solve their mistakes. However there were still some problems which I have point out and informed the author like the EURUSD live trading. As this problem was taking longer time to be solved so in the meantime the author advised all the users not to run the EURUSD EA live. But in the version 5.9 which was published on 01.03.2011, they declared that these issues are solved and users can run EURUSD live account. Now it is confusing when there is a version 5.11 before 5.9. But I believe it is the short of 5.90. And the newer version 6.0 is also on the line and will be released soon in the market. What I have learned from the developer is that, this v6.0 will have some minor improvements than the previous version.
So what is new in this version? Here in this version we have an additional EA with its own DLL and indicators which works on EURUSD. In addition to this there are also some checks present in this version to solve the problems that the EA had with the brokers because it didn’t accept the pending order expiration date. It brings a change that enables a double risk value and news filter improvement which has a chart display looks more attractive. Here you will find the EURUSD HUD chart display in a charming blue but the AUDUSD display is still the same old Mexican-food-diet-kangaroo-poo-brown. In this version 5.9 the users also have some parameters which will assist them to handle trades that might open on both pairs. This will allow them to limit the risk too.
There are very minute difference between the trading logic of EURUSD EA and AUDUSD EA. In EURUSD EA the stop loss is set to 120 pips with maximum 3 trades, which was up to 60 pips and max 6 trades in case of AUDUSD. The take profit target is also 18 pips here. Another difference is in the trading hours. It trades between 6 GMT and 23 GMT which are mostly the European and US sessions.
Probably you have noticed that the tick data procedure that I have developed is a little later than the time when original Kangaroo EA article was written. So why not provide you some new backtests for both the AUDUSD and EURUSD? There were also some updates on AUDUSD in the meantime so I was also eager to test the newer version. But this time I like to perform it in one piece. So here is the test for the version 5.9 which includes two backtests using the tick data and the fixed spread of 2.0 for both the currency pairs. I have used the GO Markets terminal for them.
KangarooEA v5.9 EURUSD 2007-2011, tick data, default settings
KangarooEA v5.9 AUDUSD 2007-2011, tick data, default settings
Surely, we have started this review with high expectations about Kangaroo EA and at the end we find it true. It’s because the charts above has shown a very smooth balance curve without any SL hit.
Upon close look, we can also find a relative drawdown rate of slightly over 16% in case of both tests. Although this may be a little confusing as the chart does not show any drawdown at all. I have also received mails several times asking the same question. Well it is because of the floating drawdown which the MT4 has calculated. It is the highest percentile drawdown which is found during backtest on open positions, including the positions that were not closed with negative profits. Theoretically running this EA with a risk set to 5 may cause the drawdown max 20% in case of a full SL. At least it is mentioned in the manual by the author. And the 16% drawdown is also not so far from 20%. Therefore we can say from here that, once in every backtest there is always a risk. But it is also possible to close without even hitting any SL.
So speaking of SLs, there is something important to mention. Several times I have discussed about it via mails and also in the comments section of my articles that there is no guarantee that the EA will not hit any SL in future even if it does not hit any in the backtests. The backtest results only an indication which tells us about the behaviour of this EA. And the news filter option of this EA is also very good. But still there may be chances that it hit the SL because there is no such EA that can only win. So you should be prepared for the fact that, one day it will hit the SL. For that reason it is better to configure the risks at a comfortable margin so that when it hit a SL, you don’t have to cry out loud or bang your head against the wall.
Let’s go back in the backtests. There is always a consistency in the performance of the AUDUSD. The differences are very minute between the old and new backtests. And it is also found in the forward test account too.
On the other hand, in case of EURUSD the charts are good and looks fit to run live. I have also added it to the forward test account at 01.03.2011, even before the backtesting of v5.9. The backtest result of the v5.11 was also good looking. For that reason, as soon as I have the green signal, I added this to my live account. And within a short time, it brings positive results from trading.
Like the previous backtests, I have also merged the results and charted it similarly. But I think it is better if I give you the result. The average return was 12.52% per month at a risk of 5 which is almost double than the result of the AUDUSD alone. And there is also a 20% drawdown and upon considering it in the stop loss hit. So according to this, the EA requires two months or more to recover.
At the end, let me share a common mistake that most people does during trading. According to most people, if any account suffers a drawdown then to makeover the loss similar profit is necessary. Thant means if there is a 20% drawdown, then you also need to gain 20% to makeup the loss. But actually it is not true. Take an example- say you start with $100 and hit a 20% drawdown. So after that you will have $80 left in your account. So to make it $100 again you need to add another $20. But to make $20 from your existing balance of $80, you need 20*100/80=25% profit gain over the $80. So the conclusion of this small discussion is that, if you have big drawdown, then you need even bigger profit to make it up. For this reason it is recommended to set the risk as low as possible.
Conclusion
I like the Kangaroo EA and after judging it with the tick data backtest and forward test at the TulipFX, no one can deny but like it. A lot of idea and strategies are incorporated with it. The website, TulipFX also has fresh contents and updated regularly. Everything indicates that it is not a trap like other robots but is a serious forex trader that is determined to stay in the business for long time.
The developer of this product is also very confident about this product and every mail from him is a proof of his confidence. And you can also judge this EA from its pricing policy. At first you have to pay 97€ 149€ for a month access. And there is also monthly payment policy which will cost 30€ per month. If it does not make money for you, then you can ask for refunds any time. There are so many features included and if you want to judge its price then I would say that the price may be a little lower than the potentiality.
This EA is licensed to run only on a single demo and live account. But if you are planning to run it on several account than you have to change it with a webpage. According to the manual it is changeable once in every three days. You can also add additional licenses in to your account. But if you want to buy more than a license then there is no rebate. From my point of view, it may be planned for the existing customers and when the price will increase it also will be added.
If you are ready to pay one time, then you can also purchase the EA without the monthly fee. But the price tag is 1227€ 1499€ in this case.
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