Thursday, December 30, 2010

Meta-Trader - Watukushay #6 Review

Welcome back Meta-Traders.

This is 6th in our series of reviews of the systems found on Asirikuy. In this review, we tackle Watukushay #6, also known as Quimichi.

Quimichi is a word in Nahuatl - the language of the Aztecs in Mexico - which means mouse. I think the name applies since the system earns un-impressive returns on individual pairs, yet gains its power by replicating its affects across multiple pairs. To analogize to nature, you might be able to trap an individual mouse, but as a group, they are hard to defeat due to their persistence and their sheer numbers.

Quimichi is a trend-following system that runs against the daily charts. The system was designed in part to improve on the performance of Ayotyl – which is Daniel’s implementation of the Turtle Trading system made popular by Richard Dennis and William Eckert back in the early 1980’s.

Quimichi runs on the daily charts on pairs EUR/USD, GBP/USD, USD/CHF, USD/JPY, AUD/USD and NDZ/USD. The parameters and rules are exactly the same for each pair which says something for the robustness of the logic. Like all Daniel’s system, the logic is simple and can be explained in a few bullet points:
  • Take a long position once the pair makes a close above the highest close for the past X days

  • Take a short position once the pair makes a close below the lowest close for the past X days

  • Stop out values are Y times the Average True Range

  • Take profits occur when the market goes Z consecutive days without closing at a new trend high or low. This may shake the system out of a long-persistent trend early, but the entry logic will re-enter on a subsequent breakout to a new X-day high or low.
This logic is an improvement over the Turtle system because it uses the daily close instead of the high and low price so it’s less likely to get drawn in by an intraday price spike. Also, the system takes profits more quickly than turtle system which would require a close below an N day low or high before exiting.

What about performance?

Given the large number of pairs, I relied on the back-tests posted on Asirikuy rather than running my own. The attached table shows that the average of the AMR (Average Mean Return) across the 6 pairs return just under 3% while the average of the Maximum Drawdown comes to just over 8%. That is not a favorable result and shows that (at least on an individual pairs basis) the system earns about $3 for each $8 in drawdown.

When combined into a portfolio, the 6 pairs perform a lot better and show a combined AMR of 18% with a Maximum Equity Drawdown of 19.4%. Again, the system earns less than in return than it suffers in drawdown. This result does not compare favorably to other systems on Asirikuy such as God’s Gift, Watukushay #2 and Teyacanani which return closer to $2 for every $1 in drawdown.

While the system may not compare favorably based on profit to drawdown, it compares favorably on other dimensions. Its simplicity gives it increased robustness which means increased likelihood that it will continue to work in the future. A few other points:
  • System trades on nearly every major currency pair and is therefore less vulnerable to any major change in the Forex market such as restructuring of the European Monetary Union.
  • System trades infrequently and with very large stops and take-profits and is therefore less likely to be affected by broker dependencies and execution related issues. The contrasts particular with my own EA FX-Regression which (according to simulations) earns $2 for every $1 in drawdown but is subject to execution issues and broker dependencies.
  • System uses the same parameters on every pair offsetting the potential effects of curve fitting on individual pairs.
Overall, Watukushay #6 is a fine addition to the Asirikuy arsenal of trading systems. However I’m going to take a pass on this system because there are stronger systems on Asirikuy competing for my investing dollar.

Tuesday, December 28, 2010

Meta-Trader - FX-Regression Portfolio analysis

Welcome back Meta-Traders.

This chart shows shows the combined 10-year portfolio simulation for FX-Regression on EUR/USD, USD/CAD and USD/CHF. The chart was created with the Profit and Drawdown Analysis tool from Asirikuy.

Here are the key stats:

Arithmetic mean return (AMR%)
49.96 (average yearly return)

Maximum drawdown %: 32.85 which is pretty high.

Maximum Drawdown period, 676 days without a new equity high. That's a long time to stick with a system without making a new equity high

Pain Index is 6.6 on a scale of zero to 10.

Win to loss ratio 3.83 (Number of wins / number of losses)

Profit factor - 1.14 Gross profit / gross loss

Total number of trades 5187

Maximum consecutive winning trades 39

Maximum consecutive losing trades 6

Maximum consecutive winning months 7

Maximum consecutive losing months 4

Maximum consecutive winning years 8

Maximum consecutive losing years 1

I need to do some more work with this tool to know how this portfolio compares to the other portfolios that have been designed as part of the Atinalla portfolios. I'm particulary interested in comparing it to Atinalla #1 and #3. Check back later for that.

Saturday, December 25, 2010

Meta-Trader - FX-Regression

Welcome back Meta-Traders.

Here's wishing you a happy winter solstice and warm greetings of the season.

Not much happened in my live or demo accounts this past week, so instead i'm going to talk about my own EA called FX-Regression.

Since starting my automated trading with Meta-Trader about a year ago, i've coded quite a few expert advisors. But all of them have ended up on the scrap heap and none have been worth of risking any real funds. Now, I finally feel like i'm onto something and i'm ready to share my findings.

The logic of the system is incredibly simple and goes something like this:

- Wait until a particular hour of the day which is at the end of regular active market hours. Trading days are Monday through Thursday, no trading Sunday or Friday.

- Place a sell limit a certain number of pips above the market a buy limit a certain number of pips below the market. The number of pips in each direction is fixed and is the same amount in either direction.

- Once one of the orders is filled, cancel the opposite one.

- If neither order is triggered within an 8-hour period, cancel both orders and start again the next day

- Take profit is when the price returns to its original value when the orders were placed.

- Stop loss pips is just under 3X the take profit value meaning the system can loose 1 out of 4 times and still be profitable.

This screen shot shows some of the typical action. In the first case, the 8 hours expires and the orders go unfilled. In the second case, the trade triggers in the first 2 hours then stays open for 15 hours before hitting the take profit. In the third case, orders are placed, one is filled and the take profit occurs within the hour.

One thing I like about this system is that it benefits from sloppy, ranging, directionless market action which is what the market does most of the time. How can I say the market does this most of the time? Based on back-testing:

- When trading EUR/USD - the system is profitable 76.8% of the time

- When trading USD/CHF - the system is profitable 77.2% of the time

- When trading USD/CAD - the system is profitable 84.95% of the time!

What about performance?

Over a 10-year backtest, on EUR/USD the system averaged over 14% per year with 2 loosing years and an average drawdown of about 14%. Risk per trade was roughly 5% of the account. The system performed even better on USD/CAD and USD/CHF, see backtest results below. A few other points:

- The system does have long periods of drawdown and is by no means a holy grail. But it does provide a statistical edge that can be exploited.

- The system takes losses when the pair gets into a strong trend and therefore is a good compliment to trend-following systems.

- Performance can be improved by avoiding trading when a strong trend is in place. I implemented one such trick in the presets file for EUR/USD to get the performance shown above.

- Tests were performed using Alpari data and fixed spreads based on recommended values from Asirikuy.

I suspect that the system will perform best when trading all 3 of the above pairs in a single account in a portfolio fashion. Before I can assess the performance of the system as a portfolio, I need to learn how to to and use the Profit and Drawdown Analysis tool by Gabor as found on Asirikuy. That will allow me to more fully understand the drawdown behavior of the portfolio and determine adequate risk levels before I start trading it live.

I have uploaded the FX-Regression EA and presets files for the 3 pairs above to my Yahoo group at http://finance.groups.yahoo.com/group/fx-mon/.


Wednesday, December 22, 2010

Meta-Trader - Atipaq Review

Welcome back Meta-Traders.

This is 5th in our series of reviews of the systems found on Asirikuy. In this review, we tackle Watukushay #5, also known as Atipaq.

Atipaq is a word in Nahuatl - the language of the Aztecs in Mexico - which means Powerful. It’s powerful because the system can be run on multiple currency pairs in a portfolio fashion.

Here’s the logic:

  • Once per day at a fixed time, calculate a box which is measured by the range of the prior N hours price action.

  • Examine the range of the box. Discard boxes that are either too small or too large with respect to the ATR.

  • If the box size passes the above criteria, put a buy stop above the market at the top of the box, and a sell stop below the market at the bottom of the box. If the orders are not hit within Z-hours, orders are cancelled and the process repeats the next day.

  • Take profit is Q-multiple of the box typically 3 or higher so that TP is 3 times the box size so when the system wins, it will make up for 3 losses.

  • Stop loss is the bottom of the box for buy orders, top of the box for sell orders.
Basically, the system is looking for to enter new orders early into the active market session based on a breakout of the range created by the prior session’s price action. The range has to be relatively narrow, so we are waiting for a price to consolidate prior to the breakout. The startup time, and the other variables are different for each pair, and Daniel has tested and optimized to find the best startup time for each pair. The pairs I tested (and I suspect are the best) are USD/CHF, GBP/USD and USD/JPY.

USD/JPY is a bit of an exception, since the recommended settings put a sell order above the market, and a buy order below. In this case, the system is being used to fade breakouts and buy selloffs. I like this option because it benefits from sideways action, which the market does much of the time.

The correctness of the breakout hour is very important. Daniel warns that incorrect settings can cause the system to lose money, and I have witnessed this first-hand. Getting the breakout hour setting correct is a real mess with multiple brokers and daylight savings time, etc, etc.

Fortunately, Daniel provides a tool which feeds the correct time to the EA’s from a log file created from an Alpari Demo account. The only annoying thing about this is that demo accounts on Alpari expire once a month, so this will require once a month demo renewal. Not a big deal in the larger scheme of things, but worth mentioning.

One interesting thing about this system is that once positions are open, they can be open for many days or even weeks. Meanwhile the daily order setting continues, so it’s possible that multiple positions can be opened at once. There is an NFACompliant setting that will prevent the system from going long and short the same pair at the same time.

What about performance?

Over a 10-year period, USD/CHF turned $216,000 which is about an 8% annual return. Not spectacular, but that is trading 0.5% risk (one half of 1%) and drawdown is low at -3.6% drawdown. As shown on the left, results for GBP/USD and USD/JPY as pretty solid as well. Where this system really shines is trading it on a portfolio approach, where multiple pairs are traded in a single account in a portfolio fashion. Daniel makes a very compelling case that this system really shines when traded as a portfolio.

I will be trading Atipaq as part of the Atinalla #3 portfolio starting in early 2010.

I have uploaded the 10-year back-tests for the 3 pairs mentioned above to my yahoo group at

http://finance.groups.yahoo.com/group/fx-mon/

minus the parameter settings.


Monday, December 20, 2010

Meta-Trader – Teyacanani Review

Welcome back Meta-Traders.

This is the 4th in our series of reviews of the systems found on Asirikuy. In this review, we tackle Watukushay #4, also known as Teyacanani.

Teyacanani is a word in Nahuatl - the language of the Aztecs in Mexico - which means “leader.” The name comes from the fact that the author considers this to be the best of all the systems on Asirikuy. And based on the back test and live test results, he appears to be correct!

The development of this system traces back to Watukushay #2. Recall that Watukushay #2 is based on a 3 bar candlestick pattern called “Three white soldiers” or “Three black crows” its bearish equivalent. The author was looking for something simpler that would trigger more quickly than the 3 bar pattern as sometimes a significant price move has already developed by the completion of the 3 bar pattern. What he came up with is the height of simplicity and is based on a 1-bar price pattern.

Unlike my other review of systems on Asirikuy, I cannot reveal the specific details of the logic. The author considers them to be proprietary but they are covered in a video which you get as part of your membership to Asirikuy. You also get the source code for the system which you can use to unravel the logic.

What about performance?

In a 10-year back test, the system turned 100K into $226,600. That comes to a 7.72% annual return which is less than spectacular. But wait, that’s only with 1% risk. Up the risk factor to 3 and 100K turns into over $1,017,179! Now that’s more like it and done with only a maximum of 17% drawdown!

A look at the back-test for 10 years on EUR/USD shows 10 straight winning years with an average drawdown of -3.70% with an average annual gain of over 10%. That means the system returns about $3 for every $1 in drawdown. This compares favorably to Watukushay #2 and God’s Gift ATR which both return about $2 for each $1 in drawdown.

Daniel also runs Teycanani on other currency pairs USD/CHF, GBP/USD, AUD/USD and NZD/USD. Backtesting shows that the system did not perform nearly as well on those pairs as they did on EUR/USD.

In terms of live results, Teycanani is performing very well (in the 25-31% range) year to date on the EUR/USD. Live results from the other pairs are all negative except for USD/CHF which is slightly in the positive.

I have uploaded a 10-year back test results (minus the parameters section) to my Yahoo group at http://finance.groups.yahoo.com/group/fx-mon/.

I will be running Teyacanani against EUR/USD in at least 2 portfolio accounts live starting in 2011.

Check back later for an updated on work on my own EA called Fx-Regression.

Saturday, December 18, 2010

Meta-Trader - Droid Takes a Dive

Welcome back Meta-Traders.

Well after almost a year of live trading, Megadroid Live gave back all of its year-to-date profits (about 24%) in one short evening. Its depressing to see an entire year's worth of earnings evaporate so quickly But I knew it could happen and giving back profits is part of the process. Meanwhile the demo account continues to chug along and got out of this particular trade with a 1-pip profit!

One point worth making is that much of the action in Forex is just stop-running. I watched a video last week about how the market makers go through a daily cycle of letting stops accumulate above and below the market. Then they swing the prices around to take out the stops. And once a set of orders accumulate at a certain level (away from the market) its exponentially more likely that the market will go there. Take a look at this chart of my Megadroid trade. The market kept on going up and up until my stop was taken out and magically, that was the top of the move!

Enough whining about this setback, how did our other robot's make out?

It was a pretty good week for the portfolio systems at Asirikuy. Atinalla #3 had a week picking up about 4% and is now up about 6.5% since starting the demo back in mid-November

Atinalla #1 live finally came into profit after being down as much 3% since starting live trading on November 12th. The star trade for the week came from Teyancanani which picked up nearly $100 on a single trade. Watukyshay FE chimed in with a few winners as well, but gave those profits back with a larger loss later in the week. The system went out out short on EUR/USD on 2 of the 3 systems, which did not trigger in my live account due a platform crash. I'm not too concerned since trend trades taken on Friday's can easily get thrown back early next week.

God's Gift Duo continues to cycle lower in lackluster trading and is now down -1.67% since starting trading live back on October 19, 2010.

So here's what I learned from this week's experience:

- A high winning percentage doesn't mean anything of the risk/reward ratio is skewed
- Martingales result in nice smooth equity curves, but when they crash, they crash hard!
- Diversification is key!

I'm going to make a few adjustments to my robot's portfolio as a result of this experience and report back on that. Also, i'm done with my regular job for the remainder of 2010 so look for more frequent posts in the next 2 weeks.

Enjoy your Saturday.

Saturday, December 11, 2010

Meta-Trader - Flakes are flying

Welcome back Meta-Traders.

We had our first snowflakes last evening and winter is upon us in the Northeast USA. But the mood is bright and the holiday season is officially upon us. But its been a great 2010 and we have much to be thankful for. So what about the robots?

It was a week for the scalpers. While Megadroid Demo was idle this week, Megadroid Live came ripping back and picked up about 3.6% for the week. FXDD Live Twin Scalpers had a good week recovering from a -4.34% drawdown to close the week +0.19 since its start of live trading back on November 4th.

The Asirikuy systems didn't fare as well. After a brilliant last week, my Atinalla #1 live instances went long EUR/USD late in the cycle just to get whacked as EUR/USD sold off early this week. The other Atinalla #1 instances on Asirikuy took some trades later in the week which were not triggered on either my demo or live instances. It was just as well since they were mostly losing trades.

Atinalla #3 was idle this week while one of the instances on Asirikuy has an open trade with about a 2% profit. God's Gift Duo Live had a series of losing trades this week, sending it into the negative, but only by a small margin. These trades were replicated in other Asirikuy accounts more or less.

In terms of robot's development, I started trading Forex Regression in a demo account this week. I'm not pleased with the results and I think I have some technical problems to work out before I share the results.

I have the last 2 weeks of the year off from my regular job and i'm looking forward to getting some good coding and research done during that time.

Check back later for a review of Teyacannai, aka Watukushay #4. Have a great Saturday.

Friday, December 3, 2010

Meta-Trader - Wow, what a week..

Welcome back Meta-Traders.

After a few rocky weeks, we finally made some good money in the land of the robots this past week.

First up, is Megadroid Demo which hasn't had a single loosing trade since the demo was restarted back on 9/1/2010. This account continues to defy gravity, and is now up an amazing 56.9% for the year.

Demo Droid's sister account Megadroid Live recovered somewhat from some recent drawdown and picked up +3.7% for the week. At this point, its up +19.5% for the year but is still in "recovery" mode. This means the lot size is doubled trading roughly 20% of the account equity per trade, and is therefore subject to further steep drawdown until it takes out the old equity high just above +30%.

A bright spot of the week was Atinalla #3. After starting this demo account back on October 10, 2010, this account has been in drawdown from the start and at one point was down about 6%. This week it finally came back into the black and is now up +1.15%, +2.4% if you consider open trades.

Another bright spot was Atinalla #1 Live which I started trading live back on November 16th. This account went into drawdown immediately and was down as much as 3%. It took some good profits early this week, then got chopped up in a few trades as the week went on. It went into Friday's Non-Farm Payroll report long EUR/USD and that one trade put it in the black. Even though the account shows down -2.8%, its up about +2.3% if you consider open trades.

God's Gift Duo Live had a similar experience and had 5 trades this week, 3 losers and 2 winners, but still came out on top up +68 pips for the week.

Finally, FXDD Twin Scalpers went straight into in drawdown from when I started trading it back on 11/9/2010. This system would be up if I dropped Scalper X (EUR/CHF) and just traded the Megadroid EUR/USD. We'll see how it finishes the year before deciding how to go forward.

I'm finally getting a taste of trading the Asirikuy systems live. Its an altogether different experience than trading the scalpers. The table on the left summarizes it nicely. I think there's something to be said for both styles.

The fact that the market ranges much of the time benefits the scalpers. But we do see some pretty good trendiness also. Take a look at EUR/USD which at one point was down about 2.3% for the week, then turned around and rocketed higher making back those losses and then some.

Trading the trend-followers is much more of an exercise in faith because you have to believe they will come back, and that's where the research comes in. I recall a story about legendary trend follower John Henry who started trading a system which was still in hole after 13 months of live trading. But he stuck with it and it came back and showed many years of profitability after that.

With only a few weeks left in 2011 things are coming together nicely. Things get really slow around the holidays, so in a few weeks we're going to wish we had as much action as we saw this past week.

Check back later for my next review in the Watukushay review series where we will cover Watukushay #4 (aka Teyacanani) which is arguably the best system up on Asirikuy

Also, more to come on my own EA called FX-Regression.

Enjoy your weekend.

Tuesday, November 30, 2010

Meta-Trader - Watukushay #3 Review

Welcome back Meta-Traders.

This is the 3rd in our series of reviews of the systems found on Asirikuy. In this review, we tackle Watukushay #3, also known as Kutichiy.

Kutichiy is a word in Quechua (the language used by the Inca and related tribes in South America) which means “answer.” The name comes from the fact that the author considers the system to be the answer to an ongoing search for a weekly breakout system that adapts to the market – versus systems based on fixed breakout, Take Profit and Stop Loss values.

Like all Daniel’s systems, the logic is relatively simple and easy to explain. The system waits a certain number of hours after the Sunday open then enters a buy stop above the market and a sell stop below the market. The distance between the market and the stop orders is set as a multiple of the “box size”. The box size is determined by the range (High-Low) of the preceding X number of bars. Since the system bases the box size on the actual range of the pair, the box size will vary by week. Take profit and stop-loss values are set at a multiple of the box size.

Position sizes are set based on the risk setting (which defaults to 1) and are adjusted for the box size such that the system will make or lose roughly the same amount for each trade as a percentage of account size.

Once stop orders are entered, the system will cancel the orders if they are not filled as of the close of trading that week. Open positions are left open until they hit either the Take Profit, or the Stop Loss which can occur anywhere from days to weeks after the orders are placed. As a result, the system can have multiple orders open at the same time in the same or opposite directions. This means that the system (when trading as designed) is not NFA-compliant since NFA prohibits ‘hedging’ or being long and short the same pair at the same time. The system does have an NFA compliant setting which allows it to be traded under NFA rules, but that affects performance as discussed below.

What about performance?

When trading with NFA=False (Hedging allowed), the system returned approximately 13.5% a year over a 10-year period with an average drawdown of about -12.0%. Performance could be improved by increasing the Risk level, but that would also increase drawdown proportionally.

When trading with NFA=True, the system returned about 7.5% per year, but the maximum drawdown for the period was -19% which was the same as the maximum drawdown for the NFA=False system.

On the basis of performance, Kutichiy does not compare favorably to both Watukushay No 2 and God’s Gift ATR which both earn close to 20% per year with average drawdown close to -10%. Both those systems are traded with a higher risk level, but manage to return about $2 for every $1 of risk.

I should mention that Kutichiy is designed to work on many different pairs and contains a setting to fade breakouts as well as buying them. Daniel mentioned that one of his users designed a robots portfolio where one trades Kutichiy on USD/JPY. I tested a few pairs aside from EUR/USD and got mixed results.

All that said, Kutichiy is an interesting addition to the Asirikuy arsenal of trading systems. The most important additions I believe are the following:

  • Breakout-based systems should trigger at certain fixed hours of the day and the breakouts should be based on the price action itself. The systems can either buy or sell the breakouts, and Kutichuy has an option for either approach.
  • Once open, trade closing should be based on conditions which are not the mirror images of entry conditions both on time and price. SL and TP values are dynamic in the sense that they change from week to week and trades don't necesarily need to be closed every week.

At this point, my robot’s portfolio for 2011 is nearly formed and some of them have already started live trading. I'm not reporting on them just yet since I would like to build up some trading history first.

Check back later for details on that and have a great week!

Thursday, November 25, 2010

Meta-Trader - Happy Thanksgiving!

Happy Thanksgiving to all my readers!

Its been a great year in Forex and particularly the equity markets and we have much to be thankful for.

With a day off from work, we have time to kick back, spend some time with the family, and of course work on developing long-term profitable expert advisors!

I've been hard at work on a system i'm calling Forex Regression that is based on logic from Fish Forex commercial EA. Here's a few key stats to whet your appetite:

  • System has profitable trades nearly 80% of the time!
  • Ten-year back-test shows an average annual return of 15.6% with max drawdown of 19.8%
  • System is up 19% for the year with only 10% drawdown!

Still, i'm not satisfied with the system in its current form and i'm looking for opportunities for improvement. Once i'm satisfied it it, i'll make it available at no charge to members of the million dollar trading room, and on my Yahoo group.

Check back for a review of Watukushay #3 (aka Kutichy) and enjoy the holiday!

Friday, November 19, 2010

Meta-Trader - Boot stomped

Welcome back Meta-Traders.

I took a bit of a beating in the forex market this week. But i've had a pretty good year so far in both equities and Forex and drawdown is part of the game. So let's do the numbers.

Megadroid Live took a big it. Recall from last week's post that was back above 30% for the year and just short of a new equity high. The lack of a high put the 'Droid in "Recovery" mode which means it trades double lot size. Well it did so and took a 70-pip loss times 2 or about 14% of the account in one shot. This set the account back and took back about half of this years profits. Even so, it remains up 17% for the year and we'll see what happens next.

Megadroid Demo took no trades this week and remains up over 50% for the year. Note that MD Demo is running a different version of the 'Droid and on a different broker than my live account which may account for some of the differences.

The beating continued with Atinalla #1 which lost -182 pips after getting drawn in on a short EUR/USD position early in the week which reversed as EUR/USD moved higher later in the week. This was also my first week trading Atinalla #1 in my new live FXDD account. That account lost $54 or about 2.7% on the week.

Atinalla #2 took a long GBP/USD and short USD/JPY early in the week and are still with those trades. Those trades went positive as the USD weakened later in the week against the majors.

Finally, God's Gift Duo Live started with week with a -95 pip loss and slowly zig-zagged its way back to end down about -35 pips.

In the other half of my new FXDD live account, I traded the Megadroid, ScalperX combination. This account also lost about -2% on the week. Comparing this account to Forex.com, i'm finding that the spreads are actually worse than Forex.com. FXDD advertises a fixed, 2-pip spread in EUR/USD, but apparently that is only good during active hours and it becomes 4 pips after hours. The spread on EUR/CHF is even worse and I saw it as high as 7 pips.

Overall lessons learned for the week are as follows:

- EUR/CHF and EUR/USD have a strong positive correlation, and trading the scalpers as a pair doesn't help to diversify the account

- EUR/CHF is not an ideal pair to use with a scalper since the spreads are much wider than EUR/USD

- Trading 40% of my accounts with scalpers is probably not smart as they are likely to all draw down together.

Overall, my journey to profitability in Forex in going to be much lumpier than I expected. Stay tuned for the Watukushay #3 review and have a great weekend.

Sunday, November 14, 2010

Meta-Trader - Join our Trading Room

Welcome back Meta-Traders.

Well I promised you an interesting opportunity and here it is.

For over a year now, I have been associated with a group called the Million Dollar Trading Room. Our mission is to become better traders and share our research and knowledge of Forex trading and technologies.

We meet usually for the Asian open from 7-9 PM EST and a new Goto Meeting ID and phone number are provided via e-mail. We meet Sunday - Thursday and sometimes for Non-Farm Payroll news release.

We share templates, trading ideas, EA Test results and whatever else is available. Anyone can be the presenter and can take over and share their screen and present their results. Due to some member turnover, we have some spots available. There is no charge, but we do collect a small fee to pay the Live Meeting subscription fees.

If you are interested, please contact me private message on Twitter at http://twitter.com/tcxmon. I will reply with an e-mail to which you should send your resume, CV, or short bio describing your education, experience and trading history and what you can provide to the room. If we accept your request, you can join on a trial basis to see if it works for you and the group.

Also, if you are a Forex industry celebrity, and you would like to present to the members on a guest basis, we can arrange to do that and record it for future playback.

So drop a line if you are interested and let's see where it takes us.

Friday, November 12, 2010

Meta-Trader - Bouncing Back

Welcome back Meta-Traders.

It was a week of bouncing back and a nice follow-up to my post 2 weeks back A week of drawdown.

Megadroid Demo topped 50% for the first time this year

Megadroid Live came roaring back from recent drawdown picking up over 6% for the week and is now up 30.1% for the year and just a buck or so off off an all-time equity high. This system has been very easy to trade spending most of the time at equity high with drawdowns short lived. Just before the start of 2011, I will top this account up to $2000 will be 20% of my live robot's portfolio for 2011. More on that in a later post.

Atinalla #1 picked up 67 pips on the week and is up 12% on the year since opening it back at the end of July.

Atinalla #3 picked up a solid 387 pips on the week and is recovering nicely from some startup related issues. This account is still struggling to get back to even.

God's Gift Duo Live had a bummer of a week and dropped -237 pips and has now had 5 straight losing trades. I took a look up on Asirikuy and the results look more or less consistent with other instances.

On the development side, my new FXDD account funding of $4000 came in last week. I started trading it live with the Megadroid/Scalper X combo at 5% risk. It quickly got into trouble and lost about $70 on Monday on a few EUR/CHF trades. But I stuck with it and it made back its losses on the week and closed up $14. I cloned that account with an e-mail to FXDD and sent $2000 from that deposit off to the newly cloned account.

One bummer item was that I was expecting at least a 5% deposit bonus on this cash. I was dissapointed that I didn't get it and I later found out that the bonus promoted on the Trader's Choice FX Webinar was only good for one week. Further follow-up with FXDD showed that the bonus was not active for last week, but a 5% bonus was active this week, and possibly even a larger bonus starting this Sunday.

This was at lost opportunity of at least $200 and possibly even more. So the plan is to see what FXDD offers next week, then possibly clone another account and send another 4K over there just to collect the deposit. At that point, I have the option of closing the other accounts and getting my original deposit back. It may not be worth the effort, but we'll see.

Finally, i've lost interest in the Q-Diamond EA's for now. I need to start another demo up this coming week and see if we can get some interest going on that front.

I've started work on my review of Watukushay #3 (aka Kutichiy) and will have that for you soon.

Also check back tomorrow for an interesting opportunity which is totally different than anything you have seen so far on this blog.

Have a great weekend.

Sunday, November 7, 2010

Meta-Trader - Watukushay FE review

Welcome back Forex Fans.

This is the second in a series of reviews of the systems found up on Asirikuy. This week we tackle Watukushay FE.

Watukushay means 'to care for' in the in Quechua, the language used by the Inca and related tribes in South America. FE means "For Everyone" because it has the distinction of being the only one of Daniel's system's which is free to the public. You can download it at http://watukushayfe.blogspot.com/.

This EA was made free on the Internet on December 25, 2009 as a gift to the trading world. Daniel could have named it Forex Mega Cash Machine, and hyped it on a web site with a lot of pop-ups. But instead gve it away to the world for nothing. That shows you what type of guy Daniel is. His lack of greed is pretty refreshing, especially in the world of Forex, which has its share of hype and agressive marketing to put it kindly.

The system uses the 1 hour timeframe and a 20 period RSI. The RSI indicator was first published by Wells Wilder in his 1978 book, New Concepts in Technical Trading Systems. The indicator measures the ratio of up to down movement over a time period smoothed with an Exponential Moving Average. The value is an oscillator and is between 0 and 100.

The traditional interpretion of RSI is as the price reaches high values, the instrument is overbought and should be sold. Watukushay FE uses the opposite logic and when the RSI exceeds 72, the system will go long once the RSI comes crosses back below the 72 line. When the RSI is less than 28, the system will go short once the RSI crosses back above the 28 line. The idea is that when RSI moves to an extreme, it signals the start of a strong trend. The system will exit trades upon a second cross over and re-entry to the below 32 or above 68 zones.

What about performance?

In a 10-year back test with 3% risk, the system grew 100K to $258K which comes to about 9.1% return per year with an average drawdown of about 11%. This is clearly not one of Daniel’s more profitable systems versus say God’s Gift ATR or WA #2 return closer to $2 for every $1 in drawdown. For that reason, I probably wouldn’t trade it stand-alone, but I would definitely consider trading it in a robot portfolio and expect to be doing that starting in 2011.

I uploaded the 10-year back test to my Yahoo group at http://finance.groups.yahoo.com/group/fx-mon/.

Next up in the series Watukushay #3 also know as Kutichiy, so check back later for that one and have a great week.

Friday, November 5, 2010

Meta-Trader - In Fed we Trust

Welcome back forex fans.

It was a huge week of news developments affecting the markets.

The US mid-term elections came on Tuesday and the Republicans took back the House of Representatives as expected. Score one for big business there.

The big news dropped on Wednesday when the US Fed delivered on weeks of speculation that they would create billions in reserves (with a mere book entry of course) to buy government issued debt. This was a major dollar negative and sent USD tanking versus all the majors.

The last shoe dropped on Friday with Non-Farm Payroll when the US Labor Dept reported that the private sector added 159K jobs in October versus expectations of just under 100K jobs added. They also provided upward revisions on prior month's numbers. This put the USD back on the advance and took back all of the dollars losses after the Fed report.

So what does all this mean for our money? Equites ripped higher inflating my stock portfolio about 2.8% for the week. How did our forex robots perform in this news-driven week?

Megadroid Demo and Megadroid Live picked were basically flat and picked up a pip or 2.

Turning in a nice performance was God's Gift Live which closed out a long EUR/USD trade opened just before last week's close for a 1.48% gain in a few days's time. This was a 148-pip gain and impressive given only 1% of the account was at risk. Later it the week, it went long GBP/USD and this trade closed out at about an 80-pip loss which reduced its gains to about 0.68% for the week. Gains were bigger than losses which is a good thing.

Next up was Atinalla No which took a pasting on the week and lost about -4.7%. I opened another demo account against FXDD trading this system, and it lost -7.8% on the week which was rough. But long term profitable systems have periods of drawdown, so this is well with expectations.

Next up was Atinalla No 3. We re-started this account after some parameter adjustments and it lost about -3% early in the week but closed with an 18-pip winner and went out long GBP/USD with a few pips open profit.

On the development side, funding of my new FXDD live account is nearly complete. I setup a new demo called FXDD Demo Twin Scalpers which trade Megadroid and ScalperX at an 0.05 risk level. This is a conservative setting considering we typically trade Megadroid with an 0.10 risk setting. In any case, it picked up about $18 on a $2000 account which is sufficiently close to my 1% per week mantra.

My review of WA FE is nearly complete and to follow. Have a great weekend.

Friday, October 29, 2010

Meta-Trader - A week of drawdown

Welcome back Meta-Traders.

Just as the leaves fall from the trees, last week's bliss has given way as nearly all of the systems I follow went into drawdown this past week. Let's get through the results and talk about next steps and future developments.

First up is Megadroid Live which gave back 72 pips or roughly 7%. This is the 'Droid's first drawdown since July and breaks a streak of 26 consecutive winning trades. This system remains up 23.6% for the year and has shown its ability to recover from drawdown. Important to note is that the system is now in "recovery mode" which will either lead to a quick equity recover or further drawdown.

Next up is Megadroid Demo which runs on FXDD and managed to sidestep the live's account's trade and exit with a 1-pip profit. Apparently, FXDD has a fixed, 2-pip spread on EUR/USD and i'll soon find out how good it really is since I'm in the process of funding a live account with FXDD.

Next up is Atinalla #1 which had a pretty good week and picked up 146 pips or almost 3% on a short EUR/USD trade. This system is now up about 20% since starting it back in late July.

Next up is Atinalla #3 which had after a few days idle, put on a sell trade on GBP/USD which is currently down nearly 100 pips.

The Q-Diamond twins finally came off the bench as Forex.com somehow changed their system suffix from PRO to FXF which allowed the Q-Diamonds to start trading again. Q-Diamond EUR/USD picked up over 100 pips but is down about 41% since startup. Its sister account Q-Aussie is up about 19% since startup and picked up 39 pips on the week. Unfortunately, it went into the weekend with about 149 pips in drawdown, so its clear that the years gains are in jeopardy on this move. I'm having doubts whether I can really trust live funds with these systems.

Finally, one bright spot of the week was God's Gift Duo Live. This system gave back -65 pips earlier in the week, but went out long EUR/USD with a 46 pip profit. This was a late-day surprise on Friday that closed out Friday's session with a smile.

As mention, I opened a new live account with FXDD and funding is in progress. I'm expecting a 5% funding bonus and ongoing rebates from Trader's Choice FX. I'm adding 4K and expect to split it into 2 accounts, one trading the Megadroid/ScalperX combo and the other trading Atinalla #3.

I'm considering some options for trading Atinalla #1. This system is one of the real gems of Daniel's work and I want to trade it in its pure form without any compromises. The Megadroid guys suggested Fin FX as a non-US broker with no US locations. If anybody out there has any suggestions for alternatives, please leave me a comment.

Next Tuesday Nov 2 is election day in the US. And House member Barney Frank is up for re-election in Massachusetts. He is the co-author of the Dodd-Frank financial reform bill that got us to these new ridiculous Forex Regulations. So if you are located in Mass, please do us all a favor and vote for the other guy.

Next up in the Watukushay trading systems review series in WA_FE , also known as Watukushay for Everyone. Check back later for that and enjoy your hard-earned weekend.

Sunday, October 24, 2010

Meta-Trader - Watukushay #2 Review

Welcome back Meta-Traders.

This is the first in a series of reviews of the systems found up on Asirikuy. Asirikuy author and webmaster Daniel Fernandez always preaches that you should not trade systems that you don't fully understand. And what better way to gain an understanding of the systems than to go through them one at a time, run backtests and learn about their underyling logic?

One more thing before I continue. Coding long-term profitable systems is very, very time consuming. I've found that I can go from concept to working code in a few hours time. But the systems aren't very good and certainly not worth trading with real money. Really good systems are developed over time and it takes days, weeks and sometimes months of analysis, trial and error before you get a system worth risking with your hard-earned funds. I personally don't have the time or inclination to do all that work. Fortunately, Daniel has put the time into developing the systems, and for a modest fee. Now with just a little bit of work on our part, we can review the systems to derive the benefit from his hard work.

Just to keep things in order, a quick word about Watukushay #1. This system is based on a moving average crossover. This is a good starting point for system development, but is so simplistic, it doesn't perform well in backtesting or forward testing. A 10-year back test on Asirikuy gained only 20% over 10 years.

Now onto to Watukushay #2.

Entry logic is based completely on price action using candlestick chart patterns. Long entry comes on the "3 white soldiers" candle stick pattern which is a trend continuation pattern. Short entry comes on the "3 black crows" pattern which signals a continuation of a downtrend. The Sell trade entry in the screen shot above shows the "3 black crows" sell trade entry.

What about trade exit?

Trade exit comes from a complely different set of conditions. Did you think that trade exit should come on just the opposite of the trade entry conditions? I used to think that way and its a very a normal and simplistic assumption for a beginner, but not one that does not lead to profitable systems!

In this system, trade exit comes from one of 3 candlestick trend reversal signals. For a long trade, exit conditons would be one of the following: Hanging Man, Bearish Engulfing, Dark Cloud Cover or Bearish Rapid. I've heard of all of these except for Bearish Rapid which turns out is Daniel's own pattern.

For a short trade, exit comes on the bullish equivalent of those same signals. What's even more clever is that many of these patterns are defined at least in part as a percentage of the daily Average True Range of the pair over the prior 14 days.
What about results?

I did a 10-year back test on a 100K starting size and the equity grew to 729K. This comes to about a 20% annualized return. What's even more impressive, is with only 3% risk setting and 10% drawdown. The screen shot on the left shows 10 straight profitable years with about $2 in profit for every $1 in drawdown.

There are 3 live accounts up on Asirkuy showing results for nearly 1 year of live trading. I can't share the details, but let's just say for 2 of the 3 accounts, the results appear basically equivalent to the back testing. That's another way of saying the systems are back and live test consistent.

I uploaded a 10-year back-test statement for Watukushay #2 to my Yahoo group at http://finance.groups.yahoo.com/group/fx-mon/ minus the parameters.

Based on all of the above, I think Watukushay #2 has earned a place in my robots trading portfolio going forward. I'm going to start with 1% risk and gradually work up to a high risk level from there.

Check back in a week or 2 for the first forward-test results, and live test results later this year.

Friday, October 22, 2010

Meta-Trader - Cool and Crispy

Welcome back Forex fans.

Its a magical time to live in the Northeast USA. The air is cool and crispy. The squirrels are burying their nuts, and all woodland creatures and preparing for the winter ahead. The light takes on a special property where even the common place is incredible. Words can't describe the experience. Alright, back to business..

It was a fine week in the land of Forex Robots and things are moving along right on schedule.

First up, the IamFX account that was supposed to get moved to Forex.com was liquidated and they sent me check for $2054.33. This was a return of 2.7% on my deposit of $2000 after just 2 weeks of trading with my favorite 2 scalpers. Consistent with my 1% a week mantra and i'm happy with that.

Next up, Megadroid Live had a fine week in its new home with Forex.com US and picked up 2.59% for the week. This was milestone since the account topped +30% for the year for the first time. This system has now had 25 consecutive winning trades and is way overdue from some drawdown. Megadroid Demo gained +3.5% in a similar fashion.

Next up is Gods Gift Duo which is my first live account trading this system trading on EUR/USD and GBP/USD on a $1000 account with a risk setting of 1. I want to trade this account at a higher risk level, but i'm going to finish out 2010 at the 1% risk level to see how it goes. The account picked up just under 1% with an open sell in GBP/USD.

Next up is demo account Atinalla #1 which gave up about 0.9% for the week. Also in the same category was Atinalla #3 which I kicked off last week in demo mode. This system lost -2.12% for the week and i'm not impressed with the way its going. I back-tested 3 of the 4 symbols, and was profitable on only 1 of the 3 YTD. Also this system seems to loose slightly more than it wins, with a win/loss ratio of about even. You can't make much of a judgment after 1 week, but so far, i'm not impressed. Good thing its demo money.

Finally the Q-Diamond demo accounts were idle all week. With the switch to Forex.com US, they switched to a new symbol format for demo accounts: EURUSDpro. The new suffix defeats the Q-Diamonds and I e-mailed the vendor to fix this this last weekend, but got no reply back. This system/vendor is making things more difficult than necessary. They could just pick off the left 6 characters of the symbol and be done with it, but for some reason they choose to make this harder that it needs to be. I'll follow up and circle back.

Have a great weekend all.

Friday, October 15, 2010

Meta-Trader - What goes around ..

Welcome back Meta-Traders.

Whew! Its was a roller-coaster week in Forex with some surprises, some good news and some bad news. Before we get to the specifics, check out this screen shot of Teyacannani from Asirikuy taking a sell order on the EUR/USD.

Daniel's stuff is getting better all the time and as I mentioned in a reply on his blog Mechanical Forex, he is single-handedly advancing the science of trading with the Meta-Trader platform more than any other person on the planet.

Now onto this week's developments.

The shocker came when I found out that my new account with IamFX, which was supposed to get transferred to CMS forex, will instead be transferred to........Forex.com!

This is a mixed bag since my other live accounts are already with Forex.com. The good news is that I can sign this account up for pip rebates with Trader's Choice FX. The pip rebates account for an extra 1% or more of annual return, so its definitely worth the effort. On the downside, my efforts at broker diversification have been dealt a minor set-back. All things considered though, not a bad development.

The other downside from this week's action came with another 30% loss from Q-Diamond EUR/USD after climbing back from a 30% drawdown, this system has once again given back its profits and sent the account back into drawdown. Also, it ended the week with an open loss of abount $83 which is another 8% of the original deposit. The bright side is that its still demo money, reinforcing the point that you should trade new systems for many months before going live. Now onto the good news.

Q-Aussie had another solid week and is now up 17% since its start on 8/30/2010. It was disappointing to find out that AUD/USD is not considered a "major" and is therefore subject to 1:20 leverage under the new NFA rules. The majors (GBPUSD/EURUSD/USDCHF/USDJPY) get 1:50 leverage under the new rules.

I have an interesting story to tell regarding my newly funded account at IamFX. I decided to let this system trade out it's last week running a Megadroid v1.21 and ScalperX combo. Things went well and as of Tuesday's close, I was up nearly 2% adhering to my "1% a week" mantra. Unfortunately on Wednesday, things went south as Megadroid got stopped out for a 40-pip loss wiping out gains for this and the prior week.

Here's where it gets interesting. On Thursday I pretty much ignored this account thinking it had no chance of making up the prior day's losses. Instead, it was surprised to see it up about $55 in open trades. Knowing the SL and TP characteristics of this system I figured it would exit with a gain before then. After 1 hour or so beyond when these trades should have closed, I went down to the computer in the basement and found my profits almost gone, and the trades still open!

I tried to close the trades manually and the trade was accepted by the platform but not executed. Instead the MT platform just said "Order Sent" and gave me a cancel box to cancel the order. I started to get concerned and tried to call IamFX on the phone. After 10 minutes of hold time, it occured to me that these people probably had all left the office and were out at the pub! I figured if they were going to be out of a job tomorrow, why should they care? Just let the customers hang out to dry!

Now I was getting concerned. I had 2 positions open and in profit, but no way to close them. I tried IamFX chat support, sales and got a guy named Christopher. Long story short, he stayed with me on chat for over one hour. He looped in CMS Forex support who indicated their servers were down. He was able to get the trades closed for about a $50 profit leaving me with a 2.7% in 2 short weeks of trading this account. The results can be found here.

As Cramer says, "Sometimes it's better to be lucky than good."

Lesson learned: If you broker is going out of business or moving your account - don't trade with them up until the very last minute! There is some chance the employess will walk out on the job and leave you hanging. All credit to Christopher though, he stayed with me and did the job. I sent a nice e-mail to his boss in thanks.

The Megadroids were quiet this week and picked up 1 or 2 pips.

Finally, I added a new portfolio this week called Atinalla #3 from Asirikuy. This account is designed to be NFA compliant. It trades 2 different systems across 4 pairs. The system took a good profit of about 1% of the account, but gave it back on a similar trade the day after. After a few days on the bench, it came back and shorted EUR/USD on Friday and went out for the week short EUR/USD and up about 0.5% of the account since opening it less than 1 week ago. You can follow that account here.

Okay, i'm exhausted and ready to call it a week. I'm boxed in with family business most of the weekend. So i'll catch you next week. Get some rest and have a great weekend.

Sunday, October 10, 2010

Meta-Trader - IamFX Live week one

Welcome back Meta-Traders.

As promised here's a report of my first week live trading with IamFX. I opened up a new account with $2000 and the plan was to trade Megadroid and Scalper X with 5% risk which is roughly equivalent to 10% risk on a $1000 account.

My thinking was that the narrow spreads would make up for the fact that they charge commission - about $1 per round trip on a 0.10 lot. Also, the abensce of spread widening would allow the system to take trades which would not execute on Forex.com. The results of my first week's trading can be found here.

The first thing I noticed is that the ScalperX opened up trades very quickly and readily - more so than the demo feed from IamFX. In fact, ScalperX traded every day Monday through Thursday while the same system on the demo account from IamFX only traded Wednesday and Thursday! Strange to see such a difference and it suggested the broker was somehow manipulating the feed to make the EA's trade. Recall they get paid a commission on each trade plus the spread.

I've been trading the scalpers for almost a year and I know their logic pretty well. One important feature is that if the take-profit is not hit within one hour after opening, the system will close the trade at any profit whatsoever. It will not take a small loss between 1 and 2 hours after opening. The stop loss will only kick in after the trade has been on for 4 hours or more.

Well with IamFX, the system was taking small losses! My only conclusion here is that the system was closing the trades when they were profitable, but I was seeing 3-4 pips of slippage on execution! This of course negates the commission and the whole benefit I was trying to acheive from going to this broker!

This affect was even more pronounced on Wednesday. See that $10.19 profit on Wednesday? That should have been a $20 profit that where the price literally slipped at 5 pips on execution. Also, the reverse trade that got taken immediately at close of the first trade trade close opened immediately with a -$10 loss! And that trade should have closed at a small profit per my explanation above instead resulted in a small loss!

Well after 3 days of trading, I was almost ready to throw in the towel. On Thursday though, things seemed different, and I saw spread widening at the 5 pm entry window, so the system didn't trade until almost 5:30 PM. These trades closed with decent profits, and was able to bring the trading into the positive for the week.

Megadroid did trade once during the week and took a -0.90 loss. The same trade made about 3 pips on the demo account and the demo account took a 15 pip-profit on a trade not taken on the live account.

Final score for the week with 1.3 full-size lots transacted is a profit of $14.13, commission paid $13.62. Observation conclusion is that executions on Forex.com are much better and even though the spreads are higher there's not much slippage on execution.

This all is a mute point anyway since this account is being moved over to CMS Forex as of next Friday. I thought was worth sharing anyway. Take care and stay tuned for some some robots setup and analysis from Asirikuy.

Saturday, October 9, 2010

Meta-Trader - Slow and Steady

Welcome back Meta-Traders.

It was a fine week in the land of the Forex Robots. Much time was spent digesting the new rules which affect US-based traders starting after the close of business next Friday October 15th.

Here's how I'm going to be affected:

1) My 2 live Forex.com accounts will be moved back to the US. Forex.com has provided a link to their new, US-compliant Metatrader.

2) My brand new live account with IamFX will be closed and transferred over to CMS Forex under the new rules.

I'm still debating whether I should take the CMS Forex Transfer or just close the account and get my money back.

Its probably a good thing that i'm being forced to comply with the new rules so I don't have any ongoing regulatory risk on my path to wealth building in Forex. I don't expect the new rules will have any negative affect on my systems, although I'm still evaluating the Q-Diamond's. Now onto the week's results.

The Megadroid twins had a fine week with Megadroid Demo picking up about 1% and sister Megadroid Live picking up about 2% for the week. The Megadroid equity curve is a thing of beauty (see above) and is now up 28.4% on the year. This system has had 21 consecutive profitable trades with a 94% winning rate and a profit factor of 2.73. This robot has a pretty good chance of meeting my 30% to 60% yearly profitability goal by year end. I'm overdue for some drawdown, so we'll see how it works out.

Atinalla #1 had a pretty good week with a huge 170 pip winner, then gave back about half over the remaining 2 days. Even so, this system is up an impressive 11% since starting it back on 7/29/2010. Unfortunately, this system is not compliant with the new NFA rules, and Daniel Fernandez over at Asirikuy has already provided some alternatives. I'll do some work on that over the weekend have have the first week's results on the new system for next week's post.

The Q-Diamond twins had a solid week also with Q-Aussie picking up about 1.8% for the week and Q-Diamond EUR/USD picking up just over 2% for the week. I'm getting to know these systems better, and i'm still not %100 clear on whether they will be affected by the no-hedging rules.

I have an interresting story to tell about my first week live trading with the scalpers on my new IamFX account. Unfortunately, i'm out of time, so check back later in the weekend for that.

Get out and make it a great day!

Thursday, October 7, 2010

Meta-Trader - Trader's Choice Webinar redux

Welcome back Meta-Traders.

The developments are coming fast and furious regarding the new Forex regulations due to take affect in the US starting on October 15th.

I spent some time this afternoon in a Webinar sponsored by my favorite referring broker Trader's Choice FX. The session lasted almost 2 hours, and there was lot of fluff, dead air and marketing. It was almost 25 minutes into the session before we got to any real content. So I'll save you guys the time and give you the executive summary. Here goes:


- The new regulation applies to all US Citizens residing in the US. If you are a US Citizen living outside the US, or a non-US Citizen living inside the US, you may not be subject to this regulation.

- All non-US-based FCM's which have an office or presence in the US which hold accounts for those who reside in the US are required to return their accounts to the US under the new rules.

- Safety and security of funds should be paramount in any decisions you make as to where to fund your account. For brokers based outside the US, or non NFA or CFTC based brokers inside the US, you are completely subject to the financial condition of the FCM. In other words, if the FCM goes under, you can loose all your money. Fine for a few grand, but don't be the farm on these brokers. So stick with large, well capitalized brokers.

- All the major FCM's handled by Trader's Choice (FXCM, Forex.com and FXDD) are all subject to the regulations and are all repatriating their accounts but all doing so differently.

- These regulations are not as bad as they sound. Traders who trade with high leverage (beyond 12:1) typically loose their accounts. The presenter challenged the audience to provide a brokerage statement for more than one year which shows successful trading of an account at this leverage level and nobody took him up that I'm aware of.

Now on to the good stuff. Here are the 3 options provided by Trader's Choice FX:

1) Open an account with Citi FX Pro. This was a bit of a shocker since this large US-based bank will allow you to trade with FIFO and Hedging, but subject to the 1:50 leverage. Strangely enough, Citi is not subject to CTFC or CFC regulations, and the accounts are FDIC insured up to the 250K limit. In my first hand experience, this is an abberation, and its just a matter of time before Senators Dodd and Frank get word of this loophole, so don't bank on it.

Also, Citi's minimum account size is 10K and they will not split accounts down further. That counts them out for me. Not that I can't swing 10 grand, but I'm not about to bet 10 grand on any single forex robot. Someday, but not now.

2) Open an account with Forex.com US. This is perhaps the least favorable option because they (just today) released their NFA-compliant version of Meta-Trader 4. On the plus side, this is a reputable and well-capitalize broker. On the down side, performance of non-US accounts may change when they are brought back under US rules.

3) Open an account with FXDD US. These guys have a bit of a leg up since they have had a MT4 version which meets US-rules in place for some time.

Trader's choice also indicated they will pay a 5% deposit bonus on any new account $250 or above. Also FXDD has a solid reputation with spreads as low as 2 pips on EUR/USD.

In summary, my major takeaway from the presentation is that these regulations are in place to protect you and your funds. There are very few profitable systems which are rendered ineffective by these regulations.

Take care folks and stay tuned for some interesting, first hand experience I got this week trading my new IamFX account live. Check back later for that...

Monday, October 4, 2010

Meta-Trader - Repatriation part two

Hi guys. Let's face it, most of you reading this blog are men and if i'm wrong and you are a female, leave me a comment and i'll stand corrected.

In any case, I heard from Forex.com this evening as follows. The only significant difference between them and FXCM was that Forex.com came out and said you are not required to transfer your account. And they provided a link to click on that opens a chat window to their sales people. Now that's what I call capitalism....

Important Account Notice - Changes to your account

Regarding your account: ***********

Dear Client,

On August 30, 2010, the U.S. Commodity Futures Trading Commission (CFTC) announced a new rule that prohibits foreign affiliates of US FCMs from acting as counterparty to US domiciled foreign exchange accounts.

Our records indicate you are a resident of the United States, which means you will no longer be able to conduct business with FOREX.com UK Limited after October 18, 2010.

In anticipation of this change, we will be changing the margin requirement on your account to 2% (50:1 leverage) for major currencies and 5% (20:1) for all others on Friday, October 8, 2010. View full list of currency pairs.

You can continue trading forex by transferring your MetaTrader account to FOREX.com US, a CFTC registered FCM/RFED and a member of the NFA (NFA #0339826). Upon transfer of your account, your funds will be held in a non-segregated account with FOREX.com US and your account will be governed by the rules and regulations of the CFTC.

We have made the transfer of your account as seamless as possible to ensure no interruption to your trading and your account details, User ID and Password will not change. Simply review and agree to the FOREX.com US customer agreement by 5:00 pm ET Thursday, October 14, 2010, and we will automatically transfer your MetaTrader account to FOREX.com US on Friday, October 15, 2010 at approximately 3:00 pm ET.

The MetaTrader platform offered by FOREX.com US adheres to NFA client trading rules and as such, hedging is not supported. We strongly encourage you to sign up for a demo account to familiarize yourself with the system and test your EA's prior to Friday, October 15, 2010 by clicking here.

You are not required to transfer your account. If you oppose the transfer of your account, please click here to discuss your options.

If you are unsure of how this change will impact your FOREX.com account or have any additional questions, please feel free to contact one of our customer service representatives.

Sincerely,
The Team at FOREX.com

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Friday, October 1, 2010

Meta-Trader - Welcome Myfxbook

Welcome back forex fans.

With this week's post, i've converted all my account statements over to myfxbook.com. This platform has many nice enhancements not the least of which is that it continues to work since the other 2 publishers (mt4live.com and mt4stats.com) have gone under or failed to deliver due to capacity issues.

For a look at the new content, check out my flagship Megadroid live account here Megadroid Live. This account has the most history of all the accounts since the demo accounts expire every 3 months or so. Myfxbook allows a new demo account to be published to the same history as prior demos, so we should see more history going forward. Also, check out the nice looking equity curve on the Megadroid live - let's see how long it lasts!

In terms of robot's action, this week's winner was Q-Diamond EUR/USD which picked up about 4.7% on the week. This account is now down -2.7% from opening back in early August and has climbed back from an almost 30% drawdown! Sister account Q-Aussie also had a solid week and picked up about 2.7% on the week. Note how Q-Aussie picked up over 10% for the month which is consistent with back-testing.

Megadroid Live and Demo picked up a pip or 2 so not much to talk about there. My new account with IamFX is funded and ready to trade.

As I mentioned in the comment, Forex.com UK will be sending their UK-based accounts back to the US. The absence of hedging capability is offset by the fact that I get pip-rebates from Forex.com via Trader Choice FX. So i'm unclear on how this is all going to shake out since ideally I would like hedging and pip rebates.

That's all for now, get out and enjoy your Saturday!

Wednesday, September 29, 2010

Meta-Trader - US Repatriation of UK Accounts

Oh yea we got trouble, right here in river city.

FXCM has got a plan to repatriate their UK Accounts back to the US as of 10/18/2010, see below. No word yet from Forex.com UK.

Dear Client:

FXCM would like to inform you of important new legislation passed in the United States that will impact your forex trading account(s). The recently enacted
Dodd-Frank Wall Street Reform and Consumer Protection Act is a federal statute that states that overseas brokers not registered with the CFTC will not be able to be counterparties to US retail investors in OTC forex transactions after October 18, 2010.

What does this mean for your account? As you are a resident of the United States, FXCM LTD (FXCM UK), FXCM AU LTD (FXCM AU) or FXCM Asia Ltd. (FXCM Asia) can no longer be the counterparty for your forex transactions. However, so that you may continue trading, your account(s) are scheduled to be moved the weekend of October 15, 2010 to FXCM LLC (FXCM US). As a US resident having your account(s) with FXCM US will comply with this new rule.

How will my account(s) be affected?

Will my account move?

Yes, your account is scheduled to move the weekend of October 15,2010 to FXCM US.


Will I have the same username and password? Yes, you will keep the same username and password.

Will I have to download a new platform?

No you will not have to download a new platform.

Will my margin requirements change?

Yes, the maximum leverage available with FXCM US is 50:1 for major currency pairs and 20:1 for exotic currency pairs. (See the table below). For detailed examples on how margin will change and how to avoid a margin call,
visit the online support center.

Will my open positions transfer? All open positions and orders will be transferred to FXCM US.

There is no need to close positions.

What will happen to my stops and limits? All stop and limit orders can remain open during this move.

There is no need to remove them.

Will I have hedging on FXCM US?

No, you will no longer be able to open new buy and sell positions on the same currency pair at the same time.

Will I have to do anything? FXCM will be providing continuous communication over the next few weeks and will outline if there is any further action needed on your part or any changes to this initial communication.

Will my deposit and withdrawal procedures change? You may continue to visit myfxcm.com to deposit and withdraw funds. Account holders in USD denominated accounts will now send their funds to Bank of America in the United States.

What protection will my account have under the new US regulations?

FXCM is registered with the Commodity Futures Trading Commission (CFTC) and is a member of the National Futures Association (NFA). If a dispute arises, investors can turn to the NFA or the CFTC. Please be aware that once your account has transferred to FXCM US, American (US) requirements and consumer protection rules will apply. The rules made by the UK’s Financial Services Authority to protect consumers will no longer apply; FSA consumer protection, bankruptcy protection, segregated accounts money rules. Any complaints you may have about activities up to the date of transfer will be dealt with under UK rules, thereafter under US.
For additional information, please read the
Frequently Asked Questions on the DailyFX Forum. Visit Now

Saturday, September 25, 2010

Q-Diamond Revealed!

Welcome back Meta-Traders.

After about 2 months of demo, back-testing and evaluation, I’m ready to reveal that System-Q is from http://www.qdiamondsystems.com/. I want to mention that I have no affiliate relationship with the vendor and my only interest here is sharing the results of my research with my blog readers.

The vendor sells 3 systems, Q-diamond 100 which trades the EUR/USD, Q-diamond FX II which trades GBP/USD and Q-Aussie FX which trades AUD/USD. All systems trade the given pair on a 5-minute chart. The vendor is currently asking $249 for the EUR/USD system, $179 for the GBP/USD system and $219 for the Aussie system. You can get a free one-month evaluation copy of any of the systems by visiting the vendor web site. Failing that, you can e-mail the vendor at qdiamond.ea@gmail.com. You also get a discount on the other systems after you pay full price for one of them.

The account statements on the vendor’s web page are misleading since they don’t show any drawdown whatsoever. The systems definitely will drawdown, more on that below.

What about performance? In back and forward testing, the EUR/USD and AUD/USD systems return about 6-12% per month. The systems are also capable of some nasty drawdown, and when things go bad, the system can drawdown about 30% in a very short time. Also, the systems are very spread sensitive, and in some back-tests with an accidentally high spread, the system lost and much as 80% on the AUD/USD and wiped an account on the EUR/USD. The system does have a spread protection feature, which when activated will not trade when the spread is wider than 5 pips.

You can setup the systems to run with a conservative, moderate or aggressive risk levels or anywhere in between as follows. The system will take up to a maximum of 5 positions and you set the size for each position. Since I like to start with a $1000 account, I set my starting lot size to 0.05 for moderate risk. Thus, the system will trade up to 0.25 of a full lot. The system can be long and short the same pair, so is not compliant with NFA rules.

A description of the system logic was provided by the vendor as follows. The EUR and AUD systems are trend followers which wait for a trend to develop then trade in the direction of the trend after a retracement. The default TP is 20 pips but can be larger in a more volatile market. If the price moves against the initial trade, another trade is put on in the same direction, and the TP and SL are adjusted to a single value making it “easier” to reach the TP. Under some circumstances, the system will close a losing trade and open a position in the other direction and follow the original logic.

In terms of stop losses, the system uses an SL of 135 pips. To calculate your drawdown, take the position size, times 5, times the 135 pips. In my case, max position size is 0.05 times 5 = 0.25 which comes to $2.50 per pip times 135 pips equals $337.5 or about 30% of my $1000 starting account size. The vendor estimates the system will draw down on average 1-2 times per year and recover in 3 months or less.

In my demo testing, I started trading Q-Diamond 100 back on 7/27/2010. It quickly gained 5% then went into drawdown, losing about 30% of its value. It has been climbing back since and as if this writing is down about is down about 6%. Q-Aussie is up 8% since starting it on August 31, 2010. I lost about a week of trading when the demo ran out, but is running again now.

One annoying thing about these EA’s is that when traded live, the compiled ex4 file must be coded and compiled to work against a specific account. You need to e-mail the account number to the vendor, and he will compile the EA and sent it back to you. This is going to make any updates to the system difficult to distribute. On a positive note, this along with the conservative marketing practices of the vendor will hopefully prevent the system from being over hyped and over used.

I’m a pretty conservative guy and normally I would not consider trading a system where I can lose 30% of my money in a short time. But these systems are such consistent money makers that some alternate tactics may be in order to succeed here. Here’s what I’m thinking.

Start with a small amount of money (say $1000 per account) and slowly decrease the risk as the account grows. Another tactic is to withdraw the profits and keep trading the original amount. Sure, you could lose the entire account in drawdown, but changes are pretty good that after a year or 2, you will have made the entire principle and then some.

The system will grow the lot size proportional to the equity through a variable called Growth Management which is set to True by default. Another tactic is to set Growth Management to False so the system will trade a smaller portion of the equity as the balance grows. Some of the back-tests (including one one shown in the graphic above) have GrowthManagement set to false and that option seems to provide the smoothest equity curves with risk greater in the early going and then slowly decrease risk as the account grows.

The vendor suggests trading all 3 systems on one account with default (moderate) settings. Under that scenario, the account should earn about 18% to 36% per month or about 1500% per year assuming no drawdown. When it does drawdown, the system should recover in about one month. That might be a little aggressive for my taste, but does have a decent chance of turning $1000 into $10,000 in one year’s time.

I uploaded a whole bunch of back-testing statements to my Yahoo group at FX-Mon Yahoo Group. Please join the group if you want a copy of the files and the other stuff up there. The back-tests only go back as far as 2005 since the system will not place any trades prior to then.

My plan is to start trading the EUR/USD systems and AUD/USD systems live later this year. Stay tuned to see how it turns out.