Wednesday, September 29, 2010
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.
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
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 email@example.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.
Friday, September 24, 2010
Here's wishing everyone a happy autumnal equinox which signals the first day of fall here in North America. Now that the earth has completed half its annual tilt, its seems everyone is finally back from the beach.
On Tuesday, our Uncle Ben Bernanke and the US Fed came on and basically said they would throw money out of helicopters if that's what it took to get this economy going again. That plus some decent jobs numbers lit a fire under the EUR/USD and send the dollar tanking across the board and equity markets soaring. That made for great conditions for the trend following robots as we'll see below.
I had my best week in years in the equity markets and crushed it with Netflix and Apple. I'm primarily a trend follower in equities and nothing screams Buy Buy Buy! to me like a breakout to a new all-time high. Let's get to the forex.
The winner on the week once again was Atinalla #1 by Daniel Fernandez over at Asirkuy.com which ripped higher gaining 9.1% for the week. This system was firing on all cylinders with solid gains from each of the 3 embedded experts. This robot clearly benefited from the strong trending action in EUR/USD this week and is now up 13.4% since starting it back on 7/29/2010.
This system is going to be one to watch since it seems to encapsulate and concentrate some of the best features of Daniel's systems, and package them together for optimal performance. This system has pulled in an impressive 563 pips in the less than 2 months its been running.
The Megadroid's were finally back from the beach with a 2.5% gain in Megadroid Live and a 2% gain in Megadroid Demo. These systems are now up 27.4% and 34% for the year respectively.
One bummer in an otherwise upbeat week was Scalper X which lost 9.4% for the week and gave back most of the year's gains. I've been concerned about the performance of this 'bot lately and I think i'm going to shut it down and start it up live on my new live account setup over at IamFX.com where I opened a live account this week. My experience has shown that both Megadroid and ScalperX will perform better on IamFX due to the narrower spread. 6% of my 9% loss this week would have been closed at a 2% profit had I been executing on IamFX at least in demo mode. Stay tuned for some actual results, it should be interesting.
The God's Gift's were quiet once again and I should just stop following them and remove them from tracking. They obviously are not trading properly since FXDD went to 5 digits and i'm going to be running the ATR versions anyway.
Finally, System Q EUR/USD had a good week and picked up 2.6% trading both sides of EUR/USD. System Q AUD/USD had a good week and picked up 1.7%. It was been off-line for the past week while I had to resolve some license issues.
And speaking of System Q, i've finished my blog post and i'm ready for the big reveal. It will come in a new post on Sunday, September 26, 2010. So be sure to check back for the big unveiling then.
Thats all for now, check back later.
Tuesday, September 21, 2010
Below is my letter to Dan in the sales department.
Thanks for the mail. I am interested in opening more accounts and adding more funds. My only issue at this point is that i've been trading 2 live accounts since the beginning of 2010, and I have yet to see any pip rebates whatsoever.http://fxmmdlive.mt4stats.com/ and http://fxmscalperx.mt4stats.com/.
Moreover, there's doesn't seem to be any effort on your part to calculate the bonus that I have earned, or tell me when its going to be paid. I understand that its a small amount of money, but if you can't meet the terms of what we have already agreed to, what's to say you will do so if I add more money? I tried to e-mail your accounts department, and I got the below reply (scroll down), which I consider to be unacceptable.
I was told at one point that nothing would be paid unless it amounts to more than $10. I did a quick calculation and I believe i'm approaching $20 as of the end of this month. This takes into consideration that you are 2 months behind on paying this an you are still in July.
Here's what I'm looking for:
1) I want to see a statement of what bonuses i've earned thus far and when it will be paid
2) I want to see some type of regular accounting of what bonus i've earned. I don't accept the fact that you don't have any way to calculate the bonus since you yourself receive payment based on my activity. Also, it was my understanding that you were supposed to be paying me a bonus. How can you do so if you don't have a way to calculate it?
I don't want to be nasty, but I don't think you are living up to what you agreed to do, and i'm not going give you any more business until this gets resolved. Thanks in advance for your reply.
From: TCFX Bonus Department http://firstname.lastname@example.org>>
Subject: RE: Trading bonus
Date: Tuesday, September 14, 2010, 1:04 PM
A monthly statement is sent to you directly from the FCM> that you trade with. Here you will be able to find your total monthly volume (will need to> convert to standard lots (100K)). You can then multiply your total standard lots by your monthly bonus rate (.2 pips). This will give you your monthly bonus each month.
If you should have any questions, please email email@example.com.
The TradersChoiceFX Team
Toll Free: 1.877.272.5850
Saturday, September 18, 2010
Where else do computers work tirelessly to make you money 24 hours a day 5 days a week while you get on with your life? Anyway, back to business...
Atinalla #1 had a breakout week and picked up about 8.5% on the week. For my demo account, this took it from a loss of -5.8% to a gain of +4.3 in just 5 days!
Taking a look over at Asirikuy this performance was pretty much duplicated in a bunch of live accounts. Asirikuy has no fewer than 8 live accounts running this portfolio across a number of different brokers one of which is shown in the graphic above.
The above account runs on Forex.com UK (where my live accounts are located) and was started back on on 6/1/2010 and is up 17% since then. All but one of the accounts are positive since opening and its very interesting to see the same exact system trades on 5 different brokers. Keep in mind that this portfolio has only been trading a few months and it remains to be seen if it will be a consistent money maker. Either way, its a good chance this system will be running 20% of newly deposited live funds starting in early 2011.
In other robots action, the God's Gift's were quiet and didn't have much trading action to speak of. Megadroid Live picked up 0.8% on the week and is now up +24.3% on the year. Megadroid Demo picked up a nearly identical 0.84% on the week and is now up +38.1% on the year.
Scalper X picked up $13.38 or about 1.3% on the week, but is still suffering from recent drawdown. For some reason, the system did not double its lot size as expected which is fine with me. ScalperX is up 12.6% on the year.
System Q EUR/USD was up 4.2% on the week but is still down -9.3% on the year. It went into the weekend long EUR/USD with down -$50 in floating losses.
Finally, I added a new system this week called System Q Aussie which trades the SystemQ algorithm on AUD/USD. This system is up 7% since starting it back on 8/31/2010.
I'm about ready to reveal the identify of this system in a major post I have been working on for several days now. So check back later for that.
Enjoy your weekend.
Friday, September 17, 2010
Let's take a look at 10-year back-test results for the God's Gift ATR system.
Daniel Fernandex over at Asirikuy released new versions of these systems last week with a number of improvements including better error handling, faster backtests and re-worked for consistentcy with DF's coding standards. This was a big help because we could never get a clean backtest with the prior versions of these systems.
The graph on the left shows a 10-year back test for GBP/USD with a risk level=3. Over the 10-year period, a 100K account grew to $682,846 which comes to about a 19.6% on an annualized basis. Even better than that, the maximum drawdown is only about -11.2%.
EUR/USD did even better and a 100K account grew to $793,946 which comes to about a 21.3% annualized return. The maximum drawdown on that account came t0 -14.3 also not that bad.
So these are clearly long term profitable systems. The plan is to include this in my robot's portfolio for 2011 and allocate 10% of my funds to each system. So together God's Gift's will be 20% of my portfolio.
I uploaded the backtest statements to my Yahoo group at http://finance.groups.yahoo.com/group/fx-mon/. If you want to join, drop me a private message at http://twitter.com/tcxmon and i'll add you to the list.
Sunday, September 12, 2010
It was a holiday-shortened week in Forex with quiet trading action in most accounts.
One notable development was an all-time low in the EUR versus CHF. The Swissie has been gaining some strength as a reserve currency and in troubled times, money flows back the CHF as a safe haven.
This action led to losses with Scalper X which trades the EUR/CHF in a scalper-like fashion. The system took a 69-pip loss on Monday and a 13-pip loss on Tuesday. On Wednesday it finally eeked out a small gain but the damage was done and the account lost about 9.1% on the week. That move took back a good part of this year's gains and the system is now up about 11.3% on the year.
Note that since the system is in drawdown, the lot size is doubled since the system is in "recovery mode." Profits have been slim in this account lately, so its possible we are going to see some futher drawdown ahead.
Next up is System Q which picked up 55 pips or about 2.7% on the week. This system has now recovered about half its losses and is now down about 13.5% after being down as much as 28% a few weeks back.
Regarding System Q, I have some further back testing to do it assess whether this system is really long-term profitable. The equity curve has a lot of the properties of a Martingale-based system - smooth equity curves followed by the occasional huge drop off. I've also started to test a related system traded on AUD/USD. More to come on that in a future post.
God's Gift EUR/USD finally put in a trade this week, while its cousin God's Gift GBP/USD was idle this week. Both systems lead the pack up in the neigborhood of 40% on the year.
Daniel Fernandez over at Asirikuy released new versions of the God's Gift ATR's this past week which now back-test much cleaner than the old ones. One of my live accounts for next year will definitely be GG ATR trading the EUR/USD and GBP/USD against a single account with 3% risk on each system. I need to get that live account setup and funded shortly with the year quickly drawing to a close.
Speaking of DF, Atinalla #1 took a nice gain on Monday, but gave it all back and then some later in the week with a string of loosing trades. This system is now down -5.8% since starting it back on 7/29/2010.
Finally, Megadroid Demo and Megadroid Live were both idle this past week. Megadroid live continues to hold up well and is up 23.5% on the year.
Check back later for more Forex fun.
Saturday, September 4, 2010
It was a blowout week in equities. With September upon us, it was almost like they flipped a switch and stocks ripped higher gaining almost 5% for the week and taking my equity portfolio out to a new 2-year high.
Winners on the week were Apple, Netflix, HMS Systems and Compellent. Okay, i'm clearly on the wrong blog, but it makes me wonder why I spend so much time on Forex when I could be making serious money with stocks. Okay, back to Forex.
It was another quiet week in the Forex market, with profits coming in low and slow. But every account that was active took home some pips and you have to be grateful for that.
The winner on the week was Atinalla #1 which closed a 64-pip winner. Atinalla #1 went into the weekend long EUR/USD and in the black about 125 pips. This trade is shows an open profit of about 3.5% and if closed would bring this account back to down about 5% since open. Keep in mind that this system is a combination of 3 trend-following systems and does well in trending markets. August has been a bit on the choppy side and we expect that this account will make most of its money in just a few trades - which is typically behavior of trend-following systems.
Next up was Megadroid Demo which closed about up about 3.2% for the week. The lot size was doubled since its recovering from a recent drawdown.
For my live accounts, Megadroid Live picked up 5 pips and Scalper X gained 4 pips. While unspectacular, these moves were enough to push both accounts out to new all-time equity highs.
These systems are relatively easy to trade since they have a low "Pain Index" which is a measure of the amount of time spent in drawdown. In case you missed it, Daniel Fernandez did a post on this topic here Pain Index.
I don't necessarily agree with his conclusions that scalping systems are dangerous. He might be right of course, but so far my back-testing, demo testing and live testing don't show that to be the case. Will I be proven wrong? Keep coming back and we'll find out!
Next up was System Q which picked up 29 pips on the week, but is still down about -16% since starting the demo account back on 8/1/2010.
Finally, God's Gift EUR/USD and GBP/USD didn't trade at all this past week. I can't find any problems with the Meta-Trader terminal. Things haven't been quite right since FXDD switched to being a 5-digit broker. If this keeps up, I may have to kill those demo accounts and start up again with God's Gift ATR which is Daniel's adaptation.
One more thing - I started work on an EA which is based on the behavior of the Fish Forex Robot which has been gaining popularity and showing some good results. The system trades EUR/USD starting at 3PM EST 4 days a week. That's all i'm going to say about it for now.
Have a great holiday weekend all!
Thursday, September 2, 2010
The forex hype-machine has been in overtime lately selling the latest, best-ever forex robot called Forex Bulletproof.
The system trades EUR/USD and USD/JPY on an M1 timeframe. The manual recommends IamFX as a broker and provides a link to download M1 historical data from the IamFX site. Unfortunately, the link only provides data for EUR/USD, and the link itself didn't even work to download EUR/USD data when I tried it. So I performed all my testing on an FXDD which contained 10 years of historical data for EUR/USD and USD/JPY.
The 10-year results are shown on the left. The modeling quality was poor - only 25% which could call the results somewhat into question. Second, the system uses a 7-pip take-profit in many trades which is a low enough number to be subject to tick interpolation errors caused by the MT4 backtester.
The system had 3 spectacular years out of 10, in one case returing over 200%. But the rest of the time, the system was a disaster. For example, the in the year 2000, the system lost 47% of its equity within the first few months - which totally nixed the effect of a 10-year full backtest.
What really got me was the graph on the left which shows a 1 year backtest for 2010. The equity curve is smooth and rising. Then at the end of the graph, it just fell off a cliff. And the test didn't even make it past February!. I started again in March, and again in April, same result. It did have a few winning months after that, but I don't think your account would survive long enough to see them.
Another thing about this system is that its a Martingale. That means it opens 0.01, then 0.02, then 0.04 and so on until either it takes a profit or blows you account. You might have a smooth and rising equity curve for a time, but it will eventually blow your account.The system also trades USD/JPY with test results shown on the left. But it requires a minimum account size of $4000 - which is hard-coded into the EA and cannot be changed.
Why is that you ask? Because a 10-year back-test shows the system won't survive a back-test without at least $4000 in equity without blowing up the account. Keep in mind the position sizes do not appear to adjust based on account balance. Its still follows the 0.01, 0.02, 0.04 progression.
I've tested a lot of systems and needless to say, i'm not impressed with this one. I would suggest you ignore all the hype and save your money.
See you on the weekend with the weekly review.