Welcome back Forex Fans.Before I get to this week's results I just want to reply to some comments left last week by my friends and most loyal blog readers. I apologize for not replying sooner, but I was on a family vacation this past week with very limited access to the Internet.
Daniel - Regarding my comment that the God's Gift ATR account at Asirikuy is running at 10% risk, I based that on the Risk=10 value in the settings file.
I spent some time trying to reconcile that the EA is trading 0.04 lots on a $1,000 account to figure this out. After a while it seemed like too much work and i'm still in vacation mode, so i'll save this one the weekday when the market is open and my brain in back in weekday mode.
JT - Regarding Fredrick, he can leave me a private message on Twitter at http://twitter.com/tcxmon and i'll answer whatever questions he has.
I've found that Megadroid seems to be a solid system, but I haven't yet found a broker that will let it trade as it was intended. So i'm not ready to give up it yet, but let's just say it has some broker dependencies that hold it back in terms of actual execution.
At the same time, a nearly 20% gain on my 2 scalpers year to date isn't too shabby, so take that for what its worth.
Redford - Thanks for the info regarding Dukaskopy and their tick data. I'm finding that the issue with scalpers is not so much in the back testing (they backtest great) but in the execution. I don't think the systems themselves are flawed (I know Daniel will disagree) but the fact that the systems are so effective, that the broker's will not execute them because the brokers loose too much money. I have some data to back this conclusion, but i'll cover that tomorrow.
Finally, in terms of ECN's and other brokers such as IamFX and Interactive Brokers, there comes a point at which their cost of execution is so much lower for a given size that the other spread-based brokers are left in the dust.
It's not unlike equities where pay-per-trade brokers (such as E*Trade) are a complete joke versus pay-per-share brokers (such as Interactive Brokers). No serious professional would trade with an E*Trade versus and Interactive Brokers. But there's a question of scale where a broker such as Interactive Brokers won't work for small guys such as myself but might work when I go to full-size lots. Some day perhaps, but not today.
Thanks again guys for all the great comments and check back tomorrow the weekly summary.
Hello Chris,
ReplyDeleteThanks a lot for the specific reply :o) I always read your weekly updates since I consider your journey interesting as it is representative in many ways of what most people go through when exploring automated trading. (I in fact take notes about the decisions you make and what you post so you may be featured in one of my future posts :o) )
I am a little bit confused by your note on the Risk = 10 since none of the accounts trade at this level, most of them trade at 3 and some of them at 0.15 and even then, the Risk setting is not strictly equivalent to percentage values and a Risk = 3 for this system is equivalent to about a 1% risk per trade although it depends on the particular SL ATR % value used. Please send me an email with the account you are observing so that I can better explain to you the risk settings and actual risks taken per trade :o).
Regarding scalpers, don't get me wrong here Chris, I am not saying that they cannot make money in the long term. What I am saying is that you are trading systems whose risk you cannot accurately determine. As a professional trader one of my most important jobs is to accurately determine the risks and worst case scenarios of my systems and since scalpers lack accurate simulations, accurate estimations become impossible.
I warn you simply about the fact that you are trading systems you cannot fully analyze based on backtests that may - with certainty - absolutely overestimate profitability. I walked this road Chris and I am doing my best to share it with you.
Of course, I am not saying that success with scalpers is impossible but I am merely saying that success without adequate and accurately determined risk and profit targets in the long term is extremely hard and that you are walking a dangerous but obviously tempting path here.
I just want you to know here that you are trading with a blind fold in the sense that your information is extremely inaccurate and that over estimations of profitability and under estimations of draw down may only become apparent along statistically meaningful periods of time.
This is why from all the successful traders I know, none use scalping systems or strategies. To weather draw downs and control risks requires accurate estimations and expectations, my greatest doubt is how you plan to be successful if you cannot accurately estimate them. Remember Chris, there are old and bold traders but there are no old bold traders.
In the end it is not about who is right or who is wrong but about learning, understanding and helping each other achieve long term profitability. I just want to share my opinion with you in the hope that you can at least have this information I didn't have when I was walking your steps :o)
Thanks again for your post and weekly updates. I hope you enjoyed your vacation a lot !
Best Regards,
Daniel
I just caught wind of this you published. Really it’s a good stuff for those who are looking for automated forex trading with tcxmon. I would like to tweet on it and keep my eye behind at every moment you blogging.
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