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.

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.

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.

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.

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.

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!

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...

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

Customer support seven days a week
24 hours a day from 3PM Sunday to 10PM Friday (GMT)
Saturdays 2PM to 10PM (GMT) Freephone: 0800 032 1948 (877.367.3946)
International: +44 (0) 20 7398 5030
Email: metatraderuk@forex.com


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Forex and other leveraged trading can involve significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved, seeking independent advice if necessary. Contracts for Difference (CFDs) are not available to US residents.

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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!