What to do…

So it’s been a few days now and I must say that I’m not much wiser. There is a lot of speculation online regarding this incident, but sadly very little information have come out of JadeFX and absolutely none from the CFTC.  The latter is quite surprising, and also makes me wonder if they really are involved or not. It seems they often put up a press release when they are investigating brokers, but none have been put up for JadeFX.

The alternative is of course a very scary and frustrating one, and that is that JadeFX is another case of Madoff. It has been discovered that in the fine print parts of the client agreement it is stated that under Belize law clients funds are not protected in case of bankruptcy, in direct conflict with the information about this in the FAQ that was posted on the website. There it was clearly stated that clients funds was kept on segregated accounts and could not be touched.

It would be extremely interesting to know who ordered the cutting of the price feed. If it was done by the CFTC I would think they’d put out information about it. I must say that I’m not very hopeful of getting my money out, it might just be a defensive mechanism, but the thing is that it all is extremely strange. The Website is now completely down, and it is of course an active choice by someone at JadeFX, it would have been simpler just not to touch it. For some reason they don’t want us to be able to read the information that was out there. Also the platform is shut down since Saturday, so the only channel that JadeFX have been communication through is now down. And yesterday they also shut down my VPS, again an active act. They’re in complete shutdown mode.

Hopefully there’s more information soon… In the meantime I’m thinking about my options with other brokers, but the thing really is that I don’t have energy for that right now. I’m going on a mini-vacation tomorrow (skiing) for a few days, I will try to completely stop thinking about this for that time.

Here is screen dumps of all the communication I’ve received from JadeFX since this began, so anyone interested can form their own opinion.

Read more…

In a move of complete and utter disregard for peoples’ belongings the CFTC have shut down the trading operations of JadeFX and freezes the companys’ accounts. The allegation is that they are breaking the CFTC’s regulations. The interesting thing of course is that JadeFX is a Belize registered company and that they have no American customers (they all we’re kicked out last year when the CFTC started their crusade against home forex traders). I am very frustrated with this, I have a nice sum of money in there that I can’t access now. I am not an American, I should not be affected by their crap.

Apparently the CTFC argues that they have jurisdiction because the liquidity provider that JadeFX is using is Citi, but why the hell doesn’t they just send Citi a cease and desist letter and JadeFX can find another partner to trade with.

So basically I’m counting on the CFTC to penalize JadeFX for their “wrong doings” and I’m not counting on getting any of my money out. Thank you CTFC for protecting me as a trader and taking all my money. Thank you protectors of the Free World.

I’ve sent this to the CFTC. I don’t expect a reply:

“Dear Sir(s).

I would like a explanation why you are interfering with my right as a world citizen to trade with currencies on a fair market as provided by JadeFX out of Belize (not a US state FYI). I am a Swedish (Sweden is also not a US state) citizen. Please inform me on what grounds you are stopping my broker JadeFX from dealing with me? Whom are you trying to protect here?

JadeFX is saying that they will not process any withdraws while this process is in action, so I can’t get my money out. Also it is of course likely that they will be forced into bankruptcy if you don’t stop interfering with their business, and then I’m sure I won’t get any money. So if you were trying to protect me from losing money on trading Forex you instead just made me loose 100% (instead of gaining 143% like I did during 2010). Thank you very much.

BR Johan Axelsson
Customer at Jade FX, not an American citizen under your jurisdiction.”

The Jade FX website is down, but we have been getting some updates in emails within the MT4 platform. It doesn’t look good.

I got spammed by Alpari UK about something they call the Gold account. I thought it would be kind of a VIP thing requiring $25,000 or something like that, but I was surprised to see that it actually was something quite interesting. Basically it is a normal micro or standard account using Gold (XAUUSD/1000) as base currency. I have accounts now based on USD and EUR (and have been thinking about starting a GBP based one also) as a strategy against risk associated with using just one currency.  A gold account would actually fit quite nicely. It is basically a negative correlation currency against the USD.

Check it out. As far as I can see it will behave exactly like a normal Alpari UK account other than deposits and withdraws are converted to/from XAUUSD/1000. If you are a gold bug this would fit perfectly.

http://www.alpari.co.uk/en/gold_as_currency/

Almost three months ago I started a demo at FinFX, a Finnish ECN broker. I haven’t been paying too much attention to it since, but today I checked in and realized that it have been performing very well indeed.  The strategy is a optimized Channel Scalper trading EURGBP.

MyFXBook chart of FinFX demo

I wish I had started a few more demo accounts at other brokers with the same setup for reference, but of course I didn’t… But I’ve been checking it against a JadeFX demo account with the same setup and the FinFX demo is actually a little bit “better”. It takes more trades and closes them quicker.

The commission is $7/lot, but Cashbackforex.com offers $1/lot back in cashback. As JadeFX nowadays take $8/lot on GBP basd pairs this is a very good level. I’m quite tempted to open an account. The minimum deposit is $2500. The only problem is that I really like the performance at JadeFX live account. There is of course no guarantee that live performance at FinFX is reflected by the demo.

It was of course inevitable, there had to be a loosing month sometime. January started of rather bad (like December ended), picked up a little and then fell through on the 24-25th. And then some more yesterday the 31st. So for a total loss of 14.53% it ended rather badly.

It is trades in EURGBP, the main currency traded that have been bad, and mostly then by The Channel Scalper. Other EAs have been small winners, with the exception of XBars MA Scalper trading GBPUSD that ended a small loser with 3 wins and 1 loss (and the ratio between TP and SL is just over 3).

When I’ve been looking at the performance day to day I can’t but see that there is some portion of “bad luck” involved here, or at least bad settings.

This picture is from yesterdays session. First off we can see of course that it started trading a little too early. The market was drifting upwards the entire session though, so the trades should have been taken “badly” either way. The really unlucky part is in the timeout value of 4 hours thou, when if 4h30min would have been used instead all trades would have taken profit instead of closing for about three times the TP in losses. Three positions survived the peak and took profit here. One EA, trading with a experimental SL of just 11, just exactly hit that before the reversal.

4 hours instead of 4,5 is a little better in backtests thou, so I will stick with it. Hopefully the Market will behave more like I expect it the coming month.

There have been even some more bad news for this account thou, as JadeFX have announced a 33% increase in commission for GBP based pairs. As 85% or so of my trading on the account is in EURGBP and a few more percent is GBPUSD this is really bad news. The commission on these will be $8/lot starting February 14th. Perhaps it is time to look at some of the alternative brokers, which are quite few, but perhaps worthy of testing out either way. FinFX is a ECN broker that I’ve been demotrading with successfully. They have about the same spread as JadeFX and they will after this change have lower commission. A HotForex Currenex account is another possibility, this one has the advantage of requiring just $500 to start out live testing with.

But I really like JadeFX and the setup I have there with their ultra low latency VPS. We’ll see, I won’t make any hasty decisions.

Just a quick graph of the 6 months of trading that made up the second half of 2010 at JadeFX. The account have during this period exclusively been running scalpers and 85% of the trading have been by The Channel Scalper trading EURGBP.

Performance July 1st - December 31st 2010

The funny thing is that the graph above states about 104% gained when in reality 143% was gained. MyFXBook calculates something very differently here and I have reported it to them. Not that 104% would be shabby but the account really have 143% more dollars now and I haven’t deposited any. $150 have even been taken by JadeFX from the account to pay for six months of their VPS. Strange.

143% gives a average gain of 16% per month, which I am satisfied with. Over 12 months this would give about 500%

Update of my JadeFX accounts scalping performance under December. Prior years I have shut down EAs in early to mid December, but this year I decided to trade almost as usual. I ran quite a few backtests using Dukascopy tickdata and concluded that it wasn’t riskier to trade this month than any other (with my strategies that is, others might perform differently). Up until December 16th I thought I had made a excellent decision with a gain of 30% during the month, but that day and the also the following I lost about 17% of the account and was down at 7% gained during December. The latter half of the month added a little pips here and there and ended up at 12.53% gained.

December performance at JadeFX

The biggest losses came from XBars MA Scalper trading GBPUSD and RSI MA Scalper trading EURUSD. A version of settings for The Channel Scalper trading EURGBP also got hit hard. Prices was trending significantly during the normal quiet Asian market. Going forward I have made adjustments that I hope will reduce drawdown like this without penalizing profit taking during periods when prices are range bound during my trading hours.

A few weeks ago over at Donnas forum a thread discussing HotForex gained momentum. I didn’t think much of it at the time, there are so many brokers out there no one can keep up with all of them. And it is rare that they are anything worth thinking about either. Since then I’ve been checking the thread now and then and it seems people are pleased with their experiences. There are also very favorable reviews at Forex Peace Army, a site that usually is on the negative side (common human behavior to only report negative events of course).

The last thing that really spurred my interest was something I saw just today thou. They are now featured on CashBackForex and give 0.4 pips / lot back. I’ve asked how this applies to the Currenex account type at HotForex but still haven’t gotten an answer, hopefully it is valid regardless of account type (Update: Yes it was). The Currenex account is a ECN with $10 / lot traded ($5 per side) in commission, that with a rebate of 0.4 pips would be $6 / lot. The spreads and execution are supposed to be very good. Minimum deposit is $500 and minimum lot size is 0.1.

In order to get the rebate you have to register at CashBackForex.com of course and follow the instructions posted there. I’m thinking about checking it out.

November is over and it is time to look at the performance of my scalper EAs at JadeFX. It was the worst performing month since May this year with “just” 2.88 % gained. There we’re two massive loosing streaks on the 3rd - 5th and the 18th - 19th. In both cases news pushed prices out of the usual channels during the Asian session basically affecting all scalping strategies.

Performance outside of these dates was good. Risk taken is clearly quite high, but it is intended as a high risk account. I am experimenting with tighter stoplosses and adapted timeout values as a way of reducing the swings.

Most profits (and losses) are made by The Channel Scalper trading EURGBP, but the performance of XBars MA Scalper on GBPUSD this month is notable. It took profit in 9 of 11 trades (82%) and made 99.5 pips in total because of it’s sensible TP vs SL ratio of 1:3.

I’ve started updating the Forex Guide published here by me. It is a little bit dated now (untouched since August last year). Hopefully it will be more useful in a couple of days.

Stay tuned.