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Archive for March, 2010

AUDNZD breaks out of 10-year trading range

March 5th, 2010

… and it really breaks my main accounts right now. I’ve been grid trading this pair with RoboMiner since July 09 and gradually increasing the funds traded because it seemed a solid system. AUDNZD hadn’t been above 1.30 (or 1.2967) for 10-years. During January this year I spent 80-100 hours making my own gridtrading EA based on the same principle (but with quite a few improvements I think). They both break when price moves above ~1.30 thou, and this week it did, with a bang. I put my own EA, called Green, live just one month ago with a safety margin of 200 pips, IE it wouldn’t trade as soon as there wasn’t enough equity to cover a move to 1.2967 + 200 pips = 1.3167. Right now we’re at about 1.31. IE I only have about 70 pips left of margin before the margin calls start.

So, what to do? I can’t do much I think. I won’t fund the accounts with additional funds to cover even more margin. I am contemplating a hedge trade, but I feel that I should already have done this when the range broke, but I didn’t. So I might put in a smaller hedge now (for perhaps just 1/3 of the short positions) just to extend the upper limit I can handle. If we’re lucky NZ have been catching up to AU before my margin is out or at least AU have released some news that shows their growth have declined. The next high impact news out of NZ is scheduled for next Wednesday and Thursday, but analyst doesn’t really anticipate any improvements.

So what was my main fault? I didn’t diversify enough and went in with to much money into the same, somewhat flawed, strategy. Again. Also my timing was awful. Just one month ago I funded my CFX account and started trading the AUDNZD range. Had I waited just one month I wouldn’t have an additional $7000 on the line right now. What I should have done, and really was my original idea, was to trade multiple pairs with low correlation and I should have started out with smaller amounts. But the growth curve of trading the AUDNZD compared to the other pairs was too tempting.

So what does this mean for the future of AUDNZD range trading? I don’t know yet. If NZ catches up quick enough price should move down again and perhaps the cycle will continue for years to come, but with a higher historical high. Perhaps they don’t catch up and price goes up a bit more and starts ranging at a considerable higher range. It really shows that there is a need for more safety margin than 200 pips also, but when simulating with 500 pips the profits really isn’t to impressive anymore. One thing is for sure, next time I will be more careful.

Lowered Cashback at Alpari UK.

March 1st, 2010

I got a email from the guys at Cashbackforex stating that Alpari UK have lowered the cashback for them, so now they are just able to give 0.1 pips / lot back. Alpari is motivating the change by saying that they’ve lowered the spreads. Sure they we’re lowered a bit last fall, but not really 0.32 pips in average I think. This unfortunatly makes Alpari UK quite uninteresting as a broker (it was just okay before).

So, what’s the best alternative? I would say FXCM/UK via Cashbackforex. They offer microlots now (at least if you sign via the guys at Cashbackforex and deposit at least $1000. Follow the instructions at the site). They have good spreads and you get 0.6 pips / lot back. FXCM also has great support. I will start an account at FXCM/UK and start unwinding my Alpari UK account.

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