What to do…

A bit late with the update, but hey I guess I’m one of the few who reads these Read more…

If you ever have bought a EA from anyone I’m sure you’ve already have received a lot of spam from them about the Forex Robot World Cup (FRWC). I’ve been getting the spam from FAP Team, MD Team, GridBot developers and numerous of professional affiliate marketers. I find it truly funny when for example the developers of FAP Turbo or MegaDroid spams me about other products, telling us that it is the best EA ever (much better than the one you bought from them a while ago and they still sell).

You can read up on the details on the FRWC at the site, but in short it is a competition with a $100 000 first price than was just won by a guy in Croatia with a EA called LMD Multicurrency. It made 145% profit over two months of live trade at FXCM (that apparently sponsored the event). Other EAs in the competition have been quite impressive also, like one called HiRider that placed second with a 88% gain. Sounds good right? Well…

The reason you get spammed so much right now is that the FRWC is about to sell these EAs, you see the developer had to sign over the right to promote and sell their EAs for six months to the FRWC in order to enter the competition (I can’t believe anyone agreed to this). And now they will start selling them (all I think, but at least the top 5) for $999. They’ve also combined the top 5 bots into one, called Fusion V, that made something like 350% in a month of live trading. Out of that $999 the FRWC offers 50 % (!!!) to affiliates. That is $500 per sell that is going to the marketers. Can you see now why everyone is trying to promote these EAs? The percentage is just crazy, and that $500 is much more per sell than all of them made on their own products!

So, are the bots good? Well they where during the competition at least. Several independent sources I trust have been able to log into the live accounts to verify the results. But two months really is too short of a time to state that these are profitable in the long term. I am intrigued thou. Personally I think HiRider seems better than LMD Multicurrency because it have been a consistent winner.

But what if it was just a fluke then? The two months the competition ran was the most optimal for the winning EA, during which conditions where just right. Do remember that it ran over the holiday season, when markets behave rather strange. Perhaps it isn’t too hard to find a few that performs this well, during a limited period, if you start with a large enough number to begin with (they started with 329). Remember the ScamBot by DonnaForex that I demo traded? It performed well for a while with a completely random logic.

The last time I considered buying a EA this expensive I wish I hadn’t, and I had to return it (FAP Turbo Evolution, before the FRWC this was the biggest marketing hype in the Forex online world). This time I’m quite tempted again. In the bag now is some rather impressive EAs I think, and I would have loved paying $999 for them if it was only offered to me. Of course it isn’t. So anyone can buy them and run them. If many do they will try to take advantage of the same “flaw” in the market. Since the market is adapting it will adjust to the strategy and heal the “flaw”, making the EA less profitable or even completely void. Forex is a zero sum game (or even negative sum game). It has the advantage over other zero sum games in that regular people and companies need to act in the market to convert currencies, in order to buy and sell goods abroad. This is what gives the Forex market it’s huge liquidity and it is the regular entities in the market that pay the gains to traders (and of course a lot of traders lose also). Is it really feasible you think that an EA can return 350% on its investment per month and no one of the real customers in the market will react? They have to pay these profits in added spreads because no value is created in the market.

Ah well, I’ll stop ranting. I really think this is a case of too good to be true (even thou the live performance now have been good it might not be repeatable for the coming months). But still I am tempted.

So, here’s my affiliate link. I don’t expect you to use it.

Last week started out rather bad with SL:s hit by MegaDroid on GMT+6 at basically all accounts on Monday. I probably shouldn’t have traded right after the NFP. I think I will make that a rule actually, no scalping the day before or after the NFP from here on. Lets check the curves out. Read more…

That was a rather stupid title to this post. Duh, it is hard to find the optimal broker, of course it is. Well, I find it increasingly hard to even find good ones when you put your demands on paper. I have recently written a EA that uses a long term grid trading strategy. It will leave positions open for months or even years, they will be heavily in loss during this time, but it will never close them. There is no stop loss. But what happens if you are forced to close them by your broker? This have recently happened with at least one broker I know of because of a switch of liquidity provider. Also, because of the long time in the market, swaps play a huge part in the performance of the system. It can deal okay with low negative swaps, but neutral or positive is of course much better. As for leverage the higher the better, but at least 1:100 but more preferable 1:200.

Spreads is not as important actually, but the tighter the better of course since price doesn’t have to move as far to take out profit. But this is not as important as swaps. Microlots is quite important for the system when account balance is below $10K, after that it isn’t as important as the EA would be close to using 0.1 lots anyhow. It is still preferable to be able to open 0.11, 0.12 and so on (LOTSTEP of 0.01 even thou MINLOT is 0.1). Of course it is impossible to run a grid system on a FIFO broker, so no NFA registered entities are good enough.

Regulation, dealing desk and deposits/withdraw handling are other factors, but they are not directly tied to the trading per se. It is however very important not to get scammed of your money of course. FSA regulation is prefered I think, and no dealing desk hopefully makes the broker less probable to be tempted to try to scam you (on slippage and such).

So this gives a checklist I’ve been trying on a few brokers (for long term strategies like my own EA or Robominer):

1. No FIFO requirement.
2. Positive swaps on pairs to be traded.
3. No future forced closing of positions.
4. Regulation by preferably FSA. Good stable company in general (the bigger the better I think).
5. At least 1:100 leverage (check that margin requirements are unchanged over the weekend).
6. Microlots.
7. Competitive spreads.
8. Low slippage (it is annoying to be slipped a few pips on entry and exit if they’re very rarely to your advantage).

I can say straight off that I haven’t found any broker that fulfills all of the above. The ones with the best trading environment (positive swaps, low spreads and low slippage) is rarely regulated and aren’t trading microlots. Also they could be forced to change liquidity providers now and then to get the best spreads (important for their scalper customers) which would force us to close positions that are negative. On the other hand are the bigger players with quite costly swaps and spreads, but at least I think you can be sure you are going to get payed by brokers like Forex.com or FXCM.

So, what to do? Since I can’t find one perfect broker I will diversify and use several. I will also trade different pairs on the selected ones. It is quite interesting that there are brokers where you have to pay 4.5 pips a day for 1 lot AUDNZD short when there’s others where you get payed 0.3 pips a day for the same position. It doesn’t quite add up for me, but that is the reality. Also the best ECN brokers give spreads in average of 5-6 pips during a day when some of the fixed spread brokers offer fixed 12 pips, a spread that the ECN offered just for a few ticks a day during news.

I have live accounts with Alpari UK, Forex.com/UK, Jade FX and The Collective FX right now. I’ve deployed my EA at Alpari UK, Forex.com/UK and The Collective FX. At Alpari UK the swaps in AUDNZD was just way to high, so I stopped that pair after just a few days realising how expensive it would be with lingering positions. I still trade EURCHF there thou. I just yesterday replaced RoboMiner on the Forex.com/UK account with my own EA and it will continue trading AUDNZD and EURCHF there. Swaps in AUDNZD is negative, but manageable. The Collective FX is by far the best broker of the bunch for AUDNZD since the swap for short positions is 0 (zero). IE you can have lingering positions without penalty. JadeFX offers the best spreads in AUDNZD, but the swap is too high there so I won’t deploy any long term strategies. Also there is talk in the forum about switching liquidity provider.

I’ve also checked out a great number of other brokers to open additional accounts with. I’ve opened but not funded an account at PrimeBankForex. They have great spreads, excellent swaps and trades microlots, but aren’t regulated. I’ll wait a few weeks before funding because I found out that they’re considering changing locality of their trading server and possibly this would force a close of open positions (I’m guessing they’re trying to get to the UK from their current NYC location because of fear for the NFA and CTFC over-regulation of the market with 1:10 leverage and FIFO).

I would like to have funds at a respectable broker like FXCM/UK, but their swaps is just to huge (in the pairs I’m considering at least) and they don’t offer microlots. The same for MIG Bank that have been getting good reviews by people I generally trust. DukasCopy have many things talking for them, but their 1:33 leverage over weekends pretty much destroys the number of open positions to a level that isn’t good for a grid system.

So this leaves me with mainly two brokers I am live with, Forex.com/UK and The Collective FX. It is good becuase they’re pretty much each others counterparts. The performance of the system is really much better at CFX, but Forex.com/UK (with Gain Capital) is a huge respectable entity. It is a very slim chance I will get scammed or forced to close positions there I think. But two brokers, when neither is perfect, is not good enough… I will desperately try to find at least two more. Suggestions are very welcome.

It is incredible but another week has flown by. I’ve been extremely busy this one since I’ve been working on my new EA. I’ve been yanking out code and got a new VPS at SWVPS.com for demo trading it. Currently 18 different demos running there, but I couldn’t really resist putting it live also, so it’s live on my Alpari UK and The Collective FX (CFX) accounts as of middle this week. Read more…

Another week has passed and this was quite a good one actually. Perhaps it has something to do with that I basically turned of the FAP Turbo scalper last week? Well, it has actually made good trades on my Alpari UK account with 0.01 lots during the week. I keep trading that small just for observation. I recently started to trade the FAP Turbo long term strategy (in EURUSD) thou, and it has made a lot of pips in the downwards move this week. I’m very cautious with it thou and runs it with microlots also. Read more…

Like I predicted in a blog posting in the beginning of the week (”To scalp or not to scalp…“) it was just a matter of time before FAPT USDCHF, the latest and greatest pair with that particular EA, blows up. It happened just one day later. There was a jump in price when the results from the election in Massachusetts was revealed. I must admit that I wasn’t enough informed about this event (I’m a Swede and it really haven’t gotten any coverage here), had I known I probably wouldn’t have traded the USD pairs that night. But that’s scalping for you… Read more…

Just a quick post about the performance of Forex Shocker v1.1 and v2.0 year to date. When v2.0 came out I stopped v1.1 on my demo account, but started it again week 1 this year because I wanted to see if it really was better than the earlier version.

Here’s the trades of V1.1 since 2010-01-04:

Currency   Trades    Pips       Profit($)
GBPUSD     15           75.0      75.00
USDCAD     5             23.8      23.06
EURCHF     21           13.8      13.20
EURGBP     17           69.4      112.18
USDCHF     18           81.4      79.76
EURUSD     15           76.9      76.90

and V2 the same period:

Currency   Trades     Pips      Profit($)
GBPUSD     12           41.8       41.80
USDCAD     11           32.0       30.90
EURCHF     29           19.9       19.21
EURGBP     10           -7.5       -12.79
USDCHF     10           42.9       41.94
EURUSD     10           42.5       42.50

As you can see it is quite a different picture, especially for EURGBP, but overall V1.1 trades much better than v2.0 (the only pair that v2.0 have an advantage in seems to be USDCAD, but I wouldn’t trade that pair on either version anyway). This is on a demo account, of course the performance live won’t be as good, but slippage effects both versions so I still think the comparison is valid.

So, my plan is to enable V1.1 on my live account again and let it trade EURGBP, USDCHF, EURUSD and GBPUSD. I will also keep v2.0 live trading USDCHF, EURUSD and GBPUSD as before, because as far as I can see it is very rare that they actually take the same trades. Just in case I will put them on max 1 open trade each.

Oh yeah, I know I wrote about being tired of scalpers yesterday. I still am, but during my analysis of their performance I spotted this. If you want to analyze it further yourself you can look at my demo account (click the graph above). It trades both version with default settings with fixed lotsize of 0.1 at JadeFX Demo.

Well, that really is the question on my mind right now. I enjoy some aspects of the scalpers I employ (FAP Turbo, MegaDroid and Forex Shocker), but I hate others. I really enjoy checking the nights’ progress in the morning. I live in Sweden and most of the trading is done after my bedtime, so the first glance at the accounts in the morning is quite exciting. Since the scalpers actually make money most days it is something that motivates me to spring out of bed, I need that. It is great to see that your EAs have successfully scalped away pips throughout the night. I especially like when they’ve made successful scalps in both directions, from the top and the bottom of the range they’ve established. It really can be a beauty to see (perhaps a twisted preference).

Well, the backside to the scalpers cannot be news to anyone. They blow up now and then. Like last Thursday when several of my traded pairs broke out of their ranges and made my scalpers positions go into deep drawdown only to hit stoplosses during the Friday. It really can make you sick to see. The whole point of scalping is to grab quick pips, not to go into deep drawdown and keep the positions during the day.

So what to do? I don’t know. But reality is that RoboMiner, by far, is my most profitable strategy (not a scalper, rather a long term grid trader). The scalpers used on my JadeFX account can really make magic for a while, like it nearly doubled in the first six weeks from $500 to $929. But after that it totally broke down to $217 in just a few weeks. Since then the account have been going upwards quickly only to get beaten down again. It’s exciting, but probably not the best investment…

My JadeFX account to date.

I’ll have to think some more, I’ll be back when I have made a decision. For now I keep running the scalpers.

I had a terrible Thursday this week with stoplosses hit on all accounts actually. The Alpari UK account took the worst beating. Read more…