Just found a nice angle on debt and creation of money. Lets hope the bankers find a way to scale out of their practices rather than the inevitable Armageddon that would ensue if more people understood this.
http://www.telegraph.co.uk/news/features/7280559/Our-world-balances-on-a-sea-of-debt.html
This must have been the hardest week of my brief Forex trading career. As AUDNZD rose well above it’s 10-year high the two biggest accounts below was stretched very thin. The account at CFX was just a few hundred dollars away from getting positions stopped out, luckily my deposit from the week before eventually made it there, in time for the push above 1.31. Because price is above 1.2967 (which I used as trade cutoff) those accounts really haven’t been trading much last week. Read more…
… 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.
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.
This was a great week. I was a bit afraid of the AUDNZD breaking into the 1.30 range, but it backed off and closed the week down at 1.28. Good news for my grid trader. Read more…
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):
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…