One Day Of Trading Left

May 30, 2007

There's one day of trading left after Wednesday in the May forex trading contest.  9 traders out of about 30 managed to have a profitable month so far; that's about 30%. 

QLaun is the clear cut winner with a return of 76.81% and a maximum drawdown of -6.54%.  If the contest were to end today, the winners of the $50 Amazon gift certificates are:

QLaun – current leader in Conservative Trader Category

Got Gas Money2  – current leader in Money Management Category

Alex – current leader in Aggressive Trader Category

These were the same traders leading back on May 15th so they managed to keep up their excellent trading results all month.

I personally haven't shown anything but losses all year and May was no exception.  I'm at -5.21% in May with a maximum drawdown of -1.51%.  I'm not enjoying my trading life right now.  I'm bored with it all, I have writer's block and as a result I don't have my pulse anywhere near the forex market.  I realize how melancholy this blog is at this point.  There is nothing positive about it whatsoever but hopefully this will change.  I've been saying this for a while though, yet I can't seem to get back into trading.  

MB Trading

May 26, 2007

MB Trading: Narrow pip spread. Fast Executions. Professional order types capable of preventing slippage. Service Staff eager to help. Downside – No Charts.
[Read more] Fined For Cheating, Defrauding

May 25, 2007

gain capital

 was fined $100,000 for violation of rule C.R.2-36(b)(1) which is defined as "Cheat, defraud, deceive forex customers" and two other counts.  The other counts are related to the failure to maintain an anti-money laundering program and a failure to notify the NFA in advance of carrying customer accounts.  Gain Capital Group did not admit or deny the allegations but did consent to the finding of two counts and agreed to pay a $100,000 fine.  This decision came last week from the NFA.  Their attempt to cheat, defraud, or deceive forex customers relates to the use of misleading promotional material.  You can read more about it here:

How Was I Trading Last Year?

May 25, 2007

{mosimage}I decided to look over my posts from May 2006 to get an idea of what I was up to back then.  The last 2 years of trading forex has been an absolute roller coaster ride so I figured I could expect anything looking into the past.

Last May, I was about a month of so through Rob Booker's training and mentoring.  Therefore, I was using the channel trading system.  This trading system was very simple and most trading systems I've tried to create since then have been a derivative of it.  From what I remember, trading the GBP went like this:

  1. Draw horizontal lines on 15-minute chart at the high and low that occurred during midnight EST and 7:00am EST.
  2. Wait for a candle close below lower box line only during US session.  Go short.
  3. Wait for a candle close above upper box line only during US session.  Go long. 
  4. Set a 30 pip limit and a 30 pip stop or sometimes a 30 pip stop and a 20 pip profit target.

Due to the fact that this system was to be traded only during the US session, I became interested during this period of my trading life with news trading.  I started news trading through FXEngines shortly thereafter in June 2006.

Since last year, I've struggled to maintain a sense of loyalty towards a system.  Due to my nature, I've jumped around a lot between many different systems and styles.  I don't know if this has ultimately hurt my progress or if trying many different things has furthered me along in my journey.  Last year, I also felt like I was really cooking with my forex trading progression.  This year I've felt like I'm stuck in molasses.  

My goal this Memorial Day weekend is to write a plan to get back on track.  How I'm going to do that is unknown to me as I write this.  What does come to mind is something I've learned from working in the IT industry which is splitting tasks up into phases.  Currently, everything I do is lumped into 1 big pile of mess.  The three phases could be:

  1. Development – development of trading system, backtesting
  2. Integration – further development and tuning, further backtesting and forward testing
  3. Production – live trading in small lot sizes

Obviously some things may not reach it past the development phase but nevertheless, failure of one method may sometimes lead to a similar method that proves successful.  My goal isn't only in developing trading systems.  I also want to further my knowledge in additional fundamental and technical aspects of trading. 

Forex Traffic Ranking Update

May 25, 2007

I'm trying to catch up on emails and everything else so I hope to be back in the swing of things after Memorial Day.  I just updated with the latest traffic data.  No major changes on top.  This site is losing a bit of traction as my Alexa traffic ranking has slipped above 80,000.  I've been away though and I really haven't written any substantial in over a week so that could explain why.  I'll be up to speed soon.  

South Beach Vacation

May 22, 2007

I just got back from vacationing in Miami Beach so I've been out of it for a week….  I'll be back writing and trading tomorrow. 













Another One Of Those Moments

May 15, 2007

I'm sure a lot of you have had the moments of frustration where you get stopped out and then see your trade idea come to fruition thereafter.  I had another one of those moments this morning going long the GBP/USD on a GBP reversal trade.  You'll see the graphic below where I clearly spell it out.  The problem with this trade is it happened after a US economic release where traders were still digesting the news.  In hindsight, I should have waited but I got a signal and took it as I should have.

bastard trade







May Forex Trading Contest Update

May 15, 2007

Just like during the April trading contest, trader QLaun has performed well through the first couple of weeks with a return of 30.29%.  This time though, his maximum drawdown is a respectable -6.49% making him the leader of the Conservative Trader category.   

Trader Got Gas Money2 performed well through the first week of May and continues to do so with a return of 19.07% and a maximum drawdown of only -.98%.  He leads the Money Manager category as of today.

Trader Alex led all traders through the first week of the contest and continues to do well with a return of 11.53%.  His maximum drawdown is slowly creeping towards disqualification though at -17.13%.  He currently leads the Aggressive Trader category.

13 traders currently have a positive return.  16 traders currently have a negative return and there's no surprise that I'm one of them with a return of -2.01 and a maximum drawdown of -1.00%.  Just like I mentioned last week, I'm not losing loads of money but I'm slowly bleeding to death.

Keep up the good work.  $50 Amazon gift certificates are still at stake here.

What Currency Is Warren Buffett Buying?

May 15, 2007

{xtypo_quote}One object of Mr Buffett’s affection could be the yen, which has hit a
series of record lows against a host of currencies in recent months –
fitting the Sage’s reputation as a value investor.{/xtypo_quote}

Read more here 

Forex Diversification

May 13, 2007

I was reading Simon's blog where he believes that trading multiple currency pairs is not diversification.  Like he states, going long the GBP/USD, long the EUR/USD, short the USD/CHF, and short the USD/JPY is betting against the U.S. dollar.  If you trade these 4 major pairs, is this diversifying your forex trades or would you be better off concentrating your efforts on only 1 of these pairs? Craig mentions in a comment that he believes that the best course of action is to trade 1 system on a handful of the least correlated pairs.  Simon says that another trader recommends trading multiple systems on 1 pair to diversify.   

I personally have been concentrating on trading the GBP/USD for over 6 months now, but on and off I feel compelled to look at the other pairs, mainly the USD/JPY, EUR/USD, EUR/JPY, USD/CAD, AUD/USD, GBP/JPY, and the USD/CHF.  My thinking was that I didn't want to rely on only the GBP/USD to generate trade signals for me but after reading Simon's post, I'm rethinking this a bit.   I think a combination of the 2 methods above may be my best course of action at this point.  Currently I really only have 1 system that I follow on a daily basis but I'm always on the prowl for more.  I have yet to attempt to regularly apply this to other currency pairs but maybe I should test it on other less correlated pairs.  It may be easiest to put the process in list form as follows:

  1. Find a system that gives an "edge" trading the GBP/USD.
  2. Find other currency pairs that are least correlated to the GBP/USD.
    •  According to Oanda's heat map of currency correlations, the USD/JPY and EUR/GBP are the least correlated pairs to the GBP/USD.  (see heat map below)
  3. Test the system on these least correlated pairs.

Is there a better way of diversifying your forex trading other than going outside the forex market to futures, equities, etc? Another thing to think about is whether going this route is neglecting the correlated pairs and the chance that this system may be more successful on them than the GBP/USD?  

currency correlation









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