So after yet another hiatus from trading forex, I just recently had my first trade in months. It was a successful one also. But the question I want to answer is, “Is this blog dead?” The answer is no. I’ve made a living over the past 3 years ducking in and out of here depending on what’s going on in my life. Sometimes I’m just too swamped at my real job, other times I just don’t feel like writing, but I always come back. The great thing is I’ve built up a lot of content over the years so a lot of it applies to the type of forex trader you’re trying to become.
So where do I go from here? I’m in the mood to start trading forex again so that’s what I’m going to do. I’m also going to talk a little about stocks. I’ve had a lot of success, believe it or not, trading the stock market in the last couple of months and I think I’ve learned some things that I could apply to trading forex. So you’ll hear me talk about some of these things also.
It’s very important that if you’re exploring forex trading or already trading that you have a trading system. One aspect of that trading system are the actual setup rules which usually contain entry and exit techniques. Traders put a lot of time and effort in developing these setup rules too often neglecting other aspects such as position sizing or relative size of your profits compared to losses. Therefore it’s important to find a comprehensive forex trading system.
Where can you find a comprehensive forex trading system? Throughout the last three years, I’ve been through many trading systems obtained mostly from books, forums, or other websites. I’ve found that almost every time, I’ll mold that system into something totally different than the original incarnation, something that fits my personality and style of trading. Many times, the original system will also need to be expanded to include things that were neglected or forgotten. Those of you searching for the perfect system may find this method of modifying existing forex trading systems desirable. There are places where you can find the whole package without any need for modification.
This brings me to the question, "where did you get your forex trading system?" I think there are four main ways of getting a trading system.
- Buy it. There are tons for sale out there on the net but heed caution. Many were just copied from forums, books, or other websites. Sometimes when you buy forex education, part of the package will include a trading system. For instance, Rob Booker provides his Arizona rules as part of his mentoring program.
- Get a free one. There are many free systems that can be found in books, forums, or other websites. I guess one can question whether a system found is a book is free since you paid for the book.
- Create an original system yourself. My main trading system is an original creation. There may be other systems out there that are similar to it since it’s a culmination of years of exposure to other systems and experiences.
- Modify someone else’s system and make it your own. As I stated above, I have done this many times.
I’ve created a poll that asks you this question here. http://www.forexproject.com/forex-polls/
I’ve read a lot about how automated forex trading systems just don’t work in the long run but I can’t conclude this from personal experience. I’ve never seriously traded forex using automation. The following is an email from a trader who can conclude this from his experience. I found it totally worth sharing.
I came across your blog this afternoon whilst casually surfing the various forums in lieu of watching rubbish on TV.
I find your search for trading success an interesting one as in many respects it mirrors my own experience in many ways.
I spent well over two years, pretty much full time, searching for automated solutions to trading, having been in the process automation business for 25 years. To summarise, I have concluded it is a futile exercise with the technologies currently open to the average retail trader. I have yet to find any expert that is reliable enough to be left trading on its own and have pretty much concluded that most are really curve fitting solutions. I have seen no strategies posted anywhere that are consistent or reliable and capable of being automated without significant risk. I see some that pertain to be profitable (Artemis would be an example) but it needs constant adjustment and tuning which makes it akin to semi automation, not full automation.
However, there are manual strategies that are available that are profitable; they just do not lend themselves to automation due to the ability of the human braoin to make decisons based on proce movement that are pretty much impossible for any expert to make. So I abandoned my search for full automation solutions a year ago and concluded semi – automation was probably the right route. I trade manually today, with a few automated aids.
Linked with that, money management and certainly trading psychology are massive keys to success, the first to ensure you are alive to trade tomorrow and the latter because it takes time to get your mental state right to be able to trade at all, and that is what takes the time Rich. Sure, you need to understand the basics of trading, but without the right mental state, you’ll never be consistently profitable.
Your target of 50% per annum is achievable so keep up your search.
This is a question I receive often and unfortunately I can no longer give an honest answer which is the only answer that I ever want to give. This is due to the fact that I haven’t dedicated myself to Rob Booker’s training since 2006 making my experiences outdated. The good news is that over the coming months, I will be able to give you an honest opinion because I am in the initial phases of giving his tutelage another go. This is possible because he has no expiration date on his training. According to his training contract, "You have as long as you need. You never have to pay me anything again…."
At first glance, there have been many changes to his training. His chart school, which are Rob’s trade ideas for students in video format appear to be more interactive. He provides a web conferencing platform where any of his students can attend and ask questions via messenging or voice. Other basic course materials seem unchanged such as the course introduction, FX basics, backtesting, support and resistance, moving averages, and similar topics. These are really basic though and I don’t see any reason why these would ever change. The course materials are also for the totally inexperienced forex trader, someone who has really never explored Forex outside of this course.
His primary trading system which has many components to it is called the Arizona Rules. He was just developing this system back when I lost interest in his training so I haven’t really explored it. If anything, it seems like Rob’s attempt is to provide his students with a well tested and possibly profitable trading system while also providing a comprehensive trading plan and system that one can take knowledge from to develop their own forex trading system.
I’m just getting involved again so I cannot comment further at this time but keep checking back here in the upcoming days and weeks for more details on Rob Booker Training. You can also read my previous and new experiences at http://www.forexproject.com/category/rob-booker-training/.
Welcome Ryan, the author of this Forex Project guest post. Ryan trades from a quiet country lake house and helps traders through his blog at http://www.ryanokeefe.com.
Does your trading plan encourage you to over trade?
Recently I started a survey on my website asking traders to answer this question:
“What is holding you back from trading successfully?”
Currently the number one answer is “I make some money, and then I give it all back.”
Multiple factors contribute to this result however over trading is the most frequent concern struggling traders email me with. I have some thoughts to avoid over trading I hope you’ll find useful.
Consider Your Trading Plan
Over trading may be baked into your trading plan without you realizing it. I received an email from a concerned trader who struggled with taking too many trades although they were following their trading plan. I asked to look at their trading plan and found it was built around the 60 minute chart, the opening of each trading session, support and resistance levels plus the MACD indicator. How many opportunities do you think their trading plan generated on a daily or weekly basis?
I’m a big fan of slowing things down with longer time frames. Using a longer time frame automatically reduces the number of trades you will consider which reduces your trading plan’s built in propensity for over trading. You won’t be tempted to take a “valid signal” 10 times a day trading a daily chart. The vast majority of my trades are planned on the daily chart with the entry taken on a four hour chart.
Consider a Weekly Goal
In my trading plan I have a weekly goal of 50 to 100 points. This is a realistic goal for me to achieve and having the number written down reminds me that once I’ve made my weekly goal there is no reason to place it at risk. When the goal is achieved it is time to do anything other than trade. If you’re trading a lower time frame I think setting a weekly goal is even more critical because as we have discussed, shorter time frames offer more “trading opportunities” which place your profit at risk. I’ve had this weekly goal established for years and it works well against over trading.
Some traders may think a goal of 50 to 100 points a week is too low but keep in mind there are as many ways to configure a trading account as there are ways to trade it. With the right mix of leverage, lot size and risk capital you can do a lot with a goal of 400 points a month. Most important is to set your goal according to your personality; whatever you believe you can achieve and doesn’t stress you out in the process is best.
Do you really need to take that trade?
Before I open a trade I ask myself this question every time without fail. It seems obvious but so is lowering the landing gear before landing yet some pilots still manage to land with the gear up. Consider your emotions before you take a trade. Are you tired? Are you angry? Did you miss a good trade and now desperate to make some pips? Have you made your weekly or monthly goals? If you have met your goals you don’t need to trade, period. If you can honestly answer this question with a “yes” then pull the trigger but if not, don’t put your capital at risk.
Be accountable to somebody other than yourself.
Rob Booker pitched this idea in a presentation I watched online and I believe it is the strongest action you can take to eliminate any propensity you have to over trade. Whoever you report to should have a basic understanding of your trading plan and be able to question you on each trade in a constructive setting. This is a full disclosure exercise so find somebody you can trust.
I report to my Wife every Friday morning with a print out of our account statement. We go through every trade while I explain what system I used, why I took the trade, what mistakes I made and what I could do better next time. We also discuss what I should be doing during the upcoming week if goals are already exceeded.
If knowing you need to explain why you put hard earned profit at risk for an unnecessary trade at the end of the week can’t keep you from pulling the trigger, nothing will.
I’ve received positive and negative feedback from a lot of you who have experienced forex automation. I don’t want to talk about the bad news quite yet. So what’s the good? Unfortunately, the good news mostly involves available API’s for developing your system and brokers that support automation. I haven’t heard of many success stories relating to forex automated trading. Here are some recommended API’s and brokers and some comments on whether I will explore them further.
Interactive Brokers has a free C++, Java, and .NET API. The C++ API does not come highly recommended from the one trader I received an email from but the API’s are free. He also goes on to say that, “Interactive Brokers is also good from a fund safety point of view, given they are one of the bigger brokerages. Commission is very cheap and they basically offer anything you can trade.” This seems to be the best option I’ve seen and definitely worth exploring further.
Another trader recommended Varengold Bank for trading via Metatrader. He says that he has “yet to find anything to come close to their service utilizing the Metatrader platform.” Varengold Bank is a German bank and has regulatory oversight by the German Federal Financial Services Supervisory Agency. Unfortunately I don’t have a lot of experience with brokers or regulatory agencies outside of the United States yet this may be worth exploring if Metatrader is the platform of choice.
Interbankfx with Metatrader comes recommended also. A trader who just recently started using IBFX states, “I just started live automated trading this week… They seem to be very EA friendly and come highly recommended.”
MB Trader comes recommended due to their “well documented API and you can develop and test your system on their demo servers for free. MB Trading is a relatively well-known firm inside the United States so this could be yet another option worth exploring.
Ninja trader comes recommended and could be a “good option that allows for testing and development for free.” It’s also broker independent supporting Gain Capital, Interactive Brokers, MB Trading, and more. I like options and with the multiple brokerage support, I may look into Ninja Trader further.
Other options include FXCM’s FSS or Forex system selector. Based on what I’ve read though, you really can’t design your own system. You can select from their own designed forex systems. I don’t see the benefit to this at all.
FXTraderLink provides a facility for automatically trading your account based on signals from a portfolio of signal providers. I don’t want to rely on a signal provider to “provide” me with wealth plus I don’t trust them. I’m not a big fan.
I haven’t even begun to explore any of these options yet but I will regardless of the bad news I’ve received from others. Is it possible to make money with forex automation? Unfortunately I cannot answer this. I’ve had a tough enough time making money manually trading but at this point, I’d like to try something else.
I have never traded a forex strategy live using any advanced automated methods. At the most, I’ve placed a limit order. Most, if not all of my experience has been with expert advisors in Metatrader.
I realize more than ever that if I could automate my strategies, this may take me to the next level of trading and keep me more involved in the market. At this point, I need the motivation. The subject of automated trading has always interested me but my issue has always been with trusting a broker and the platform with a live account using an expert advisor. Therefore I’m calling on everyone who has experience with automated trading to share your experiences. If you’ve used Metatrader, have you found success with any particular brokers? I know there are other automated trading software available that mostly allow trading via an FXCM API but are they any good? I know Oanda also has an API but it costs about $600/mo. If you could, please send any experiences you have to my email address at firstname.lastname@example.org and based on what comes in, I’ll put the information together and post it here. Thanks.
Based on Google trends, global search volume for the term "forex" has increased steadily since 2004.
When June started, I said that I was going to try to be consistent in following my forex trading systems. Fast forward one month and I did nothing I said I was going to. Fortunately I know what the problem is. I’ve been putting in overtime at my job and when I do have free time, I spend it concentrating on subjects relevant to my job. How did this happen. I’ve been trading forex over the last three years to become less dependent on corporate America yet I now find myself more dependent than ever. Today I reflected on the last couple of months and came to this realization. I’ve strayed far off the path to self sufficiency. I want to get back on that path. I’m going to try to do this now before it’s too late.
Six months through the year, my forex trading has produced a return of 3.6%. I could have just as easily deposited the funds in a money market account and got about the same return in interest. I have to pick it up over the next six months. I plan on trading more by bringing additional systems online this month. I still won’t risk more than 2% on any given trade but I believe that I have to trade more frequently than I have been.
I’ve updated all of my forex trading graphs that show my monthly profit/loss in USD, equity curve, monthly profit/loss percentage, rolling 12 month profit/loss percentage. http://www.forexproject.com/My_Forex_Graphs/
Rankings of the most visited forex websites were updated last week. http://www.forexontop.com
All Financial Commission Merchant reports have been processed at Broker on Top. See where forex brokers rank based on excess net capital and see trend data associated with this. http://www.brokerontop.com