Best Way To Automate Forex Trading

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 rich@forexproject.com and based on what comes in, I’ll put the information together and post it here. Thanks.

 

Popularity: 100%

Citi and Goldman Break Into Retail FX

Citi has been in the retail FX market for a couple of months now but it signals a continuing trend of big financial institutions trying to get a piece of our forex action.  Deutsche Bank was the first big bank to get in a couple of years ago (from what I remember) but it’s interesting to note that all these big banks did was partner with the bigger forex firms.  They blew up the sub-prime mortgage business, will they do the same to Forex?

Here are the notable partnerships between big banks and forex specific firms: 

Deutsche Bank is partnered with FXCM.

ABN Amro and UBS are partnered with Oanda.

Citi is partnered with Saxo Bank.

Goldman is partnered with CMC Markets. 

Popularity: 78%

FXCM to Offer Metatrader

This came as a complete surprise to me but I absolutely welcome it. FXCM announces they will offer Metatrader in 2008.

FXCM plans to introduce the MetaTrader online trading platform in the beginning of 2008.Because many traders have expressed an interest in this trading platform, we would like to keep them informed of our progress. Please complete the form below if you would like us to send you information about the upcoming release of MetaTrader.

http://www.fxcm.com/metatrader-platform.jsp

Popularity: 5%

Did Brokers Prepare For NFA Requirement Changes?

I guess we'll find out sooner or later but Forexds has an interesting comment regarding the whole thing:

"I know that many of the small FCM fishes have become IB's to established FCM's in December or sold their books to the likes of FXCM. But ALL of the names you mention in your note have posted the higher capital (I know for a fact that MB Trading and FX Club have). Alpari is a new comer to the US, but very well established in Eastern Europe. The higher net cap requirement of $10m is no surprise to FCM and they've had months to prepare and get the capital in order. You wont get the DEC data from the CFTC site until 6 weeks from now, though."

For those of you that aren't versed in the common acronyms you see in forex, FCMs are Futures Commission Merchants.  IB's are introducing brokers (defined as a futures broker who has a direct relationship with a client, but delegates the work of
the floor operation and trade execution to another futures merchant.)  Some IB's may be fund managers and some could just be considered salespeople, "introducing" traders to a larger broker and taking a commission and a cut of the spread.

Popularity: 2%

FXCM Transitions to No Dealing Desk Business Model

I haven't heard much from traders regarding FXCM's no dealing desk but an email I received from them today surprised me.  FXCM states that they've already transitioned 95% of their clients to no dealing desk execution.  Here are additional highlights:

• Over 95% of FXCM direct clients now trade with No Dealing Desk (NDD) Execution.
• Clients trading with NDD have seen spreads significantly reduced in 13 currency pairs.
• NDD eliminates the potential conflict of interest between trader and broker; all trading orders are passed through FXCM to global banks and financial institutions competing to offer the best price. 

From what I've been reading on the forums, no one is very impressed with the no dealing desk option.  I'd like to hear from others experiences.   

Popularity: 1%

Stopped Out Only At Oanda

This is nothing new and just part of trading but I was stopped out on my long GBP/USD trade apparently only at Oanda.  Look at Oanda compared to 2 other brokers.

 

 

 

 

 

 

This seems like it's too much of a discrepancy compared to FXDD and FXCM.

Popularity: 4%

CFG Trader Goes Under

This news is about two weeks old but I've been meaning to post it anyway.  CFG Trader, also known as Forefront Investments Corporation, was suspended because they failed to maintain and produce current and accurate books and records.  They were forced to liquidate all of their customers open positions.  Similar to what happened to Refco, traders who had a balance of money at CFG may be screwed.  I received an email from FXCM where they state that they are trying to rescue about 3,800 of CFG Trader accounts.  This would need regulatory approval but FXCM would contribute approximately $1 million to make up the difference between the assets of CFG Trader and the funds owed to CFG clients due to under-capitalization.  Under this proposed agreement, supposedly no trader will lose any money.  

This just confirms what others and myself have said previously about the risk of trading forex.  Not only do you have to worry about your individual trade risk, but you also have to worry about whether your broker is going to go broke or not.  This has been a known risk factor when trading forex and if you want to trade forex, you're just have to live with it.  Do your research and pick a broker that has financial stability.  I've mentioned ways in which you can protect yourself as much as possible in previous posts.  In addition to broker research, you should only keep whatever money is necessary in your account and periodically take your profits out.

You can read more of my previous posts here:

How Can I Prevent Fraud When Trading Forex?

Is Your Money At Your Forex Broker Safe?

Forex Broker Financial Data

FXCM Compliance Officer Response

Popularity: 2%

FXCM Apologizes

Yesterday and part of today, FXCM had technical difficulties and their trading platform was unavailable.  Anyone who had open positions from last week couldn't manage their trades.  They sent out an apology today and offered to reimburse those clients who suffered a loss on open positions during the outage.  They pretty much stated that they haven't done enough to address reliability issues and wanted to ensure everyone that the technical issues were not indicative of FXCM's financial stability or health.  Do you believe them?  Click [Read More] to view the entire email that I received because I have monies deposited with FXCM.  They are my backup broker. 

[Read more]

Popularity: 2%

Financial Health of Forex Brokers

I received a follow-up email from the DCIO or the Division of Clearing and Intermediary Oversight, a legal arm of the Commodity Futures Trading Commission.  My questions were:

1. How can the data (FCM merchant report) best be interpretated to conclude the financial health of a broker?
2. What would be grounds for a broker having to halt operations based on the data from this report?

Their response, which was from the Special Counsel was long but the information indispensable.  Click [Read More] to read their entire response.

The 2 important points I got from the response were:

1. The FCM report that shows a firms net adjusted income is not totally indicative of financial health mainly because, in her words,  "a firm's transactions and positions (proprietary or customer), exposed to market events can impact capital levels quickly."  This is very similar to our (we traders) capital levels in a high risk market such as foreign exchange.  Market events can impact our balance quickly. 
2. Similar to the Refco situation, in her words, "should an FCM with liabilities to customers for off-exchange retail foreign currency have to halt its operations due to a loss of capital, those customers may be left in the position of unsecured creditors of the entity with respect to trying to collect anything from the FCM." 

The scary thing is that even though Forex retail firms keep customer funds separate from operating funds, your funds are subject to seizure from creditors first, which I'm sure Refco customer are well aware.  This needs to change and additional regulation should be adopted to counter this.  

[Read more]

Popularity: 1%

Trade with a Flexible Lot Size

I'm now with my third different broker in the one year since I started trading.  My first was FXCM, which I still use, my second was Gain Capital or http://www.forex.com, and the third which I most recently opened an account with, Oanda.   If I had to describe each in one incomplete sentence, it would go like this:

FXCM - Comfortable platform with industry standard spreads.

GAIN - Offers a decent free API to standard account holders with at least $10,000.

Oanda - Lower than usual spreads during non-news events that allows any size lot trades.

It's pretty much impossible to describe in one sentence but I thought I'd give it a try.  What I'm finding is that there really isn't a hugely noticeable difference between them.  I've heard traders say that FXCM artificially spikes prices or that Oanda's spreads during economic releases turn news trades into news untradables but each have their issues and there is no perfect broker platform.  If I had to make a semi-perfect broker platform, it might be a combination of the three.

• Spreads from OANDA
• Currency pair selection from OANDA
• API from GAIN
• Order types from GAIN which provide limit, stop loss, OCO, If/Then single, If/Then OCO, and trailing
• News from GAIN and FXCM
• Money transfer options from GAIN and FXCM
• Interest on balance from OANDA

This is just a list by quickly brainstorming but it might be beneficial if I created a feature matrix unless someone knows if someone already did on the web.

Originally, the whole point of this post was to mention FXSol's Flexi Contract options that I stumbled upon today.  I thought Oanda was the only broker that offered variable sized lots but this is not the case.  FXSol offers lot sizes of 1K, 5K, 10K (Mini), 50K, or 100K.  Nice….

At this moment, my wish list of features that are not provided by any broker are both related to order scheduling:

1. Ability to schedule an order at a specific time.  This is provided by FXEngines and can obviously be done via an API
2. Ability to receive alerts if and when this order is triggered also provided by FXEngines  

Like I said, FXEngines can do both but what FXEngines really provides to you is a front-end to their API that communicates with FXCM.  This front-end is web-based and slow.  They really need to update their technology and offer a front-end to brokers other than FXCM.

Popularity: 1%

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