Is Rob Booker Forex Training Any Good?

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 This is due to the fact that I haven’t dedicated myself to Rob Booker’s training since 2006 making my experiences outdated.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/.

Popularity: 100%

Free Forex Tick Data

The only place I know where you can get free forex tick data is at Gain Capital’s site, http://ratedata.gaincapital.com but from my experience and from other traders I’ve spoken too, the data is spotty at best.  There are gaps, format differences, and data overlaps.  What can you expect though, the data free.  I tried for a long time to fill gaps and clean up the data but I gave up.  There was just too much data and it was going to be impossible to verify.

A trader sent me an email a couple of days ago about Oanda providing tick data.  It’s free but with a condition.  You have to have at least a $1000 account with Oanda.  You then can request tick data for one currency pair (GBP/USD, EUR/USD, USD/JPY, USD/CAD, or USD/CHF) that goes as far back as January 1st, 2004.  Oanda’s states that it may take up to two weeks for them to send the data to you and you can only have one request open at a time.  So if you want tick data for all five currency pairs, it will take about ten weeks.  

If you’re an academic faculty member, you don’t need an account open with Oanda.  You can get an exemption and obtain the data for free. 

More details are available at https://fxtrade.oanda.com/cgi/fxticks/order.cgi

For more forex related posts from the Forex Project, check out:

1. Forex Historical Data
2. Where Do I Get Forex Historical Data?
3. Building Up Historical Forex Data
4. Lots and Lots of Forex Data
5. Forex Real Time and Historical Data

Popularity: 10%

Wanna Easy Profitable Forex Trading Strategy?

I started doing more probability testing over the last couple of days after I got my backtesting database all sorted out.  I have seven (7) years of backtest data for the GBP/USD.  My backtesting has been on trading in a direction based on the OHLC of a certain time period.  For instance, take this example which turns out to be profitable over 7 years of backtest data.

1. Look at an hourly GBP/USD chart.  What color is the 4:00 a.m. EST candlestick? 

The candlestick is green?  Go long at 5:00 a.m. EST.  Close the position at 12:00 p.m. EST.

The candlestick is red? Go short at 5:00 a.m. EST.  Close the position at 12:00 p.m. EST.

Pretty easy.  This is a strict day trade.  Who cares about anything but the 4:00 a.m. candle.  Sounds random, right?  Who knows if it is or it isn't.  All I know is that it turns out as the most profitable from what I've tested so far.  

What do you set your stop loss to?  You don't set one.  This is a time-based stop loss.  You will close the position at noon no matter what.

What is your profit target?  Again, this is a time-based target.  You will close the position at noon no matter what.

How profitable is this?  Over the last 7 years, the short trades would have profited 4,636 pips.  The long trades would have profited 7,510 pips.  That's a total of 12,146 pips total or an average of 1,735 pips a year, 145 pips a month, or 7.25 pips a day (based on 20 day trading month.)  

You may ask what type of drawdown this system will produce.  I have those numbers too.  The greatest loss from all short trades was 251 pips.  The greatest loss from all long trades was 292 pips. 

What is the greatest profit from a short and long trade?  225 pips and 256 pips respectively. 

Is this a viable strategy? I have no idea.  With a lot of capital, maybe.  I'm just throwing it out and sharing.  Don't take my word for it.  I've validated the results but they're all dependent on the data provider.   If you really think about it, trading a 1-lot mini-account, you're looking at a profit of $1735 for the year.  This is peanuts and not worth the effort.  Trading a 1-lot standard account, you're looking at a profit of $17350.  Still peanuts.  If I wanted to live off this one strategy, I'd really have to trade 6 standard lots which means my maximum loss could cost me $17520.00.  Wow.  If I wanted to only risk a maximum of 1% per trade, I'd need an account over 1 million dollars.  Sucks.  This just shows how hard it is to make money doing this if you don't already have a pretty sizable capital base.

Popularity: 3%

Building Up Historical Forex Data

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In the last couple of weeks, I've been able to build up a pretty extensive collection of Forex historical data.  Included will more than 5 years of historical data for over 15 currency pairs.  The time frames include tick, 1 minute, 5 minute, 15 minute, 30 minute, 60 minute, 180 minute, 240 minute, and daily.  The most intensive and extensive time frame was obviously the tick.  I hope to actually utilize this data in the upcoming days.  Unfortunately all of this is happening on my laptop, where the CPU has been pegged for days turning the laptop into an instant heat source… 

Popularity: 4%

Forex Profit Loss Index

Continuing the spotlight on backtesting, there are 3 different indexes that can be calculated in your backtested results or your live trading results to give an indication of the chance of success.  I mentioned 1 last week, Buy and Hold.  The other 2 are the risk/reward index and the profit/loss index.  

Calculating the profit/loss index gives you a general idea of the success your trading or trading system is having.  A simple example is best suited to illustrate this. 

1. Calculate all of your winning trades in dollar amount.  For this example, I had 5 profitable trades, each $90 for a total of $450.  
2. Calculate all of your losing trading in dollar amount.  For this example, I had 7 unprofitable trades with the following losses: $ -45, -30, -110, -25, -30, -90, and -55.  The total losses amount to $385.
3. Subtract the losing dollar amount from the winning ($450 - $385 = $65)
4. Profit/Loss index =  ((Winning trades + Losing trades)  ÷ Winning trades) * 100

So the profit/loss index for my example would be calculated as such: ($65 ÷ $450) * 100 = 14.4 %

The profit/loss index for this example is 14.4%.  The following key translates these results into something more meaningful:

+100          High Profit/No Losses

+50            Profits > Losses 

0                Profits = Losses

-50             Profits < Losses

-100           No Profits/High Losses

Using this key, the above example would be on the lower end of the 0 - +50 range, not great.  Ideally, you want the index as close to 100% as possible.  If your index is negative, you're losing more than you make.  If your index is 100%, your perfect.

On the surface, this calculation can seem kind of useless but what it does best is give a clear meaning to all of your profits and all of your losses.  How would you otherwise interpret a number like $65?  Yes, it's a profit but in the example case, not a very good profit.

Popularity: 4%

Lots and Lots of Forex Data

A lot of my time in the last week has been dedicated to compiling
backtesting data for multiple currency pairs and multiple time frames. 
I previously had GBP tick data that I was working from but now I'm
collating this data to multiple time frames and increasing my currency
pairs to 35 or so.  This process takes a lot of time and requires some
of the following steps:

1. Creation of databases and tables.  I believe MySQL can handle
   over 240,000,000 rows per database.   When you're dealing with tick
   data, size has to be a consideration.  A couple of years of GBP data
   can easily include over 20,000,000 ticks.
2. Importing the data into respective database tables.
3. Adding indexes for faster querying. Indexes on the datetime are a
   must.  Without indexes, it would be like searching for a term in a book
   without an index.  You would have to go page by page to look for the
   term.  With an index, you look up the term and it points you to the
   page number similar to what a database index does. 
4. Go tick by tick and verify that the data is there.  The key here
   is to verify that there are no gaps in the data.  A gap in the data can
   throw a calculation totally out of whack.

My point of explaining all of this is that there are so many
variables that go into backtesting, the above steps being those that
are abstracted from the user if you are using a given software
package.  With that said, different brokers have different data.  Some
brokers open earlier on certain days and holidays, other brokers close
on certain holidays; the bottom line is that the data is disparate. 
Forex doesn't have a central exchange so the prices you're working from
could be very different from the next person.  In turn, your stochastic
indicator could be showing oversold while another's guys may be at 50. 
For example, right now, my Metatrader charts (Alpari) show the 62 EMA
on the 30-min GBP/USD at 1.9749.  The 62 EMA on the 30-min GBP/USD at
Oanda is 1.9759.  That's a 10 pip difference. 

I've always said
that backtesting is necessary but I do believe that as the time frames
get shorter and shorter, the results have to be taken with more "grains
of salt".  That is why in addition to backtesting your system, it
should always be forward tested.  The object of backtesting should be
to get a general idea of its viability and to assist in determining if
further testing of this trading system is worthwhile.  For example, if
you were to backtest a moving average crossover, it becomes quite
evident that this type of trading system just isn't profitable (most of
the time.)  The negative results associated with this type of system
are just stacked up so high that you can make the assumption that this
system just wouldn't work in real-time.  This of course may not always
be the case.  Interpreting backtesting results requires you to make
assumptions and educated guesses.  Backtesting assists in moving your
system system testing to the next phase whatever this may be.  After
all, we have to make due with what we have and if backtesting can add
the inner confidence to stick to a trading system, then it has helped
in one way or another.  

Popularity: 3%

Buy and Hold

The next couple of weeks, I'm going to try to put the spotlight on backtesting similar to what I did with money management a couple of weeks ago.  I'm going to bounce around the subject in no particular order but hopefully we'll all get something out of it. 

No matter what anyone says, I feel that backtesting is a very important part of trading.  I'd be very hesitant to jump into the market with a system that was never backtested and even though profitable backtested results don't guarantee future profitable results, backtesting will also help you become more familiarized with your system.   

Most trading software contains backtesting functionality built in and I've checked most of them out including eSignal, Metastock, Metatrader, Intellichart, and Amibroker.   Getting into detail is for another time but I just wanted you to see that you have a lot of options.  Most of these require some programming knowledge which is a limitation that some of you may have but you always have the option to manually backtest.  Unfortunately, manually going back in your charts is a very arduous and monotonous task.  In addition, sometimes you become very biased towards your system where you see only what you want to see. 

In its most simplistic form, backtesting is the process of going back in time and finding each and every trade signal that your system would have generated.  Using your profit target, stop loss, and additional money management rules, you will compile a list of both your profitable and unprofitable trades.  These can be further broken down into profitable long trades, profitable short trades, unprofitable long trades, and unprofitable short trades.

This brings me to a backtesting component that maybe some of you have or have not heard of which is the buy and hold strategy.  A buy and hold strategy assumes that you buy at the beginning date of your backtesting and hold the position until the last date of your backtesting.  The buy and hold profit is calculated by using the price on the first day and the price on the last day.  This will tell you how much you would have made or lost if you made one trade, opening it on the first day and closing it on the last.  What does this have to do with your trading systems backtesting results?  Ideally, your trading system backtesting should produce higher profits than the buy and hold strategy would have.  If this is not the case, trading your system would not have been worth the time or effort.  This is just one minor way to gauge how good your trading system was in the past and it's worth calculating because it's very simple to do. 

Popularity: 4%

Pivot Point Project

I've been trying to do so many things this week other than trading that I almost forgot that this was my #1 goal.  I've started to write some more scripts to start my pivot point project.  Basically I'm going to crunch lots of data to try to understand their usefulness.  I'm planning on starting small and expanding as I go forward.  For instance, last night I analyzed pivot point data for the GBP/USD over 4 years to theorize whether the opening price being above or below the pivot point has any affect on the price for the rest of the day.  This test just happened to pop into my head first plus I was curious to know the results.  The pseudocode for this procedure is below. Pseudocode is not real code and is more natural looking so most people can understand.  It's much easier to code for real once you have the pseudocode.

Here are some questions that the results theoretically attempt to answer for the GBP/USD over the last 4 years:

1. "If the opening price is greater than the pivot point for a given day, will the price for the remainder of the day remain above the pivot point?"
2. "If the opening price is  less than the pivot point for a given day, will the price for the remainder of the day remain below the pivot point?"
3. "Will I have more wins than losses by opening a long position at the beginning of the trading day if the open is above the pivot point?"
4. "Will I have more wins than losses by opening a short position at the beginning of the trading day if the open is below the pivot point?"

The simple answers to all 4 questions are……………

NO, NO, NO, and NO!

The results were basically 50/50 meaning that 50% of the time if the price opened above the pivot point, the price stayed above the pivot point.

This is very simplistic but a start.  I have to finish importing tick data for other currency pairs which is time consuming.

__________________________________________________________________ 

pivot_point;   # Pivot Point as calculated from the previous daily close
current_bid;   # The current bid price of the GBP/USD
opening_bid; # The opening bid price of the GBP/USD
closing_bid;   # The closing bid price of the GBP/USD
date = 2003-01-01;  # Starting date is January 1st, 2003 
true_counter; # A counter to keep track of true values
false_counter; # A counter to keep track of false values 

price_diff; # Difference between price a close to price at open.  If price is positive, long was profitable 

# Loop through all tic data from 
while (date <= 2006-09-30) { 

# Loop through all tic data for the day in order from open to close
while (open bid <= end bid ) {

    # If the open bid is above the pivot point 
    if (opening_bid > pivot_point) {

        # If long was profitable and price was up             
        If (price_diff > 0) { 

            # Increment the true counter
            true_counter ++;
        }

        # If short was profitable and price was down
        else if (price_diff < 0) {

           # Increment the false counter 
            false_counter ++;  
         }

…Repeat similar logic if the open bid is below the pivot point

Popularity: 2%

H-system Squashed?

I decided this weekend that backtesting with 1-minute data just wasn't
accurate enough for backtesting daytrading strategies so I went out to
Gain Capital's site, http://ratedata.gaincapital.com
and grabbed 5 years worth of tic data for the GBP/USD.  It took hours
upon hours of grabbing the CSV data, inserting into the database and
then modifying my backtesting scripts but tic data is going to give me
the most accurate results possible. 

Unfortunately the results obtained were disappointing and the H-system
failed to show anything but a tiny profit over the last 5 years.  This
pretty much throws a huge wrench into the only strategy I've been using
over the last month or so.  I don't know how others feel about this but should I be making a decision to shut
this system down?  It has been profitable since I started trading it but based on the backtesting results, this would be nothing but a waste of time to trade.  I know that past results don't always translate into future results but the whole point of backtesting is to find a system that has past results that are favorable.  This would mean going back to the drawing board.  If anything, the results instill less confidence and trust in me and this alone can create problems when trading.  The most disconcerting thing about all of this is the confusion that it causes and the feeling that I have to start over again.  I guess this is all part of trading which isn't supposed to be easy.  I don't always ask for advice explicitely, but I sure could use some on this one….

Popularity: 2%

Buy the ASK Sell the BID

Here are some helpful visitor comments received in the last 24 hours.

The first relates to the confusion regarding bid and ask prices experienced by beginner traders.

Posted by Nik 

"This is the line I used to use when I first started."

"Buy the ASK , Sell the BID"

The second is an observation regarding trading systems offered by others and backtesting.

Posted by Dropout

Anyone offering a new system should be able–at minimum–to say that
they've manually backtested it for at least a year's worth of data,
resulting in "x" number of winning trades and "y" losing trades, for a
profit of "z."

However,
99.9% of the time, experts selling systems, and those posting their
systems on message boards, say, basically, "Here's a system I've been
fooling around with. I looked back at a few trades I could have made
with it, and it looks really good." Then, they and others who follow
their advice start trading the system with live accounts.

As you can probably tell from my tone, I think this is a bad idea.

Popularity: 12%

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