What was your Profit/Loss this week?

There is a new poll on the top of the right column of the website.  What was your Profit/Loss this week? Be honest.  I'd be interested as well as others in seeing the results. 

Popularity: 3%

Forex Mentor Reviews

I stumbled upon yet another useful website if you're looking for a mentor or just want to know which were reviewed well or poorly.  Reviews are provided by users who post comments and a rating of SCAM, 1, 2, 3, 4 or 5.

Scam sites that I've seen in the past either via advertisement or Google Search:

•  
  WinningTradersAssociation.com - The one thing I can say about this site is that if you look like this guy, don't post your picture all over your website
•  4xmadeeasy.com

Reputable mentors?

• Tom Yeomans Education
• Peter Bain Mentorship Program
• forexinterbank.com

Take user comments with a grain of salt.  Some of the comments are really good though.  They range from really ANGRY users who had their accounts blown up in a matter of days to users that are extremely grateful.  

My mentor, Rob Booker was reviewed so-so.  Here are some comments about Rob that I found interesting:

THIS ONE I CAN RELATE TO.

"He was busy with too many
clients, with his own trading, and with some
side projects."

"Apparently Rob also
started a managed accounts service, which is a
nice proof that he actually trades himself. 
His results from January 2006 to March 2006,
haven't been too impressive at only 3% gain for
three months, but what's encouraging is that Rob
is honest about it."

"…This is a very
expensive program for offering not much more
than rehashed information from so many trading
texts."

You can check out the reviews and comments for yourself.  If anything, it opens your eyes even wider to the fact that you have to be responsible for your own account and analysis.  If you have had enough experience and have learned what works for you, it's much more beneficial working on your own or with friends than ever signing up with a mentor.  Would you be more angry if someone else told you to make a trade and you lost big money or if you told yourself to make a trade and lost big money?

Personally, I'd be a lot more steamed if I listened to someone else and lost. 

http://www.forexbastards.com/education_reviews.shtml

Popularity: 5%

Week 2 Performance

After my 2nd full week of Rob Booker 1 on 1 training, my results have improved from last week, I only lost 153 pips! I'm being sarcastic and once again don't blame anyone for my results this week but myself.  I made 17 trades this week, only profitable on 5.  My average profit per winning trade was 18.8 pips and my average loss per losing trade was 20.58.  Now it isn't unusual for traders to only "win" 5 out of 17 trades but when your risk/reward is only 1:1 like mine, it is difficult.  That is why I find myself questioning Booker's channel trading strategies where most trades only give you the 1:1 risk/reward.  

On an upbeat note, I ended the week on a 2 trade winning streak, my 1st was contrarian and my 2nd was during the jobs report on Friday.  I actually have been quite successful trading the jobs report in the past and it was no exception on Friday.  As I have done in the past, I drew channel lines for the high and low for the previous 12 hours or so.  I placed a buy order 6 pips above the upper channel line with a 20 pip trailing stop.  I placed a sell order 6 pips below the lower channel line with a 20 pip trailing stop.  On Friday, the price broke the upper channel, my buy order was initiated and 15 minutes later was automatically closed when my trailing stop was hit with a profit of 30 pips.  I could have made more if I didn't place a limit but I've never been greedy when it comes to taking profit.  I'm a lot more stupid when placing stops.

Popularity: 6%

I Signed Up For Forex 1 on 1 Training

I have felt totally lost over the last couple of months.  I have books, charting software, a blog where I receive numerous helpful comments from all of you and yet I don't really have a trading strategy.  I've dedicated a lot of my time to this and though I'm in the early stages, I feel like I need to head off any of the "giving up" feeling that may be entering my mind.  I know that going forward if I don't do something to stimulate my learning process, my blog will be yet another sitting around with stale content because I'm off working for the man again with no thoughts of being free.

So what did I do?  I signed up for 1 on 1 training with Rob Booker.  The training will officially last 5 weeks.  I trust Rob Booker and have been exposed to his recommendations and articles in the past. Here is a quick course overview.  I will keep everyone updated on the training.

Anyone interested in reading more about it can visit: https://www.robbooker.com/training.html 

Course Overview: 

1 on 1 training is exactly what
it sounds like: it's where you and I work every day, by
instant message, phone, videoconference, and email, and
we turn you into the kind of trader that your mother (or
spouse) would be proud of. We work together officially
for 5 weeks — following the course outline below — but
I will work with you for as long as it takes for you to
be a consistently profitable trader. I
guarantee it.

This is not some ridiculous
course that you buy and read and then find impossible
to profit from. It makes me sick to my stomach when
I hear that someone has spent $2,000 or $3,000 for a book-based
system. You don't need a book. You need a mentor.

During the training, I become your
mentor and your coach with one mission: to dramatically
improve your trading results.

Training officially lasts 5 weeks.
But we will not stop working until you are successful,
or we're both dead. Note: no one has ever died. Every
one I've trained has been successful.

You will have my phone number.
This is about getting personal advice from someone who
has been in the market. I can help you correct your mistakes
and speed up your path to trading success.

You will receive course materials,
30-40 assignments, and at least 80 hours of total instruction.

I worked with 41 traders in 2003.
All of them are still going strong.

You will always be able to contact
me, even after the training is complete. You will be part
of a growing network of people I've trained, all across
the world.

I have training references. You
can request them from me if you are thinking of signing
up.

Popularity: 3%

3 For the Day

{mosimage}
Big Losses are hard to take.  Rob Booker Helps You Recover

US Trade Gap Narrows More than Expected due to decrease in Chinese Imports

Check out Amateur Trade System Results at Collective 2

 

 

Popularity: 1%

Are Moving Averages Most Profitable Technical Analysis?

Thanks to Craig for this interesting post:

Here is an interesting research paper you might like to read (http://reports-archive.adm.cs.cmu.edu/anon/2003/CMU-CS-03-123.pdf).
This
guy did statistical studies on the major TA's which everybody uses &
used genetic algorithms to try and breed trading stratergies using TA
combinations. Some interesting results, e.g.

1. MA's are by far the most profitable TA
2. Some common strategies are so bad that turning the buy signals into sell and vice versa produces quite good results!

Seems
to me trading is a bit like surfing, you watch the ocean and learn to
pick the good waves, but you can't ride a wave until it has actually
developed.  But experience allows you to size up the good rides
early. This analogy also applies to timeframes, beginner surfers spend
a lot of time thrashing about in the shorebreak fighting over slop, the
old hands wait patiently for the big ride out back.
Nothing more or less.

Popularity: 2%

Mechanical versus Discretionary Systems

After finally importing 2 more years of intraday data, my Dooku trading system has failed to backtest well using 4 years of intraday data.  Where does this leave me?  In a word, LOST.

I need to investigate furthur the recommended methods to backtest a trading system.  Of course I realize that past results don’t guarantee future results but I need to understand it more.  1 question I need to ask myself is:  Will my system will be totally mechanical or a discretionary system?

Here are some good pros and cons of both:

Mechanical systems

Advantages 1. This kind of system can be automated and backtested efficiently. 2. It has very rigid rules. Either, there is a trade or there isn’t. 3. Mechanical traders are less susceptible to emotions than discretionary traders. Disadvantages 1. Most traders backtest Forex trading systems incorrectly. In order to produce accurate results you need tick data. 2. The Forex market is always changing. The Forex market (and all markets) has a random component. The market conditions may look similar, but they are never the same. 3. A system that worked successfully the past year doesn’t necessary mean it will work this year.

Discretionary systems

Advantages 1. Discretionary systems are easily adaptable to new market conditions. 2. Trading decisions are based on experience. Traders learn to see which trading signals have higher probability of success. Disadvantages 1. They cannot be backtested or automated, since there is always a thought decision to be made. 2. It takes time to develop the experience required to trade successfully and track trades in a discretionary way. At early stages this can be dangerous.

Popularity: 3%

Developing a systematic approach to trading

After days and days of backtesting, I think I have found a simple system that works for me.  I backtested it over the last 5-6 months on the EUR/USD 60-minute charts.  Of course I understand that there are no guarantees that this system will work well in the future too.  But it does feel really good to have designed a system that I can use going forward.  My goal over the next month or so is to trade religiously using this system and being the gambler I am do so using my live trading account.  It actually feels really great to have a system that is going to generate long, short, cover, and sell signals right on my charts.  Here are my backtested results:

 

 

 

 

 

Popularity: 3%

38 steps to becoming a trader

Brian mentions that this has been on the internet for years but it’s the first I’ve seen of it.  It’s pretty good.  I can and you should also be able to relate.  Thanks for the info Brian.

38 steps to becoming a trader

They are as follows:

1. We accumulate information - buying books, going to seminars and
researching.
2. We begin to trade with our ‘new’ knowledge.
3. We consistently ‘donate’ and then realize we may need more knowledge or
information.
4. We accumulate more information.
5. We switch the commodities  (products) we are currently following.
6. We go back into the market and trade with our ‘updated’ knowledge.
7. We get ‘beat up’ again and begin to lose some of our confidence. Fear
starts setting in.
8. We start to listen to ‘outside news’ and to other traders.
9. We go back into the market and continue to ‘donate’.
10. We switch commodities  (products) again.
11. We search for more information.
12. We go back into the market and start to see a little progress.
13. We get ‘over-confident’ and the market humbles us.
14. We start to understand that trading successfully is going to take more
time and more knowledge than we anticipated.

MOST PEOPLE WILL GIVE UP AT THIS POINT,
AS THEY REALIZE WORK IS INVOLVED.

15. We get serious and start concentrating on learning a ‘real’ methodology.
16. We trade our methodology with some success, but realize that something
is missing.
17. We begin to understand the need for having rules to apply our
methodology.
18. We take a sabbatical from trading to develop and research our trading
rules.
19. We start trading again, this time with rules and find some success, but
over all we still hesitate when it comes time to execute.
20. We add, subtract and modify rules as we see a need to be more proficient
with our rules.
21. We feel we are very close to crossing that threshold of successful
trading.
22. We start to take responsibility for our trading results as we understand
that our success is in us, not the methodology.
23. We continue to trade and become more proficient with our methodology and
our rules.
24. As we trade we still have a tendency to violate our rules and our
results are still erratic.
25. We know we are close.
26. We go back and research our rules.
27. We build the confidence in our rules and go back into the market and
trade.
28. Our trading results are getting better, but we are still hesitating in
executing our rules.
29. We now see the importance of following our rules as we see the results
of our trades when we don’t follow the rules.
30. We begin to see that our lack of success is within us (a lack of
discipline in following the rules because of some kind of fear) and we begin
to work on knowing ourselves better.
31. We continue to trade and the market teaches us more and more about
ourselves.
32. We master our methodology and our trading rules.
33. We begin to consistently make money.
34. We get a little over-confident and the market humbles us.
35. We continue to learn our lessons.
36. We stop thinking and allow our rules to trade for us (trading becomes
boring, but successful)
and our trading account continues to grow as we increase our contract size.
37. We are making more money than we ever dreamed possible.
38. We go on with our lives and accomplish many of the goals we had always
dreamed of.

Most traders will identify with this list and should be able to place
themselves within these steps. Keep in mind that very few people progress
through these steps in an orderly fashion. Developing your trading skills is
an iterative process. For example, you may reach Step 13., find that
although you were making money, your basic premise for trading was flawed
(you might have been benefitting from the bull market, rather than your own
trading prowess and then have been rudely awakened when the market entered a
bear phase) and you may drop back to Step 4. and start ‘climbing’ the steps
again. Having the proper mindset, attitude and psychological makeup becomes
increasingly important as you progress through the steps. The focus of the
earlier steps is on external issues, i.e. developing proficiency in the
mechanics of trading while the focus of the latter steps (particularly from
Step 30, on) is on internal issues, i.e. improving ourselves mentally and
psychologically, maturing as traders.

Popularity: 1%

Week 14 Performance

As I mentioned a couple of days ago, this week was especially hard on me.  I lost $3000 to drop my 14 week earnings to +2500.  There are a couple of major adjustments I’m going to make going into week 15.

1.    Finish a preliminary test plan that at least details 1 trade setup

2.    Stop trading multiple currency pairs.  I’ve been trading and trying to study about 8 different currency pairs.  I feel like this is definately too much for me to handle and most would not recommend a beginner to do this.  I will try to study and trade the EUR/USD ONLY since it is considered to have the most volume.  I will slowly try to incorporate some more of the major pairs into my trading plan as I get more comfortable with the EUR/USD.

3.    Back test, back test, back test.  A couple of months ago I was really interested in back testing trading strategies but lost interest after several attempts proved to be very unprofitable.  I have since started using Metastock with esignal to backtest moving averages.  Metastock has an optimizer function that will go through all combinations of moving averages and return the most profitable combinations.  My goal will be to first to find the most profitable moving averages for the EUR/USD.  I will try to correlate the moving average pairs to produce the most profitable 3 moving averages. 

I’ve already started performing #3 and I currently have Metastock performing backtesting on over a years worth of 1 hour interval data.  It’s very CPU intensive and will take about 4 hours.  It’s currently half way done and so far the best EMA pair is the 7/75.  The 7/75 EMA’s actually have some impressive results over the last year on the 1 hour EUR/USD chart. 

Here is an exact description of the backtest:

Buys/sells when a moving average of 7 periods goes above/below a moving average of  75 periods. 

I also have it factoring in the broker fee and have set the results to buy/sell 1 lot.

Here are the results:

70 profitable trades with average profit of $355.86 per trade.
Highest profit was $1020 and the most consecutive profitable trades was 12 

15 unprofitable trades with average loss of $972.67 per trade.
Highest loss was $2180 and the most consecutive losing trades was only 2 

Over 1 year, if you followed this trading plan by buying or selling 1 lot each trade, you would have profited $10320.00. 

Popularity: 3%

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