FX Engine Performance

Currently I am trading a live mini-account with FX Engines to evaluate it. I’m using real money and my own money to prove whether this is as good as it looks.

FX Engines focus on the ability to trade the news automatically through their platform. Since news tends to create major short-term moves in currency prices (sometimes in just the first 1-10 tics after the announcement), they see the potential for profit with a limited amount of risk. In fact, most trades orders are placed with a stop loss of only 10 pips.

Week #	Pip P/L	Gross P/L	Total # of Trades	Total Winning Trades	Total Losing Trades	Total Even Trades	Avg. Winning pips	Avg. Losing pips
0	0	$0	1	0	0	1
1	58	$58	2	2	0	0	29.0000
2	22	$22	5	2	3	0	20.5000	-6.3333
3	-51	$-51	4	0	4	0		-12.7500
4	19	$19	6	3	3	0	18.3333	-12.0000
5	3	$3	5	2	3	0	10.0000	-5.6667
6	-3	$-3	1	0	1	0		-3.0000
7	41	$41	3	2	1	0	38.5000	-36.0000
8	-5	$-5	2	1	1	0	18.0000	-23.0000
9	-35	$-35	1	0	1	0		-35.0000
Total	49	$49	30	12	18	1

Popularity: 2%

Trade The News

Good thing there really isn’t any news to trade….

Popularity: 1%

Five Keys To Surviving The News

I was skimming through Futures Magazine today and found an article that may be useful to some of you.  I'll admit that the content of the article was not new to me and may not be to some of you but I have to be cognizant of the fact that a lot of newer traders visit this site who may not be privy to this information.

Personally I don't trade the news in ways I once did.  This entailed placing orders before the news and depending on the movement after the release, automatically entering into a position.  I mainly found that due to technological restraints, trading the news was not smart.

Here are five things that you can do to put yourself in the best position to profit from trading the news.

1. Always use a stop-loss order - this is pretty much self explanatory.  You're absolutely crazy if you enter a trade, especially a news trader without a stop-loss.
2. Understand the globalization of markets - this takes a lot of experience and a dedication to learning it.  Read everything.
3. Know when the news events occur - you can't trade the news effectively if you don't know when the news occurs.  I use http://www.forexfactory.com to see what news events may be relevant to the currency market.
4. Early bird gets the worm - most of the major news events occur during the U.S. session or earlier so depending on where you live, you will have to be up early to trade it.  Some of you in Europe are already having lunch…
5. Use Fed announcements to make money - I did just this last week.  I made some money going long on the GBP/USD after the Fed announced a rate cut.  This is the most powerful of news releases so use it to your advantage. 

Want to read the full article? Futures Magazine

Popularity: 1%

How to Make Easy Pips Trading News

I don't want to be the ultimate pessimist because I know there are traders out there that do well trading the news but it's not a sure thing for you beginning traders.  I've tried trading the news with limited success but I also have a full-time job and no ability to sit and watch the second by second movement during an economic release.  It easy to look at a chart during previous economic releases and say, "Wow, look at how fast and how much the market moved.  It would be easy to place a trade and capture at least some pips."  While it may seem so by looking in the past, you have to remember that this is not reality mainly because of your broker.  Oanda increases their spreads during economic releases, sometimes by 10x, and many other brokers if they don't increase spreads, re-quote the price and your order never executes at the level you wanted it to.  You find yourself late to the game or not in the game at all.  It's very difficult to trade the news because of this fact.  There is just too much working against you in most cases. 

I don't want to discourage anyone from trying it yourself and seeing what type of success you may or may not have.    

FXFisherman sent out an email last week touting their new economic calendar and forecast tool with results from trading the US Economic situation:

Feb 2007 13:00: Short EURUSD, Profit: +63 pips
Jan 2007 13:00: Short EURUSD at 1.3089, Profit: +80 pips
Dec 2006 13:00: Long EURUSD at 1.3275, Profit: +80 pips
2006/11/03 13:00: Short EURUSD at 1.2760, Profit: +80 pips.
2006/10/06 13:00: Short EURUSD at 1.2662, Profit: +80 pips.
2006/09/01 13:00: Short EURUSD at 1.2815, Profit: +10 pips.
2006/08/04 13:00: Long EURUSD at 1.2793, Profit: +80 pips.
2006/07/07 13:00: Long EURUSD at 1.2774, Profit: +80 pips.
2006/06/02 13:00: Long EURUSD at 1.2814, Profit: +80 pips.
2006/05/05 13:00: Long EURUSD at 1.2691, Profit: +52 pips.
2006/04/07 13:00: Short EURUSD at 1.2176, Profit: +80 pips.

Their stated method is to use their forecast direction, enter a trade 30 minutes before the news release and set a target and stop at the same level that they specify.  I thought I'd mention this because it made me think about the difficulties of trading the news.  If you followed this method, you wouldn't have issues entering a trade since it's done before the release but exiting is a whole different story!

http://www.fxfisherman.com/forums/forex-metatrader/trading-systems/1445-make-easy-pips-economic-calendar.html 

Popularity: 24%

Alternative To Forex Factory?

I saw that there is another player in the world of economic release calendars.  I was thinking about developing a competitor to Forex Factory last year but came to the conclusion that it would just take too much development work and up keep.  I guess it could have been fully automated, pulling release projections and the actual release numbers but it's just another one of those things I couldn't follow through on.  Fxfisherman has an economic calendar that emulates the Forex Factory functionality which include actual, forecast, and previous economic release numbers and expected volatility.  They take it a step further by also including a predictor with preferred currency pair to trade after the release, the predicted direction, and possible range in pips.   Only time will tell if this is a useful tool but since I don't trade the news, I probably won't be able to tell you.  I've added the site to my "Massive List of Forex Resources" page but you can browse directly to it at http://www.fxfisherman.com/forex/economic-calendar/.

 

 

 

 

 

Popularity: 1%

No Signals Today

I just wanted to give a quick recap of the week…  I did not have any GBP/USD trading signals today.  From the experience I've had with my system, it certainly seems like the GBP/USD is at a critical juncture where a decision will be made very soon on whether the short-term trend downward will continue or whether the pair will reverse or correct. 

Overall, it was a losing week for the system with a total of 4 trades, 2 winners and 2 losers.  I lost a total of 63 pips this week.  I changed my exit strategy this week to a static stop loss of 30 pips.  This was changed after my 108 pip loss (3 lots at 36 pips each) on Wednesday.   In addition, I think I've optimized it more and hopefully the results will reflect this going forward.

1. Changed the stop loss to 30 pips.  I will no longer use a 34 EMA as a stop loss.  I noticed that if the price went against me by over 30 pips, usually it would continue to go against me.
2. From backtesting results, it would be safe for me to move my stops on all 3 positions to breakeven after I'm up 20 pips.  This will certainly cut down on some losses from what I've seen.  This is a new addition.

I've been poking around the FX Trader Plus capabilities that FXEngines offers and have asked many questions of them over the last day.  I've come to the conclusion that this system can be fully automated.  Each evening, I would still manually put my orders in at certain levels but after that, I'd let the automation take over.  I will make sure to demo test the automation next week before allowing it to take over.

http://www.fxengines.com/register/signUp.jsp?referralUser=rparedes  

Popularity: 1%

Am I a Flip-Flopper?

I had just about written off FXEngines as a viable option for news trading but not as a trading platform.  Here is a question I sent to them yesterday:

I'm wondering if the following can be automated?

Here is an example:

1. Schedule order at 1:30 am at a specific price with a 30 pips stop and a 30 pip limit
2. Order executes at or after 1:30 am with a 30 pip stop, 30 pip limit.
   
3. If the position goes in my favor and is up at least 20 pips at anytime, move the stop to breakeven
4. On a long position, once profit reaches 30 pip profit, trail the stop using last candle low and the reverse for a short position

This is possible with FXEngines FX Trader Plus package which costs $1.00 per lot traded.  You get premium exits like the one described in my question, exit creation, US news trading engines for not only the EUR/USD but the GBP/USD, USD/JPY, and USD/CHF, European news event engines, Japanese news event engines, and Australian news event engines.  I don't see myself taking advantage of the news engines but if I can totally automate my trades via this platform, I will.  

Let's think about the cost of the FX Trader Plus package.  $1 per lot traded.  If I make 20 trades a month at 3 lots each, that's 60 total lots for a price of $60.00.   How much does it cost for the Oanda API where you also have to do the programming, $600.00 a month.  Quite a difference for losing a little bit of flexibility.  The drawdown here is that you are limited to only FXCM as a broker but this may change in the future. 

I've signed up for the FX Trader Plus and as always will let everyone know how it goes.

If you're interested, follow this link and use me as a referral: http://www.fxengines.com/register/signUp.jsp?referralUser=rparedes

Popularity: 1%

Why I Don’t Trade the NFP

{mosimage}I used to try to trade these highly volatile announcements, specifically the non-farm payrolls and FOMC interest rate announcements but not anymore.  There is just too much going against you to risk it.  

1. Look at the chart to the right.  How could you possibly trade this? It's just beyond unpredictable
2. Broker spreads increase
3. Broker cannot guarantee execution of any orders including stop losses or limits and in most cases, the broker platform freezes 
4. Too stressful

I know some traders who stay away from all economic announcements but I don't think this is necessary.  There are a lot of announcements out there that aren't nearly as volatile as the NFP and don't have the shortcomings listed above.  I don't actively trade the news anymore but if I'm in a trade before the announcement, I usually won't close it just because the news is being released.

Popularity: 1%

Bent the Rules Today

I kind of broke the rules of my forex trading system this morning when I got a signal at 10 am this morning.  My rules say to only trade during the US/EUR session overlap which 10 am clearly falls within but sometimes you have to adapt.  Today I did just that because of the FOMC announcement coming out at 2:15 pm.  I have to wait and see if this saved me from a loss or if I missed a good trading opportunity but either way, I think I did the right thing.  I don't want to make a habit of doing this but this is the one and only announcement where I can see doing this.  During my backtesting, I have not seen a profitable trade coming after 10 am.  By this time I would think most traders are trying to settle up on their positions especially today. 

Even though the rules were bent, I think that to be successful, you have to constantly adapt to the changing environment and tweaking rules or flat out changing them is necessary.  I'm not changing them because I'm overly emotional or fearful, I'm just doing it because when I woke up this morning, I told myself not to trade until after the FOMC announcement.  I'm hesitant to open any positions before this and expected more consolidation or the classic, Buy the Rumor, Sell the News.

Popularity: 1%

FXEngine Seizes

After 30 trades and 9 weeks of automated trading via FXEngines, I am abandoning ship.  It isn't because I've lost money because believe it or not, I'm up 49 pips.  The primary reason is because I just don't see how this system of trading will benefit me in the future. 

First, I just do not want to be reliant on anyone but myself when trading.  This method of trading put a little bit of discretion in your hands but not enough for me to feel like "I" had a good trade when the trade made money. 

Secondly, initially I thought that automated trading may be a good way of supplementing my discretionary trading income in the future.  I just don't feel that it can.  The trades that were profitable were mostly the medium volatility news trades that slowly moved in your favor.  This could have just as easily done manually.  The trades that this system is advertised to catch were just not possible.  This could very well be that FXCM is the broker and the limitation is with them.

This was certainly an experience, one that was educational.  How? It really shows that if you remain disciplined and consistent, you can come out on top or at least even.  Like I said, I'm ending my relationship with FXEngines with a 49 pip profit.  In all, I made 30 trades.  12 were winners, and 18 were losers.  The key here was also money management and the tighter stops.

To see the weekly results, go to http://www.forexproject.com/FX_Engine_Performance/

To see each trade by week, go to http://www.forexproject.com/Forex_Engine_Trades/  

Popularity: 1%

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