Items Tagged With trade the news

I've talked to a lot of you about FXEngines and there has been much optimism as well as much skepticism.  I was first exposed to all of this at the FXCM expo where I personally got to listen to Scott explain their goal.  There were a lot of ears turned up during his talk.  There were also a couple of people who just flat walked out which I took as close-minded on their part.  In this world of Foreign Exchange trading, there are so many scams out there and it isn't easy to disseminate what is real from what is not so I can understand but I'm opting to remain open-minded for now.

I sent an email off to Scott (the CEO) about my concerns with the inability to capture last week's large move and I think there is something I have to understand about all of this.  FXEngines strategic direction recently changed to trading the news so this platform is in its infancy.  Just the fact that after 5 weeks, I remain profitable is also a good sign.  I am still hopeful in automated trading because FXEngines are constantly changing as we all must in this environment.  Like I said, this is all relatively new to them so we can either stand by it and continue automated trading or not. 

Here was Scott's response to the inability to capture the move last week and also a response after I said that somtimes, his post trade review was "sugar-coated."

I don't take offense, so don't worry about that.

The bottom line is I am not sugar coating, although I will put the best spin on things I can. Yesterday's traded DID take profit, and that's why they exited early. The exit signals are there for everyone to see, and they protect profit. If that's not the way you want to trade you can create your own orders, or soon we'll have more wide open engines. But it's a fact - those engines protected profit because that's how the engines are designed. It's also a fact that most bad trades are flat trades. We have not had a SINGLE trade reported by me that was a good spike, but that I reported as flat. Thursday's trade was flat at the open. It SLOWLY became a 20 pip spike, then retraced. Our system is not designed to pick up slow moves, only spikes.

So in all of the cases of the reviews I feel pretty justified, but don't take this to be defensive. I take your point completely, but I offer a rebuttal and I think it will stick. I have no problem calling a bad trade a bad trade, and I will do my best to keep it straight going forward. I value honesty more than most people, so I appreciate your feedback and feel free to let me know if you disagree.

Scott

I think it is important to see that this platform is designed to pick up spikes, NOT slow moves.  I think it is also important to see that they are constantly making efforts to improve.

I had 3 trades go off automatically today during the 3 news reports.  I subscribed to the moderate engines instead of the more conservative or more aggressive that would enter the market later or earlier respectively.  The overlap of news reports made me think that indecision may prevail in between.  It turns out that there remains indecision after the reports were all released.  I was still able to capture 12 pips, 21 on the Initial Claims, -2 on the TIC, and -7 on Capacity Utilization.  I remain +80 pips since I started trading with FX Engines last week.  

I think this platform will prove to be consistently profitable because the reward to risk is just too good.  But like Wim mentioned yesterday and as I stated last week, can this last in the long term.  Will FXCM or any broker that FX Engines works with in the future allow consistent winning before putting them on manual? Their platform would be absolutely useless if this happened. 

It's nice to make pips through them but I'm not ultra-excited because I'm really not doing anything except clicking my mouse to subscribe to engines.  Believe me when I tell you that I'm still concentrating a lot more on studying chart patterns and my own trading systems.  If I can be successful trading my way, then I'll feel comfortable.  I think of FX Engines the same as working for the man, they can provide me with a paycheck one day but the next day they could be showing you the door.  You need to be in control of your own financial future as much as possible though some may argue that the markets are actually in control of it.

One of the workshops this weekend was presented by FxEngines where I was almost completely run over by a woman who just needed to have the literature they were handing out.  I've checked out fxengines in the past and never really had a ton of interest but basically it allows you to automate your trades through their system.  

The newest thing they are focusing on is 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, the CEO stated in the workshop that trading the news through their platform typically allows trades with a stop loss of only 10 PIPS! Ok.  So maybe this was why people were overly excited by this workshop.  On another note, Rob Booker's main teaching in his 1-on-1 training is exactly this, trading the news except his strategy is to trade using 15 minute charts and wait for the price to close above a channel line before entering the trade.  In addition, he recommends waiting for the candle to close.  

So this seems like a great thing and I have to say that it is of interest to me because I've been watching the market during news releases closely for the past month.  There is a lot of potential for quick gains.  Watching the news though also shows how quickly the market can take off in 1 direction and then change direction immediately.  FXEngines provides a very handy report for each news release for the EUR/USD only for now.  For instance, the ISM report for today at 10 EST contains probabilities for initial pip movement.  This is based on data from January of 2005.  The probabilities in pips are:

0-10: 100%

11-15: 100%

16-20: 94%

21-25: 88%

26-50: 75%

51-75: 13%

So it looks like the probability for a 26-50 pip move is 75% with the average max pips at 37.  So the point of their platform is that it enables you to capture this move with a limited amount of slippage.  Trading the news manually is just not feasible to capturing the first couple of tics after a move.  Fxengines doesn't care about the result of the data released.  They just use probabilities and if the first tics or tic are long, an automatic long trade is initiated.   You create your own trades using these systems and you determine what your limits are.  So if you only want to capture 20 pips, then you set it at 20.  If you want 51-75 and want to go against the 13% probability, go ahead.

I haven't looked much more into it but it sounds great.  The reports alone for each release are worth signing up for a demo.  Check it out.  I am. 

Be aware that if you want to trade with their platform, you have to open an account with FXCM because the trades are routed through their system from fxengines.  

http://www.fxengines.com

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  

TIC data was released at 9 this morning and it was less than forecasted.  Net foreign purchases of long-term securities were $69.8 billion.  The forecast was for 80.2B.  I thought that this would have been bearish for the dollar but the dollar took off after the release.  I scratch my head sometimes and wonder why what I thought would happen didn't.  Either way, I don't care which direction the price goes because I was waiting for a channel break either up or down.

The dollar did well overnight and my long USD/CAD position was up about 70 pips during European session trading.   Ahead of the NY session and the TIC report release, some of the dollar gains were given back this morning.  I had moved up my stop this morning to 1.1143.  I entered at 1.098.  The USD/CAD actually hit the .250 fibonacci at 1.1175 and then bounced off.  This is where having multiple lots would have helped.  I was watching  3 fibonacci levels:

.250 = 1.1175           .382=1.1280             .500=1.1374

If I had entered with 3 lots, I would have placed a stop order at the .250 for the 1st lot and held on to the other 2.  This is all in hindsight but something I thought about when entering this position.  Either way, when the prices started consolidating a bit this morning, I was stopped out at 1.1143 for a profit of 45 pips.  Should I have held on to the position longer? I don't know.  I didn't want to give back all the gains if the dollar started to get pounded again.  I figure I can go long again on a break above the .250 fib.

I've received a lot of great comments from you about automated trading through FXEngines.

Duncan summed it up pretty well by saying that, "Big news items don't work at FXEngines. Small news items don't move enough. Only mid news items seem to be successful."

I feel the whole point of trading the news would be to capture the big news reports.  The CEO places the ability of the platform to capture these large pip moves above everything else and it is just not happening.  It may not be anyone's fault but their clearing broker.  I spoke to Scott (CEO) about this on the phone on Friday and basically all FXCM has to do is put their orders on manual and you can pretty much kiss goodbye any potential profit you could have made.  For example, if 100 people put market orders in at a particular time, instead of these orders being cleared electronically, they would go into a queue.  FXCM will take each order one at a time from the queue and manually execute it.  This probably requires a human to pull up a list of orders, click it on, and process it.  In between the time they pull it up and process it, they can take 2-3 sips of their coffee, take a trip to the bathroom, or do whatever they want while you sit on the other end hoping your order will be closed in time for you to make a profit.

Craig's comment, "Is not trading the news like having a Tiger by the tail? spreads increase & orders are not filled. Most advise I have read (all of course to be taken with a grain of salt) recommends staying out of the market during the news.  I qualify this as an observation, I have never attempted to trade the news or use FX Engines."

I've heard this before and Craig may very well be right.  It may just be more wise to stay out of the market during the news and try to get the follow through 15-30 minutes afterwards.

Mike states, "In summary, the FxEngines platform is a great concept, but WAY too loose around the edges to make it work during volatile markets."

Yes this is true and if it wasn't for 1 economic news release, Initial Claims, I would be losing money using this platform.  This goes back to Duncan's comment about mid news items being successful.  The Initial Claims is a mid news item and these types of news events seem to work.

So what am I going to do about all of this?  I'm not sure yet.  I'm up 50 pips in 5 weeks but is it worth it.  Will I ever be willing to put big money into this? I don't think so. 

As you can see from the results above, automated trading via FXEngines is almost back to breakeven.  I have not had a winner since the 6/15 Initial Claims report.  That makes it 0 wins in the last 8 trades. 

Just to refresh your memory, I deposited $1000 into a mini-account in early June to see what type of potential this platform had.  So far I'm less than impressed but who can you blame?  4 weeks aren't enough to test the waters with this platform and there just haven't been any quality spikes during news releases this month.  I'll continue to perform news trades until I deem it unprofitable for me or until I run out of the $1000.  Hopefully this won't happen.

Before I get into the real reason for this post, let me just say that automated news trades haven't been going as a lot of us expected.   After 4 weeks, I've gained a total of 13 pips with a couple of economic releases left for tomorrow.   Just the fact that I'm still in the black is enough to continue with automated trading though today was very disappointing.  It seems like whether you were conservative, moderate, or aggressive, the results were similar; very little gain during the FOMC release.  If an engine cannot capture a move like today, it's going to be tough to trust it in the future.  It makes you realize more that there is no substitute for the human mind.   Computers are fast but have no intelligence (artificial doesn't count.)

My Trade History and Goal & Performance are being kept up to date daily.  In the past, everything was categorized by week but I have since changed this to by month.  I feel that doing this will put less pressure on me each and every week.  It gives me less of a sense of urgency.  Before, if I had a bad week, it was like the end of the world.  Now my "final" performance can be evaluated 12 times yearly instead of 52 times!  

My goal right now is to profit 260 pips a month.  This is not just an arbitrary number.  This is a figure that I have calculated based on how much I need to make a year to sustain a living by trading 3-4 lot positions.  It isn't set in stone that I have to trade 3 or 4 lots each and every time but it is a best effort at an estimate.  I feel like if I can consistently profit 260 pips or more each and every month, I can do this full-time and for a living.  I live in New York City so for some of you that have a lower cost of living, this figure could be much less.   Read my post a while back titled, How Realistic Am I Being About Trading Full-Time.  This explains more about this.

With the end of the month of June coming tomorrow, my goal of 260 pips will not be realized but I didn't start discretionary trading again until June 18th.  Since this date, I have profited a total of 131 pips and $1250.  I am quite satisfied with my trading over the last couple weeks but I have to remain disciplined no matter what happens.  I'm obviously still learning a lot and have to expect that there will be many bumps on the way.  I have been learning and trading Forex for almost a year now but the road is long and if I want to put it into the perspective of a formal education, I am a still a Freshman.  My "GPA" certainly wasn't stellar but I learned a lot, had plenty of all-nighters, studied a lot, and certainly had heapings of stress.  My motivation remains as I continue the journey into year 2 which is critical to success.  I can't say that there haven't been times when I felt like giving up but in all honesty, being surrounded by so many other traders striving for the same goal has kept me going.  

Happy Trading. 

After 6 weeks of trading the news with FXEngines, I've seriously considered abandoning the platform.  I haven't really been trading the news over the past 2 weeks but I'm having a hard time giving it up considering I'm up 48 pips total.  So I'm going to give it a couple of more weeks and see if it pays off.  On one hand, the reason why I would give it up is because it just isn't producing enough pips for the time I put in to it.  But on the other hand, it's the only profitable system I have right now so I would be an idiot to just throw it away.  So my plan going forward is to subscribe to the All Events Ultra-Aggressive EUR/USD.  What this means is that I will be mostly on auto-pilot, with the platform automatically trading every news event available.  Sometimes I'll intervene to manually exit if I can and sometimes I won't.   

My discretionary trading is going no where right now.  I only made 1 trade this week, shorting the USD/CAD.  This position was up 60 pips before it came back and stopped out at break even.  It was a good thing too considering the news out of Canada pushed the pair back in the USD's favor.  So I'm still down 225 pips for the month with 1 week of trading in July left. 

Being the inexperienced trader that I am, I tend to go between feeling in sync with the market to feeling utterly and totally out of sync with the market.  The last couple of weeks, I've felt the latter, totally clueless.  I'll stare at the charts everyday and I might as well be staring at a book written in Chinese because it all looks foreign to me.  I've had a lot going on but I just don't feel with it lately.  I actually feel lost.  This has happened to me in the past and I do seem to recover from it.  I think it's just time for a vacation because not only do I feel out of sync with the market but I've also been having a case of writers block.  I don't really consider myself a writer but I haven't posted much here lately.  It isn't only because I've been busy but also because I just haven't had much to say.  This also has happened to me in the past and before I know it, I'm posting 5 times a day.  So the bottom line is that if you want to make it in anything you do, you just have to keep grinding it out.  The most rewarding things sometimes are the hardest and I enjoy learning how to trade and maintaining this blog too much.  So I'll get back into the groove sooner than later. 

I hope you all had a great trading week.