maxr

Does anyone know of a way to incorporate adaptive position sizing (APS from now) into NT? That's a money management technique where the size of your next trade trade is calculated on current account size, logical initial stop loss for this trade. and a preset parameter you specify - the most common is probably maximum % risk per trade. So - account size is X (picked up from your account, or user input), Max preset loss is Y% (user input), logical stop loss for this trade is Z pips/points (placed on the chart in Chart Trader), and the platform automatically works out your trade size. The effect is to automatically increase trade size in line with account size when you're doing well and reduce it if you hit a losing patch. It would be great if this could be incorporated into something that works like the NT Chart Trader window, where you could fill in your max risk per trade and have it calculate your trade size automatically. I heard that there is a commercial Strategy available that effectively replaces the NT Chart Trader window, but I can't find it. I know it's easy to have a little XL sheet to work this out, but having it just pop up in e.g. the Chart trader window would be much quicker and surer. Thanks, Max

Is this basically the same sort of MA as the Hull Moving Average or HMA? If so, there are several articles on the web explaining the maths of such MAs (Google Hull Moving Average), and their possible benefits and disadvantages. Max

I have a question on something they don't teach you in trader school, which I'd appreciate some help on from more advanced traders. Due to closing out a USD based futures account into it, the IB account I have for FX trading now contains similar values of GBP and USD. IB Universal accounts don't automatically convert non base currencies back to base, you can hold a mixture of currencies indefinitely. My interest is mostly in trading GBPUSD, I pay bills in both GBP and USD, and have bank accounts in both. It appears to me that more or less by accident, I may have effectively (from a global standpoint) hedged my 'available' (ie non traded) funds against variations in the main currency pair I trade. As I currently like to be flat end of day and am only in the market for limited periods, that appears to cover the whole account for 16-24 hours per day. I guess I could attempt to profit further by switching account base regularly to whichever currency appeared more likely to rise (and effectively taking a position trade on the whole account), but that's a step too far for me. So tell me, folks, have I missed something fundamental, or does all this make sense? Do any of you (who have suitable accounts) deliberately diversify the available currencies in your account, and if so how do you calculate the proportions? Max

No, that would be an 'Investor'. An 'investment' is a trade where a speculator buys at the wrong price, holds onto the loss, then waits for it to go away. Investors are holy men who enable corporations to keep their CEOs in the style to which they're accustomed, whatever the balance sheet. Sometimes they even give their money to banks to 'invest' for them, displaying both their utter trust in even the most unpromising humanity, and their complete detachment from material things Max

The world 'speculator' is often used nowadays as a negative value judgement on short term investors, However, in the original meaning of the word, all 'business' activity of any kind is speculation. I don't see there's any useful moral line you can draw, unless the speculative activity is actually harmful to society. The guy buying pencils to 80c and selling them for $2 is speculating that there will be enough ready buyers at that price for him to sell his stock and make a profit. The result of his speculation is that someone gets a pencil he can use, but that wasn't why the whole transaction was made possible by the vendor. He is speculating, not selling them because he feels sorry for unfortunates without pencils. The only reason he doesn't ticket them $3 is that he knows there's a good supply of pencils available at around $2 and he can't get more for them. Perhaps the 'really' useful people do things like curing people of disease or nursing ill folks, for which they are paid a salary - in many cases, by a speculator who hopes health insurance companies will pay him a chargeout rate of double or whetever the doctor's salary. That speculator has provided liquidity in the form of health care to the market. In the capitalist market system, everyone who is not a 'wage slave' or 'unwaged' is a speculator of some kind. But, in the end it doesn't really matter, because nobody outside this business understands what we do anyway, and most of them have a slightly negative reaction if only because most people think they're the only ones who work hard, and disapprove of most things they don't understand and can't explain away by e.g. inventing a religion. Damn, overdid it again :crap: Max

There are lots of free Forex simulator platforms available with live datafeeds - FXPro is one of the better ones as it doesn't currently appear expire after say 90 days. I don't know what trading a live account with them is like, but when the time comes, there's lots of info on the forums. If you do go down the Forex route, be aware that unless you are going to trade a 'true ECN' account (you'll know because they'll tell you, and they'll charge commission rather than just widening the spread), it is possible for brokers to manipulate your orders (using a program designed to do that). This operates on the best known retail trading platform, which is MetaTrader4, and for all we know, some other brokers can manipulate their orders placed through their custom trading platforms. Not all brokers do this, but it appears some do (there are huge threads on at least one FX trading forum on this). I guess you could call that a hidden danger. Also, many trading educators don't teach you about the importance of money management, and being aware of how the Bid-Ask spread (Investopedia that if you're not sure) affects the actual order levels you place as opposed to what you see on the screen. There's quite a lot of free info about this available on the FX Smart Tolls site (they're Forex specialists, but this info is universal) Forex Smart Tools . I'm not connected with them in any way other than I use their software. Max

Speaking as one who is going through the process, all these guys are right, and here is my personal suitability questionnaire - answer each question 'on balance'... 1) Can you be comfortable with your decisions being wrong much of the time, and not knowing why many of the others turned out right? If YES, read on... 2) Are you attached to money? Do you sort of feel it as a presence in your bank account, does $X represent a new car, or a boat, or a house to you, would you feel bad all day if you dropped $100 in the street and it blew away? If NO, read on... 3) If you lost your trading pot, how much difference would it make to you physically and psychologically? If the answer's 'not much at all', read on... 4) Are you considering trading partly as a way to increase your self esteem in the community and among your peers? Well, nobody else understands what we do, so If NO, read on... 5) Do you enjoy a gamble - does it get your heart beating and your adrenaline going? If your are a gambler, trading will take your money faster than a casino. If NO, read on... 6) Are you looking to trade yourself out of financial difficulties? If YES, the pressure will kill your trading. If NO, read on... 7) Do you respect the opinions of economic and financial commentators in newspapers and periodicals, and would you consider them to be able to provide a worthwhile guide to investment and/or speculation? If NO, read on... 8) Do you consider that one can predict the future with a reasonable degree of certainty? If NO, carry on... 9) Are you happy to work entirely on your own? If YES, carry on... 10) Can you take decisions quickly? If YES, read on... 11) Can you accept 100% responsibility for the outcome of your efforts, without making any excuses or explanation whatever for failures other than 'I was wrong', and be content with that? If YES, carry on... 12) Can you follow a plan precisely if required, or do you always change it as you go? If you can follow one, carry on... 13) Are you happy to take what you can from events totally beyond your control? If YES, carry on... 14) Do you really know and understand yourself to a reasonable extent - your character, strengths, and failings? If YES... CONGRATULATIONS! - if you got this far, you have some of the attributes required to start to learn about trading. This is a bit tongue and cheek, but you get the idea. However, financial trading as an individual appears to require an unusual mindset, which is not what it may appear before you get involved - I reckon it may be nearer that of a Zen monk than 'Wall St'. Like you say TroyMaster, you'll never know unless you try - and you WILL learn a huge amount about yourself if you do - I have already, and I'm still a student. Oh, and by the way, if you look to trade FX, be aware that is probably the most shark infested territory in trading. There are good FX trading methods and coaches and good FX brokers out there - unfortunately it's easier to find the other ones. Believe nothing anyone tells you unless you've seen them do it live - teaching a trading method is absolutely no guarantee that it works, even for the teacher :-) Max

When you start the new thread, can you please post a reference to it here just before you close this one, so we get email notification ? Thanks, Max

Sounds all good to me, thanks optionstimer. Max

Ingot 54 said: That's the problem with many indicators - they just show you what's already visible on the charts, but they put it into numbers and pretty colored lines so it looks like science rather than just 'an indication'. The result is we give them too much credibility. The more complicated they are, the further they get from price action, and the more scientific and credible they look. An oscillator can tell you it looks like price may be 'oversold' - OK, what does that mean? It means that someone who devised the indicator told everyone that in his opinion some figure like 2 standard deviations from the mean, or variation x between two MAs, gave a good statistical indication that the market was oversold and may retrace. Statistically, that's fair enough. So you bought, and now you're still waiting for the retracement, and the damn thing's still going down, because the indicator is looking back at past price action, and you're trying to use it to predict a future in which the rules have temporarily changed and the 'statistically' probably action will have to wait until conditions return to 'normal'. You could have seen that from the chart and been in doubt as to what to do, but the indicator hit its magic line so you believed it and entered the trade. Of course I'm sure we won't go down that path here, but the above is why I'd prefer to stick with the simplest indicators possible, those most closely related to price, which we can instantly relate to what's actually happening on the chart - e.g. 'I can see that a 2 candle (or whatever) break of this SMA/EMA quite often gives a good exit point on this chart', or similar. Max

optiontimer said: Can I suggest Forex, optionstimer? When I was looking to find a good FX broker a while back, I found many unhappy bunnies in that area, and they weren't all on forexpeacearmy :-). Their woes extend from unscupulous brokers manipulating accounts, to the many expensive 'get rick quick' Forex systems that don't. Anyyone, almost anywhere, can open a demo FX account for nothing, and a simple system which loses little or no money overall would really brighten up these traders' lives. I guess Forex would preclude using volume based indicators, but personally, as a long term student verging on trading seriously for real, I'd be very interested to see a good simple system largely based on price or analysis thereof. I think we'd also all benefit from your advice in passing on how to, err, avoid choosing the wrong broker when trading FX - that seems to be much more of an issue than with other instruments. Max

I assume you're talking about long term trend on a daily, weekly, or monthly chart. I'm not being facetious, but if a trader can't see the current trend on one of those charts without an indicator, I would suggest that either there isn't a clear current trend to trade, or the trader may benefit more from some fundamental advice on what a trend is, than from an indicator which, being further removed from price action, he is less likely to understand? Max

A logical extension of the proposition 'no Forex EA's work' is that no relatively simple discretionary mechanical trading system works either. Reason being, that if it did, you could program it. For example - there are a number of manual systems out there which appear discretionary - you know: 'current price is above the rising 50 MA and the 5 EMA, it's fallen 4 candles in a row from the last consecutive high and now you have two green candles. If ADX> 15 and the spikes on the last 20 candles look on average less than 25% of their body length, Buy. Stop to breakeven at 50% ATR, take profits at 0.75 and 1.5 ATR open profit'. I'm not saying that would work (and it's not a direct quote of anything I've seen), but it's not atypical of the style of some manual systems. It looks discretionary because you have to eyeball the candle wicks, and it looks as if it might take account of market volatility because you have an ATR condition and profit takes set by the ATR. But - you could program this and automate it to do exactly what a person trading it manually would do. My suggestion is that if it's simple enough for an absolute beginner to learn and trade on those kind of rules, it's simple enough to automate. So, can either work? Max

ProSpreads advertise 'direct market access style trading' on Futures etc, and the couple of people I know who trade it for real say it's very good. Their FX trading runs on a Currenex system (which as I understand it means trading being matched amongst traders, with banks supplying liquidity as required - is that correct?). They had plans to introduce Mini lots in FX, but that's not available yet. So it's kosher trading, not 'bucket shop', with fast execution and no requotes. Their FX spreads are somewhere between spot FX ECN account rates (but no separate commission) and spot FX 'bucket shops', so you pay a pip or two spread to get the tax advantages of spread betting. You do have to trade full FX lots and futures contracts with ProSpreads, so you'd need a healthy account balance, good money management, and proven trading methods. Of course, If you're not making more than your personal CGT allowance (which is £10,100 single, £20,200 couple), or otherwise using your GCT allowance every year, there's no point in opening a spread bettting acount for the tax advantages. If you're just doing it for a bit of fun and don't mind losing a little, you can open 'bucket shop' spread accounts with very small sums - but in that case, why not just get a free demo FX account and paper trade? You'll have more beer money left that way. By the way, I haven't yet seen a forum post which suggests that the writer has started with a very small spot FX or spread betting account and grown it to the point where they're now making a living trading., without introducing capital (starting with $500 then adding $50K from your bank is easy, IF you have that $50K). There must be such people out there, and I'd be encouraged to hear they've achieved that - because my researches in the last few weeks tend to indicate that the vast majority of active small spot FX and spread bet traders either blow their accounts, or don't manage to grow them quickly enough, because the odds are stacked against it one way and another. Have any of you managed it? Max

Thanks for that, Cosa Nostra, I'll make a note of it. When I downloaded MT4 from the developer's site, it identified I'm in UK and suggested I use a demo feed from Alpari. This feed is good, it feels like a totally different platform from the last MT4 demo I had. Now, can anyone suggest an MT4 script or whatever that will let me set up one manual OCO order with a market or limit entry, a stop, and two or three take profit limit levels? Max

Thanks Ingot54, that's great. I have an FXCM Malta demo, but (at least here in UK) the datafeed seems pretty slow. I need the MT4 feed to provide data for the Forex Smart Tools program called Forex Calculator - it works out a 'partial pips' trade size based on current price, maximum loss %., required stop loss and spread. Also, The Oracle Trader news trading system (which I'm exploring for light entertainment - I might get 1-3 trades a week from it, some or all of which will be 'no-trades') uses MT4 EA's to enter and control news trades. The problem with this system (and they make no bones about it) is that many of the brokers who use MT4 are liquidity providers who make all their money from the spread and don't want news traders taking money out of their pocket by trading so fast they can't cover it (an Oracle trade can be over in half a second - so fast you can't watch it). I'm told I can use Ninja Trader to interface an IB ECN style accouint with the MT4 order system (whew...) - or maybe I can find a direct access futures broker who uses MT4, and use Oracle to trade CME futures with it. Max

dowjonestrader: sorry, don't get it - are you recommending a trading platform or a broker, and do you have a URL please? MadMarketScientist - I've had IB recommended as a broker by several sources, for FX and Futures. You can trade anything from one funded account, unlike say TradeStation (where you need to apply separately for Stock Futures, and FX accounts, each with a truly gigantic form to fill). Their FX ECN sounds OK, but I found their interface messy when I demoed the platform. I haven't yet taken the time to get to gripswith NinjaTrader - I'd use that just as a dealing platform, at least to start with, as I have TradeStation for analysis. Can you set up Ninja to e.g. put in an OCO order with one stop order and two profit target limits, raising the stop to breakeven as you take the first profit target? If so, will the IB futures and/or FX servers happily accept that order? Thanks, Max

Can anyone suggest MT4 demo accounts that don't expire? I'm looking to update my Forex Smart Tools trade calculator with market prices in MT4 format. I don't mind opening a small real account (eg a nano account) with a few dollars if that's the only option. Thanks, Max

How is this statistic useful? If you're one of the 'fails' it may reassure you that you're not alone, but it still doesn't show you where you went wrong. If you're one of the others, you don't need to concern yourself with it. I you're not a trader, surely there are better things to do in life :-) Max

If you have the account to trade full size futures contracts or FX lots, have a look at ProSpreads . They operate a different model to most 'spread betters' - it feels like direct access trading (or Currenex for FX) through a glass wall. No requotes, because you're trading either market spread or Currenex spread, and whenever I've needed help it's been right there on the phone. Their interest is similar to direct access shares brokers - they make money from volume, not trading against you. I have an account, which I've only demoed so far, but no other connections with them. They're planning to introduce Mini FX lots in 2011. 'Traditional' model spread betters (ie the other kind, basically bookmakers) can feature wide variable spreads, stop losses way out on a limb (I remember seeing a 75c minimum stop loss on Crude on a demo platform from one of the biggest operators), and stories of mysterious spikes which don't appear on other datafeeds are rife, as are stories of consistent winners' accounts being closed. I think it's as well to remember that this is spread BETTING, which is why it's tax free. Many operators are trading their own 'book' against you. Just like traditional 'turf accountants', the job of the typical spread betting company is to provide facilities to enable clients to consistently lose small to medium amounts of money, which they do very efficientlly. As a student of trading (rather than an expert tader), my current opinion is that spread betting with most operators has similarities to trading a small retail FX account for real - It's fine if you're happy to lose relatively small amounts of money for the 'fun' of 'trading', with the dice loaded against you - but why would you want to do that? Max

This is coming a long way after the last post, but I just found I may have a use for this. MadmarketScientist - is this procedure effectively using Ninjatrader as an API? If I connect TS to IB through NinjaTrader, I assume I'm looking at TS data on TS charts. Can I use the TS order entry platform, and/or the Ninja Trader order entry facilities? Likewise, I have an account with a UK spread betting company who can accept orders via NinjaTrader. Does that mean I could trade their account using TS via NinjaTrader? Does hooking up in these ways increase latency from firing an order on the remote dealing platform (e.g. TS) to it being received on the end trade server? And, err , how confused am I likely to get as to which account I'm trading :-) Thanks, Max

Am I right in saying that if one uses tick charts on spot FX data (you can do this on e.g. TradeStation with no 'true' volume available), then each 'tick' represents one line on Time & Sales, ie one deal, whether it's one lot or 20? Do ECN or Currenex based accounts (e.g. the Interactive Brokers ECN system) show true volume for that particular ECN? Max

ptcman asked above: As SCOTTB says above, the problem is that the time it takes for any given number of trades to go through varies during the day, and will rarely be the same day on day - so although it appears to make sense, it's difficult to create parallel tick and time charts in practise. Would anyone care to explain the logic behind using any particular tick number (fibs or otherwise?) for charting? Max