FXCM trading the FOREX.

 

Not a bad little trading system. I have been using it for (apparently) one month. I am quite happy with it but the practice account only lasts for a month unless you have a proper account with them.

So, I am still looking for a practice account, preferably with spread betting, for the FOREX where I can place trades on live data but with ‘virtual’ money.

 

Anyone got any ideas?

 

Forex USD / CAD Ascending Triangle part 2

 

I set up a set of related trades as detailed in my previous post. The trade did a false break out of the triangle on the sell side through the support. This closed my trade on its stop with a minor loss. The breakout was significantly large to trigger my sell trade, but has since re-entered the bound area but not yet hit the stop for this second trade.

 

The  trade has gone against me twice, but because I have set up my stops properly, the losses will be very small.

 

I am considering adding another trade to buy as the trade travels further within the bound range with a limit about 75% up into the triangle. However, I will probably leave this one to see where it goes.

 

FOREX USD/ CAD ascending triangle

 

The chart for USD / CAD pair has made quite a nice ascending triangle on the day chart. (See image above).

 

I have entered a trade at the bottom of the triangle going Long to catch any rebound to the top of the range.

I have set a stop just below the support at the bottom of the triangle and a limit just below the top of the resistance at the top of the range.

 

I have also entered an entry order at a distance of the ATR below the range SHORT to catch any breakouts going in that direction and also an entry order going LONG at the ATR distance above the bound range.

Both entry orders have stops at the range points in case it is a false breakout.

 

So in most cases, I should be in for a winner, unless I get a false breakout SHORT and a false breakout LONG.

 

This is a multi day trading strategy and I expect this trade(s) to last for several weeks.

 

Free practice Forex trading accounts

I have across and nice application that is free and allows you to trade FOREX major currency pairs in real time in a practice environment. It is from FXCM.

 

You can download their software for free without having to sign up giving your life story and all your important documents. The trading and charting environment is good as well.

 

You can trade right from the charts at the point where you click on the chart which I like too.

 

Does anyone know of a practice FOREX spread betting account that you dont have to send off your passport etc to?

 

 

The url is http://www.fxcm.co.uk

 

It is not spread betting, but the principle is the same with long and short capabilities in amounts in multiples of 10k lots.

 

I started with £5K virtual money on Monday and it’s now Thursday and I am up using the strategies I know from trading stocks and from the book ‘FOREX, patterns and probabilities‘ by Ed Ponsi.

My account is now £117 up which is just over 2% in four days.

 

The book is quite good and I would recommend it for anyone who is starting out trading in FOREX and needs a refreshing or wants to learn the standard strategies for technical analysis as they relate to FOREX.

 

First order linear recurrence and compound interest

 

I am reading and working through the book ‘Mathematics for Economics and Finance’ at the moment by Martin Anthony and Norman Biggs.

 

I am learning the mathematics that is detailed in the trading course ‘Certificate in Quantitive Finance’ to prepare myself both for working in finance and building my trading platform.

 

At the moment I have just learnt about First order linear recurrence equations and how this relates to working out capital gained on compound interest in an account with a constant percentage rate.

 

I have always worked this out before in Excel with arduous calculations for each year, now I have the maths to do it for any year in one calculation. It is quite a buzz to see the power of mathematics at work in real life.

Why didn’t they make it this interesting at school!

 

Standard First order linear recurrence  for compound interest can be expressed in maths as:

 

y_{t =} ay_t-1 + b

 

where y is the capital at year t, a is (1 + r) where r is the interest rate as a decimal, and b is zero.

 

This gives

 

y_{t =} (1 + r)^ty₀

 

or Capital after t years = (1 + r) to the power of t multiplied by the initial capital.

 

If the equation is reversed, then we can see how much we need in the bank to achieve a target t years in the future.

 

y₀  = y_t / (1 + r)^t

 

or

 

capital needed is the desired target amount divided by (1 + the interest rate) to the power of the number of years.

 

Easy as pie!

 

FOREX back data for the major currency pairs

 

As you know, if you have been reading my posts, I am embarking on a journey to write my own trading system. I am focusing more on FOREX at the moment and I am looking for somewhere I can find back data for FOREX currency pairs, preferably every minute of data or thereabouts for the last 6 months.

 

Does anyone know where I might find this?

I imagine it will be a big download, but that is not a problem.

 

Any help much appreciated.

 

What’s next?

What’s next? 

For anyone who has watched ‘The West Wing’, you know what I am talking about.

What’s next?

 

The business is 99% over. I have a few things to clear up in terms of contracts etc and also there are still some prospects out there that may come off at some point, but nothing immediate.

 

This leaves me with the greatest asset of all. Time.

I now have all the time in the world, the rest of my life ahead and I can do whatever I want.

So what to do now.

 

Well, I have learnt a hell of a lot since starting this journey a year ago, perhaps a good place to start would be to see what I have learnt and use this to form a new business plan.

 

1. I have learnt a lot about the markets, trading (both share dealing and spread betting)

 

This is mostly to do with technical analysis, the mechanism for trading, the importance of having a trading system and risk management.

 

2. I have learnt a lot about running a proper business, getting sales and productising ideas to sell to potential customers.

 

This is mostly about keeping costs down, being creative, taking that idea and making it commercially viable and then selling that idea to someone who then pays for you to build it.

This is great in a growing market, and extremely difficult in a shrinking market (as I have found).

 

3. Property would be great to buy now, but I don’t have any cash. Have not explored this avenue yet.

 

4. I love the flexibility of running my own business and the fact that this allows me to spend time with my family when I want to.

 

5. I like being the boss.

 

6. Not many of my friends understand this way of life and in fact some don’t even like to talk about it. (I had one friend who took one look at the very first paragraph of this blog and switched it off quickly as if the thought of discussing making money through assets was somehow unclean!)

 

7. I don’t mind using the telephone to call people up

 

8. I like working on my own as well as with others

 

9. Spending money is a good way of losing money not making money.

 

10. The most important aspect of anything is to have fun!

 

Into the pot, I could also throw that I need some cash in the reasonably short term to carry on paying my expenses.

 

There are some options in order of what I am thinking I might do next:

 

1. Get some contract work which I can do quite easily which is high paid and short term to build cash reserves. The downside of this, is it is back to working on someone else’s asset, the advantage is low responsibility, short term and high cash.

 

2. Go back to working on freelance work form home. The advantage of this is that I can manage my time as I like so I can keep open for opportunities, work from home to see my family more, but the disadvantage is I am not building assets and the cash is a lot less than contracting work.

 

3. Carry on with the business as a background task to keep up with the prospects we have made, pursue any low cost / low time prospects as they might arise.

 

4. Come up with a whole new business idea

 

5. Learn more about trading in its various forms and make a living through that

 

6. Carry on learning and come up with another method of making some money

 

I am going to think about this over the next few days. I have been testing the water with contract work and there still seems to some of it about although not as much as a few years ago.

 

I’ll let you know how it goes.

 

The big trading challenge

 

I signed up for the SG Turbos Trading Challenge today. I haven’t actually placed a trade yet, but I am going to have a look at it tonight.

 

You get £10K of pseudo money and you have to trade using their system. There are prizes for the best traders (i.e. the ones with the most cash in their accounts) at the end of each month and at the end of the three month game.

 

The game started today and the winner so far has a 6% gain in one day.

 

So it is early days yet. You can also create leagues to play against each other that don’t count towards the prizes, but I cant see me doing that.

 

In return for running this game, they of course want to market their stuff to you and hope you like their trading system so much you use that instead of your existing one. As long as you know this, I think it is worth a go.

 

I’ll start placing some trades tonight and I’ll let you know how I get on.

 

For those of you who want to play (it is free) you can sign up at: http://www.sgturbos.co.uk/index.php

 

SG Turbos is run by Societe Generale.

 – Just as an addition to this post, the game is actually trading something called a Turbo. Seems like a CFD with a few differences. There is a free seminar explaining what these are on the 8th April. I think i would prefer spread betting than this but Im willing to give it a go. I might go to the seminar, I havent decided yet.

 

 

 

Banging one’s head against a wall of mediocrity – a rant about marketeers.

 

It has been four months and probably around 500 phone calls to top marketing and advertising agencies as well as companies trying to talk to them about innovative new ideas that will make them money since I started up the new company in October.

My new business manager and I have been to many meetings and talked to many leading figures in the internet world. It never ceases to amaze me, how much mediocrity there is and how most people prefer to follow than to take a chance whilst pretending they are leading their companies forward.

An over whelming number of so called innovative figures in key positions for growing companies will not even listen to a new idea from people who have made a lot of money for people in the past.

I am amazed that there is such a degree of rigidity when approaching one’s job in the city. It is a rare find to find people are genuinely interested in listening. It seems most people, even people whose responsibility it is, is to bring new ideas to a company prefer to hunker down and pretend the world doesn’t really exist and just get through their day and appear to be doing their job.

Our business is finally taking traction now as we enter into a second round of meetings with key partners, but what a task it has been to get there.

My theory is that there are actually very few innovation centres in the world and that these are actually just one or two people in each place who are true entrepreneurs. They drive everything and everyone just talks the talk and pretends to be innovative.

Most managers and directors, wont even hear an idea. They either don’t even let you present an idea, or they think they are listening but they don’t hear. They somehow have a subconscious block to anything that might change their day to day, or make them visible to people higher up the ladder.

It is no wonder there is a recession going on with the inefficient middle manager nightmares that populate so many of the big companies. It has been said that this recession will be a recession of the middle classes. I hope it shakes out a few of the mediocre middle management whose sole purpose seems to be to pass pieces of paper to other mediocre managers either in their own organisations or in others.

It took Richard Branson a year and half to get his first advertising to get is first magazine off the ground and he spent all that time calling everyone he could. He made it and so will we.

 

 

Back on the trading game

 

I had an interesting few emails from a fellow trader who seems to have a very similar outlook to trading as me and who also wants to build a trading system.

I am looking forward to putting our heads together to see what we come up with. I think I have needed a kick start back into trading after focusing so much time on the business.

He seems to have a much broader and in depth knowledge of trading than I do, and I have the technical coding skills and knoweldge of psychology of trading which hopefully put together should be enough to come up with a reliable set of tools to form a system.

He has sent me quite a few resources and other blogs to read, so I am going to work my way through them and see what information I can find.

I’ll post anything of value here and let you know how we get on.

It’s very exciting to be back to trading.

 

The last four months

 

It has been four months since I stopped writing this blog. This was not a conscious decision but more that other things took over and I have been focusing on growing my business rather trading or writing.

I stopped trading both in stocks and spread betting after the major banking crash late last year. I lost a lot of money betting that Barclays would bounce back and it didn’t, it went even further down.

I wanted to maximise the amount of cash I had to put it to best use as at that time there was no more cash coming in. I decided the best place for my cash was to invest it into the business.

After taking an office at Regus (see previous post) I realised I needed to employ someone who knew about calling companies to offer our services. I am no salesman but I recognised that sales is very important in us gaining work going forwards.

This was an important step as realising who should be on the management team is one of the first stages in building a good business.

I employed someone with over 20 years experience in the industry I work in, which is new media and we drew up a business model for going forwards.

We looked at our collective experiences and identified the target clients. We called round and from feedback we received we adapted the model to demand.

We also tried several different ideas in different market sectors.

They key thing we found is that we needed something unique to offer and then offer our main services on top.  This has worked well in getting meetings with large companies.

Over the last 4 months we have partnered with some of the biggest agencies and companies in the UK. We have won a small amount of work to keep us going.

We are now continuing to create meetings and opportunities with large companies and are waiting for a big contract to come out of the meetings we have made.

We have found things much slower than usual due to the current economic climate, with companies taking longer to make decisions and allocate budget. We have found a lot of companies have changed their strategy in keeping staff in house and are looking to outsource their requirements.

This is great for us, as we are an outsource company, but it means that at the moment the industry is in a bit of chaos with job roles appearing and disappearing quickly. This means delays in projects and ultimately business for us. In the medium to long term is should mean much more business.

The aim of the game now is to survive and keep knocking on doors until we get the contract to take us to the next level.

 

 

Ban on shorting

Ban on shorting

I thought I would write a little on my opinion on the ban on shorting. As you may know, the governments around the world have placed a ban on shorting various stocks. Some countries have gone for a total ban and some just selected stocks. The UK have banned shorting on Banking and Insurance stocks until January 19th 2009.

My personal take on this, is that this will, in the short term increase volatility in the markets and in the long term cause massive drops in share prices when the bans are removed.

My reason for this opinion is that in the short term, if people cannot short it means they can not hedge against going long in other stocks or investing money / lending money to large institutions. This in turn means there is less trading in the markets which in turn means that the trades that are placed cause much high volatility, which in turn keeps people out of the markets and the cycle increases.
With regards to long term massive drops in price, it has been shown that stocks become overvalued if there is no way to short them. This is borne out by China allowing for the first time, shorting of stocks to try to offset market bubbles which have recently burst. When the overvalued stocks have the ban removed, the stock will be shorted and drop like a stone.

Shorting stock acts like a  stabiliser to the market and I believe is one of the key ingredients which make the markets bounce back and become self regulating. In my previous post way back when I started this blog about Alan Greenspan’s book, ‘The age of Turbulence’ , I talked about the difference between a free market and a socialist controlled market and how a free market is better for all of us as long as you don’t mind a bit of stress every now and again. I also talked about the socialist and populist forms of control and how the ultimately lead to their own demise.

I see this ban on shorting a populist move based upon fear and misunderstanding of the true nature of the markets.

I guess when you have archbishops standing up and saying ‘down with the shorters, they are like bank robbers’, you know you are in the hands of a mob.

 

Good trading books for strategy with FOREX

I am looking for a good book on Forex trading, that contains strategies that I can test and potentially use for intraday trading.

My end of day trading strategy does not apply to forex..

I have looked on Amazon and there are several books coming out over the next few months, which makes me wonder if everyone is getting into this! The books that are listed mostly have bad reviews or seem low quality..

If anyone has any suggestions for good forex strategy books, please add a comment to this post with your recommendations in. Everyone can use this a resource for good books..
Thanks..

 

Spread better’s seminar

Spread betters seminar

Malcolm Pryor who write the ‘The spread betters handbook’ is holding a seminar on the 1st November 2008, in London. I have written a lot about his book in previous posts and this would be an ideal time to meet him.

The course is £350 + VAT if you book in advance and the places are limited to 12. I am not going as I think the course material might be a little too basic, however, for a good start this seems like it would be a really nice day.

You can find out about his seminar at http://www.sparkdales.co.uk

He also has a website which looks very informative. This can be found at http://www.spreadbettingcentral.co.uk

If anybody does go to this seminar, please feedback how it went and what you learnt in the comments.

 

Designing my own trading system

Designing my own trading system

Recently I wrote about how I had discovered that Sharescope has a bespoke language built into the program called Sharescript which allows you to write scripts to interact with the trade data. After spending a few hours getting my head around the basic commands, I decided to write a script that tested the Traders University trading system out.

I used a 400 day period from today back to 400 days ago. I revised the exact system from the notes they gave me on the course and programmed the script to place pseudo trades if all the criteria were met. I programmed in the exit strategies for being stopped out and taking profits or losses.

I also added in the ADX filter criteria defined in the ‘The spreadbetter’s handbook’ which was also recommended to me by my one to one mentor from TU. The difficult part was programming in a trend but I used the position of the MAs and the ADX filter to achieve this.

I ran the script across the entire FTSE350 for the 400 day period and found that the system makes a consistent loss. By altering the parameters away from the TU specified parameters I managed to only lose £20 instead of £500 using their criteria, with a starting capital of £2K. No matter what parameters I entered I could not make a profit.

I am pretty sure that I have programmed the script accurately, but I am still unsure whether the script correctly identifies a tradable trend. I have got each trade printing out to an excel spreadsheet. If I can not definitely determine the trend part, I will go through each trade and determine that part manually. There are not actually many trades in that period, so it should not take too long.

The only way the strategy can win is if there are many trades that lost money during this period that would not have been placed due to the incorrect identification of a tradable trend. I’ll let you know when I had a chance to go through and see and remove these.

I am reading a book recommended to me by a reader of this blog, which is nice. It is called, ‘Trade your way to financial freedom’ by Van K Tharp. It is a book about creating your own trading system that reflects you individually. The first part is about the psychology of trading, which I have now spent some time on due to reading the book ‘Trading in the zone’. The next parts are about putting the system together.

I am really enthused to get this right now and to put together something that consistently earns money, it is both challenging technically but also psychologically and really good fun.

At the beginning of this journey, I wondered if any of my attitudes or views on life would change, well reading ‘Trading in the zone’ has certainly opened my eyes about some things and I would even go so far as saying it has helped shape a ‘cornerstone’ of my believes about reality. I am still going to write a post on that book, but I have decided to read it again before I do.

I have also reviewing my entire business over the past two months and our new website is now finished and the new sales materials are complete. The next part is to complete the sales strategy.

I have a very good feeling about the next few months; so expect some interesting posts J