Welcome to my tiny shed!

[raa]

Hello guys, it's great to be back! Welcome to my new little corner, where I would like to share with you my experience in news trading, scalping, order flow trading, automated strategies (algos) development and perfecting risk management strategies which became my obsession!I will post an introduction here very soon, so keep on tight if your are interested!

[raa]

Hi there!
Since I have been offered to share my findings, thoughts and methods here, I understand that whatever I post must be backed by some sort of credibility, as you need to know who's cooking. So I will share a short version of my forex journey with you here and you can decide whether my postings worth anything or nothing.

I have an engineering degree in IT systems design, worked over 15 years in software system development, later in payment and processing systems, at the end was and still working in an administrative field, running a small payment processing company. Love active sports: motorcycle racing, kite-surfing, snow-boarding, biking, running. All things fast, you name it

First introduced to FX in 2005, but that was a brief encounter and I got out like most with bruises of impact Since I am not a gambling type of person I never sunk much, however I sort of lost interest of Forex for years. As crisis unfolded and times went pretty bad in many spheres including mine, I started to look for a potential career change and trading was one of the choices, since I was always interested in it. By luck I almost immediately found Marc's site and there the real journey began. That was December 2009. I traded M1 and M2 first 2 months on demo, LMT followed, then on nano-account, then moved to micro. That was March-April 2009 when the first Greek crisis stroke and market lost any sense. Any method I was used stopped to work. I paniced, moved my stops, and you know the end - a margin call. I felt ashamed rather than really hurt. So I decided to make a step back in order to make few more forward. Tried few scalping systems, Megadroid robot. Was looking for a holy grail as most. My trading wasn't going much anywhere, staying low profile, not losing not winning. Then at some point I got a word of news spike trading, despite being quite a big thing for years it remained highly secretive in a relatively closed trader community. I started first experiments in July 2009, made first small live trades in August. As I was looking for a broker, learning the ropes, and trading more and more, I have seen October 2009 to come. That was a turning point. As I already saw the amazing edge this trading was giving, started to believe this can really make money, I pulled my savings together into a decent trading account and gave it a go. First risk-averse and later, as success followed I took on more risk. My journey through news trading included changing many brokers, trading autoclick from different sources, straddling, and eventually settling with a new news feed provider and a young new broker where things looked well. I learned the MQL language despite it's been many years since I wrote any code, and developed my first straddling and clicker scripts. It's been going very well, despite few rough patches, namely March 2011, when spreads went sky high, news did not produce expected move. I guess you know why. It's a very turbulent year. However as my trading lead me to July 2010, my trading account more than doubled and my lowest draw-down was around 10% in March. I went for vacations to the beautiful island of Kos where met Vassilis. I still did few trades, but nothing spectacular. August was good, but only first part. By September I recognized the news trading is temporarily dead, as market was shaken every day by more and more dangerous news about US rating, Greece situation, then Ireland, Portugal - you name it. I started to recognize in the beginning of August that news trading is going to be put on a back burner and probably for quite a while, since at the times of crisis and collapse regular economic reports matter less and less and reaction can be very muted or violent and unpredictable. This is where I started to look again towards more classical trading methods and algorithmic trading. I started to use Forex Growth Bot again and started to learn Volume Spread Analysis (VSA), Supply-Demand trading, Order Flow trading, alternative ways to trade news, got into programming my own strategies and back testing them, etc. Eventually I also added MDP bot to my portfolio, it underwent serious testing on different brokers, servers, configurations, setups. Despite few big blows, my account was mostly in black while I was learning alternative manual trading styles. At some point I opted to buy a Power Edition of FGB and used absolute non-standard configuration with a success. At this moment my friend wanted to invest money with me, as I was trading his money as well on news before, so I became a money manager. It went well into November, which was flat. I mostly stopped trading in December as liquidity wasn't great and eurosummit rumours proved to be dangerous events. I ended up with 73% gain on my initial small account which I started in August with FGB, and 30% gain on larger managed account consisted of my own and friend's funds. That was pretty much of my 2011 and I consider being lucky.

Currently I concentrate on back testing and optimizing algorithms, including FGB (which I run on M5 charts), MDP and my own algorithms that went finally live last week. I went live with my new scalping approach in many parts inspired by Lance Beggs and his YTC course, and in part of my previous experiments with unconventional post-news trading, namely fading. I also look to continue adding new algos and plan to expand once again to longer term charts as I am a firm believer of a diversified balanced market-neutral portfolio of trading methods and algorithms, producing clear and plentiful alpha.

I plan to describe some of my main methods here, including post news volatility trading, principles of order flow trading, and what I consider my forte - risk optimization for manual and automatic trading.

Please feel free to ask anything if you are interested, otherwise, I hope it will be a nice journey together.

Alex

[mcharec]

hola , donde se pueden ver tus trades ?
gracias

[fuzzz]

Hello Alex.. i just been reading some of your posts.. its amazing the work you do here on FMP for other traders to see/read and sharing your experiences, not to mention the actual work you do behind the scenes in order to provide this tremendous amount research! Its very much appreciated. I just have a general question for you.. so is your style of trading based on manual trading combined with automated trading? and/or do you just use anything that works when you are trying and testing different methods? i am quite new to automated trading, so i am just interested in how it all works.. thank you

[raa]

Hi Fuzzz, thank you for the kind words! Basically I have decided to blog away my forex jorney here so people may do less mistakes themselves, and perhaps see some other angles of trading as well.

I used to do only manual trading, however I tried once in a while robot or two, during last 2.5 years I have been trading actively and spending from a couple to as much as twelve hours day on forex mastering it, I actually tried a lot of robots and perhaps all manual systems you can imagine. I have to say many of them work, but it doesn't mean they work for me - as they require different trading style and different psychology. What I have learnt from doing all this is:
1. Stop looking for a holy grail, it does not exists, just get the system that suits your style and mentality and master it
2. Don't believe any mechanical system can work well in long-term, anything without discretion will either blow your account or will deliver dismal permormance, the least you should be concerned with when using the system is current versus historic volatility
3. Most manual mechanical systems and almost all robots target specific market phenomenon that may deliver stellar returns but only for a little while, until the market cycle/phase changes and then this system or robot will blow your account, this can be seen again in again with most popular robots out there, my example is also my new non-spike after news trading system that was blowing the roof of in January, February but started to struggle in March and April and stopped working since then, as it was based on the phenomenon that news events were causing stair-case type price move with nice energetic pushes, so momentum-type entry with very small stop loss was working the magic, but then markets became too chaotic, price was all over the place and I lost everything I won before and I stopped as it's not getting better. Very similar situation with MDP - it is based on phenomenon that market makes a big push that in most cases followed by a fast reversal without too much hesitation, that was working for about half year and started to struggle more and more, we can blame market for a different pattern and certainly brokers too as we have factual evidence they employ Virtual Dealer plug-ins in their MT4 server software, allowing them to randomly increase spread and slippage in order to kick us out of position before the big reversal starts. But again, market has changed too, reversal are much slower now and not that emminent, so this pattern is broken and system is nowhere near its peak performance.

I prefer to avoid such systems - they may be fine for a quick gain, but you can't count on them for a long run. And I am here for a long run! Any short-working stuff is dangerous as you spend time testing it on demo, them moving on small live account and you are happy it works, but then you move to a big account and it stops working and you take the loss. Why? Not because of moving to a big account but because of typical timing pattern - test, pilot, live, always take a similar time. By the time you move live it stops working, not deliberately or by design, by because of market pattern change, that was exploited in the system or EA design. I want to stay away from systems like that.

From EA I can certainly say FGB is the best robot I have ever seen or tried, but it isn't flawless too. In its original configuration it generates quite draw-downs, but manages to pull out of it, since market patterns change and it can't be on top of it. However, FGB is one most flexible systems we have seen, allowing for a complete optimization and customization, with a proper back testing it allows to adjust to the current market patterns (let's say last 3-6 months) and improve performance. This is the only way you can trust mechanical system like that to work - by optimizing it. Anything rigid will fail.

If you ask me about manual trading - I have done it all. I started with Marc's systems, M1 was working awesome back them but then totally stopped, now seems to waken up! M2 was most difficult to me at times, as required a lot of discretion, and I simply did not have enough experience to have this sort of discretion. Still I banked 20-40% gain a month in first few months on small live trading but then 1st Greek crisis struck and all went highwire and I couldn't make profits any more. I tried different systems back then as I believed into mechanical approach back then. Nothing worked good enough. Then I discovered news trading and spent over 1 year doing solely news trading. I was very successful in it, and used all my savings as my deposits and actually made over 100% of them over that period, some people did much more but I was always risk-cautios and never risked anything close to other people, but I am pretty happy as my account grown into next set of digits thanks to that. It stopped worked more or less in August last year, due to second Greek crisis, then I couldn't get anymore decent brokers where it was working and faded away around November 2011. Then I lost interest to continue it, as I grew tired jumping between brokers, risking my money by sending it to most of the time shady places (it does not work with ECN or most repubable brokers) and I did not see a future in it - your gains are always limited but losses - never. You can't grow too much and make it a future. And also, news spike trader isn't really a trader. It's very mechanical approach, that works in specific conditions, but it's more like cheating on brokers (well, cheating the biggest cheats isn't a crime), but it never felt right to me. So I decided to find a way for me to trade into the future, something that work just as good on 1000 usd account as on 10 Mio usd account.

Last 9 months I tried several approaches, I don't say systems anymore, since it's less about strict rules but more about the style, most seem to work, I just wanted to get most comfortable to me. I realized that I want to trade either short-term, intra-day, holding position minutes to maybe an hour or two, to not be affected by fundamental shifts of major news or events and take my profit or loss quickly and be done before market stalls. And also I am interested in longer term approach from daily charts, holding positions for a week or more, with a slack big enough to compensate for any news volatility or any bullcr..p from political clowns we have on wires 24x7.

My journey led me finally to two methods:
1. Order flow trading, I tried several approaches in it, but finally settled for a system called ALF (Adaptive Laguerre Filter) that I found on ForexFactory, it's pretty much a trend-trending system, entering on pullbacks when continuation starts, it's very similar to many more method the only difference is that it uses ALF instead of EMA, and it seems to be an advantage, and a few visual perks that help, but it's not principal, you can trade naked charts once you get your eye trained well. Most important is to understand market mechanics, why price moves that way, why 1-2-3 that is praised by most trading books actually don't work (the problem with books - they project stock trading method onto forex, it's a big mistake especially when talking intra-day stuff), due to stop hunting and specifics of market accumulation and distribution by dealers and prime brokers. It seems to work in all market conditions and not reliant on any specific phenomenon.
2. Long term trading. Only starting there, evaluating few approaches, the one that comes to mind first is set of EMAs to ease following the trend, but trading break outs and crosses lead to many losses, which are usually covered by the big runs. However lately we discovered an amazing tool, TradeMiner, that gives you historical data and it seems to give an incredible edge. I plan to start trading live with it perhaps next week, first small of course, but I already can see how this can suppliment short-term trading and I want this style eventually to take over completely. I plan to use data from DataMiner with additional analysis from Marc's M2 (which is awesome once you invest your time into-chart reading skill as it is based on support-resistance that work in any market) and perhaps some elements of Pierre's ES system, but my goal is not to use anything complicated, just bare-bone tools and go with the market flow.

This is pretty much a condensed story of my findings in Forex. Hope it wasn't too boring and at least a bit informative or entertaining

[fuzzz]

[QUOTE=raa;31452]Hi Fuzzz, thank you for the kind words! Basically I have decided to blog away my forex jorney here so people may do less mistakes themselves, and perhaps see some other angles of trading as well.

I used to do only manual trading, however I tried once in a while.....


Wow! Thanks Raa, that was more than i expected.. was a good read... I did a little backtesting on the Miner this week too, will post what i found in the thread now, perhaps you will add a lot more to it when you do your thing...

[Jamesd]

Hi Raa,

This was a great insight into your journey and is exactly why I joined this forum, to get gems of information like this. I have seen some of your comments on other threads and is great to have the background to support your opionions.

I am just starting out myself, I looked intofx trading about 3-4 years ago and spent 6 months on forex factory and others looking into systems and testing EAs etc... But couldn't find anything that really worked (consistently) and didn't have the confidence to invest my dosh into it. I also just had my first child so any spare time I had was quickly eaten up.

So I am back and very interested in your approach in developing your own algorithims and back testing etc..

Also interesting to hear your view on auto bots not being long term solutions. Having read many of the threads on here that would certainly ring true on most of the bots, they seem to be great for a couple of months and then crash dramatically. I can see that the markets are constantly changing that would cause this but are brokers really in a position to manilupate things to force the crash of your account/system?

Cheers,
J

[raa]

Hi, J

Glad you like it, hope it gave you some inspiration. Algos and EAs now on a very rough patch just as well as many manual strategies. I stopped myself spending any time on new algorithms and ideas and concentrated instead on getting my "internal compass" aligned with the markets. I doubt that any mechanical strategy being automated or manual can do really well in these markets. I think the best EAs out there (see Omar's corner) can survive it and make some gains, but as year is nearing its end soon we can see at best it will be about break-even year for those best EAs. I hope they will improve in these last months but I am not extremely hopeful. I think the best chance to survive and thrive in today's (and more so tomorrow's) conditions is a strategy that involves a lot of discretion. This is most difficult part that comes with experience. I think Marc's and Pierre's M2 and E&S are one of the best candidates out there. I also value STT but find that we will have increasingly disorderly markets and getting these nice long runs STT is famous for will be more difficult as we get now mostly choppy price action with sometimes huge swings and lots of event risks.

I would encourage you to work on these strategies and getting experience under your belt. In order to make it happen faster you can you tools like ForexTester2 or a tool-set of scripts for back testing manually in standard MT4 (I cross-posted an article about it with my remarks).

I do believe that very short-term strategies have best chances with EA, as at micro-level market doesn't have too much states like at macro-level, but lately we are getting hit with incredibly bouncy price action and instable spread, so those strategies suffer a lot too. Just look at our conversations in MDP and Shark EA thread. I was a big fan of MDP and traded relatively large but since Feb this year it became a horror story as after 3 huge hits I pulled the plug. I could see that market price action is very different now than it used to be before, much more nervous and less predictable. Spread is erratic and kick off trades even when direction is right.

To sum it up, I would say try something if you have a burning desire to, but don't rely on it too much. Instead invest your time into making yourself a better trader. Good luck.

[Jamesd]

Hi Raa,

Again this is really useful, thanks for taking the time to write back.

I guess the reason for my interest in automation is that my background is that I am/was a techie and can therefore relate to it and like the concept of having tech making my life easier. So the burning desire may be in there.

That said, I am very keen on using my time wisely so will certainly take your point on board. I have had some good trades using the STT and actually enjoy using it but it seems like few and far between opps. I havent back tested it at all so will spend some time looking at this to hone my trading senses for the opportunities.

Where would I find the cross posted artice on tool-set of scripts?

I haven't got my head round the E&S or M2 yet but will.

Thanks again
J