Alan’s Forex Blog

Hi everyone. It’s been a while since I published my first Forex Overdrive performance update post, so I figured I’d update you all on how my testing is going with this EA. So far so good Forex Overdrive is now in profit by $6485 (starting account of $10,000) so my account balance is now up to $16,485.

I can’t post the entire performance statement here as it’s HUGE, so here is but a brief excerpt and some useful stats:

Account: 2622708 Name: alan Currency: USD 2010 August 31, 04:53
Closed Transactions:
Ticket Open Time Type Size Item Price S / L T / P Close Time Price Commission Taxes Swap Profit
173022800 2010.05.05 02:22 balance Deposit 10 000.00
173067304 2010.05.05 15:00 buy 11.65 eurusdm 1.28670 1.28900 1.29220 2010.05.05 16:06 1.28900 0.00 0.00 0.00 267.95
173088231 2010.05.06 01:40 sell 11.99 eurusdm 1.28330 1.31610 1.28230 2010.05.06 04:54 1.28230 0.00 0.00 0.00 119.90
173124178 2010.05.06 13:43 buy 12.21 eurusdm 1.27500 1.27550 1.27900 2010.05.06 14:06 1.27550 0.00 0.00 0.00 61.05
173162898 2010.05.06 19:31 buy 10.55 gbpusdm 1.48430 1.48570 1.49280 2010.05.06 19:50 1.48570 0.00 0.00 0.00 147.70
173188320 2010.05.07 02:05 buy 10.70 gbpusdm 1.48500 1.48790 1.48950 2010.05.07 04:03 1.48950 0.00 0.00 0.00 481.50
173202556 2010.05.07 06:10 buy 11.29 gbpusdm 1.47070 1.47080 1.47300 2010.05.07 07:42 1.47080 0.00 0.00 0.00 11.29
173210099 2010.05.07 07:46 buy 11.30 gbpusdm 1.47160 1.47290 1.47810 2010.05.07 07:50 1.47290 0.00 0.00 0.00 146.90
173217634 2010.05.07 09:22 buy 13.20 eurusdm 1.27580 1.27800 1.28680 2010.05.07 10:43 1.27800 0.00 0.00 0.00 290.40
173220416 2010.05.07 10:05 buy 11.08 gbpusdm 1.46040 1.42760 1.46290 2010.05.07 10:06 1.46290 0.00 0.00 0.00 277.00
173220527 2010.05.07 10:06 buy 11.42 gbpusdm 1.46330 1.43050 1.46580 2010.05.07 10:27 1.46580 0.00 0.00 0.00 285.50
………………….

180815434 2010.08.30 14:15 sell 19.42 eurusdm 1.26901 1.26874 1.26155 2010.08.30 14:46 1.26874 0.00 0.00 0.00 52.43
0.00 0.00 -97.55 6 583.02
Closed P/L: 6 485.47

Some additional stats:

Profit Trades (% of total): 134 (97.10%)
Loss trades (% of total): 4 (2.90%)
Expected Payoff: 47.00
Profit Factor: 1.47
Maximal Drawdown: 11 228.15 (81.48%)

The maximal drawdown is way too high in my opinion. I mean I’m in profit but bringing the account nearly to its knees is not cool at all.

None the less it seems trading is going rather well for this EA so who knows maybe that drawdown was a fluke related to the recent market volatility. I dunno, further testing is needed – meaning for a longer duration – to flush out the truth.

If you wish to share your opinion or join in a discussion regarding this EA you can do so at the following forum thread:

http://www.forexrobotsforum.com/showthread.php?t=29

That’s all for now. I’m probably going to have another update on this EA’s performance posted in about 2 to 3 weeks from now.

Happy trading everyone!

Cheers,
Alan

He made a BILLION DOLLARS trading in one year.

Hedge fund trader George Soros made $1 billion dollars in the British Pound shortly after my book on foreign exchange was published.

Coincidence? Maybe, but you decide.

Hello, my name is Adam Hewison and 20 years ago when my book “RIGHT ON THE MONEY: The definitive guide to forecasting foreign exchange rates,” was first published, it was a huge hit with bank and hedge fund traders.

One hedge fund trader by the name of George Soros, who may have read my book, made a cool billion dollars in profits in the British Pound in 1992.

This was not a one off event. Banks and hedge fund traders regularly make millions of dollars every year in forex trading.

IT’S NOT JUST ABOUT FOREX

The truth is, many of the same trading principles that major banks and hedge fund managers use everyday to make millions, you will learn about in the eBook version of “RIGHT ON THE MONEY.” These principals can be applied to any market.

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THE PERFECT PORTFOLIO

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HOW THE PAST CAN HELP MAKE YOU A WINNER IN THE FUTURE

There is an old Hungarian proverb that I believe in, I used it in “RIGHT ON THE MONEY,” “The past is the teacher of the future.”

Only by learning how the markets have worked in the past can you possibly be successful in the future. Nothing really changes in the world, if it did we would all be living in utopia and unfortunately, that is not the case.

DON’T JUST TAKE MY WORD

Take it from Leo Melamed, Chairman Emeritus of the Chicago Mercantile Exchange (CME), now the CME Group. Leo Melamed is credited with creating financial futures in the United States. Here is a portion of what Mr. Melamed wrote in the foreword to my book, “… excellent educational reference for every serious trader.”

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I am not sure how long we are going to offer the exact trading strategy and formulas for filtering trades that we use to achieve those outstanding results as we do not want to disturb the harmony of these two portfolios. If you want this valuable information on two cutting edge portfolios, plus my eBook “RIGHT ON THE MONEY,” you need to act now.

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Co-Founder of MarketClub

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Hi everyone. I’ve gotten recently into playing around with another one of these forex “Autotrading” signal providers. This latest one is called “Rent a Signal” and so far it looks promising. I’m going to post on a regular basis the top signal providers in case you want to follow along with me and test them out.

The latest most profitable signal providers are:

What’s interesting about these signal providers is that their performance results are audited by senior members of the forex-tsd.com forum. I think there is some business relation between the forum and rent a signal but I’m not 100% at this time.

Anyways, feel free to checkout the Rent a Signal website and demo test those top signal providers posted above. Let me know how your experience goes.

Cheers,

Alan

Guest post by Kris Matthews (http://tradeforexfundamentally.com)

Let’s face it: Forex is a highly competitive game that takes more than the simple “buy when one indicator crosses the other” systems sold for $29.97 on the internet. Just look at the spreads- the fact that the cost of making a trade on the Euro can be as low as 0.0001 tells you right off that so many players and so much money comprise this market that any small newbie trader that enters is likely to get eaten alive unless he really knows how to really play.

If you want to achieve forex profits you need to gain an “edge” in this market. An edge is defined as an indication of a higher probability of one thing occurring over another. In trading this means either spotting a reoccurring pattern in price action or knowing information related to traders’ positioning in the market. In this article I want to focus on the latter. Think of it this way—if you were playing poker at the MGM in Vegas and somehow knew what the cards in the hands of the other players were, would that give you an advantage? Of course it would!

How to spy on the big dogs without cheating

Certainly, if you were discovered at the MGM using such a strategy you would probably find yourself face-planted into the red carpet entrance after some big guy threw you out. Fortunately, in the forex market, there’s a way for you to get a pretty good idea of the sentiment of the “big dogs” (the major banks and hedge funds who control the money flow in the forex market) without cheating or doing anything unethical. The secret is looking at price action during economic news releases.

Economic news releases occur almost every day and the high impact releases such as interest rate decisions, inflation, GDP, employment, retail sales, and manufacturing PMI cause the market to move considerably when the number comes out much better/worse than forecast. The reason is as follows: the big dogs put money into currencies whose countries’ economies are expected to do well and take money out of those whose countries’ economies are expected to do poorly. They decide which trades to make based on economists’ forecasts of high impact economic indicators such as those listed above. If these releases come out better than forecasted, the big dogs and other market players will make adjustments to their positions by buying more of the currency, causing price to go up.

Now that’s for the normal case. When price action does something strange, like decreasing on better than expected news after a long uptrend, that’s an indication that there is not enough demand at higher prices and sentiment is taking a turn for the downside. Do you see how that’s like the big market players showing their hands to you?

A step by step strategy for forex profits using price action and news

• Look for a nice uptrend or downtrend to develop
• Watch an economic calendar such as Forexfactory.com to see if any high impact news releases are coming out (usually in red).
• If the news comes out better than expected in an uptrend but price fails to move significantly upward following the release, or vice versa for a downtrend, sentiment is likely changing direction.
• If you’ve observed a turning point, look for a confirmation such as rejection of the upward trend at a key resistance level or a very bearish candle signifying the beginning of a new negative trend.
• Keep losses small and hold on for as long as possible, as the moves following these turning points are often one-directional and last for a few days to weeks.

I don’t know about you guys but Forex MegaDroid v1.30 hasn’t been working out to well for me. In the last while it placed multiple buy orders against the clearly defined BEARISH downtrend. I don’t know why this is the case, but I think the safe thing to do at this point is to turn off megadroid, and I recommend that you do the same. One of the members of my forex nirvana forum has written to the megadroid developers asking them to look into this recent bad performance and come up with a fix. So once again my advice is turn it off until we hear more from the megadroid developers regarding a possible fix or improvement.

To keep yourself up-to-date on what other real forex megadroid users are saying I recommend two forum sources:

1 @ forex nirvana – http://www.forexnirvana.com/f19/forex-megadroid-421/

2 @ forex robots forum – http://www.forexrobotsforum.com/showthread.php?t=5

I bet you’re thinking that you’re going to downgrade to version 1.21. Nice try! That’s not going to be a possibility as the megadroid developers made it so that 1.21 will expire shortly. It seems the only way to go is up to a new version. I can understand the reason they chose to implement this policy from a development point of view, but it kind of leaves us at their mercy in a sense.

I’ll keep you all posted on the latest regarding this issue.

Anyways, that does it for my rant. I wish you all happy trading, be it automated or manual.

Cheers,

Alan

The last two years has been the most intense time of global economic hardship since the Great Depression. When Lehman Brothers and Bear Stearns collapsed in the early fall of 2008, there was a period that lasted just a few days, when the global economic system was literally balancing on the precipice of complete failure. Fortunately, Central Bank leaders around the world joined together in an unprecedented movement of decisive action and slashed short-term interest rates to historically low levels. This swift action by financial and governmental world leaders literally saved the economic system.

Then, just a short 6 months later in March of 2009, the global recession began to bottom out. Equity markets began to rally as key economic data releases began to surprise the upside, economic growth began to take off again throughout developed nations, and the global economy continued to recover and move forward, albeit at a very modest pace, until another disaster struck in November of 2009. In late November it became clear that Greece and several other EuroZone countries were in serious danger of defaulting on large amounts of sovereign debt. This fear of default in Greece caused investors to make a run on the Euro. The Euro dropped ferociously from November of 2009 through June of 2010 as forex scalping traders and investors in general questioned the very existence of the EuroZone. During the worst of the Debt Crisis, there was talk that Germany and/or France may leave the EuroZone, or Greece, Spain, and Portugal may be kicked out. No one knew what was going to happen.

Finally in the late spring of 2010, after months of speculation and political bantering, the European Central Bank and the International Monetary Fund joined together and created a bailout fund for struggling EuroZone countries. This effort reassured market participants that there would be no EuroZone member sovereign default, at least in the short term, and the market began to cover its short Euro positions, and the Euro began a strong rally back up. Currently, the Euro has just finished a massive run against the U.S. Dollar in the months of June and July.

Now, two years later, each developed nation is emerging from the recession at a different velocity, which is making for some very interesting economic and political developments around the globe.

The EuroZone

In order for Greece, Portugal, Italy, Ireland, and Spain to receive bailout funds from the ECB and IMF, they have each been required to institute very strict fiscal austerity measures. In other words, the very loose fiscal budgets that have been in place for years in these countries (which are the very root of the Debt Crisis) have had to be modified significantly. These countries have had to initiate huge government spending cuts, which has set off riots and protests in every country. Minimum wages have been lowered, pensions have been cut, jobs have been slashed, and minimum retirement ages have been raised. These are just a few examples of the many cuts these countries have had to make over the last 2 months.

Many economists are concerned that these austerity measures will eventually weigh heavily on the economic recovery in the EuroZone in coming months. The idea is that if austerity measures are introduced when a country is still in a very weak state of recovery, as all these countries are, then the chance of falling back into economic contraction is very strong. Thus, the outlook in EuroZone is bleak.

United States

The U.S. economy appeared to be recovering quite nicely in early 2010. In fact, the Federal Reserve began closed door talks of when to possibly begin tightening monetary policy. These talks have all vanished in the months of June and July. In June, key economic data of the United States began confirming that the U.S. recovery was hitting a major wall. Currently, in early August it is clear that this slow-down is quite serious. The Federal Reserve has announced it will institute another round of quantitative easing in an attempt to stimulate the U.S. economy. The U.S. Dollar has been feeling the effects of these talks in forex trading, as the Dollar has plummeted in value versus the Euro and Pound in June and July.

The scary thing about the current global economic outlook for 2010 is that no one knows for sure what is going to happen. Two years after the Crisis erupted, experts are still very uncertain concerning the economic future of developed nations. In fact, Chairman Bernanke testified before Congress at the end of July, and in his testimony he declared the outlook for the U.S. economy is “unusually uncertain.” Unfortunately, it doesn’t seem that the history of the 2008 Credit Crisis has been fully written quite yet.

Q&A with an experienced Elliott wave trader reveals seven common trading mistakes.

By Elliott Wave International

To be a successful trader demands knowledge.

If you’d prefer to become an unsuccessful trader, you can start by making the following common trading mistakes, detailed by a professional who spent 25 years in portfolio management, trading and forecasting in the financial capital of the world, New York City.

In 2002, Wayne Gorman, long-time Elliott wave trader and current head of trader education at Elliott Wave International, left his 35th floor Manhattan apartment and moved to the quiet of North Georgia. He’s been sharing his knowledge and skills with aspiring traders ever since — in both online seminars and before live audiences around the world.

Wayne graciously agreed to a Q&A about trading mistakes. In his interview, Wayne reveals seven common mistakes traders make.

——–

EWI: Could you name two mistakes frequently made by stock traders?

Wayne Gorman: (mistake 1) The first big mistake is the flawed logic of extrapolation. Many traders and investors assume that a trend will remain in force until an “event” comes along to change it. But market trends are not like billiard balls on a pool table. This false assumption will put you on the wrong side of the market more times than not, especially at major turning points.

(mistake 2) The second big mistake is to suppose that news events drive market trends. In fact, the opposite is true: economic, political and social events lag market trends.

EWI: What are two common mistakes among options traders?

WG: (mistake 3) One common mistake is to buy puts or calls that are way “out of the money,” with no other transactions to compliment them. Unless your timing is absolutely perfect — and who has perfect timing? — your chance of success is low. It’s like buying a lottery ticket.

(mistake 4) Another common mistake is to buy options with too little time left to expiration. With less than one month to expiration, the time decay begins to accelerate and the chances of success diminish.

EWI: Please name a frequent mistake among traders who aim to catch the beginning of a particular Elliott wave.

WG: (mistake 5) In the middle of a corrective pattern, it’s common to run out of patience while waiting for confirmation of a trend change. You have to give corrective patterns time to unfold before you jump in. This requires discipline, and a solid understanding of the many ways corrective patterns can unfold.

EWI: What’s the biggest misconception among traders about using Elliott waves?

WG: (mistake 6) Too many traders think Elliott wave is a trading system that tells you exactly where to enter and exit a particular market. That’s the biggest misconception. The reality is that it’s an analytical and forecasting tool, which helps you develop and use your own trading system, based on your own personal risk tolerance.

EWI: What technical indicators do you believe traders over-rely on, and why?

WG: (mistake 7) Traders tend to over-rely on momentum indicators such as RSI, Stochastics and MACD to precisely spot turning points. But to paraphrase Mark Twain, markets can stay overbought or oversold a lot longer than either you or I can remain solvent.

EWI: How would you characterize today’s market action, and do you teach courses that address this environment?

WG: This is a difficult stock market in the near term. Prices haven’t strayed far from where they began in January. The action has yet to break out significantly to the downside or upside. This situation may not last much longer. I can suggest these online courses to deal with the current situation, and to prepare for the next big move:

• How to Spot Trading Opportunities, Parts 1 and 2
• How to Trade Choppy, Sideways Markets
• 5 Options Strategies Every Elliott Wave Trader Should Know
• Trading the Line – How to Use Trendlines to Spot Reversals and Ride Trends

Hi everyone. I’ve got some interesting news to report regarding the Forex Megadroid robot. I am surprised to find out but apparently the developers have dropped the price of Forex Megadroid from $149 to $97!! It used to be $97 when it first got launched, then they increased the price to $149, and now it’s back down to $97. Not sure what they have in mind here – maybe sales have dwindled and this is an attempt to make their product more approachable? I’m not sure, but I’d say this is a deal too good to pass. I have mentioned on many cases that Forex Megadroid is one of the few forex robots that I trade live.

You can see my live account performance either here on this blog (use the google search box to search this blog for “forex megadroid”) or at my forex robots forum. Here is the specific thread dedicated to forex megadroid where I will be posting regular performance updates:

http://www.forexrobotsforum.com/showthread.php?t=5

Happy trading everyon!

Cheers,

Alan