Forex Trading – What Really Works

Hey Guys and Gals, I apologize for the long delay between posts. Today I have something special for you. My opinion about what’s really up with trading. It’s been over 5 years now and I’ve invested over 5000 hours into this.

The skinny: I don’t believe in static automated trading anymore. What this means is that unless the program is adaptive it’s not going to work in my opinion.

What’s really up with Forex: Everybody says you can’t manipulate a 3 Trillion$/day market, it’s too big, bla bla bla. Well, I used to say that and now I know it’s Bull-loney. 80% or more of the transactions per day are by the biggest 8 banks in the world. It’s totally manipulated. The market makers who work at the biggest banks suck in the general public and take their money.

How to Trade Successfully: Price Action is the key, not necessarily Al Brooks or YTR, etc but just like in poker if you don’t know who the fish are, you are one — you need to learn how to read when the market makers have trapped the public. You can see this often when there is a stop hunt (look for a big wick on a 1 hour or 4 hour chart). Often times the price will bust up through a support level and then fail, people enter short, then the price starts coming up again scaring out the shorts and enticing new longs, then price breaks above the recent high and crashes back down. Longs are trapped, shorts got burned once already…

Fibogroup Pamm Account – Smoke and mirrors?

Previously, I made a post about Fibogroup pamm account provider Elephant. Did I mention that interpreting the statistics is a bit of an art form?

I’m not saying here that Fibogroup is intentionally misleading people, I think they are just displaying some type of plugin that displays trading statistics in this fashion. (totally distorted from reality!)

Let’s take a closer look at the top 10 pamm accounts:

So, initially we see Elephant has been trading this account for 313 days, has achieved a profit of 368.51% and has quite a bit of capital in this account. Let’s find out more. Here’s the equity curve, fairly smooth..

Here’s the rest of the statistics.

What I would like to know is how is “Total Profitability” measured? The PAMM account capital is how much the investors have added to the manager account. The PAMM account funds is how much money is there now. (including the open positions of which is -23,526!) Even with the negative open positions you’d think that there would be enough profit guaged by the “general probability” chart.

If you’re confused right now then check out the following statistics. Notice how the Manager’s funds (current balance) are higher then the Manager’s capital (what he started with).

The above statistics are very straight forward. Account started with $300 and is now at $935. That’s really good for 6 months, however since the drawdown is at -72%, this is definitely a high risk investment. Imagine if you had given $10,000 and then watched your balance go down to $2800, ouch! Of course then it would have gone way up to 30,000. Actually, that’s making a huge assumption that someone who can double or triple a few-hundred dollar account can manage successfully a much larger account. (totally different game from the psychology perspective, unless it’s a fully automated strategy.)

Back on track – Be careful of what you initially assume by glancing at the statistics. What I have experienced as causing the “smoke and mirrors” is how the profitability statistics are calculated. Let’s say that the provider starts with $1000, triples it (balance is now $3000) and then $50,000 comes into the Pamm account from investors. (Pamm balance is $53,000). Now the account loses 40% and has a Pamm balance of $31,800. (total funds in the account are now down over $20,000). Let’s figure out the “general profitability”. The account manager owns 6% of the account (3/53). 6% of 28,000 is $1,680 – so that means the “general profitability” is now +68%. Why show these types of statistics, are they designed to help you make a sound decision?

It’s a jungle out there. Check out this last example, this guy started out with 400k and then had a 50% gain before crashing and taking massive losses, all in the last year.. Trade safely and choose your managers wisely folks. Be really careful and make smart decisions. It’s much wiser to focus on potential loss first then potential gain first.

Some Advice for Amateur Forex Traders

All you traders, be careful out there if you don’t have money to burn. It’s really easy to underestimate this game. Here’s some advice from a veteran.
  • If you treat this business like going to a casino, the odds are stacked against you
  • Beware of curve fitted statistics on systems and ea’s (ex: look how great it did in 2011… meanwhile it lost like crazy in 2008).
  • Don’t trust any ea until you’ve thoroughly tested it on a demo account and then on a live micro account for 3-6 months (depending on # of trades).
  • Grid ea’s and Martingale money management always lead to disaster.
  • Don’t trade with more then a micro account until you can double it twice.
  • Don’t put all your money on one system/investment/trade, etc.
  • Trading isn’t for excitement, it’s for making money, find other ways to get excitement
  • If you don’t have tons of patience and discipline, you should be an investor – not a trader

I recommend getting a forex account with Oanda because you can trade for as little as 1 penny per point (on their flash based software, not mt4). I think it’s important to trade with real money so that you actually feel emotions when you lose as opposed to a demo. As a game you can trade for $1 per trade, how long will it take you to lose $100….

Of course, if you really want the easy route, why invest years of hard work and pain to become a professional trader when you can instead be a portfolio manager and allocate money to various professional traders? At some point most of us don’t want to have to stare at the screen all the time.

Forex Managed Accounts Review


Are you looking for a smart place to invest some money? Who isn’t right.. Well, I did say SMART and you need to be to sort through all of the lies,

Are you looking for a smart place to invest some money? Who isn’t right.. Well, I did say SMART and you need to be to sort through all of the lies, false promises and manipulation in this industry…

I decided to post this Forex Managed Account Review as I’ve finally found a money manager that I have actually allocated some funds to. (to hedge my performance) Believe me, I’ve been looking high and low for the last year or so. Forget about Zulu Trade and ZipSignals as they don’t perform like the statistics show.. I’ve been watching FX Stat which I think is a cool service but no high-quality traders there yet.

OK, the REVIEW – A picture is worth a thousand words.

This is the equity curve for Elephant Managed Forex Account for this year. That’s right, over 250% so far and the account has only been running since April 10, 2012. This guy is an amazing trader.

How the Forex Managed Account works:

  1. Open up a trading account with FiboGroup. (I trade with them and trust them. They are a very good broker because the execution is instant, they don’t change the prices like most forex brokers do. Payments are always on time, they have convenient withdrawal. Customer service answers all questions promptly.)
  2. Fund the trading account. – The minimum account size is $300
  3. Inside your account panel click on “To Investor” , click on Elephant, click on Invest and allocate funds.
  4. You split the profit 50:50 with the manager – a bit high yes, but he’s on track to do 300% this year!

Choosing a Forex Managed Account:

Here are some important statistics that go with this managed account.

Besides looking at the earnings you always want to check out the Drawdown. This means how much the account was at risk. You can see with Elephant Managed Forex Account that he took a hit in the beginning of about 30% and has had a couple of dips so far that were also about 30%.

Also, look at the funds in the account. The manager has invested 20k and he has 58 investors who together have invested about 60k. This isn’t an amateur.. Notice as well that there were only 66 trades this year. And the investment period is 1 week, which means you are only “locked in” for a week at a time. If you take your money out earlier he charges a 1% fee.

I give it a Pretty Damn Good!! (Don’t invest the farm though, seriously, I would only invest a maximum of 10% of my trading capital with Elephant…) Only risk money you can afford to lose.