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Slowing down a bit unfortunately, still positive though – I’m tweaking the settings a little bit and looking at avoiding low volatility times of the day..

I had a really good night last night =) Not just with my adorable girlfriend Sophie.  You see, in the last couple months I’ve found the “system for me”, it works with my style of trading. Hallelujah!

However, there’s been some challenges as this year I’m living on the west coast (after living on an island in Thailand for the last few years), the hours for trading with some market flow start at 11pm and go until 9am.  I either stay up until 4 or sometimes all night and sleep in the day.

So, I’ve been working on making an ea that can trade my style and give my eyes a break. I know my style works so it’s just been a question of how to automate it.   Last night I finally got it!!

(17 wins and 2 losses on just two pairs: cad/jpy and aus/jpy)

This is what I call a sweet equity curve:

Now, of course it’s only been 1 night – if this was some “super duper ea” I would be very skeptical, but this is the same system I’ve developed over the last year and have been trading live for the last couple months. I’ve never had 19 trades in a day before though!

Very excited about next week…

PS.  Please don’t contact me asking to have a copy. If you have been accumulating knowledge, the picture is worth a zillion words.  I will be offering my signals here next month: ZIPSIGNALS – Automated Forex Trading, 10 day Trial $1

Stay tuned to track the progress and more hints. Keep it real!  ~ Jason

There is a ton of mt4 expert advisors available on the net, but do any of them really work? And if they do, can you trust them?
So I’ve been on “mad scientist mode” for the last year, working all hours of the day and night, testing – tweaking – statistics, further, further  and am now convinced that from this moment on I’m collecting the prize.   Don’t let me anybody tell you that you can’t do something, just because they gave up and are bitter…  Be very careful because this is so subtle and you could wind up carrying someone else’s limitations. If you’ve been spending a lot of time in forums investigating systems, then you’ll know what I mean. =)

It’s been 2 years now since I began “The Quest”, to earn a REAL income, working when I want – living where I want – traveling the world – abundance baby!  There have been many times I’ve been extremely  frustrated and considered giving up.  Losing money hurts and even more when it’s because you haven’t been disciplined.  AND even more when you don’t have much money to begin with. But that’s all in the past now…

Don’t worry, this is about automatic forex trading sytems, it’s not some article that’s been put together by a robot for search engine optimization. =)

During the last year I’ve tested/investigated “a bunch” of ea’s. How many?  At least 20. I’ve tried backtesting the systems using mt4, reaching for that positive equity curve. Previously I had one that was profitable but was on the daily chart and I don’t want to wait years to get mine. I’ve visited blogs where other people tested sytems a variety of ways and shared results. I’ve “come across” hacked versions of various ea’s, etc.  Nothing, nada, zilch.  Don’ta worka.

This is from testing in my own account for a couple weeks by the way, not from backtesting. I want to see for myself it it works or not, how is the drawdown (the amount of your account at risk), most wins in a row – most losses in a row, etc.

So, I gave up on all the “ea nonsense” and worked really hard to come up with a system that suited me.

Part of what was frustrating was that I found a few systems along the way that actually worked but I didn’t want to play that way, waiting forever and not enough opportunities.  So I’ve kept searching to find what I really wanted. (after reading this, you can google forex factory big dog breakout, from my tests if you use a 1:2 risk: reward, it’s profitable, test for yourself of course…)

BTW – This blog post has some amazing clues in it, some people are going to relate I know it. A lot of us on this crazy forex journey I’m sure.

Along the way I have established some personal biases:

• You can never know with 100% certainty what will happen
• Don’t trust backtesting results from mt4, most likely they will be “curve-fitted” – meaning either a certain date period was chosen to enhance results and the settings were tweaked for this
• There are some “technical fundamentals” and if you look hard enough you will find them - It doesn’t hurt learning traditional methods used by professionals, the tough part is deciding what is useful and what is not unless you are going to copy their system/tweak it slightly.
  
• Set an alarm and don’t be in trades when major news happens. - This is dangerous as the market could go 100 pips against your position so fast that your stop loss doesn’t work.  We have to accept that it’s possible this could happen anyways if a terrorist event, etc happened  on a once-in-a-decade basis, but it can also happen on a weekly basis if you’re not smart with news. I use a program called Aquarius Soft PC Alarm Clock Pro, I just scan Forexfactory at the beginning of the night and set the alerts for orange and red events and get out of my trades beforehand  unless I’m up a lot on the position and think it’s safe
• I like “black box” strategies as opposed to discretional – no stress! (b-b-when this happens do this)
• I like Renko charts better than time based charts - It is so much cleaner and smoother =)  In Renko charts, each bar shows price movement only, instead of ‘in 5 minutes it went up 10 pips’, you could set the bars to be 10 pips each and then ‘a new bar will only be formed when it completes 10 pips’.
• I want a lot of opportunities per week with a high success rate

That’s what I’ve been working with for the last year. Personally before I risk a lot of my hard earned money I want to know that the method is solid.  I don’t want an automatic forex trading system with a fancy name like Golden Goose Forex where I have no freaking idea why it enters a trade. That’s almost as scary as “photoshopped” results appearing on a sales site for Forex Kill Em All coming soon to your local web browser. (A lot of tangents I know, I’m having fun with this!)

What I mean is that I want to be able to manually backtest the system for the last 3 years and see how it performed. What’s the win rate, how much profit per 100 trades based on my risk:reward minus fees, slippage, etc.  Personally, I find Renko to be awesome because you can easily manually backtest – I’ll talk more about this later , and I will discuss the ea that I have created and why it’s different.

As the majority of new traders bounce from system to system, its important to stop and look at what makes a Complete Trading System. We need to know:

• Which Markets/Currency Pairs do we trade? – If you are trading more than 4 markets and are losing money, its a good idea to specialize and get to know the pairs you trade. Personally I find cross pairs, especially yen crosses very hard to trade with short-term strategies as it’s like the pair is in a middle of a tug-a-war, getting pulled in opposite directions.
• Risk Control / How Much To Trade - It’s important to know exactly how much of your trading account you will risk per trade, and also to have a predefined “pain threshold”, if you lose X amount in a day/week you will quit trading and re-evaluate your strategy. Without proper Risk Control, you can not be a successful forex trader
• Entries and Exits – Exactly when do you enter and exactly when do you exit a trade? If you don’t know this, you might as well go to the casino and play blackjack, your odds are about the same. (bad)

• When Not To Trade – There are times when you should not be trading the market. If you have a trend-following strategy and the market is range-bound, you should not be trading or your account will get eaten up. And vice-versa, if you have a counter-trend/range strategy and the market is in a major trend, you’re just throwing your trading money out the window. Know thy strategy!
• Time of Day – this is similar to the last point, but I gave it a new heading because its really important. If you are a daytrader, just because the market is open 24 hours a day does not mean you should be trading at all times. There are many hours per day that have very low volatility for example, if your forex strategy requires high volume, you will get chewed up. Spend time analyzing and backtesting your forex system and find out which times of the day work best.

By covering the above points you will be heading in the right direction, I can’t emphasize enough the importance of really knowing your trading strategy inside-out, what are it’s strengths and weaknesses? How do you know when you’re wrong? When exactly do you take profit or take a loss? To be a professional forex trader, you really need to treat this like a business.

If you’re like the majority of  new traders you’ve probably been bouncing from system to system. I did way more than my share of system bouncing in the first year. I’m not the kind of person who would just learn how to buy when an indicator turns green and sell when red, etc. I like to understand the what, why and how deeply…

This diagram comes from an amazing book I’ve been reading: The 3 Skills Of Top Trading – by Hank Pruden. I highly recommend this book. Hank has been trading for over 20 years and has a ton of experience. He was fascinated by the psychological aspects and really went deep into it. For you Wyckoff fans out there, you’ve probably already been learning from him.

I love that phrase “mental state mangement”, that’s powerful stuff - I would add emotional as well, “mental and emotional state management” – this is the key to being on top of your game. Just like top athletes us traders need to be in the zone and to do this involves knowing our strengths and weaknesses and how we play our game best.

On the left is the Black Box forex system, that’s the buy when green – never deviate. If you have zero discipline (and it’s ok to admit, be real with where you are now) then that’s for you. Then progressing towards the right each stage requires more discipline and better mental/emotional state management.

I couldn’t imagine being all the way on the right though! Ruthless/Outlaw lol, sounds like staying up all night in vegas donating your green to a bad cause.  : D

This book is such a great read, my blog post barely scratches the surface, Hank teaches us how to rate our system and to know its strengths/weaknesses individually and also as they relate with our own very unique selves.

ZuluTrade is the first autotrading platform and presents a fantastic opportunity. You can have other traders trade your account for you while you are working, sleeping, on vacation, etc. It’s no wonder that ZuluTrade is growing at a very fast rate.

One of the most successful traders in history was asked “what advice would you give to a trader that is struggling and not profitable?”, he answered “he/she should find someone who is a successful trader and get them to managage their account”. When you think about it, this is excellent advice. The learning curve for forex trading can take a couple years, if you could have a professional trading for you – what an advantage to earn while you learn!

How ZuluTrade works in a nutshell:

1. Sign up for a Free Account by clicking on the image:
2. Then you sign up for a new broker account from within ZuluTrade, you can choose between over  a dozen popular brokers like FXDD, FXCM, etc – (the account minimum for some brokers  is only $200 for a micro account)
3. Once your new broker account is activated you login to ZuluTrade and select your providers and the amount of risk for each provider.
4. Once a week you will receive a report with how many pips won/lost, you can check statistics and change providers anytime you like

This service works out to be free for you because the brokers give ZuluTrade a small commission on each trade from each referral. They split this small commission with the service providers. Anyone can choose to be a service provider for ZuluTrade by linking their live account.

The advantage of autotrading with ZuluTrade is time freedom, besides the initial time you spend choosing your providers and monitoring them, you don’t have to do anything. Each time one of your providers makes a trade it is automatically traded in your account with the money management (risk allowance) that you choose.

Where You Have To Be Careful - In my opinion the vast majority of current trade signal providers at ZuluTrade are VERY risky. There is various information available to you about each provider that you need to sort through:

Notice the column that says Max DD%, this is very important in my opinion, DD stands for draw-down and shows how down these providers have been in “adverse times”. Forex trading is an up and down game, at best 2 or 3 steps forward and 1 back. In the image you can see one of my favorite providers Lowest DD, after 1771 trades the most draw-down is account has seen is 14%, so if you have a 10,000$ account and you experienced his drawdown period, you would have been down to 8600$ at the worst period.

You see IKZE trading with the 250% DD, if you would have been trading with this provider during the worst time, you would have lost everything if you committed 100% of your account to this provider.  So, as the saying goes “don’t put all your eggs in one basket”, if you had only 10% risk set for that provider, then that’s all you would have lost. Personally I only choose providers with a very low DD and lots of experience.

Viva la pips!

Sign Up For A Free ZuluTrade Account

Wow,  I’ve had an amazing week, groundbreaking to say it mildly. So what happened?  Reading this book has changed my trading life forever!

I highly recommend this and if you’re like me you will probably really appreciate the audio-book version ; )  My eyes are busy enough thankyou, lol.

Here’s a synopsis of what this book is about:  If you haven’t heard of Richard Dennis yet, he’s the guy that turned 400$ into over 200 Million by his mid thirties. He got an early start as a runner on one of the smaller exchanges in his late teens and became known later as “the prince of the pits”.

In 1983 Richard and his high school pal Ed were in Singapore visiting a turtle farm where there were thousands of turtles in a huge vat. They were having a longstanding argument about whether trading is something that can be learned or something you have to be born with the right skills.

Richard was so confident that he told Ed, “there’s one way we can settle this, we’re going to raise traders like they raise turtles in Singapore”.  The following year they put an ad in the Chicago Tribune advertising for traders and that each successful trader to go through their program would get 1 million dollars in trading capital.

They received 1000 applicants and broke it down to just 40 and then began interviews. 13 traders were accepted into the first training in 1984, the best and brighest was the author of this book Way Of The Turtle.

So how did it turn out?  You have to read the book to find out…

Just kidding, no cliffhanger – not everyone was successful from the beginning after the 2 week training period, only the author of the book Curtis M. Faith who was and remained the most successful turtle for the whole 5 year period. The others except for 3 who were cut all went on to average 80%/year gains for the next 5 years.

In my opinion Curtis is a very smart guy and I really appreciate his understanding and incites into trading psychology and irrational human behaviour. This book beautifully articulates cognitive biases that stop us from acting logically. In my opinion it is emotional trading which causes failure.

The title of this post is Today Everything Changes, the other night in my hammock as I was listening to the book and Curtis talked about his views on trading and the techniques used in Dennis’ strategy something totally clicked. I leaped up and turned on my computer and 6 hours later had manually backtested my new strategy for the last 8 months on the euro. The results?  Pure Magic!!  I’m not sure yet if I will be publishing this or not. (sorry a real cliffhanger, lol).

Ok, here’s a little something, what really clicked was when Curtis said that friends would always ask him what his view of the markets was and he said that he didn’t have any. And he really meant it, to him it was impossible to predict what would happen, the only thing that mattered were the probabilities.

That was part 1 of “the big click”, part 2 was related to the actual strategy that Dennis taught them which is basically a trend-following system that starts after a breakout. I see how that can do amazing for commodities and daily charts of currencies but I am interested in intraday trading. My intuition translated their long-term strategy into a brilliant short term strategy.

From now on, I am putting Ichimoku on the side. My energy is best when it is highly focussed and I will become a master of one thing. My new style means I am trading 90% mechanically and only 10% discretionary, no emotional-rollercoasters, just complete confidence in the probabilities with each trade.

Euro moved below the 4 hour kumo and that 1.4600 level looks like it is giving way.  Looks like Euro is going to go down and test that 1.4530 level.

Interested in Eminis? Check out Emini Trading blog.

Last week we saw the pound doing some diving, will this week be the euro’s turn?  We think that there is a high probability of this happening. Right now the Euro is still in the 1.46-1.48 range but if it breaks the kumo, the next resistance is around 1.44. You can see on the monthly chart that the euro fell out of its longterm channel and now has come back to test it.

ichimoku-chart

It’s likely also that the S&P and Gold are coming down very soon as well, this will help our short move on the euro:

That word is a mouthful isn’t it!?   Been hearing about this book for a long time but prefer to listen to books instead of reading, finally got the audio book version today. If you’ve been trading for a while and have had your ups and downs along the way it’s a big reminder of how intense this work can be.

Making the step from being a gambler to a trader is  HUGE.  If you’re a bit stubborn like me you probably have blown up a few accounts along the way, the gunslinger approach =)  I blew up 4 micro accounts in my first year.  All I knew is that I wanted to trade and so I took a bunch of video courses learning various indicators and techniques. Trying system after system with limited success, day after day, month after month, it was equally humbling and frustrating. Feeling a bit stupid that I hadn’t mastered this in a few months  : ) 

My feeling at the time was that the majority of the “systems” I found were mostly scams which didn’t work, but looking back I see that it was also that they either didn’t match my personality or that they were only for good for certain types of markets and I wasn’t yet aware of if the market was trending, range-bound, on a pull-back or retracement, etc.

 Like Jesse, I wanted to understand this game really well and master it, become a great trader… Well it has been an amazing journey,  learning and re-learning (and un-learning!), making mistakes sometimes the same one again and again and still moving forward. I realized that I was 100% committed to making it and trading to win and there has been no question of if, just when.  If you’re 100% committed then you will make it.  The only word you need is: Further.

This year I have found Ichimoku and for me it is the perfect methodology. I’ll be sharing how I trade Ichi soon as there are a few strategies under the main methodology. Ichi is a trend-following method, you don’t get to sell the tops or buy the bottoms but you get in good part of the move with high probability. You know when to get in, when to exit , which markets to trade and why. That’s one of the best parts in my opinion, I don’t want to be an emotional trader, I want to be an experienced aware mechanical trader with attention to the details that matter.