Getting started in Forex

[tayser]

ahhhh you and I have headed down the same path

Chart backfill isn't really a big issue for me, I only need a general look at the market so I just have a standard MT4 demo up and running on a M1 chart before I start for the day.

Be careful with EFX & Minis - on their thread on forexfactory, they said they can't guarantee fills for orders < 10,000. i.e if you order under 10,000 or a number like 134,567, you could be waiting a while for a fill! Justin LeBang (rep on FF) did say that you shouldn't have problems with multiples of 10,000 (which is a mini contract, however some people were trying to go even lower).

 

[KamiCrazy]

I never planned to trade in strange lot sizes.

10k is 1 lot at EFX and on their leverage of 100:1 it seems to be the perfect lot size to me. I think that sort of risk is acceptable.

Have you given neoticker a spin yet? Their backfill for MBT is very good.

I'm also looking at openquant as well. However I need a decent charting package to go along with it if I decide to go down the openquant path. Finding it difficult to find a clean looking charting package which works with forex as well.

 

[>Apocalypto<]

I never planned to trade in strange lot sizes.

10k is 1 lot at EFX and on their leverage of 100:1 it seems to be the perfect lot size to me. I think that sort of risk is acceptable.

Have you given neoticker a spin yet? Their backfill for MBT is very good.

I'm also looking at openquant as well. However I need a decent charting package to go along with it if I decide to go down the openquant path. Finding it difficult to find a clean looking charting package which works with forex as well.

if you are trading single lot sizes with EFX 10 000$ don't get upset if on some occasions your order sits there waiting for a little while. you have to think that how many players in the interbank market are buying/selling minis!

Tayser,

have u seen this happen?

 

[tayser]

Not in their demo. I'm yet to go live (still no word on AUD accounts?).

 

[KamiCrazy]

I spent earlier today playing with amibroker again to get a feel for how it works in a forex environment. There are a lot of settings which need to be customised for it.
Been playing around with it mostly on my laptop but when I went home and tried it on my desktop (1920x1200 res). I don't like its window management on such a bigger screen.

Tonight tried out neoticker again. Its interface is seriously not intuitive but there are a lot of nice forex stuff that it does (the forex board is primo). And its window management being everything is undocked suits bigger/multiscreens more.
However all comments I've read about it being sluggish has been true, its definitely not a snappy program. Its almost starting to annoy me greatly.

 

[nizar]

Alright, first time posting in these forums, so here we go...

This thread seems the place to be for forex newbs so this is what I have learnt over the last month of research. I'm sharing it so that if I have anything incorrect hopefully someone will correct me!

Brokers

In the retail forex sector (low cap traders) there are only two kinds of brokers, bucketshops and ECNs. ECNs are better. Period.
There are only 3-4 retail ECN brokers around, IB, hotspot and MBT/EFX (they are the same company).

I didn't look into hotspot, not interested in them as they do not do mini's.
IB has a $10k USD opening balance requirement (unless you are under 21, then its $3k). As I do not have close to that amount of money I couldn't use them but I would prefer them for data reasons (everyone's program seems to be able to hook into their datafeed).
MBT/EFX has a small opening balance requirement and allows you to trade in mini's. They are pretty much the broker of choice for poor bastards like me. Only problem I have is that there aren't many good programs which can hook into their data and they don't supply backfill either.

Datafeeds

Once I was done looking for a broker I went and looked at datafeeds. I'm a long time user of Metastock EOD for trading ASX. So I searched for compatible feeds for Metastock Pro. The more I looked the more I realised this slight conundrum.

You either have two choices. Use a 3rd party datafeed or use your brokers datafeed.
There are many quirks which go along with either choice. The first one I realised is that if you choose the 3rd party feed it isn't going to match your brokers feed. What your broker says is happening in the forex market is not neccessarily what is happening on your 3rd party feed. This is a real problem as these differences large and small can have a bad impact on your trading.
Choosing your brokers datafeed can leave you with insufficient data. Basically MBT doesn't provide backfill, so even though I have intraday data with them and there is no issue of not having the "correct" data, having no backfill well sucks.
Choosing your brokers datafeed can also limit the programs you can use. Unless of course your broker is IB, which practically everyone hooks into (big reason to use IB!).
At the moment I am using MBT's datafeed with backfill provided by tickquest (through FXCM).

Charting/backtesting/automation

When it comes to intraday forex data, there isn't much choice for metastock pro, so I decided that I basically had to drop it for another charting program. This was the longest part of my quest to get started and I am still treading this. I have been through a lot of product websites, read heaps of user comments on products and tried to ascertain which product would suit me. I've only investigated charting at the moment. I haven't even begun on which backtesting app will suit. Although I have automation largely figured out with tradebullet.

On the charting side I'm comparing 3 products atm.
Amibroker, I would probably like to settle on this, but I am having issues with datafeed as it does not hook into MBT's feed at the moment. The current plan if I go with amibroker is to subscribe to dtniqfeed and just put up with any tick differences.
Neoticker, I am currently demoing this. It hooks into MBT fine and backfill is provided by their own backfill server (which gets its data from FXCM). Integration with MBT is really good as well. I don't really like neotickers interface however and its charting doesn't seem to be up to scratch.
Sierracharts. Again needs to hook into dtniqfeed. Relatively inexpensive charting program, haven't tried it out yet but I want to.

Thats all I have figured out atm.

Great post brother.
Welcome to the thread.
I've only just started looking at forex as well.

I have been looking at neoticker and I appreciate your feedback. It seems to be exactly what I need.
Im looking towards automated trading and Neoticker/EFX seems to be a good way of doing it. The neoticker forum has alot of discussion about this.

Openquant Ive heard is mostly designed for hardcore programmers, whilst neoticker is more trader friendly. That said, openquant can do some things that neoticker cannot.

What does backfill mean exactly?
It it like very recent data?

Where do you get like a few months of intraday data for neoticker?

Thanks.

 

[MS+Tradesim]

So I've now got eSignal real-time data plugged into Metastock Pro. Anyone else doing this as I've got questions??

EDIT: Nope, doesn't matter anymore - I've figured it out.

 

[nizar]

Im just wondering, what does scalping actually mean?
Is it short holding time or small profits or both?

If I have a system that trade using 5-minute bars, with average nett profit per trade of 3pips (after spread and commission), and average holding time of 20-minutes, am I scalping?
Or am I trading intraday?

 

[tayser]

yes, you're scalping - you're only looking for small gains on short timeframes - you're not waiting and looking for a big move which will net you 50+ pips etc.

Scalping is far more effective at faster timeframes however... i.e tick charts or 5sec (Oanda offers 5 sec). In saying that, if you've caught a big move - why would you get out? why wouldn't you stay in for 50 pips?

It's more a mindset - i.e. I only want this much and I only want to do it in this amount of time, whereas swing trading is I'm happy to wait for this much and I'll sit here all day if I need to. etc

A lot can happen in 5 minutes! Look at faster timeframes for entry/exit and confirm it with slower timeframes.

 

[nizar]

yes, you're scalping - you're only looking for small gains on short timeframes - you're not waiting and looking for a big move which will net you 50+ pips etc.

Scalping is far more effective at faster timeframes however... i.e tick charts or 5sec (Oanda offers 5 sec). In saying that, if you've caught a big move - why would you get out? why wouldn't you stay in for 50 pips?

Because of the trailing stop (which trails very close to the price action), Some of the winners in my testing so far have netted me 50 pips or even more. I get maybe 1-2 of these everyday.

In fact about 20% of all trades make a nett profit of more than 20 pips.

But its the losses which bring down the average. Heaps of losses around the 5 pip mark. Hit rate is still about 50%.

So far the testing has been positive, the system does between 50-80 trades per day, with a nett of profit of 3 pips per trade, thats 150-200 pips per day.

The discretionary backtesting I've been doing has only been over a few days, so the results are far from conclusive, but to be honest with you I'd be happy with half of that (75-100 pips nett per day).

The system is trend-following in its nature, and because of its structure, it will never miss a big trend. Its these big trends that bring home the bacon.

A fellow trader I have spoken to once said he traded a very similar system for some time very profitable. But he said once the market entered a volatile state, with no clean trends, he just got whipsawed to pieces (the system trades long/short). So maybe a filter based on a longer timeframe is a good idea??

The system is designed to be autotraded server-side by EFX. There's nothing better than making money while you sleep

But still a long way to go...

 

[KamiCrazy]

After testing out neoticker and sort of working around its flaws I have decided to go ahead and get a full licence for it.

In the end I just wasn't impressed enough with amibroker's offering plus I like the free data setup I have going with neoticker.

On the subject of AUD accounts I asked them if they would do that for forex and their reply was no.
I would in the future like to pursue a non-usd account to insulate myself from some exchange rate movements lowering my profits (bit weird aye? hedging a forex account with... forex?).

Now comes the hard part... learning c# haha!

 

[nizar]

After testing out neoticker and sort of working around its flaws I have decided to go ahead and get a full licence for it.

In the end I just wasn't impressed enough with amibroker's offering plus I like the free data setup I have going with neoticker.

On the subject of AUD accounts I asked them if they would do that for forex and their reply was no.
I would in the future like to pursue a non-usd account to insulate myself from some exchange rate movements lowering my profits (bit weird aye? hedging a forex account with... forex?).

Now comes the hard part... learning c# haha!

Thankyou for your feedback.
I have heard good things about neoticker as well.
Its what the real professionals use including some hedge funds.

Where are you getting your data to feed into neoticker?
Esignal?

 

[KamiCrazy]

MBT+tickquest

There is no backfill delay either because I only deal with forex instruments.

The best is esignal but I am unwilling to absorb the cost at the moment.

 

[nizar]

An interview with a very experienced trader who trades automated forex systems.

Well worth the read IMO.

 

[Temjin]

Excellent thread going on here guys, keep it up!

Looks like my original plan of MT4 -> TB -> ECN/STN brokers, then Amibroker -> TB -> IB is still quite feasible.

Damn real life..I mean social life, is definitely getting into my way at the moment. In the middle of a career crisis (ok, not really a crisis!) as well, so time to tune up my time management skills.

You got my last email Nizar? Sorry about the lateness in reply.

 

[nizar]

Excellent thread going on here guys, keep it up!

Looks like my original plan of MT4 -> TB -> ECN/STN brokers, then Amibroker -> TB -> IB is still quite feasible.

Damn real life..I mean social life, is definitely getting into my way at the moment. In the middle of a career crisis (ok, not really a crisis!) as well, so time to tune up my time management skills.

You got my last email Nizar? Sorry about the lateness in reply.

Hi Temjin,

What is TB?

Yes i got your email.

 

[Temjin]

Hi Temjin,

What is TB?

Yes i got your email.

http://www.tradebullet.com/

Basically, you can use Metatrader 4 or Amibroker or Wealthlab, or almost any custom applications to connect to ECN brokers like EFX or MBT through tradebullet conversion/routing program. (or whatever they call it)

While I don't like the idea of the dependance on another third party program, I guess this is the only effective way currently available for small retail automated traders.

The more professional future managed fund managers tend to have their own custom application connected to IB without the need for third party softwares.

 

[KamiCrazy]

Well today was the first day i started practicing what I've learnt and try it out. With real money that is. It's more fun when you have hard cash riding on it

http://dump.justwipeit.com/Pics/firsttrade.JPG
EDIT: I originally attached a picture but now I've linked it cause its too big for the website.
The blue box on the chart basically shows where my trade went.

Anyways I was sitting at my desk, saw the breakout and entered in at 1.4851. I entered with 1 lot and watched it goto 1.4865 then retrace back to 1.4860. It then meandered there for like I dunno ages... I was considering exiting but the support seemed to be there and so I stayed.

Then there was another breakout and so I quickly added to my position at 1.4871 with another lot. It spiked to 1.4883 and then quickly retraced back hitting my stop at 1.4873.

So I'm pretty happy at the results. Although I think I need to tighten my stops a little more, 10 pip trailing seems too much.

 

[nizar]

Well today was the first day i started practicing what I've learnt and try it out. With real money that is. It's more fun when you have hard cash riding on it

http://dump.justwipeit.com/Pics/firsttrade.JPG
EDIT: I originally attached a picture but now I've linked it cause its too big for the website.
The blue box on the chart basically shows where my trade went.

Anyways I was sitting at my desk, saw the breakout and entered in at 1.4851. I entered with 1 lot and watched it goto 1.4865 then retrace back to 1.4860. It then meandered there for like I dunno ages... I was considering exiting but the support seemed to be there and so I stayed.

Then there was another breakout and so I quickly added to my position at 1.4871 with another lot. It spiked to 1.4883 and then quickly retraced back hitting my stop at 1.4873.

So I'm pretty happy at the results. Although I think I need to tighten my stops a little more, 10 pip trailing seems too much.

Good stuff, and a great start.
Its always good to start in the green.

22 pips and 2 pips on your first two trades is nothing to scoff at.

What broker are you using?

With the stop, why don't you try trailing it very tightly, putting it 1-tick under the low of the previous bar?

 

[KamiCrazy]

Sorry haven't been on for ages, busy with work... not been paying any attention to my trading development. Bad yeah I know, need to regain focus in march.

Anyways to answer your question I use MBT/EFX.

And for the trailing stops question. I'm not sure... I think its just a case of trading style. I like giving the trade a bit of breathing space. I could be very wrong in this matter, but I simply need more experience to get the trailing stop size just right. I don't think a 1 pip trailing stop is very useful. You just get whipsawed.