Clemmo's Trading Odyssey

Weekend testing report.

Electra blew up. Which is too bad as it had the coolest name. Carmichael is holding on. Everything else is status res.

RIP Electra.

Your death was not in vain as we now know inverted governors are a dumb idea.

Weekend Testing report:

G7
Not as much to report this weekend except that the thrashing of the Euro didn't produce too much benefit for the trending systems. Reversion systems however are loving it.

Lismer - the stability champion.

Macdonald - profits but some equity volatility.

and Varley - a deadly spike, handled deftly though.

On the Pleiades side, the most interesting development is Celaeno's frighteningly rapid profit accumulation. It's probably a fluke, we'll see if it can overcome the equally rapid rise in floating loss.


and I resurrected Electra with a couple minor tweaks. It will probably just do the same thing again. The initial stability is curious though.

My best broker has apparently got tired of me winning, and overnight changed the margin requirements for an instrument I'm trading so that I can't even open 0.01 positions in the opposite direction. Basically, they waited for me to build up a position, and then boom, - prevent me from trading out of it. It's completely unfair. No notice.

When I objected to them I get the standard "please contact head office to let us know what changes we can make to improve our service". You can stop changing the rules when you are losing!

I still don't have an account big enough to trade with a 'real' broker like IB, so what does one do? What is the next step??

edit: This isn't the first time something like this has happened to me either. When I was winning with SimpleFX they simply reduced my leverage from 200:1 then 100:1 then 50:1 then 20:1, where, if you don't have a huge account, you are going to make pennies at a time. This seems to be a standard industry tactic.

Modern day Jesse Livermore?

Well it seems like the bucket shops haven't changed much; they've just refined their tactics.

Its both inspiring and scary. Inspiring that one can win until the brokers start monitoring their activities. Scary that they will try this. I guess the clique that the system is rigged against everyone applies everywhere.

Honestly, blaming poor trading performance on a broker is the telltale sign of a losing trader, but if the rules are not consistent, if we expect to be able to do X after doing Y and then the next day that ability is withdrawn, it's hard to know how one can succeed on those terms. However I've learned what is possible and now I have to build it into my system. The amount of risk that I can take on is much lower though, and it seems I won't be reaching my profit goals the way I originally planned.

I am also going to start looking at broker programs like FTMO as I'm sure I can pass the test with a scalping system and maybe their setup encourages more honest dealing? There is some reason to believe so based on what some people are saying on other forums.

The greatest risk in Forex is broker risk. The casino will always find a way to win eventually, but will rarely do anything to scare away a new mark immediately. Two new rules therefore.

1. Raise accounts by 50% then remove funds and switch brokers. When you have been identified as a card counter it's wise to leave the casino before you're asked and definitely before they cut your brake lines.

2. Never let VAR go above 10% at any time. Don't give them an easy and deniable way to kneecap you. Don't drink at the table.

And the main quest is no longer (mainly) how to win consistently but how to avoid getting spotted as a winner. Winning too fast may be a problem. Maybe act more like a mosquito, trading very occasionally, rather than a leech that is constantly draining the host.

New broker accounts will be required. A method of getting other traders (or friends?) to open accounts, without running afoul of money laundering regulations? The longer term goal is to move to a reputable broker (like Livermore moving from bucket shops to Wall St.) and possibly to currency futures.

I have some things to look forward to, as one of the bots I've been working on with Kefada is nearing stability and is ready for some extensive demo testing. I will share those results if there's interest.

I have also been testing my scalping bot and was pleased with its performance in offline testing. It looked like this:
This will easily meet FTMO's condition if it behaves the same in a live test.

However later I was annoyed to find it's not behaving profitably in live demo testing. Digging deeper I discovered in fact it's just as profitable, but as a scalper, of course, it places many trades and the cost of commissions is completely dwarfing the profits. Of course this is not reflected in the tester which will do everything it can to convince you that you are a genius, in order that you may be sandbagged later on some live account.

Now, I've found a broker that will let me test 3 different account types. They call them 'pro', 'fix', and 'zero'. However the explanation of their benefits/drawbacks is somewhat lacking. I'm suspicious of anything labelled 'pro' as it is usually just an excuse to charge higher commissions and swaps, and enforce large minimum trade amounts, with the benefits of being 'pro' somewhat unclear. However in this case it seems the account that has commissions is 'ZERO'. I liked it because of the low spreads, but really I'm not sure spreads are going to be as much of an issue with this system, as I intend to trade it on EURUSD only. However, as a scalper any costs will have a big impact, so that remains to be seen.

This is what the broker tells you:
FIX

PRO

ZERO

If anyone has insight into these different types of accounts, I'm very interested. Obviously the logical thing is to test each type of account and see what the best performing one might do. I also need to familiarize myself with FTMO's fees and test it there.

This is what I've learned from 'EarnForex' a very useful site in general that I recommend visiting often. I guess it's a little embarrassing that I haven't learned about this earlier, but I'd rather be embarrassed revealing my ignorance than embarrassed financially.

Fixed spreads — (must be 'fix') the simplest model, which seems very novice-friendly but has its hidden disadvantages. During increased volatility in currency rates, a fixed spread will mean requotes if your broker uses instant execution model, and slippage if your broker operates with market execution. In both cases, your trading process will be disrupted, making you miss a trade or land a trade much different from the planned one. Nevertheless, a fixed spread allows for accurate trading cost planning and protects you from the trades that could otherwise turn too expensive. Generally, fixed spreads are best suited for scalpers and other short-term traders.

Variable spreads (I assume this is 'pro')— this model makes the ask/bid difference change almost every tick. It also means that traders will normally experience tighter spreads during periods of calm markets. Unfortunately, it will also result in very wide spreads during high volatility or low liquidity periods. This type of trading fees is well-suited for long-term traders because they have the luxury of less restricted timing for opening their positions.

Commission (and I assume this is 'zero') — a traditional compensation model for trading intermediaries in non-spot FX, but it is a less popular scheme in the retail Forex industry. Not only zero-spread accounts, but also ECN accounts with near-zero spreads usually have some sort of commission, which is based on trade volume. This type of fee is preferred by traders who operate during news or periods of low liquidity. Paying commissions, which often are pretty high, protects such traders from abnormally wide spreads, requotes, and slippage.

source: https://www.earnforex.com/guides/for...le-commission/

Incidentally, look at the win/loss ratio on that scalper! At one point it loses more than 60 times in a row! I never would have been able to trust something like this a few years ago. I now see it as a benefit, since if something can lose this often and still be profitable it's showing signs of antifragility. Is this wisdom? Excelsior.

I would never consider trading with this broker but I think it's fairly shocking that a company that has had such a high profile in the industry has done so much harm to their reputation in recent years. They have outright claims of fraud that they are not even addressing. Reading the litany of negative reviews it's clear that only the truly ignorant or desperate would choose this option, and it reflects badly on the whole forex industry broadly. This almost certainly discourages new money from being risked. Why would you want the hassle if you don't need to deal with it?

And this got me wondering if things have worsened in recent months since Ukraine? The new volatility in currencies is going to knock out some of the weaker hands, both individuals and corporates.

source: https://www.forexpeacearmy.com/forex...1/etoro-review

One more negative/paranoid post then I promise I'll cheer up.

https://www.toptradersunplugged.com/...salem-abraham/
This podcast is excellent, much better than Swanscott's. I particularly like this episode around 1:00 where they begin to talk about how algos are cutting into trend-following performance. "You don't want to be gamed."

If you see price immediately move against you when you get into a market, it's not just bad luck. The algo knows how to game your position. Your only realistic option is to have a much shorter or much longer timeframe than the herd, and for most traders the shorter timeframe is not affordable. "Know thyself and know thine enemy and you shall have 1000 victories." - Sun Tzu

How many years have you been paying your Forex trading tax?

I could help out with this if you ever decide to do it.

We will do it. It's only a matter of time now.

After several years of testing various systems I can say the most important thing I've learned: Only the safe survive. Aim for maximum safety, and profits will follow.

I rather put my money in the prop firm like MFF, provided you know that your trading strategy is able to pass the 2 phases challenge.

A powerful idea. Flitting from one notion to another can result in disaster. A better first step is to figure out why something doesn't work and then see if it can be revised or repaired.

The project that I've been working on with Kefada is nearing completion I think. It isn't exactly what I thought it would be, and it was more work than I think either of us expected but I can see multiple good things coming from it in the future. I certainly couldn't have done it without his hard-work and genius. I hope I can properly reward him some day.

For now the most important thing is to make sure it's stable, relatively bug-free and then test its range of possible settings to find the most likely combinations and then demo test, and then if it's still putting up equity curves like this, to test it live. Then, who knows, the sky's the limit in theory.

What makes this project special to me, is that it's based on a 'topographical closed-loop homotopy' which is just a fancy mathy way of saying the system deforms, but returns to its original shape over time, no matter how many times it goes through the same loop. Because it's a closed loop, it's theoretically a form of arbitrage, a new form, as far as I know, since it doesn't fit under any of the traditional categories. A type of 'topographical arbitrage' if you will.

It isn't foolproof though, as I'm discovering. That means it could potentially be derailed by a concerted effort, a power play from some hostile entity. I suspect achieving 'foolproofness' is likely impossible though I won't ever stop trying to attain it. That's the fun of trading. That, and sticking it to the big market manipulators.