FXCM/DailyFX Signals and Strategies

No Forexfactory does it for members.
Click on your log in name top left and it brings up your profile page.
Halfway down on the right you can imput your sentiment and look at FF members sentiment as a whole too.
Yes , my sentiment is based on my own analysis!
Nicola

Thanks Nicola,

I learn something new all the time

So here's an interesting SSI. Net positioning in both GBP/USD and GBP/JPY has flipped to net short. Meaning the majority of orders are now short positions. Taking this as a contrarian indicator would indicate a potential bottoming in both currencies. But keep in mind the positioning is not at an extreme level and both GBP/JPY and GBP/USD have gone up by nearly 300 and 250 pips respectively. Some nice moves today for anyone trading GBP/USD and GBP/JPY on the long side.

Yesterday, I posted a picture of the FSS platform itself. I added a system to the portfolio called Insider Breakout and it opened 4 trades yesterday. Attached is a screenshot of how the trades appear when the signal is received to open new positions. I drew a red box around the trades. The system will automatically set the stop loss and limit according to the strategy. This system has fairly large stops you can see, about 300 pips. Some of these systems are very aggressive, so you need to use caution when evaluating systems, and I'll explain more about this in the next post when we go through choosing systems and looking at the equity curves.

The previous FSS post showed the Positions page. If you click on the Portfolio tab at the top, that is where you add systems to your portfolio and choose the money management settings. Money Management = how many lots you want the system to trade.

On this screenshot, there are 3 systems in my portfolio: InsiderBreakout (GBP/JPY), AVATAR (EUR/USD), BreadWinner (USD/CHF). You can choose systems based on a large range of criteria such as profitability, currency pair, system name, drawdown, maximum positions, etc. We'll go over that in another post. Just as an example, I chose these three.

It is also possible to tell each system what amount is to be traded per position. I circled in yellow the area where it indicates the amount traded and it also shows the max positions. Some of these systems can open multiple positions.

I also circled the leverage at the top. This measures the maximum amount the account is leveraged if each system opens the maximum number of positions in the amount (k) chosen. This account I have has a balance of $100k so even trading multiple positions at decent size, the leverage figure is less than 2 to 1.

Down at the bottom of the screenshot is the list of systems to choose from, 79 pages of systems. I will discuss later how to filter through the performance pages to make sense of it.

Covering something new: Technical Analyzer

There's another signal provider located in the DailyFX+ area called the Technical Analyzer. Below is a picture of it. These signals are coming from a third party provider, and cover additional products besides currencies such as oil, gold, indices, 10 year note. And the signals are purely technical, in case the name didn't give it away .

FYI, we've reached our max number for the VPS beta testing group.

DailyFX has released the weekly SSI report
http://www.dailyfx.com/story/tophead...778513008.html

Here's the USD/JPY analysis

Following up on yesterday's FSS post:

Whenever you add systems to your portfolio, you can create an equity curve based on the systems you have chosen. Please note that past returns are not indicative of future results. Here are the systems I chose
http://farm4.static.flickr.com/3650/...910dd21099.jpg

If you click on the PE Curve button at the top, it will open an equity curve for the systems you have chosen. At the top, I also set the start date to Jan 1, 2009 and the balance to $2500. This is important because you can see the equity curve hit $0. A margin call would have occurred which is why it is important to run the equity curve and make sure your account has enough capital for systems and money management settings you have chosen. This equity curve looks nice of course, naturally there are many systems that don't perform as well. And choosing an equity curve that looks like is no guarantee that it will continue performing as well.

I meant to post this yesterday when it was released. David Rodriguez of DailyFX released a correlation report comparing currencies with key markets. It shows to what extent some currencies are correlated to other markets. Closer to 1 means they move togehter. Closer to -1 means they move inverse of each other.

http://www.dailyfx.com/export/sites/...ipboardA02.gif

Click here to see the whole report

Here is something new for you: www.CFDTrading.com

We will be providing research on gold, oil, commodities, indices, etc through the new website. A great new resource for you to watch since the forex market is so interconnected with other markets. Here's a good technical piece on gold if you watch it along with your USD analysis.

http://www.cfdtrading.com/2009/08/20...angle-in-gold/

Thursday, 20 Aug 2009 6:01 EDT at 18:01 by Jamie Saettele


Since the end of February, gold has traded in a contracting range and taken the form of a triangle. The immediate barriers are 927.60 on the downside and 974.30 on the upside. However, the critical levels are 907.60 on the downside and 993.60 on the upside. A break of either of these levels would warrant a breakout strategy. A break higher targets the all-time high set in March 2008 at 1034. A break lower could result in a test of the October 2008 low at 681. Although the break may not occur for a number of weeks, this is a chart worth keeping an eye on.

http://www.cfdtrading.com/wp-content...dtriangle1.png

Continuing with the Forex System Selector...

One of the most important features is the performance tab. I circled in red in the screenshot which button to click on to find the performance. The list displays past performance so past results do not indicate future performance. The amount of information you can review and sort by is very large. So I'll just touch on a couple of things. Of course the profit column is probably the first thing most traders look at, but it shouldn't be the only. The column titled MAX DD (maximum drawdown) is very important. Profits are nice but if the system sustained massive drawdowns or losses to make that profit, then the risk level is high. Start date will indicate the date the system started trading. Be cautious of new systems showing profits that haven't been trading for an extended period of time since it hasn't been traded over a range of market conditions. Those are some things to get started with. We have a helpful video on sorting and selecting systems HERE .

If you would like to register for a demo of the Forex System Selector, you can do so here http://www.fxcm.com/forex-system-selector-demo.jsp

Check out the latest SSI from this morning. I'm watching USD/CAD and USD/CHF.

USD/CAD is interesting because we're approaching the important 1.0650-1.0700 level which was tested at the beginning of August. Retail traders bought around this level previously in early August and were correct. USD/CAD failed to make a higher high on the daily chart during August. Is this a triangle forming to the downside? I would expect retail traders to try the same thing again this time by trying to pick the bottom. We'll wait and see if positioning increases when SSI is released again this afternoon.

USD/CHF is also intersting just because the ratio is approaching 4. Nearly 80% of our retail traders are long USD/CHF which has been bouncing in between 1.06 and 1.09 for the past three months. Yet more bottom fishing by traders. Traders may take comfort in the Swiss National Bank potentially coming to the rescue if it drops through 1.06.

Hi Jason,

Thank you for sharing such interesting information with us. It certainly is helpful to see another aspect of the big picture. I will be following along.

fxpilot

Hi fxpilot, happy to see you enjoy the information . Feel free to post any questions or add insight as we go along.

Cheers,

Jason

Since I discussed USD/CAD earlier today, here's a good feature on the Marketscope charts that was I just playing around with. You can overlay one currency pair or instrument over another.

Example below is USD/CAD (candlestick chart) and Oil (white line). This way you can see the relationship between the two, if any. Oil is not on the platform yet, so you can practice with some of the highly correlated pairs such as EUR/USD and USD/CHF to test. At the top left of the screenshot I circled in red where to find the Overlay button.

Last post for the day. Wasn't planning to post the entire SSI again, but I found this interesting enough to warrant. If you look at the SSI attached from 1:30pm today, it shows that USD/CHF positioning increased to 4.00. This is from the 3.97 reading from this morning. BUT the daily percentage of longs decreased 7% and percentage of shorts increased by 25%.

At first glance, I thought this would indicate an overall drop in long positioning since the percentage of shorts was greater than the longs. Yet the positioning increased from 3.97 to 4.00 indicating an overall increase in long positioning. I posed the question to John Kicklighter of DailyFX, and found out that the daily change numbers are measuring the percentage change over a 24 hour period. So the 1:30pm reading today measures from Friday at 1:30pm to Monday at 1:30pm. So keep that in mind when analyzing the percentage change numbers.

And off topic from SSI, here's an interesting article I found on Bloomberg http://www.bloomberg.com/apps/news?p...d=awQopeDIR2X8 . After doing a little research, the Japanese national debt is roughly 148% of GDP. Compare this to the US whose national debt is about 82% of GDP. Just food for thought.

http://farm3.static.flickr.com/2574/...e5ac47bfed.jpg


LIVE TRADE COVERAGE Q&A

During the live trading events our analysts try to answer as many questions as possible. If we did not get to your question, feel free to post it in the Q&A with Analysts thread.

Disclaimer: Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts. Any opinions, news, research, analyses, prices, or other information contained on this website is provided as general market commentary and does not constitute investment advice. Forex Capital Markets LLC. will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.

In addition to the signals in DailyFX Plus, the DailyFX Analysts will also provide their "analyst picks" on the website to let you know what they are watching.

http://farm4.static.flickr.com/3498/...a182ec984a.jpg

http://www.dailyfx.com/analyst_picks/index.html

I usually just glance through to see if they are trading anything that I'm watching.

Positioning in USD/CHF gets even longer