Why aren't traders who straddle the news successful?

Why arent traders who have been news straddling for more than 3year+ multi millionaires as i started since january 2013 and have consistenly gained 25%+ per month risking 2%per trade ? as if you start with min 250usd by 4 years time you will have have made more than $11million most people start with $2,000+


I am aware of broker problems i.e slippage but if you use a stp/ndd broker problems are minimal and rare

ive posted this 3 times no response can someone explain

i used to straddle a long time ago(4-5 yrs back). But brokers started freezing the platform, slippage , widening the spreads etc which made it not feasible. if not for those broker tricks, it would have been a very safe low risk method of consistent profits.

If possible, can you share your broker name . Thanks

maybe they all are and hence are not here to answer your post

i experience that but only on big news and its either my stop gets hit after the freeze or i am in a big profit , i can name a few : alpari (ndd accounts), fx open , go markets, tadawul and other stp/ndd also when you open account with them discuss and ask about their vps and try get the same vps as them, that will deal with the frozen screens etc. i am in the process of accessing a vps also its a trial and error process with ndd/stp brokers only.

also widening spread is usually a problem aswell but theres an ea system that enables you to not be entered if spread is widened above a certain point and max slippage - http://www.forexfactory.com/showthre...t=6854&page=36 on that page. your welcome

whats your strategy then. im always looking for good news strats?

i sent you the link with the ea system above and its basically a buy stop . sell stop 15 secs before news release and a trailling

you are forgetting the fact that as your size increase, your slippage will increase as well. lets take an example of where you want to make 1mm a year. that means 5k per day roughly.

assume one news event every day (usually it is less) that you can trade, that means if you are getting 10pips per trade, you need to trade a size of 5,000,000 (5k/.001). you would have tough time getting trade of this size.

I think you answer your own question really - it is almost certainly because the strat doesn't hold up as an edge over the longer term, ie your sample size isn't large enough (only 4 months live trading data since Jan 2013.) I wouldn't want to go live with something that was not sufficiently proven to me as offering a real sustainable edge, or maybe you have a large sample back test as well to base the strategy on ?

The straddle strategy on any given instrument (s) depends on

1. Volatility being created by the known event risk like a data/news release.
2. The knee-jerk initial reaction being sufficiently large and directional or to carry through after the 1st pullback so as to reach the pre-defined target, and of course;
3. To some extent, momentum being created by the market's reaction to the event risk.

These straddle the news strats were popular a few years back but as mentioned above have with broker foul play (platform freezes and slippage etc) seen their popularity diminish. Yes ecn/stp brokers may see you fare better but in times when the volatility dries up I doubt you'll find a reliable long term consistently profitable edge with the strat. This is not to say that market reaction to known and unknown event risks don't offer hi-probability trading opps - they have, can, and do...I think it is wiser though to have a proven edge around these and to trade them judiciously when that edge sets-up. Or. maybe it is that easy and those that are doing it are keeping quite and reaping the rewards lol ?

G/L

[url]http://www.youtube.com/results?search_query=power+straddle&oq=power+straddle&gs_l=youtube.3...12049.19498.0.19682.17.13.1.3.3.0.402.1531.7j5j4-1.13.0...0.0...1ac.1.-tTqTT1bMIc[/url

that video was made in 2007 6years ago so when your saying in the long term there is no edge i dont know about you but i classify a strategy which was i have seen as profitable from 2007 - 2013 and is still working as having a longterm edge. dont you . and im aware their is flaws but with every strategy such as technical trading strategies have their own flaws just as this like draw downs and with this strategy atleast i know when im trading and when not to even bother looking at the market other wise.

but to say their is no longterm edge bbmac i think personally your wrong but everyone is entitled to their opinion

[quote ] Stt :you are forgetting the fact that as your size increase, your slippage will increase as well. lets take an example of where you want to make 1mm a year. that means 5k per day roughly.

assume one news event every day (usually it is less) that you can trade, that means if you are getting 10pips per trade, you need to trade a size of 5,000,000 (5k/.001). you would have tough time getting trade of this size[/quote]

i think thats incorrect tbh because ive spoken too people who trade larger amounts and they experience slippage as frequent as me infact some of dem experience it less as they use an institutionalised account but id have to wait and see .

but tbh i think its a myth , its like the myth you can not be profitable trading news. straddling is a well established stratrgy in financial markets its on wikepedia etc but it was orginally made for options , neverless its a well profitable strategy which is giving me good returns so im going to stick with it for atleast 2 years then i will post up my results then and at the end of every year to destroy the myth .

and you're certain it's been successful over that whole period?

Apart from broker considerations, this strat requires market volatility to work; something that was historically low until around the time you say you started trading it.

Take a look at the charts below. During the period you've been trading: high volatility. During the period of the video: high volatility. Overall volatility since that time: primarily decreasing or static after things settled down from the crash.

Someone not replying here, in just another thread, in another board, on just another forex forum, on "lovely" internet
doesn't mean news straddle profitable traders are not there (IDK either though; may or may not)

But, long back in 2009, i knew of a trader on this forum itself(not sure where he/she is now), who consistently(10-12mths or so) made money(still makes/used to make??), trading news with edge based on (as i understood)
- S&R levels
- ATR
- selective news (imp)
- selective pairs (spread;character)
- selective times
- using self-developed automated stuff (software;ea's, etc)
& sometimes also
- based on price feed lags (frowned upon)
& he was quick(real QUICK with things) (i once saw via R.desktop)


I thought of testing & adding into one of my style of trading but it didn't work out (various reasons including quality of internet connection; very few opportunities(relatively); timing/availability issues; less automated resources back then, etc)
Would try to carve out time for it. I feel its definitely worth trying/experimenting on esp. for ultra short TF traders

But remember, IMO, its gonna be volatile (equity curve) esp. with pure bucket shops.

Go to fxstreet, search for Wayne McDonell

He has traded this live 87 months in a row now

And you can watch him live, so may answer your questions much better than anyone here

Now you just have to wait another month from now

Showing my ignorance with this question, but why would brokers intentionally interfere with your straddle trading? Do brokers make money when we loose? If so how? I thought they made their money by the commissions. Are we all trading while fighting against a broker that wants us to loose?

tHAT'S A MYTH... (some) brokers warn you of potential events
when there may be "gaps" or lack of sufficient liquidity to fill
your order.

One should keep in mind the cost (for brokers) of acquiring and
keeping clients.
And of course... there are a million rebuttals to that,

what would you do ?

cheers

Read and weep. Source: Glen's website @ http://wingstarfx.webs.com/newstradeeducation.htm

Liquidity - Where does it come from?


The original question:
"What happens when crown forex has soo many spike traders sending Thousands of orders at the very same moment?
Will the liquidity be available to fill them?"
A little over a week ago, I answered "yes" and asked if anyone could say why I answered "yes". The answers were close, but no one said what I was looking for.
Many of you appear to be so jaded by a previous unpleasant experience with a broker, that you have lumped all brokers into one category: suspicious, dishonest, sneaky, and not to be trusted. If your experience is anything like Maxey posted a couple of weeks ago, that is understandable.
Forex brokers are a business. Any business can choose to be honest or dishonest. Those on the internet are more suspect than others. From all that I have observed, there are two types of forex brokers: Those that clear their trade through a financial institution and those that don't.
By definition, a broker is a middleman between two parties wishing to consumate a deal.
Those forex brokers that hold all their orders "in house" and don't clear through a financial institution do not fit the definition of broker. They are not in the "middle" they are the final stop on the other end of the deal. They appear to the trader to perform all the same functions of a forex broker with the exception of clearing your trades through a third party financial institution.
This business model does not make them dishonest because, most likely, they have disclosed their practices deep within their terms and conditions. These pseudo brokers are the ones you read about that win when you lose, and lose when you win. If they are well capitalized, they can play the odds that 95% of all forex traders will lose. They are frequently patronized by novice traders. They offer 500:1 leverage, and rediculously low minimum deposts. They accept electronic currencies, offer instant execution, and many other attractive benefits. When their success is threatened by a successful tech trader or even worse, a spike news trader, they will quietly ask them to leave. Sometimes they let you keep your profits when you go, but sometimes they will back them out. When they do, they know you will go to a review site to complain to anyone who will listen. Yet their business model continues.
The other type of broker is a real "intermediary". They fit the definition of broker by acting as a true middleman between the trader and the financial institutions. They maintain the records of your margin account while providing customer service and streaming live executable price quotes to the trader in exchange for a fair cut of the transaction in the form of the "spread". This may surprise you, but this type of broker is also the counterparty to your trade, but only temporarily. If you lose, they remove the money from your account. If you win, they display the money in your account. They settle up with their banking partners at the end of the business day. Depending on the success of their traders, this could be a net debit or credit for the broker.
We use the terms banks and liquidity providers rather loosely without actually naming them. Do you know who they are? Below is a list of financial institutions that provide that illusive liquidity to the forex market:
Bank of America
Citibank
UBS Deutsche Bank
Societe General
Morgan Stanley
RBS
CME
Lehman Brothers
Goldman Sacs
S/E/B
Dresdner Kleinwort
EBS
Santander
ABN-AMRO
JP Morgan Chase
These banks won't even talk to us as retail traders. They deal in mega $$ millions. They represent the true interbank market. Our broker, ( lets say Crown, for arguments sake) maintains a margin account with them, just like we do with our broker. As they stream their executable prices to Crown and we get filled on them, Crown is committed to them to settle the outcome of that trade, just like we commit to Crown to settle the outcome for us.
So how does a broker get a composite feed of all the available prices from all the potential providers? While there is no central exchange, there IS a forex grid or network that connects these financial institutions to their broker/clients. Here is an example of a company that facilitates this type of interbank connectivity: http://www.integral.com/products/overview.htm
In short, they provide the technology to hook everyone up.
I often refer to Crown's 10 banks of liquidity providers. To my knowledge this is not listed on their site. Our Introducing Broker, Scott Kuehne, has spent years researching forex brokers. Here is an excerpt from his site:
"We have tested or are knowledgable about most FX firms. If a firm lies, cheats, or makes empty promises we move on. We always find out how a firm offsets its client's trades. We refer you to the firms which have earned our trust and who provide the trading conditions you seek."
I encourage you to read Scott's accounting of his relationship with Crown forex on his site at:
http://www.forextradersinc.com/company_crown_forex.htm
It was here, and through Scotts' contact with the management of Crown Forex, in his capacity as an IB that I learned of the 10 bank relationship for liquidity.
Remember that these liquidity providers don't just quote prices to one broker any more than Crown quotes their prices to "just you". No matter where you trade, it is likely that some "mix" of these providers are quoting prices to you. Maybe your "other" broker uses 5 feeds, or 3 feeds or 15 feeds. You may never know, as they may deem their providers, proprietary information in the same way you may be reluctant to tell others what broker you trade with.
Now let me summarize and explain my answer to the original question.... ugh... What was that question? ......Oh yes, Can Crown provide an increasing number of traders with the necessary liquidity?
We would be foolish to think that our little group of spike traders could even shade a candle on the interbank market. Believe it or not, spike trading is not new, and we are by no means, the only ones doing it. If I'm trading the spike at Crown, and there are 10 banks ( and I mean BIG banks) behind that composite feed, and I don't get filled, then I calmly and resonably accept that there was NO liquidity, or very little, available to fill my order. I don't yell "scam" or "cheat". I have educated myself to understand that this is business. and no one is just going to hand over the money. We have to work for it. Don't blame Crown. They don't fill your orders, they just provide a price feed of executable prices, nothing more!! We set our slippage controls to hopefully grab a piece of the prices that may reasonably be quoted. Both sides protect themselves with the tools they have. Getting a fill at another broker may not be as much a function of liquidity as it is a function of technology and efficiency of the trading platform.
Lack of fills causes some traders to give up. For me, it causes me to work harder. So far, its working.

Here's a better post by Glen shedding some light on most brokers true face. Easier to read it at the source: http://wingstarfx.webs.com/newstradeeducation.htm

Lets Start a Forex Brokerage
Imagine that we are no longer traders, but a group of busniness people who wish to go into the forex brokerage business. We are only interested in creating a profitable business just like any other online or offline business. We are not out to scam or steal from anyone. We are not particularly well capitalized, in that we only have one million dollars US to invest. Because of our low capitalization, we have to establish our business in a jurisdiction that is friendly to our business and not subject to any crippling regulation. We select a Carribean island, form our corporation, and comply with all local requirements. Because of our low capitalization, our only choice is to keep all our client trades "in house". Our business model is founded on the fact that 95% of all forex traders will lose their account. Keep in mind this is not illegal, but just based on a known statistic, not unlike a casino. We have covered ourselved by disclosing the fact that we act as counterparty to all client trades. Since we are business people from all over the world, we don't really need to have a physical presence on the island where we are registered. We do need a trading platform, so we will use the very popular Metatrader 4 platform which we must lease from Metaquotes. We also need to lease a price feed to plug into the platform. We need a website, and can host both website and platform anywhere in the world. We realize that our clients would probably be more comfortable if we had offices in major financial centers around the world, so we will lease virtual offices in London and Hong Kong, complete with valid mailing addresses and working toll free numbers which can be answered anywhere we choose. We can advertise for Introducing Brokers (IB) who will provide our customer service from their home or cell phone in exchange for a piece of the spread. It is now time to promote our website to the general forex market in the same way a vitamin company promotes its website. We must do something that sets us apart from all the other brokers online so we can get new traders and lure "not so new" traders away from other brokerages. We can offer low spreads ( but everyone says that). instant execution, ( heard that before) low minimum balance requirements (seen it) , funding with every method under the sun, including electronic currencies ( haven't done it, but I've seen it). Truth is, we have to give away a lot of free stuff to get potential clients to even consider us. After a few months we have several hundred accounts of mostly novice traders. We honor all withdrawal requests promptly and our business model seems to be working just as we expected, as we have noticed trader losses definitely outweigh their wins. Our marketing efforts seem to be drawing in more traders with average experience under one year. We don't seem to be able to attract any funds managers or experienced traders because they are a little more saavy in their selection process when it comes to brokers. Our IBs answer questions as best they can but as you can imagine, there are always those who want to know about our liquidity providers or whether or not we are a "bucket shop". The individuals we have charged with answering these questions can often baffle the newbys but get frustrated when an experienced trader keeps pursuing the tough questions. They may even disconnect or abruptly end a chat. Remember they are not principals in our business organization and have only a limited interest (their commission) in seeing it succeed. As the months go by, our client base increases steadily and since we have provided good service, we have garnered some decent reviews on FPA. For the most part we are still on track to win 95% of the time as our clients lose. Sometimes we have to bite the bullet when a trader is successful, and we honor some $50K withdrawals. By now a few spike news traders have found their way to our site and have pyramided their $500 deposit into many thousands, and they seem to be doing so on a regular basis. After all, they are getting instant execution on prices that really don't exist. Our software just does what the trader requests, and executes the spike trades. Now our group of business associates has to get together to decide how to continue our business profitably. We have been in business two years and we have a few tech traders and spike news traders that are tipping the profit trades more in their favor than our business model was designed to withstand. Remember, we are not out to scam our clients and steal their profits, but we can't allow those wildly profitable tech traders to hurt our bottom line. At this point, there are only a few of them, so we decide to disable their account and send them a check for their balance. We will email them that we are no longer able to service their account. They immediately go to FPA and post their experience, but they are still in the minority and their post has a minimal effect on the influx of new accounts. ( Have you ever read of such an experience on the FPA site?) So that takes care of the wildly successful tech traders, but what do we do about the spike news traders who are also chewing away at our bottom line? We have two choices. We can do the same thing we did to the successful tech traders, or we can purchase a "plug in" application from metaquotes which will delay execution of trades at news time guaranteeing requotes to anyone who tries to trade the spike. We elect to go with the "plug in" and we find that this solution just makes the spike traders go away. They will still post on the FPA site about the problem with requotes at news time, but these two types of posts will just make us blend in with every other broker review on the site.
In summary: We are a group of business people with nothing but profit motive in mind. We have chosen a business model for a forex brokerage that mimics the interbank market but is definitely not a part of it. We have disclosed this within the fine print of our terms and conditions so we can sleep well at night knowing we are not scamming our clients. The worst that can be said of us is that we have been known to tell some clients that we just don't want to do business with them anymore. Such requests were just a business decision. By causing a delay on the news spike, we just managed to frustrate the spike traders and make them go away. Our 95% odds are still in place and we can continue to operate profitably.
Does this sound like a broker where you have traded before? Go re-read Maxey's post in the educational section of the site titled "Brokers - The Good The Bad and the Ugly. See how many fit the mold outlined above. Recognize the characteristics and move on to a legitimate broker.

YOU MAY HAVE A NERVOUS BREAKDOWN AND WIN LESS THAN IF YOU JUST TRADED THE NEWS AS YOUR SYSTEM TRIGGERED AN ENTRY 2 HRS LATER!

Vox, Love your last post. Awesome. Makes me wonder if some of the"big 11" banks dont have subsidiaries doing the exact same thing!!!

Now back to the question. I am a swing trader. I will try to focus on either the 1hr or 1 day chart, and use each other for confirmation. I haven't done too badly. Sadly most traders I think, are geared to be in one gear(smile), fast or slow trading and cant be successful;l at scalping and also medium term, 2-4 month hold trading. The strategies and the effect on ones nervous system are too conflicting.

So take a guy like me who on avg will hold his trade 3 days. If I start trading news with a trigger to enter on both sides, I am already leaving myself open to lose the discipline of waiting for traders to come to me, and as well I am leaving myself open to getting whipsawed and losing both ways. I use FXCM so thats pretty much as fair as youll get for a small retail trader. I mean to say that, the opportunities to get news with enough carry thru to make it worth your while in the usa to stay up from 2-4am,when most news breaks, and then after that, you must switch gears because by 5am the market may have technically fired off some buy signals on your chart for yOur system and now you must forget the news you just saw and maybe lost your butt, and ease back into a regular trader who made and lost 60 pips in 10 minutes just an hour ago, and now you have to wait 3 days to hope to do that again.
Better to go and get a real job or invent something to make you rich, if you have that kind of constitution. I think news trading is good for people who "only" want to trade news. And good luck if you go a whole week and nothing has follow thru and you keep going day after day at break even, be,be, be, be, be, be, over and over, especially in summer months.And how about the news traders who do succeed. They grab a fast 50 pips, think they are soooo smart(like me) and then see 3 days later the whole market is still buying that news and it went up another 400 pips or more. How do yu know when thats going to happen? So...sometimes by just trading your system, you get the benefits of news anyway.

Hello Silat. Credit for the post content should go to Glen.

The bottom line here is that it is possible to make a lot of money trading the news, be it spike, straddle, or the retrace immediately after release. Afterall news is what moves price. Beware of the 'brokers' though. Most will do everything in their power to deny retail the conditions required to profit.