Welcome back Zulu-traders.Well it was a brutal week with my live account and I need to take some steps to protect my remaining captial before I do much more live trading. If anyone reading this blog can suggest a good FX broker who works with Zulutrade and allows Micro (1K) lots, please let a comment and let me know. Please do that now before you forget and then go back and read the rest of this post.
Let's get back to the week's trading. The week started out on a down note when I manually closed a trade put on by EliteCapital for a loss of 64 pips. This turned out to the bottom of the trade and EliteCapital closed it the next day for a 100-pip profit. I wasn't too concerned about this at the time as I figured it could make it back easily enough.
Monday was a good day and all of my providers participated and I picked up 59 pips.
Tuesday was a pretty decent day and I picked up 36 pips, and everyone participated except for Cheetah. Late Tuesday Bigwin went short 2 lots of GBP/USD in the low 1.65's which looked like a pretty good trade at the time. That trade didn't work out and I went to bed down about -60 pips on each lot, pretty far away my -180 pip stop.
I woke up Wednesday to find myself stopped out, down -180 pips on each position. This was a -360 pip gap down in my account, but I can't complain since Bigwin has added about 495 pips into my account since I added him in early November.
Not content with that trade, Bigwin went long USD/JPY at 87.60 which had just pierced the recent low at 88, but had not yet taken out the intra-day lows set back in late 2008 and early 2009. This trade was in the money briefly, but started to go negative, and I closed this trade out down 1 pip. Then Bigwin came back again and added another lot which I closed out later that evening down -37 pips.
Between those 2 trades, EliteCapital came in and bought USD/JPY right about the same price level - 87.70. I stuck with this trade which hit my -180 pip stop early in the evening on Thursday 11/26. Not content with those losses, both EliteCapital and Bigwin came back and bought USD/JPY again and I close both of those trades manually, down -48 pips and -112 pips respectively.
I understand the Martingale concept where you increase your bet size as the position moves against you. Then you basically make it all back (and then some) when the position moves back in your favor. But that strategy is a sure thing only when the gambler has an unlimited risk capital. Wait - Zulutrade providers have unlimited risk capital - but I don't. So this strategy might work for them but doesn't work for me. Seriously though, why do these guys continue to add to loosing positions? If something isn't working out, do you keep doing it?
The week ended on a slightly brighter note where Cheetah came in and added 27 pips in pair of trades on Thursday evening and Friday AM.
Overall stats for the week:
TheKillerz + 113 pips - This provider has been sublime - let's hope he keeps it up!
Cheetah + 46 pips -Slow but steady
EliteCapital - 259 pips - Ouch!
Bigwin - 494 pips - Double ouch!
The overall net on the week was -594 pips.
Granted, Bigwin's GBP/USD trades topped out -220 pips and my stop was -180, and these trades were closed out by him for a profit within 24 hours of my being stopped out. But I closed out 2 of his USD/JPY trades for a small loss which would have gone on to much larger losses.
Similar situation with EliteCapital where I closed some of his trades early, but also saved some further losses. We can take a look a better look at Elitecapital when I review his demo account. I clearly added him to my live account too early.
Overall, I think I understimated the amount of drawdown involved in successful trading. I'm thinking if I went to 10-cent pips instead of dollar pips, I could better take the pain and have a better chance of making money.
Have a good weekend all and stay tuned for Rossco's provider picks from my post Zulutrade - Lot Limit and Stop Loss results.
Dang buddy, that really blows. It is interesting that you mention using a micro account. I have been thinking about that since I had read a comment on my blog about using LowestDD with a micro account. The guy said he made money using LowestDD, but I would have to have a micro account. This may be because in a micro account you can more fully follow the signal providers trading as you could be in on every trade, and allow deeper drawdowns. I really don't trust this concept, but you still may have a point here in scaling back to a micro account to keep from getting pounded and have the capablilty to take larger drawdowns.
ReplyDeleteI have to tell you, for the past 3 years I have lost money currency trading. I should have been using a micro account to minimize losses. Have more patience... But I didn't. As much as I want to find a great signal provider, I also hope I can use my own method to pull in possitive gains. In those 3 years I have learned quite a bit about patience and I suppose a bit of suffering. As my own whitness, and anyone reading, "I WILL START TO MAKE MONEY IN CURRENCY TRADING IN 2010", if I can't trust in signal providers I need to find my own way I suppose, of which I have been working on. Good luck to you my friend and anyone else caught in the same endeavor.
JT-
ReplyDeleteThanks for the support and thoughtful comments.
I understand the flawed logic in going to a Micro account. If you can't make any money trading 10K lots, what's the logic you can make any money trading 1K lots?
Here's my thinking:
To make the math easy, let's say that my total investible net worth (net of 401K, Real Estate, Pension etc) is $100K. Of that, I decide to allocate 5K to Forex.
I take the 5K and pick one provider who trades one 10K lot. Now that one provider takes one position in GBP/USD which moves 2% against my entry - about 200 pips and not at all uncommon for a major pair.
Now i've lost $200 or 4% of my initial investment. Not a show-stopping loss by any means, but certainly a blow to my psyche since i've now lost more in one day than I could make in an entire year on the risk-free rate of return from a CD or no-risk investment.
Now instead, say I take that same 5K and open a 1K lot and make that same trade. The pair moves against me 2%. Now i've lost $20 or 0.004% of my initial investment.
I haven't changed the odds, but i've increased my psychological ability to withstand a normal move in the underlying. Will that make the difference between profitability and loss? I don't think so, but it will definitely improve survivability.
In the final analysis, you are onto the right track developing your own trading method. No serious professional trader is going to let a complete stranger trade their serious money. Real money requires real effort and committment and you are definitely onto the right track in that respect.
Anyway, thanks for your comments and ongoing support,
Chris (Tcxmon)
When I first found Zulu, I thought it useless. After reading this blog for the first time several weeks ago, I thought perhaps it had potential. So, I've had a couple of demo accounts and they have both lost money, even though I've been very careful to find signal providers with 'low' drawdowns. My first pick was LowestDD until I realized that he keeps open trades going for eons it seems. Other promising traders had similar problems and before long I realized that they are all capable of violating the important trading 'rule': take losses early and let profits run. Most of the Zulu traders take profits early and let the losses run (until they somehow claw back into the black with the trade of simply ignore the loss forever).
ReplyDeleteI, like you, have concluded that depending on others to find trades is futile because they will eventually have serious drawdowns which I wouldn't be psychologically able to handle. I can much better handle my own drawdowns and really learn from them. In any case, the best 'guru' I've found is the Happy Trader at happytradersfx.com, who regularly takes about 300-400 pips a week out the markets, trading from Japan. A single losing trade during a week is quite rare for Happy. Now if I could just stay up during the Asian and London session, Happy might just work for me, but what fun would that be to simply copy another's trades.
I'm looking into EA's now, not so much to buy and use but to study and modify for my own purposes. Some of them contain useful trading techniques, like catching a trend or buying/selling at pivot points, etc. Since the forex market goes 24 hours, and I can only trade for 10 hours or so, it seems to me that an EA could be useful to trade during the period when I can't be there.
As for my approach now, I use Interactive Brokers (tightest spreads in the broker world, and incredibly fast fills, but they charge a commission), and derive my trades using MT4 demo account with some indicators which I can share if interested. They arent' scalps exactly, but I'm looking for 10 pips with a 10 pip S/L. I make the trades using Bracket Trader (bracket-trader.com) $100 as I recall. It makes trades with IB seamlessly and instantly set stops and take-profits, and trailing stops, etc for forex, stocks, futures, etc. Gotta have those stops and profit targets.
That's all I know.
Glen-
ReplyDeleteWow - thanks for the great comments.
I took a look at http://happytradersfx.com/ and it looks like a great service for the full-time dedicated Forex trader. Their web site says they have a 99% success rate which seems pretty unbelievable. I searched on google for "happytradersfx.com scam" and came upon a post on forexpeacearmy.com which had some feedback from a live user who had less than favorable comments from his experience with them. Take a look. In any case....
Part of me wishes I could retire right now to devote myself to trading full-time. The problem is, I have full-time job, mortgage, 2 kids and some scary future financial committments.
That's the appeal of Zulutrade. I can spend an hour or 2 a day and let someone else watch the market's full time. Sure there are downsides, the biggest of which is that when you lose, all you've really learned is not to trust someone else with your money.
Anyway, try adding demos for Student, and Cheetah and see what results you get. They are much more slow and steady. I agree, LowestDD is a scam.
I've been playing around with MT4 and EA's as well through some people I met through this blog. EA's are another topic in and of themselves and probably worthy of an entirely new blog etc.
Let us know how your are doing with IB-FX and if you think there's any potential there. Perhaps we can spin off another thread and figure out how to make money together.
Thanks again for the great comment,
Chris (Tcxmon)
Tcxmon, I am monitoring LowestDD, as I can see his trade is profitable, but also mixed with open possition that drawdown for 9000+ pips, could you share with me why you said LowestDD is scam?
ReplyDeleteI am looking for EA also, could you share at here which is the good performance EA, please let me know the blog if you have seperate blog for EA.
Thanks.
Glen, I'd go thru http://happytradersfx.com, they are charge usd200 per month for the signal? Even for their forum?
Wang-
ReplyDeleteIts not fair to say LowestDD is a scam, and I apologize for that. It is fair to say he opens a lot of positions and endures a lot of drawdown. In that sense, he's no different from Bigwin, who also opens many positions. His name is misleading, however because there are clearly other providers with lower drawdowns.
The information on EA's belongs to another group, and I can't share it without their permission. But i'll let them know their is interest. Thanks and stay tuned for more,
Chris
Tcxmon, I know that Isunia have lower DD, how about others?
ReplyDeleteCould you allow my to joined the EA's group?
Wang-
ReplyDeleteI ran a demo on Isunia last month, and just closed the demo concluding he didn't meet my needs for live trading. To find my comments, use the 'Search this Blog for Providers' box below the blog archive (just added).
The other EA's group meets this evening, so i'll check with them and see what they say,
Chris
At $200 per month Happy is a legitimate bargain. He provides signals AND great advice about money management and about when to trade (mainly around news events). Yes he has some open trades ('danglers') but you don't need to hold them beyond a day or so. Even then, winning percentage will be over 90%. My problem with the service was that I couldn't trade the Asia or London sessions and that's more than half of Happy's trades.
ReplyDelete