Author Bio

I came across this blog post and apparently there are trade training programs out there targeting successful online poker players. The main assumption is that playing poker is all about risk management and money management. You never have the certainty that you have a better hand, but with proper money management and risk management you can decide on the better move to play.

It sure seems like trading is providing similar qualities as gambling: “It’s easy to participate, difficult to sustain success. Many just play for the thrills of winning and losing; relatively few systematically learn from experience and build skills over time,” or at least according to Brett Steenbarger.

All of this makes perfect sense when I see the success that eToro, a gambling site for Forex traders, is giving traders the thrill they want and the ability to easily participate in the Forex arena.

The big question I have is while there are so many people trying to make a living from trading, is treating trading as gambling the right approach? What do you think?

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Be sure to read the full risk disclosure before trading Forex. Please note that Forex trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved before trading. Performance, strategies and charts shown are not necessarily predictive of any particular result. And, as always, past performance is no indication of future results.

Author Bio

I’ve visited a few sites that claim they don’t charge any money and only increase the spread by a mere 1 pip, which doesn’t even make a difference at the end of the day. Zulutrade is an example of such a site and I though I’d take the time to try and explain to people how much is 1 pip.

I took one of the leading signal providers on Zulutrade. The photos shows one of their top 20 strategies there. I looked at the summary of that strategy.

As you can see, this strategy made 296 pips and has executed 141 trades. This means that if you pay 1 pip for every trade, you would have made only 155 pips on this strategy (296 minus the 141 pips that would have paid for per trade). That is about 50% of the reported performance. So in this specific example, 1 pip equates to 50% of the gain you could have made. I would say that’s pretty expensive, not to mention the same 144 pips would have been paid if the strategy had lost you money.

The big problem of charging traders with a spread increase is that you are not only defining a pricing structure that is not properly defined, but you are also creating a motivation of the signal provider to trade more often as opposed to incentivize them for successful (and profitable) trading.

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Be sure to read the full risk disclosure before trading Forex. Please note that Forex trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved before trading. Performance, strategies and charts shown are not necessarily predictive of any particular result. And, as always, past performance is no indication of future results.

Author Bio

I’ve been hearing a lot of comments about different sites that enable traders to display their performance to the entire world. The comments were mostly claiming that these sites have unrealistic performance, and that the calculations are not even close to being right.

I decided to check for myself, and have connected a single real account to both Currensee and myfxbook to measure for myself just how far off the performance is. The reason I chose myfxbook is not to prove anything against them – as all the other sites seem to calculate performance in a similar way – but because myfxbook seemed to have the most complaints against them for inaccuracy. This is probably due to the fact that a lot of amateur traders and non-professional money managers use them.

The first picture shows the performance as recorded by myfxbook; the second is the performance as recorded by Currensee on the same account.

Performance on myfxbook

Account Balance vs. Account Equity
Currensee receives its price feed from hundreds of brokers, and we compare the open positions of any user at any given point of time to the open prices that their broker has for the instrument they are currently trading. By doing that we prevent traders from logging their profits while holding large losing positions for a long time until the market changes. I couldn’t find any site that does what we do. The others, myfxbook included, log the closed positions against the account balance and completely disregard any open positions. The risk in doing that is that, as you can see, performance can be presented in a much more attractive (and wrong!) way, making it impossible for any trader or investor without the proper tools to evaluate the actual performance.

Measuring Risk 
Most amateur performance sites measure risk as either the max drawdown or the max losing trade. We measure three parameters for risk:

1. Daily Standard Deviation – This is for us the most important measurement, and represents that volatility of the performance. In other words, does this trader advance his account in a gradual and consistent manner, or is the ride choppy and risky?
2. Percent Days Losing – We measure the percent of the days the account is down to give fellow Currensee members an indication of the short- and long-term risk in the account. Having a high percentage of losing days usually means that the account would achieve performance on a long-term basis, while having a low percentage of losing days usually means that the account growth would be more gradual and consistent.
3. Max Drawdown – Like others, we measure the max drawdown in the account – the only difference is that we measure it on the equity and not on the balance (See section “Account Balance vs. Account Equity” above).

Displaying a Risk Adjusted Return Parameter
Currensee uses a unique algorithm that measure a trader’s performance and risk, and displays a single number that evaluates the trader. Lately Tradency has replicated the concept we have been advocating for more than 6 months, calling their version the T-Score. Like Orli wrote, we are always flattered by others copying our concepts.

Currensee’s TAI (Trade Authority Index) takes the following parameters into account:

• Performance parameters, including return (based on equity, not balance),
• History in the account,
• Number of closed positions, and
• Volume traded in the account and the consistency of the trader (consistency is calculated based on deviation from a strategy).

Risk parameters include:

• Daily standard deviation (or as we call it, daily volatility),
• Max drawdown, and
• Percent days losing.

We take all these numbers, crunch them together, and give you who has the highest return for the lowest risk.

As you may know, I was also shocked to see the performance of some of the traders on myfxbook, and now that I know this is fake, I am relieved. I hope you are too.

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Be sure to read the full risk disclosure before trading Forex. Please note that Forex trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved before trading. Performance, strategies and charts shown are not necessarily predictive of any particular result. And, as always, past performance is no indication of future results.

Author Bio

About a month ago I was meeting with the CMO of the largest broker in the US and he expressed his frustration in the commercial EA industry, where people sell their EAs for a few hundred dollars and there is no way to really validate how the EA is really performing. He claimed that his sales team was being asked over and over again how these EAs are really performing.

I then started researching the issue and found out that there are a few forums out there that have a dedicated EA section. People mostly complain about their experience with the purchased EAs and trying to warn other traders from using these EAs.

I started thinking about an idea on how to help the EA developers to properly present their performance information instead of a back testing graph that they all show.

We’ve approached some of the famous EA developers and made the following offer to them:

Link a real account that was traded using this EA to Currensee, which will cost you nothing, and use our performance metrics to measure the performance of the EA over time, including historical performance. Given that this is a real account, if the performance is good we’ll advertise your real performance to our entire trader base (more then 30,000 at this point), and it will still cost you nothing.

As you can probably imagine, none of the EA developers that we’ve talked to have taken us up on our offer. They have decided to hide behind fancy pictures of gold coins falling from the sky, open wallets with $100 bills or traders sitting in front of multiple trading monitors (which always made me wonder why do you need all those monitors if it’s an automatic program, but lets leave that aside).

So here is the proposal one more time:

If you are a commercial EA developer and are willing to stand behind your performance, link your account to Currensee by registering to the free social network and we will dedicate a special spot for you on Currensee highlighting your performance. Any takers?

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Be sure to read the full risk disclosure before trading Forex. Please note that Forex trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved before trading. Performance, strategies and charts shown are not necessarily predictive of any particular result. And, as always, past performance is no indication of future results.

Author Bio

So it all started when some of our traders requested we provide an easy way for them to publish their trades directly to Twitter and also comply with the StockTwits’s format so their real trades could be published on both.

So being a responsible company, we’ve implemented the feature exactly how our traders requested it, and we now have a few hundred traders that automatically post their real trades directly from their real broker account into Twitter in real time.

Surprisingly enough, StockTwits has decided to block all the traders that post real trades from Currensee. These trades are flagged as spam, even though this can only be real people posting real trades directly from their real accounts. These traders are not even trying to advertise themselves, as there is not advertisement planted in the feed.

It seems that when the entire world is demanding more transparency from the financial world, StockTwits has decided to block the reality and engrave fake and fraudulent activities on their flag. FAIL.

So if you want to shake off the imaginary world of StockTwits and see what real trades do with real money you can follow our trades on Twitter.

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Be sure to read the full risk disclosure before trading Forex. Please note that Forex trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved before trading. Performance, strategies and charts shown are not necessarily predictive of any particular result. And, as always, past performance is no indication of future results.

Author Bio

This is the first in an occasional series of posts featuring the best and the worst in Forex services, services that would help you as a trader or just make it more fun and services that would waste your time.  Got a nominee?  Drop us a line!

This month’s best service award goes to Olsen Scale.

Olsen Scale was developed by Richard Olsen, the founder of OANDA, is a nice way to look at the global market at a glance and provide a high level view of which currencies are currently in an unstable situation – “Similar to the Richter scale which measures the release of seismic energy during an earthquake, the SMQ relates excessive pricing along various price and time scales to historical data by assigning a single number to it. On a constant basis, the scale therefore characterizes the state of the market.”

How to use it? – Other than being a pretty cool presentation of information if you are a volatility junkie then you can easily see which pairs are unstable and therefore present some short time scalping opportunities, if you like the trends and long term trading then adding this scale to your technical and fundamental analysis could prove to be very useful.

FXstreet have integrated Olsen Scale into their economic calendar – nice work guys! though I would argue that the information should be more prevalent.

This month’s worst service award goes to Market data provided by ForexFactory.

Forex Factory has proved again that they don’t really know anything about trading and which tools traders really need. Lets start with the fact that 4 digit trading is so 2005 – all of the brokers today support fractional pips, perhaps ForexFactory would have paid attention to this if they haven’t deleted half of the Forex News that bloggers submit to them. And even if it was accurate, what are you seriously expecting from me as a trader to do with this primitive chart that provide prices that no broker has?

What should ForexFactory do with this functionality – I guess the only thing to do is to have more ads on this page to justify the development time.

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Be sure to read the full risk disclosure before trading Forex. Please note that Forex trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved before trading. Performance, strategies and charts shown are not necessarily predictive of any particular result. And, as always, past performance is no indication of future results.

Author Bio

It seems like some of the House Agriculture farm commodities subcommittee including Collin Peterson and Jim Marshall have grilled Gary Gensler, CFTC commissioner regarding the 10:1 leverage reduction.  Here are some of the comments that were made to Gary:

“I don’t get what we are trying to accomplish here by lowering this to 10 to 1,” said House Agriculture Chairman Collin Peterson (D., Minn), saying the proposal appears to put investors’ money even more at risk. “Who are you trying to protect here?”

“If our leverage rules are 10-to-1 and leverage rules elsewhere are 100-to-1, the business is going to move elsewhere. Investors could be even less protected if business moves to a country with lax regulations.”

Now how can Gary Gensler have missed these basic points while drafting his proposal? I can only guess that he probably doesn’t understand the benefits of trading and the adoption of retail Forex as a legitimate asset class.

Thanks for all the traders that have sent comments to the CFTC.  Your voice is heard!

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Be sure to read the full risk disclosure before trading Forex.  Please note that Forex trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved before trading. Performance, strategies and charts shown are not necessarily predictive of any particular result. And, as always, past performance is no indication of future results.

Author Bio

While the CFTC is recommending a reduction in the leverage allowed in Forex trading to just 10:1 – a rule change that we at Currensee strongly oppose – I’d like to suggest a more scientific approach as to how calculate the ideal leverage that should be offered in spot Forex.  You can read all 50 pages of the CFTC’s proposed rule change in this PDF from their site and make up your own mind.  See below for how to let the CFTC know what you think.

The main purpose of the leverage limit is to ensure that customer funds are secure and that broker can sustain extreme market events while retaining the ability to clear customer positions without defaulting. If customers would trade with higher leverage the broker is more exposed to the market and it can reach a scenario where there is not enough capital at the broker to cover all open positions – This scenario only applies to brokers that are market makers as ECN brokers do not carry any risk on behalf of their customers.

If we take a look at the past two years the only market that didn’t default is spot Forex, and during most of that time, the maximum leverage was over 100:1.  While the stock markets across the world have collapsed, spot Forex remained significantly less volatile and showed tremendous market efficiency – this is largely due to the fact that most brokers have migrated to an ECN model and the others have increased the capital holding thus avoiding such situations.

So according to market efficiency theories the existing leverage is absolutely fine.

If you want to protect customers from over-leveraging themselves and blowing up their accounts, which in my opinion is not the responsibility of any regulatory body, then the process to determine leverage should be this simple: start at the current leverage and see what percent of the accounts blow up, then reduce the leverage to 80:1 and see what change it made in the blow up percentage. Wash, rinse and repeat by moving the leverage down. This takes the leverage down in a more scientific way based on what it actually happening in customer accounts versus just reducing it to 10:1 with no back-up or rationale.

I’d like to see the CFTC assess leverage differently and perhaps this, more scientific approach offers a new perspective. If you agree, please let the CFTC know your views. You can email your comments on this rule change to secretary@ftc.gov with the subject line “Regulation of Retail Forex” and the ID number RIN 3038-AC61 in the body of the message.  You can also fax them at (202) 418-5521 or send paper to David Stanwick, Secretary, Commodity Futures Trading Commission, 1155 21st Street NW, Washington, DC 20581.  Note that all the comments the CFTC receives will be posted to their website, including any personal information you provide them

We all have a voice and need to share it.

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Be sure to read the full risk disclosure before trading Forex.  Please note that Forex trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved before trading. Performance, strategies and charts shown are not necessarily predictive of any particular result. And, as always, past performance is no indication of future results.

Author Bio

I am happy to announce that we’re the first and only social network to have an agreement with OANDA to properly support their traders via direct and real-time API access. We’ve had overwhelming response from OANDA traders who want to join Currensee but couldn’t…until now.

Starting today, OANDA traders can join Currensee for free, link their real Forex trading accounts and enjoy all the benefits that we provide our traders – sharing real positions in real time with other community members, leveraging the strategies to create an electronic trading journal, tweeting trades in real time, using social indicators to make more informed decisions and other free features. As Paul Jeszenszky, the Head of Marketing at OANDA said:

“OANDA believes Forex traders benefit from the power of online communities and open access to information. Currensee has shown a commitment to both and we’re glad our clients now have access to their platform.”

OANDA provides a transparent and very innovative service to their traders and we’re happy to have them join the Currensee revolution as a partner. We welcome OANDA traders to join currensee today at www.currensee.com/oanda.

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Be sure to read the full risk disclosure before trading Forex.  Please note that Forex trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved before trading. Performance, strategies and charts shown are not necessarily predictive of any particular result. And, as always, past performance is no indication of future results.

Author Bio

The new regulations the CFTC is looking to impose on the Forex industry in the US has been the center of attention in many Forex-related publications lately especially the leverage restriction which is in my mind the least of the issues this bill suggests and draws the attention to the wrong items.

So before I get to the main issues I want to say one thing about the leverage issue – I talk to a lot of traders and the professionals rarely leverage themselves more than 10:1 I have talked to a few very successful traders that use no leverage at all and still make very good money so this restriction will not prevent people from making money and it may help some traders that unknowingly over leverage themselves – this is just my personal opinion and I appreciate the fact that there are plenty of traders that do look for higher leverage when they trade.  If I can appreciate the desire for different levels of leverage by different traders, why can’t the CFTC?

So what are the more critical issues?

When I read the proposed regulations there is a major difference from the regulations that are in place on the Futures industry, which is also regulated by the CFTC, and the spot Forex industry – here are some examples:

1) Leverage – I know I said that 10:1 is not that bad but why the Futures industry that is way less liquid than spot Forex can offer almost 50:1 leverage?

2) Hedging – it’s allowed to hedge in a Future contracts but not allowed on spot Forex – the regulators opinion is that because spot Forex has daily rollovers you can find yourself having a fully hedged position but still lose money every day not being aware of the rollover – Seriously – wouldn’t it be just simper to control rollover?

3) FIFO rules – as you can probably guess you can open and close positions in any order in the Futures or even the Equities space – so why restrict it in Forex? The regulators view is that money managers keep losing positions for a long time and thus hiding their losses and showing only their profits to prospective customers – wouldn’t it just be easier to mandate a comprehensive way for presenting historical performance – the CFTC should take a look at what the SEC has enforced on Mutual Funds disclosure restrictions if they can’t figure out the math on their own.

4) Introducing Brokers – Introducing brokers are individuals or companies like Currensee that offer a free service to traders and fund it by a commission that is being paid by the brokers for the introduction of new business – the proposed regulation would restrict IBs to only work with one broker a restriction that would significantly restrict that business – as you probably have guessed Introducing Brokers in the Futures industry are permitted to work with multiple brokers.

So why is it that the one regulatory body chose to regulate one industry in a completely different way than the other? Especially since instead of trading spot FX I can trade FX future with none of these silly restrictions – can this be because the CFTC, which was originally selected to regulate the Futures industry, is trying to relieve the pains that the Futures industry suffered from the introduction of spot Forex?

How will this end – In my opinion this is highly depends on the brokers – if they can unite and have enough money they will probably start lobbying or even open a legal procedure against the CFTC in a similar manner that the Hedge Fund industry has managed to push regulators off their lawn. If they don’t I would guess that they would probably start offering FX Futures in the US, which are BTW more expensive to trade, and offer spot FX outside the US.

As for the retail traders – they will be forced to do business outside the US which at the end of the day makes them more vulnerable to fraud so by overprotecting the traders the CFTC is actually exposing them even more.

We are working with our legal team to draft a response to the CFTC, if you are an IB or a broker and would like to participate in our response please email us at opposeCFTCregulation@gmail.com to get involved – it’s more likely that the CFTC would listen to us if we unite together.

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Be sure to read the full risk disclosure before trading Forex. Please note that Forex trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved before trading. Performance, strategies and charts shown are not necessarily predictive of any particular result. And, as always, past performance is no indication of future results.