Forex Trader Network

In academic terms, the Disposition Effect is a psychological bias in traders and investors to take profits quickly and let losses run. This is something which has been talked about in the markets for many years. It comes from a combination of risk aversion effects and a bias toward certainty over uncertainty. In other words, we humans generally prefer a sure gain, even when there is the prospect for a bigger one, while at the same time we prefer having the prospect for a smaller (or no) loss, rather than a sure one.

It’s pretty easy to see how these biases can turn into being quick to book a gain, but giving the market a chance to turn around rather than taking a sure loss.

It is to avoid the potential negative outcomes from this bias – not making as much as we should on winning trades, and taking losses which are much bigger than they should be on the bad trades – that we introduce systems and processes in our trading. For some it goes as far as strictly mechanical trading. For others it includes rules about where to place stops and how to move them up with the market. They attempt to enforce a discipline on us to avoid allowing psychological biases like the Disposition Effect to negatively impact our performance.

Keep in mind, however, that this needs to apply to social trading as well.

In most cases, when using an auto-trading or mirror trading system like Trade Leaders you have the ability to make changes to trades that are done in your account. As a result, there may be the temptation to close out or cut-back a winning trade before it is done by the trader you are following. This is not something that is good idea.

Consider the math of trading performance. Expected returns follow this formula:

R = (win% x avg. winner) – (loss% x avg. loser)

If you close out winning trades early you are impacting the size of the avg. winner. That lowers R - the expected return. This could go so far as to produce a negative expectancy in the most sensitive systems.

In other words, as a social investor you need to ensure you abide by very similar discipline as you would if you are trading in your own right. Don’t let the Disposition Effect drag down your performance.

 

This month, we were very excited to learn that Currensee would be featured in the magazine Alternative Latin Investor. This bimonthly publication covers the alternative investing industry in the Latin American region. The Latin American (LatAm) markets are among the fastest growing areas for the industry globally.

What was most interesting about the piece was the perspective put on Currensee, as it was being observed through the eyes of the LatAm investment industry.

Titled “Currensee: The Next Step in Forex Trading,” the article began by explaining a few aspects of foreign currency trading that are alluring to the LatAm investing industry. Characteristics like the massive size and liquidity of the world currency market, the speed and flexibility in which transactions can be executed, and being aware of the potential to generate returns during times of volatility are all attracting LatAm investors to Forex.

The ALI’s article discusses two aspects of this program have been particularly appealing to LatAm investors: transparency and diversification.

Because Currensee began as a social network for Forex traders to collaborate, communication has always been an integral component of how Currensee operates. Though today the focus has shifted more towards the Trade Leaders program, communication is still there and it equates to a high level of transparency.

“What’s unique is that our customers can give one another permission to view their actual trading activity and performance… There’s a level of transparency beyond any alternative investment I know of,” says Currensee CEO Dave Lemont.

LatAm investors are also drawn to the program’s ability to achieve “double diversification.” What this means is that as an investor in the Trade Leaders Investment Program, investors benefit from asset class diversification in the Forex market as well as diversification in their individual accounts by choosing from a variety of Trade Leaders. This new method of diversifying is an exciting development for the world of investing.

The article drives home the points around diversification for all investors and the proof is in the numbers – the fact that from 2000-2010, the S&P 500 has dropped a cumulative 3.7%. That means if you’re one of the many who had been adhering strictly to the general 60% stocks/40% bonds rule of thumb, you ultimately lost out.

Lemont says: “The stock market is manipulated by big players and algorithmic traders on a daily basis. The foreign currency market is so much bigger: US$4 trillion a day, with 24-hour trading. We’re not going to get together and move the euro today. But we could get together and move the price of a small-cap stock.”

So although collaborating and trying to move the euro is not likely something investors can achieve, keeping a diversified portfolio is. Keep cool and keep it diversified.

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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. Investor returns may vary from Trade Leader returns based on slippage, fees, broker spreads, volatility or other market conditions.

With the International Traders Conference just over three weeks away, we thought it would be a good idea to offer anyone wanting to deepen their Forex trading knowledge a look at what goes on within the conference. The ITC is an event hosted by FXstreet.com, one of the world’s top 10 currency trading portals offering information to help traders achieve success in Forex investing. Since the conference is purely educational, FXstreet.com’s focus was directed primarily into seeking out six of the best industry professionals to help attendees become better traders. For three days, guests will be able to partake in a series of talks and interactive live trading sessions with the speakers, as well as connect with others who share the same interests as them.

What makes this event so special is its vivacious, warm, and social atmosphere. Since there is a maximum of 70 attendees each year, the event remains very personal, allowing guests to work closely with the speakers. For three hours each day, they will be able to engage in live trading sessions with each of the six speakers where they will get to follow along with their trading on their own computers and even partake in a few trades themselves.

Below are some photos taken at the last ITC, which took place in 2010:

Attendees listen attentively during Triffany Hammon’s live trading session.

A beautiful lunch waiting to be enjoyed at the Comedor.

Todd Gordon’s group during a live trading session.

Chris Capre's group partaking in a live trading session.

Some of the 2010 ITC attendees listening to a speech.

Forex industry professionals and ITC speakers Boris Schlossberg and Todd Gordon.

Attendees enjoying the delicious farewell reception spread.

The event was enjoyed by all in attendance!

Noemí, Content Director at FXstreet.com, was able to get a Skype interview with professional Forex trader and educator Rob Booker! Here, he provides insight on what the ITC is really about ---> Rob Booker Interview.

Having the opportunity to interact with others who are passionate about improving their Forex trading skills is what makes the ITC such a unique event. Here is what a four-year attendee from Greece had to say about the conference:

"I have participated to the ITC from the first venue up to the most recent. This says a lot about my liking for a venue like that. I have no relationship whatsoever with the organizers so the decision to come from my country and attend was merely based on the merits that I receive towards my strive to become a better trader. The atmosphere, the organizers and the speakers have always been exceptional.
I went the first year and then thought that I might not go again cause I had a lot of information to digest. But likely each year has been so different, especially  the info that you can implement to your trading.
For me the motivational aspect of the ITC is the biggest  bonus as you get to meet with very interesting people and exchange ideas and cultures from all over the world!!
The way the ITC is organized  is unique on how you learn,  interact,  meet  and talk to speakers. All the concepts covered are immediately analyzed and applied during the live trading sessions."

Yannis Rigos – ITC ‘07, ‘08, ‘09 and ‘10 attendee (Greece)

To learn more about the ITC 2012 which takes place in Barcelona, Spain, visit their website here. (To receive a discount of $190 USD/150€, add coupon code: mp_currensee)

 

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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. Investor returns may vary from Trade Leader returns based on slippage, fees, broker spreads, volatility or other market conditions.

A few weeks ago, one of our contributing writers, John Forman, posted on when the best time of day to trade Forex was. The question was inspired by the Q&A session of our last Trade Leader webinar featuring Currensee’s Taylor Growth, who explained the benefits of using a conservative Forex trading strategy.

Recently, we were able to get some insight on this question from another Trade Leader; Gabor, Asirikuy Trading. Gabor trades using a technical strategy based on indicators such as Chart Patterns, Bollinger Band, RSI, Stochastics.

Gabor says:

“It depends on the currency pair. The rule of thumb is that the bigger the liquidity of the market, the better to trade it. Liquidity is changing during the day even for heavily traded pairs. E.g. the London session is considered to be the best time to trade the European majors (EURUSD, GBPUSD, USDCHF). Big liquidity does not necessarily mean directional price movement - we can experience the formation of congestion zones many times during liquid hours. But when balance between bulls and bears is broken during a highly liquid period, chances are that it is going to be a meaningful movement, the beginning of a trend.

To support my statement, I examined one of the short-term trend following systems that I trade at Currensee.

It's a momentum-based strategy, which trades the H1 EURUSD. If price momentum reaches a certain threshold, the system opens a market order in the direction of the momentum. In other words, if the open/close of the hourly candle is bigger than a preset % of the daily volatility, we enter the market. I ran a simulation of 12-year price data and then grouped the market entries by hour. The result is shown on the chart.



As you can see, most entries are in the overlap of the European / US sessions which starts in the range of 1 p.m. GMT (New York) - 2 p.m GMT (Chicago). This lasts to the last hour of the London/Frankfurt session,  5 p.m. GMT. The Asian / European overlap is the second most busy period from 8 a.m to 10 a.m GMT.”

It is interesting to compare this response to that given by Trade Leader Taylor Growth. Since he is a range trader, he feels that the lower trading volume in the NY afternoon, Asian, and early-European sessions yield the highest success rates. He explained that the best time of day to trade really depends on the strategy the trader is using. Since his conservative strategy is very technical, it fares better in Asian sessions when trading European pairs. Since it’s nighttime in Europe while the Asian markets are most active, no European news releases are making their way out and influencing trades.

To see how these two Trade Leaders’ trading strategies have been working for them, check out the Leaderboard.

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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. Investor returns may vary from Trade Leader returns based on slippage, fees, broker spreads, volatility or other market conditions.

Turn on the TV, listen to the radio or read any web page and you can’t seem to escape the pessimism, doom and gloom surrounding the economic crises happening across the globe. Whether it’s Friday’s historic downgrade of the U.S. economy’s credit rating by Standard & Poor’s or the actions of the European Central Bank to intervene in the plight of the PIIGS (Portugal, Italy, Ireland, Greece and Spain) or the debt ceiling debacle happening here in the U.S., one thing is clear: it’s a tough time to be an investor.

Source: www.psfk.com

Investors everywhere are struggling with the same issue: how to combat a down market. Investor confidence has been rattled, and they are looking for answers. Not answers that plummet into the toilet as the price of gold skyrockets or as another Wall Street scandal is uncovered, but real opportunities to succeed as an investor.

My grandmother would tell stories of hiding money in jars - sometimes in the backyard and other times under the mattress. To her, it was the only way to keep a dollar a dollar. But in these uncertain times, investors are looking to more than keep their dollar whole – they are looking for ways to invest and still buy that retirement condo in Florida or take that trip to Spain or put two kids through college. Staying whole isn’t enough in today’s shaky economy, and investors don’t have much in the way of new options.

Sure, there are hedge funds, mutual funds, ETFs, managed accounts and the like. Not too much new here. Most of these instruments invest in the same blue-chip stocks or 20-year T Bill. So much for diversification. So, how do investors go beyond the same old, same old and find exciting new ways to invest?

Personal finance reporter at SmartMoney, Sarah Morgan, recently covered the foreign exchange (Forex) investing opportunity. She wrote, “New research suggests that retail foreign exchange traders – who now account for $4 trillion in daily trades – can dramatically increase their odds of winning by simply copying the moves of more successful traders, and several new currency-trading sites now allow traders to do just that.”

Sarah’s article, “New Tool For Currency Traders: Mimicry,” examines the opportunities to take advantage of the Forex market, well-known for its complexity on one hand and profit potential on the other. The challenge has always been how to take advantage of this asset class if you’re not a trader. Making money as a retail Forex trader is tough business. Less than 30 percent of Forex traders are profitable and most churn and burn in less than three months, which doesn’t sound too promising, and we’re back to doom and gloom. But, what about a way to follow and take the trades of the experts? Call it mirror trading, auto trading, copy-cat trading or mimicry. It’s about leveraging the success of top Forex traders and making it your own. A new way to create a portfolio of people – professional Forex traders who know the ins and outs of the market, follow rigorous risk management practices and tested investment strategies all aimed at driving alpha.

Now, as Sarah points out in her article, not all Forex investing programs are created equal. Investors need to review their options carefully to ensure they are picking the right program for their investment needs. In any mirror trading program, the program is only as good as the expert traders. Sarah says, “Javier Paz, senior analyst at Aite Research Group, recommends Currensee, which he says is easy to navigate and sets a higher bar for its ‘expert’ traders than other services. To become a so-called expert that others can follow, traders must demonstrate at least three straight profitable months and use appropriate risk management techniques. Plus, the firm pays these successful traders for their performance, so their interests are aligned with their followers, he says.”

As we all know, there is no magic bullet in the world of investing. Sadly, the Magic 8 ball that sits on my desk can do no better than tell me that “all signs point to yes.” Well, being an eternal optimist, I’ll take 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. Investor returns may vary from Trade Leader returns based on slippage, fees, broker spreads, volatility or other market conditions.

How has your trading performance been in the currency markets? Are you capable of being a team leader or are you still searching for the right technique that will help discover those winning trades? If you would like to know where you stand as a trader then the place to go is the ‘Leaderboard’ on Currensee. Here you can view how community members are performing by comparing performance and risk factors and filter by currency pairs, trading techniques and/or by the region where the trader is located.

Let’s try an example. To navigate to the Leaderboard click on Community at the tab on the top of the Currensee page and then you will see the Leaderboard tab directly below. I searched by USDCAD and filtered by traders using a Technical approach and included traders based in all regions. Two pages of results initially appear and it is sorted by the trader with the top TAI (Trader Authority Index). In short this index compares performance to risk taken on a trade. I then scrolled back to the top and viewed the results by ‘Risk’ instead of ‘Performance’. The top trader not only has a strong performance record but also has strong risk characteristics (reason why they are on top). His max draw-down is 4% therefore traders that prefer to trade off daily charts may want to follow this trader. Those with shorter time-frames such as 1 and 5 minute may want to keep filtering.

There are other filters that we can use as well including ‘History’. Last year was an especially volatile one for the CAD while other pairs such as EURJPY saw oscillation in 2009. If we adjust the ‘History’ to the last 6 months in USDCAD then a whole new leaderboard will appear. This should be no surprise as today’s markets are certainly extraordinary and are ever challenging for traders.

What type of traders are doing better? Those that prefer to analyze fundamentals or those that prefer charts? I filtered the Leaderboard with EURUSD and the top 5 TAI scores were 94.5 or better for those using a Technical approach. The top 5 using a Fundamental approach have TAI scores of 87.5 or better. Time to study the charts and ignore the economic news? Maybe for some but for others draw-downs matter (especially if you don’t like losing) and on average those that were using a Fundamental approach had lower draw-downs. One last filter here. Where are the better EURUSD traders Europe or the US? I sorted using both technical and fundamental approaches and the results look to slightly favor the Europeans. I should also mention that traders in ‘Asia Pacific’ more than hold their own when trading EURUSD.

I hope I’ve demonstrated a few ways to utilize the Leaderboard and how it can assist you. If you are looking to add a teammate or just to check the performance of your trading this is the place to go.

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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.

Ever wonder who the best traders in the world of Forex really are? We’re proud to say we have over 100 of them. Today, we introduced an exciting new feature called the Currensee Leaderboard. It’s the first Forex trader Leaderboard that ranks the top traders in our trader network and shows annual returns, history and performance and risk scores. We’ve even created a Trader Authority Index (TAI), which is a proprietary algorithm that combines performance, risk and experience into a single Index . We rank our traders based on their TAI score and serve it up for the community to see in real-time.

We’ve created nifty levers where you can filter the top traders by currency, approach, trading region and other important trading factors. You can even define ranges of risk, return and experience to further refine your search.

Want to connect with some of these successful traders? Simply click on their name, check out their profile and send them an invitation.

Want to connect with the top traders on Currensee? It's members only, so sign up today. If you’re already a member, simply click on the Community tab and then click on Leaderboard.

There will be more enhancements coming in the next few months as we add additional trading functionality to the Leaderboard. For now, enjoy getting to know the top members of the network and let us know what 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.

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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. Investor returns may vary from Trade Leader returns based on slippage, fees, broker spreads, volatility or other market conditions.

Kudos to Currensee member Irwin Ki for his blog post this weekend wherein he tells how he dialing down his trading a bit while a full-time student.  It turns out that Irwin's been doing quite well trading the cable, as his Currensee strategy chart shows.  What's more, Irwin describes Currensee's new Trade Leaders program as a "great win-win scenario!"

For those of you who won't know yet, Currensee Trade Leaders are a select group of successful Forex traders that we're assembling. Soon, Currensee members and other investors will be able to follow the trade leaders, matching their trades instantly.  Trade leaders earn success fees and their followers get to invest in Forex without having to learn the nitty grity details.  If you think you have what it takes to be a Trade Leader, apply here.

Thanks for the plug, Irwin, and we look forward to having you in the Trade Leaders program.  Enjoy your spring break and keep that chart up and you'll have plenty of followers!

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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.

Today is another Currensee first - the first Forex trading social network, then the first rewards-based Forex marketplace, and now the first success-based social trade automation system.  We're proud to announce the launch of the Currensee Trade Leaders Program,

As Currensee Trade Leaders, experienced Forex traders can attract and acquire trade “followers” from the fast growing Currensee trader network and be compensated for trading without the tedious effort of recruiting customers, managing money and reporting results.

The Trade Leader program is a great fit for traders who are confident in their success, open to the transparency of real trade performance and looking for a way to be compensated for trading successfully without all of the administration and effort.

So if you think you can trade Forex and you think you want to be compensated for trading success without a lot of administrative overhead, we think you should apply to become a Currensee Trade Leader!

What is the hardest part of trading?  For traders new to foreign exchange it may be finding the right currency pair to trade.  For others it may be figuring out which time horizon to trade or learning which economic indicators have the ability to make markets move in rapid fire fashion.  Even for experienced traders that are used to hitting the “mine” and “yours” buttons it may be the technology needed which may require VPS access.  For me it has been the transition from running models in Excel with DDE feeds to learning MT4 and developing code.

Even with all those potential obstacles trading the Forex markets does offer opportunity and reward.  I’m not trying to sound like a commercial there but any market that has seen its top traded security, EUR/USD in this case, trade up more than 20% in 6 months with generally little risk of that security going to zero offers some value.  Yes there have been some emerging market currencies that have caused major pain for investors but the Forex market wasn’t alone in suffering trading and investing losses in those instances.

One of the beautiful offerings on Currensee is the “Strategy” section.  Here traders that opt to offer their strategy, and many do, show the strategy they use.  Not only is the strategy description offered but their performance is broken out by currency pair and other behavioral metrics such as the average duration of a trade is displayed.

Where else will you find such valuable insight?  You can have this work two ways for you as well.  Especially if you are inquiring about a strategy that you may want to use and want to see if someone else is already using it.  For example what if you think that "trading the (economic) numbers” is a useful strategy.  Or how about “chart pattern recognition."  There certainly are no guarantees that the trader using the strategy is making the right decision every time but certainly this is a valuable warehouse of information.

Let’s take an example.  Have you traded “Cable” or the “Loonie” before?  That is GBP/USD and USD/CAD respectively.  In my experience Cable tends to be a very choppy currency.  It doesn’t move from 1.50 to 1.60 in a straight line very often, its more like a major zigzag formation between the 2 figures.  Some counter-intuitive thinking may be needed every once in a while.  The strategy “CB Counter Trend” shows an accumulated 614.14% gain by the trader that posted this strategy.  Its description says that it is a “a counter trend system” using 5 minute charts and their target is 20 pips per trade.  For more details on this particular strategy please visit the Strategy section.

I have not used this exact system myself but it sounds perfect for GBP/USD and some other pairs.  Of course this isn’t the only strategy that shows merit and from my account there are over 160 strategies that post returns and even more strategies that showcase their description.

If you are looking for strategies and more trading ideas then you may want to visit the Strategy section on Currensee.

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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.