Industry Highlights

The Canadian economy has been the envy of the developed world in the recent past, as North America’s largest country weathered the global recession far better than most and, the subsequent recovery has been sufficiently robust to allow both output and employment to return to their pre-recession levels by the middle of 2010.  However, sharply rising house prices alongside a rapid increase in household debt has raised concerns that the so-called ‘Northern Tiger’ is simply an accident waiting to happen.

It is clear that the ‘Northern Tiger’ entered the downturn with critically-important advantages that allowed policymakers to cushion the blow and jump-start a recovery through aggressive monetary easing and extraordinary fiscal stimulus.  These included a strong fiscal position, credible monetary policy, a well-functioning financial system and private sector balance sheets that were not as stretched as much of the Western world.

The Bank of Canada reduced its policy rate to near-zero at the height of the global financial crisis and, because the monetary transmission mechanism was not impaired, consumers were able to exploit generational lows in borrowing costs.  Households took full advantage of the extraordinarily easy monetary policy, which allowed consumption to regain its pre-recession level by the third quarter of 2009, while the boost to housing demand enabled residential investment to recover its previous peak in just 18 months.

The monetary stimulus alongside other policy measures, designed to insulate the housing market, precipitated a marked turnaround in house prices.  The decline in prices from the autumn of 2008 to the spring of the following year, was contained to just ten per cent, while the subsequent rebound in the market has seen prices jump almost 15 per cent above their previous peak.

The Canadian experience stands in sharp contrast to their southern neighbour, the United States, where house prices continue to languish some 30 per cent below their peak, with little sign of a turnaround as far as the eye can see.  However, Canadian house prices had already enjoyed a marked increase from 2003 until the global crisis struck, such that valuations today cannot be described as anything else but elevated.

The average priced home in Canada today is valued at more than five times median family income, as against just three times a decade ago when valuations were close to their historic average.  The situation in Vancouver is even more alarming where the average price exceeds eleven times family income, more than double both the national average and the figure that prevailed at the start of the new millennium.

In spite of the disturbing valuations, Canadians appear to have been seduced by the rise in prices and, a recent survey conducted by the Canadian Association of Accredited Mortgage Professionals, revealed that “almost 60 per cent of respondents thought that now was a good time to buy.”

The rise in house prices alone, is not sufficient to pose a systemic threat but, when combined with high levels of debt, the cocktail could potentially prove explosive.  In this regard, household debt has expanded at twice the rate of personal disposable income since the recovery began during the summer of 2009 and, by the end of last year; the debt-to-income ratio had increased to more than 148 per cent – a level that eclipsed U.S. household indebtedness for the first time in more than a decade.

The additional borrowing, primarily in the form of mortgage loans and home-equity lines-of-credit, means that a Canadian with a two-storey home spends almost half of his household income on mortgage servicing, with the share closer to 70 per cent in Vancouver.

Furthermore, the Bank of Canada estimates that “the proportion of Canadian households that would be highly vulnerable to an adverse economic shock has risen to its highest level in nine years, despite the improving economic conditions and the ongoing low level of interest rates.”  The central bank adds that “this partly reflects the fact that the increase in aggregate household debt over the past decade has been driven by households with the highest debt levels.”

Bulls on the Canadian housing market dismiss such facts and, argue that a U.S. style meltdown is unlikely given the tightly-regulated mortgage insurance market.  The banking sector is not permitted to hold uninsured high loan-to-value mortgages – currently, greater than 80 per cent – and, since the government not only owns the Canadian Mortgage and Housing Corporation (CMHC), which accounts for more than two-thirds of the mortgage insurance in force, but also provides a 90 per cent guarantee on private mortgage insurance obligations, policymakers play a major role in the evolution of underwriting standards and can thus, contain potential excesses.

The government may well exert a strong influence on underwriting standards on paper but, in reality, the government-backed guarantees have introduced moral hazard through the transfer of default risk from bank shareholders to taxpayers.  Bank management are incentivised to play hard-and-fast with the written rules and, should a negative shock arise, the CHMC has little room to absorb the losses.  The government-owned company currently insures $536 billion in mortgages as compared with just $11 billion in equity – or just two per cent equity against its total exposure.  It’s easy to envisage a scenario in which the taxpayer is left holding the bag.

The ‘Northern Tiger’ has attracted plenty of admirers in the recent past but, upon close examination, an accident may well be in the making.  Will it happen?  Time will tell.

Originally posted on: www.charliefell.com

 

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.

There's a lot of talk these days about inflation and the impact of Fed policy on the dollar and the extension through the weaker dollar into higher commodity prices. Those looking to flame the Fed for its quantitative easing (QE) and generally loose monetary policy point to the falling dollar as the cause for oil going up above $100 and gold crossing $1500. While it's certainly true that the greenback is lower (the USD Index has been as much as about 12% off it's January peak), is the weak dollar really to blame for things like the rising cost of gasoline at the pump? Let's take a look at what the charts have to say about it all.

First is a comparative chart of oil prices in dollars and oil priced in euros. The chart below covers the last year's trading. The red line is the dollar value of a barrel of oil, referencing the left scale. The black line is the euro price of a barrel off oil (using front month futures), with that price on the right scale. Both scales are logarithmic so they express similar percentage moves between noted levels.

Now, the chart above doesn't show relative % gains for oil in the two currencies. Those are +31.3% in USD terms and +22.6% in EUR terms. This is about what we'd expected given the relative performance of EUR/USD over that time. The point of the chart is that aside from wiggles where oil has done better in one currency than the other for a period of time, the pattern of the two lines is consistent. Oil has been moving higher in roughly the same pattern, regardless of what currency we're talking about.

Now let's take a look at gold (again front month futures). Once more, the red line is in dollar terms and references the left scale, and the black line is euro terms referencing the right scale.

In this case, gold is up 29.6% against the USD and 19.4% in EUR terms. Again, that difference can be explained by the change in EUR/USD over the last year, which is as it should be. Here, though, we see a lot more variation in performance. In dollar terms gold has been in a fairly steady uptrend with only two relatively minor retracements. In euro terms, however, the ride has been much more dramatic. Those periods when the EUR line diverges considerably from the USD line are periods when EUR/USD was selling off.

The chart below highlights the variation between how gold and oil trade relative to the dollar. It shows EUR/USD on the top with the correlation between EUR/USD and gold plotted in red and the one with oil plotted in green.

Notice how much choppier the green line is than the red. That means the correlation between oil and EUR/USD is much more fickle than the one between EUR/USD and gold. That said, however, oil has spent more time with a positive correlation (meaning rising oil with rising EUR/USD and falling oil with falling EUR/USD). The gold correlation has been much more balanced. In particular, the gold correlation has been more negative when EUR/USD is falling.

Now, correlation does not mean causality. It just shows how similar the movement patterns are without looking at why that might be. The way I would tend to read the above, however, is to say that rising gold is more a factor of what's happening in the currency arena than rising oil prices. If you think about the implications of increasing money supply (which is what loose monetary policy is), then it makes sense. Gold is something with what could essentially be called a near fixed supply (very slowly increasing), so the more dollars there are the higher the value of gold per dollar (or any other currency). Oil has a different dynamic which is must more closely tied to economic considerations and geopolitics.

This week, my friend, John Forman and the IFR Markets team, won the prestigious FX Week Award for their agenda-setting coverage of the foreign exchange market through a year of great turmoil. IFR Markets is the real-time markets commentary service of Thomson Reuters and provides a variety of real-time news, commentary and market coverage across the globe.

IFR Markets Forex Watch won the Best Vendor for FX Research and Strategy, 2010 award, which is decided by votes from the foreign exchange industry and recognizes the expertise, commitment and flair of the editorial team. Here's what people have been saying about IFR Markets Forex Watch:

The team consistently provided incisive commentary and winning trade ideas through a stormy year for currency markets that included a yuan revaluation and Japanese intervention, a euro crisis, multiple dollar slides and a surge in emerging currencies. They faced stiff competition from players such as Informa Global Markets and 4Cast who value this accolade above all others.

Here at Currensee, we created our partnership with IFR Markets over a year ago, mostly because of the reasons they won this exciting award. Members of the Currensee social network can take advantage of the IFR Markets news, commentary and analysis for free on the platform and our members find this real-time insight extremely valuable. We also offer much of the Thomson Reuters IFR Markets Forex Watch information through our proprietary Squawk Box, Order Board and Trading Desk widgets. The Thomson Reuters folks have a solid reputation for providing first-class research and market analysis and we're excited to offer our members access to this offering.

Congrats to the IFR Markets team on a well-deserved award.

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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.

4 Comments

There has been a lot of chatter in forums and blog posts by some well-respected people in this industry about the final ruling of the CFTC regarding forex trading for US residents, and I’d like to express my opinion on the matter.

It seems like the leverage restriction has become less of an issue for traders, especially after Japan has already decided to restrict leveraged trading in FX with similar restrictions.

So we’re left with mainly two restrictions that traders for some reason feel limit their ability to trade or make more money than they already make. The restrictions are the good old “FIFO rule” and “No Hedging” rule, which have been in place for US traders for some time now.

A little explanation of these rules and what they mean (or don’t mean) in reality:

The FIFO rule indicates that positions that were opened on a certain instrument (currency pair) have to be closed in the same order. This means that if I open a 1 Lot position on the EUR/USD and an hour later open another 1 Lot position on the EUR/USD, when I want to close a position I have to close the position that was opened first before I close the second position. The perception of traders is that it’s possible that the first position is losing money and the second position opened later is making money. Therefore, if I close my first position I would be booking a loss, whereas if I close only the second position I would be booking a profit and I can keep my eyes closed and say a prayer hoping for the other position to turn around, booking profit there as well. The reality is that it absolutely doesn’t matter which position you close first to the overall P&L, and closing the losing position first and letting the second one run for additional profit is going to get exactly the same result.

The second restriction is the "No Hedging” rule, which means that a trade cannot hold opposing positions on the same instrument at the same time. The rule is a little more forgiving than this, but in reality this is how it’s implemented in most brokers. Some traders are under the impression that they can open a LONG position and then if it goes south open a SHORT position that would balance out the LONG position. In reality opening a SHORT position though enabling the trader to keep his eyes closed and not realize losses on the LONG position is exactly the same as closing the original LONG position and realizing the losses and it doesn’t really matter what the market is going to do next.

So to sum this up, there is no way in the world that hedging and non-FIFO would have any affect (positive or negative) on the ability of a trader to succeed or limit the profitability of a trader – so stop complaining :)

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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.

2 Comments

You know it, and you know it well – the spam email. These get-rich-quick emails offer all sorts of bizarre ideas, from Forex robots to vacation timeshares to [insert useless product here]. Typically, these “investment opportunities” have a few things in common:

  1. No one has ever thought of this idea before. This random guy from Wheresthat, USA is really onto something.
  2. These forward thinkers come from real innovation hubs where new, great ideas are born, like Winner, South Dakota.
  3. The product in development, acre of land for sale, or goat up for adoption is always on the cusp of something - a new feature, giving birth to a new baby calf, whatever. Bottom line is that since it’s a work in progress, they cannot show you a photo of it, not even a blurry one. There’s no tangible proof this product actually exists.
  4. This product-goat-thing is so unique, it is spoken about in hushed tones. Everyone is out to steal this revolutionary idea, so you cannot ask too many questions about it.

Sound familiar?

Photo by Gonçalo Valverde

We recently got an email from someone asking for an investment in his new, shiny Forex robot. Clearly this guy didn’t do his homework, because he doesn’t know where we stand on robots. When we get these kinds of solicitations, we get a good laugh at how cryptic and mysterious they make the Forex market and software development process sound.

For entertainment purposes only, we’ve deciphered this email below. Names have been changed to spare the sender embarrassment, but really – what kind of fools do you take us for?

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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.

1 Comment

He’s been blackballed, reinstated, banned again, and neglected. For Asaf, Currensee co-founder and vigilante of Forex, it’s just another day at the Forex playground when he’s called out or held under suspicion for our social network. Questions like: What’s in it for us? How do we make money? How is this safe? All valid questions we hear often from both new members and intrigued traders.

Asaf’s trademark take-it-or-leave-it style can be seen in forums and online social spaces across the Forex scene. And in case you missed it, he recently fought the good fight for 50 straight days on Forex Factory. Fifty days – now that deserves a cupcake!

The attacks on Currensee Towers got childish (and repetitive) at times, but the skeptics did bring up some worthwhile questions. As with any new venture, we have been asked questions about security, privacy, and our ulterior motives. So for you naysayers, here is a summarized version of that now infamous (around here anyway) Factory conversation. Think of it as a FAQ of sorts.

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Huey: Why does Currensee ask for my broker username and password? It’s just a matter of time before someone hacks into it and wipes out my account!

Dewey: Yeah, Huey!

Louie: Plus, this is probably against your broker’s rules, so if the pip hits the fan, the trader is responsible.

Asaf: There’s no smoke and mirrors here. All the brokers we support are fully aware that we ask for credentials, and they recognize how Currensee increases trader profitability and sustainability. We are regulated by the NFA, the same body that regulates your precious broker. We are held to the same security and privacy standards, audits and all.

The point of Currensee is to “put your money where your mouth is” and provide a link between the information and “insights” you offer with your real trading account. Without it we’d just be another forum, and really, what good is your hypothetical advice when there’s real money on the line?

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Louie: Demo accounts are a legit form of teaching and sharing ideas about Forex. I’d take a demo chart from a profitable/experienced trader over a real chart from an inexperienced trader any day.

Asaf: (cracks knuckles) Ok, now we’re talking. Put simply, demo trading and bragging about trading successful in demo is meaningless and misleading. Demo accounts do not represent reality – not for the trader or the broker. A good 90% of your trading is a psychology/money management combo, which is not represented in a demo account. Any worthwhile investment analyst or blogger will tell you that a trader worth his/her salt won’t hide behind a demo account. Call it a harsh position, but we stand by it because without it, we’d be no better than all the other Forex "services" out there. Next question.

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Louie: You are registered with the NFA as an introducing broker (IB), not a futures commissions merchant (FCM), which is not the same thing.

Dewey: Right on!

Asaf: So you know a thing or two about IBs. Well, then you must know being a regulated IB under the NFA is actually a very difficult task. After a grueling 6 month audit, we are fully regulated and are held to the same privacy and security standards as FCMs. Anyone regulated by the NFA must comply. Fun fact: there are less than 50 regulated Forex IBs in the US, so we pat ourselves on the back. This was no small feat.

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Louie: You’re just out to make a buck off me. I just know it.

Dewey: Word.

Asaf: Our community is made up mostly professional traders, money managers, and commodity trading advisors (CTAs). The community is entirely free, and no one is forced or mandated to trade under our IB. The social network is free and intended to help traders connect and collaborate.

None of our brokers we support pay Currensee commissions. No spreads either. No, really. Free social network really means free.

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Huey: If I want to follow someone else’s trading strategy, I’m going to a hedge fund, not Currensee.

Asaf: Well good. The point of Currensee is to collaborate, not blindly copy. Let me know how that hedge fund works out for you.

We don’t claim to make traders more profitable, but collaboration helps ease the burn. About 30% of our trades make money, which in an industry where 95% lose, that is just plain brag worthy.

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Huey: So Currensee is the wave of the future, huh? What makes it better than a forum?

Asaf: Forums offer valuable discussions to the online Forex community, but Currensee takes it one step further because you know who you’re talking to. You can see their trading performance before collaborating with them. If that’s too “real” for you, then stick to your anonymous forums.

We’re dedicated to bringing transparency to the entire Forex industry (all $4 trillion traded daily’s worth), so we encourage open dialogue on our Facebook page and on Twitter. Many of our Currensee members read and participate in forums, so we also spark discussions on outside forums like Forex Factory and Mataf.

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If you have any questions about Currensee (whether you’re a member or not), throw us a line. Your question or concern could be the next focus of Marcie's weekly "How can I help" series. No question is too hard. Give us your best one.

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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.

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.

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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.

1 Comment

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.

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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.

9 Comments

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

Talk about a difference in performance! I was very surprises to see how myfxbook is displaying a twisted version of reality, making this account actually look really good. Now I know why non-professional money managers use it.
Performance on Currensee

Here is how Currensee (and the rest of the professional world) calculates performance, and why performance shown on an amateur site is misleading:

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.

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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.

5 Comments

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.

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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.