Another day dawns, and all four of Ray Robot's MetaTrader spread betting accounts have suffered another small loss overnight. Another cable short, another -10.0 pips, Ray's bottom line down to £246.00 at both GKFX and Alpari UK.  This "false breakout" was however longer lasting than the previous ones.  It took 3 hours and 21 minutes on both GKFX and Alpari for Ray's (overly tight?) stops to get taken out this morning.

Since yesterday's initial report our logs have revealed many more apparently delayed quotes from both GKFX and Alpari. Sticking with just the live accounts for the moment, here's an extract from Alpari's log this morning:

Delayed quotes overnight on November 16/17th 2011 from Alpari UK's spread bet feed.

Delayed quotes overnight on November 16/17th 2011 from Alpari UK's spread bet feed.

Alpari's worst case delay was 82 seconds at 14:57:12 yesterday afternoon. Now lets have a look at the competition:

Delayed quotes overnight on November 16/17th 2011 from GKFX's spread bet feed.

Delayed quotes overnight on November 16/17th 2011 from GKFX's spread bet feed.

GKFX's worst case delay was 40 seconds at 07:50:04 this morning.  Since these long delays occur at different times on different brokers it doesn't seem as though they could be caused by a problem with the internet connection to our VPS, does it? Just for the record the ping time from our virtual private server to Alpari's servers averages 1 millisecond, whereas for GKFX's server it averages 2 milliseconds.

Whatever the ultimate cause, can you imagine the effect such delays might have if you were trading manually at the time? A member of the Trading Gurus community tried that thought experiment recently, and here is their conclusion:

I wouldn't be able to get the results I was expecting. The delay means the price would have already changed.

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I've just received an email which says it's from "Todd Crosland, President, IBFX Australia Pty. Ltd.". The email starts off by saying that:

As you may have already seen in the recently issued press release, IBFX Holdings, LLC has been acquired by TradeStation Group, Inc., a recognized leader in online trading and winner of Barron's 2011 "Best Online Broker" award. TradeStation is part of Monex Group, a leading Japanese online brokerage firm.

According to the TradeStation press release that Todd mentioned in his email:

Under the terms of the acquisition, which has been unanimously approved by the Boards of both companies, TradeStation Technologies, Inc., a wholly-owned subsidiary of TSG, acquired from Interbank FX, LLC, a Utah corporation and one of the wholly-owned operating subsidiaries of IBFX, the proprietary risk-management software of Interbank FX, LLC, and immediately thereafter TSG acquired all of the ownership interests of IBFX from its members. Within the next 30 days, Interbank FX, LLC (the primary Forex operating company of the IBFX group) will be merged into TradeStation Forex, Inc., a Retail Foreign Exchange Dealer registered with the Commodity Futures Trading Commission and a member of the National Futures Association, and, as a result, all of Interbank FX, LLC's accounts will be transferred to TradeStation Forex and it will be operated as the "IBFX Division" of TradeStation Forex. IBFX Australia Pty. Ltd. ("IBFXAU"), an Australian company regulated as a member of the Australia Securities and Investments Commission ("ASIC"), will also operate as a subsidiary of TSG.

It seems like recent speculation that Interbank FX was about to be sold was at least half right! Going back to Todd's email, he reassures IBFX Australia customers such as myself that:

You will naturally have some questions about how this announcement will affect you. We do not expect there will be any material changes to our products, services, management, spreads, fees, operations, systems or methods of doing business. In fact, we believe the acquisition will directly benefit every IBFX customer by combining our innovative approach to the FX industry with TradeStation's cutting-edge forex trading technology and support services.

So that's all OK then, and everbody's happy? As TradeStation put it:

This is a win-win for IBFX and TradeStation clients and makes TradeStation a global leader in forex trading, dramatically expanding our customer relationships and creating a global operating presence. IBFX's proprietary forex tools and services and its focus on customer care will now be backed by the financial stability and trading technology leadership of TradeStation. In time, TradeStation forex clients will benefit from technology offered by IBFX using TradeStation's award-winning, market analysis and trading platform.

A win-win situation for everyone concerned then, apart possibly from those investors in IBFX who for some reason aren't mentioned in any of the above announcements about win-win situations, but are mentioned in a document translated from the original Japanese on the website of the Monex Group, who themselves acquired TradeStation Group earlier this year?

Those investors would seem to be "Todd B. Crosland & Family (59%)  and Spectrum Private Equity Fund (40%)". I wonder what they make of all this continued consolidation in global FX?

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Ray Robot II™ has been automatically spreadbetting on four different accounts for 3 days now, two of which are live accounts with real money in them, and two of which are solely for demonstration purposes. The trades themselves have been fairly uneventful so far, although I'm sure much more excitement is waiting just around the corner! Today the live and demo accounts at both GKFX and Alpari UK all suffered their third 10 pip loss in a row. They all shorted GBP/USD just below the previous day's low yet again, and they all lost once more. Some sort of a pattern does seem to be developing however. Just like yesterday, it took longer for Ray's stop loss to get taken out at GKFX than it did at Alpari UK. 6 minutes at GKFX versus 5 mins at Alpari UK on this morning's trade.

There is some rather more interesting news to report however! To alleviate the boredom engendered by continuous repetition of one small losing trade per day we loaded our GuruLogger™ indicator on all four test accounts yesterday. This morning three of Ray's MetaTrader accounts had logged nothing of interest. However the live GKFX spread bet account was showing a number of alerts relating to delayed prices:

More on Our MetaTrader 4 Spread Betting Live Test Suffers Some Delays

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We were just gearing ourselves up to gently launch Ray Robot II™ onto an unsuspecting world when Alpari UK announced that they had started offering MetaTrader 4 spread betting accounts. In contrast to some reports elsewhere on the web, here at the Trading Gurus we are well aware that automated spread betting via MT4 has been available for well over a year from another broker – the recently renamed GKFX. We figured we'd kill several birds with one stone by running RR2 in identical fashion on live accounts from both MT4 spread bet brokers. While we're at it we thought we'd also try him out on demo accounts from both brokers, to see if there is any noticeable difference between automated live trading and pretend trading at our small sample of MetaTrader brokers. Whilst we're at that we thought we'd also compare some backtest results with all those forward test results, to see whether that made any difference to the outcome(s).

Here's the experimental setup. The minimum deposit for an Alpari spread bet account is £250, so we're starting off with 4 different accounts, all funded with £250, although of course only 2 accounts are using real live cash.  To start with we're trading the minimum possible size, which (coincidentally?) is 10 pence per pip at both brokers. We set four identical clones of the son of Ray the Random Robot™ trading daily bars of cable using his default settings. Here's how things looked earlier on this morning on Ray's two live accounts. Can you spot the difference?
More on Ray Robot II™ Spread Betting Live Test – Alpari UK versus GKFX

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It's been quite a long wait, but Alpari UK have announced today that they are now the second broker to offer automated spread betting using the MetaTrader 4 platform to UK residents. According to their news release:

Tax free* Forex trading is now available on the MetaTrader 4 platform with Alpari (UK). Financial spread betting allows traders to bet on whether the price of an asset will rise or fall with additional benefits including the exemption of income tax, capital gains tax and stamp duty*.

The asterisk leads to the usual disclaimer about how:

Any profits you make from spread betting are completely free of capital gains tax, stamp duty and income tax (for UK residents). UK tax laws are subject to change and individual circumstances may vary.

Alpari are thus now in competition with the recently rechristened GKFX (formerly Smart Live Markets) for the business of UK residents who like the idea of automatically generating tax free profits using MT4 expert advisors, not to mention the likes of larger brokers such as GFT and FXCM who currently offer automated spread betting using their proprietary APIs rather than via MetaTrader.

Alpari tell me their new spread bet accounts work rather like an FX only version of their existing Classic accounts, but with the additional benefit of "micro-lots". In spread bet parlance the "minimum bet" on the new Alpari accounts is 10 pence per pip (which is the same as GKFX), but with no upper limit on bet size.  Currently it seems there is no way to transfer cash from an existing account to a new spread bet account, so if the idea of tax free trading with Alpari appeals to you then you'll have to stump up the minimum deposit of £250 from your credit card before you make your first trade. Note that the only "assets" Alpari spread bet accounts cater for, for the moment at least, are 34 forex pairs.  If you want to trade indices or commodities tax free then you'll need to look elsewhere.  One other significant difference from a GKFX spread bet account is that Alpari are offering their usual floating spreads instead of GKFX's (mostly) fixed spreads.

Following today's announcement there's finally a bit of competition in the UK MetaTrader spread betting marketplace. Now I'm wondering if GFT or FXCM will be tempted to join in the fun anytime soon?

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The global financial crisis took yet another turn for the worse on Monday. According to Yahoo! Finance:

MF Global's meltdown in less than a week made it the biggest U.S. casualty of Europe's debt crisis, and the seventh-largest bankruptcy by assets in U.S. history.

The chief executive of MF Global Holdings Ltd. is Jon Corzine. According to The Economist recently, Mr. Corzine is:

Another former head of Goldman Sachs [potentially] running America’s Treasury, Mr Corzine (who is also a former governor of New Jersey) is seen as a long-shot candidate for the job when Tim Geithner steps down, or as a possible future White House economic adviser.

The Economist also mentions what it refers to as "The Corzine put". This cunningly constructed derivative means that MF Global:

Is offering an extra percentage point of interest to investors in its latest bond issue, should Jon Corzine, MF’s chief executive, quit to take a government job before July 2013.

I wonder what MF Global bond holders make of that extra percentage point now? I also wonder what valuation MF shareholders are putting on their holdings today? In view of the current news it seems unlikely Mr. Corzine will ever achieve that position in government, although I suppose stranger things have happened. According to Reuters, ex Democratic New Jersey Governor Jon Corzine:

Has been a major fundraiser for Obama, having donated the maximum of $5,000 that an individual can give for a presidential campaign.  He also held a lavish $35,800-a-head fundraising dinner for Obama at his home in April and raised or "bundled" donations of at least $500,000 so far for Obama's 2012 re-election effort.

Maybe in return Mr. Obama will send some of his own "political capital" in Mr. Corzine's direction one day, when memories have faded a little? Or there again perhaps not. According to The Economist once more:

It is unlikely that Mr Corzine will stage another comeback. On October 31st MF Global filed for bankruptcy after frantic efforts to sell assets or find a buyer failed. The cause of the firm’s demise were trades and strategies driven by Mr Corzine—not least disastrous bets in the market for European sovereign debt, making MF Global the largest American casualty of the euro-zone crisis so far.

The US regulators that are supposed to be keeping a close eye on this sort of thing have issued a statement on the MF Global fiasco. According to the U.S. Commodity Futures Trading Commission:

For several days, the SEC, CFTC and other regulators had been closely monitoring developments affecting MF Global, Inc., a jointly registered futures commission merchant and broker-dealer, in anticipation of a transaction that would include the transfer of customer accounts to another firm. Early this morning, MF Global informed the regulators that the transaction had not been agreed to and reported possible deficiencies in customer futures segregated accounts held at the firm. The SEC and CFTC have determined that a SIPC-led bankruptcy proceeding would be the safest and most prudent course of action to protect customer accounts and assets. SIPC announced today that it is initiating the liquidation of MF Global under the Securities Investor Protection Act (SIPA).

It sounds a lot like it's not just MF Global shareholders who will be forced to undergo a haircut. It sounds like there are some deficiencies in the supposedly segregated accounts of MF Global's customers too.  According to the New York Times:

Regulators are examining whether MF Global diverted some customer funds to support its own trades as the firm teetered on the brink of collapse. It is still unclear where the money went. At first, as much as $950 million was believed to be missing, but as the firm sorted through its bankruptcy, that figure fell to less than $700 million by late Monday, the people briefed on the matter said.

For a closer look at the many billions of dollars involved in the latest Wall Street crash let's turn for assistance to Michael Bloomberg, who is an expert in such matters. According to Bloomberg Businessweek:

MF Global Holdings Ltd., the holding company for the broker-dealer run by ex-Goldman Sachs Group Inc. co-chairman Jon Corzine, filed for bankruptcy protection as it seeks to reorganize after making bets on European sovereign debt. Its broker-dealer unit, MF Global Inc., faces liquidation. The firm listed debt of $39.7 billion and assets of $41 billion in Chapter 11 papers filed yesterday in U.S. Bankruptcy Court in Manhattan.

Once upon a time Jon Corzine looked very closely at the causes of the downfall of Long Term Capital Management, according to Roger Lowenstein in another article on Bloomberg. However it doesn't seem as though he learned very much from that particular piece of financial history. This time around it looks like he's not only thoroughly cooked his own goose, but he's also burned considerable amounts of MF Global Inc.'s customers' money, supposedly safely protected from such abuse in "segregated" accounts. Losing money on the deal is a risk MF Global's shareholders and bondholders were presumably prepared to take. MF Global's customers believed they were taking no such risk. It now seems as though that belief was mistaken.

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It's been in the pipeline for a long time now, but the Trading Gurus are now happy to announce that Ray the Random Robot™ has finally been ported to TradeStation's EasyLanguage.  Ultimately this decision was prompted as much by the announcement of MultiCharts at LMAX, as by the prior arrival of TradeStation Forex and "TS for FX for free". Whilst EasyLanguage has been around for a long time and is in some respects the "industry standard", it's never before been readily useable by newcomers to automated trading with a limited amount of capital.  Although it's still officially in beta testing, LMAX MultiCharts does promise to change that aspect of things for the better, as long as you're not a United States citizen! If you are a US citizen then I'm sure TradeStation FX will be happy to discuss opening an account with you!

Wherever you were born, or currently reside for that matter, the newly minted source code of RRR for EZL is now available for download from the Trading Gurus Community forum. EasyLanguage does some things in a non-intuitive manner, if you're coming to it from another platform for the first time. If nothing else hopefully Ray's stupidly simple example will save someone from tearing out large quantities of their hair trying to work out why their stop orders seem to be getting ignored!

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LMAX have finally overcame some inital teething troubles with their recently revamped historical data feed, and earlier today I was finally able to fire up my copy of LMAX's flavour of the MultiCharts platform. for the very first time. Here's the first thing that met my eyes:

LMAX branded MultiCharts splash screen

LMAX branded MultiCharts splash screen

As you can see, for initial testing I'm using my trusty LMAX demo account! After filling in my user credentials, and then a slight bit of tweaking of the screen layout, this was the result:

LMAX MultiCharts trading platform, set up for trading EUR/USD

LMAX MultiCharts trading platform, set up for trading EUR/USD

Please click the image to see an enlarged version. As you will then hopefully be able to see, charts now quite happily display historical data, and manual trading works fine too. On the left hand side full depth of market information is available, and below that buttons that allow you to utilise complex entry order types including OCO "fade" and "breakout" strategies.

The MultiCharts platform is packed full of other features that you won't find in MetaTrader 4, including a wide range of exotic instruments and chart types. Here's what constant range bars of US 30 year T bonds looks like for example:

LMAX MultiCharts displaying constant range bars for US T bonds

LMAX MultiCharts displaying constant range bars for US T bonds

This very brief overview only hints at the overall power of the MultiCharts platform. We will cover many more of its features over the coming days, including a close look at building automated trading strategies using EasyLanguage instead of MQL4. Note in conclusion that if you're a discretionary trader and you like the look of MultiCharts,  a version of MultiCharts without automation capabilities is available for download free of charge from the MultiCharts website.

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At last we know the answer to the questions posed by FXCM themselves back in August following settlement of charges brought by the NFA, when they revealed that:

FXCM has set aside a $16 million reserve for the…. anticipated CFTC settlement.

Yet again the CFTC have simultaneously:

Issued an order filing and simultaneously settling charges

against FXCM, and they have just issued a press release which states that:

According to the CFTC order, from at least June 18, 2008 until December 17, 2010, FXCM failed to supervise diligently the handling of more than 57,000 customer accounts traded on the FXCM platforms by its officers, employees, and agents with respect to changes in price between order placement and execution on both market orders and margin liquidation orders. The order finds that FXCM’s failure prevented its customers from receiving the benefit of price movements in customers’ favor, but allowed its customers to suffer detrimental price movements. The CFTC order finds that had FXCM diligently supervised its personnel, FXCM would have discovered these problems with its trade integrity and would have had the opportunity to correct them before its customers were deprived of, and FXCM benefitted by, approximately $8,261,937.

Further, the CFTC order finds that FXCM failed to produce certain records promptly in its capacity as a CFTC registrant and thereby required the CFTC to issue a subpoena to attempt to obtain required records from FXCM.

That covers the alleged offences, but what about the headline figure of a fine of over $14.2 million. On that side of the equation the CFTC has this to say:

The CFTC order requires FXCM to pay a $6 million civil monetary penalty and restitution of $8,261,937 to its customers and former customers. In addition, the CFTC order requires FXCM to retain, at its own expense, a monitor to review for three years:

  1. Its trade execution practices and policies as they relate to the change in price between the time the customer places the order and the time the order is executed by FXCM
  2. Its compliance with its restitution obligation.

The "monitor at its own expense" clause explains the "more than" in the title, and apart from tying that number down more tightly that is quite possibly the last such news we will hear for a while regarding sanctions against U.S. public FX brokerages. However there is still much more news to come regarding the settlement of CFTC actions brought in the U.S. courts against a long list of overseas brokerages.

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If you've been a retail FX trader for a while, and you've got a sneaky suspicion somewhere in your subconscious (SSSS for short) that MetaTrader 4 is possibly not the best tool for the job of "FX trading for a living" then the headline above should already have caused you to have taken your eyes off your multiple screens because you've fallen off your swivel chair with the excitement of it all.  This is how LMAX "soft launched" the Multicharts platform for their multi-lateral trading facility (MTF for short) last week:

LMAX MultiCharts is a professional charting and automated trading platform, designed for futures and forex traders.  A key feature of LMAX MultiCharts is its compatibility with the industry-standard TradeStation EasyLanguage.

EasyLanguage studies can be customised, optimised and back-tested prior to their implementation in the real market.

LMAX MultiCharts includes very powerful and flexible tools which are able to handle multi-symbol and multi-timeframe charts.

Many more features are available…

The news gets even better. The "beta launch" itself is due to arrive later today or early tomorrow Greenwich Mean Time, without too much fanfare. After that, and subject to satisfying certain qualifying conditions, from January 2012 you will be able to use your existing automated trading strategies written in TradeStation's EasyLanguage (EZL for short) on the LMAX MTF free of charge. Currently these conditions are:

  • Minimum account balance of $5,000
  • Minimum of 250 LMAX sized lots per month

although this may of course have changed by the time January 1st 2012 eventually arrives.

The news gets better still. If you are currently an EZL trader and you are prepared to help LMAX polish their shiny new platform by acting as a beta tester those minimums will be significantly reduced from the time of launch until the end of this year. Note also that if like me you don't enjoy sitting on a swivel chair in front of multiple screens for hours and days on end, and if like me you are not a big fan of TradeStation's EasyLanguage and therefore currently trade with your existing broker(s) using a FIX, .NET, RESTor Java API, then LMAX already allow you to do that free of charge also, albeit currently still also "in beta".

That was the not inconsiderable good news, but now it is my sad duty to inform you about the accompanying bad news. The only reason that you might possibly have for not already being on the phone to your shiny new LMAX account executive at this very moment is that they speak with an English accent, whereas you speak with an American one.

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