Dukascopy have finally followed in the footsteps of MIG, and after a long wait they have at last received their banking licence from FINMA, the Swiss regulator. Consequently they now proudly call themselves "Dukascopy Bank SA". According to their press release:
The Banking Authorization is a confirmation of a successful transition and an upgrade of Dukascopy’s organization. The changes that have been orchestrated within the Company’s infrastructure were conducted by a committed team that has designed a new Corporate Governance and an Internal Control System in line with Swiss Banking requirements.
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For the last month FXCM have been busy migrating all the new customers they acquired when they took over UK broker ODL. I have now received several emails from ODL on the topic. The one I received on May 21st informed me that:
Your MT4 username and password have not changed. Continue to trade with the same installation of MT4 currently on your computer.
That seemed to work out reasonably well, and I'm now happily trading using my shiny new FXCM MetaTrader 4 account without having to install yet another flavour of MetaTrader. The biggest problem was that the times of the quotes changed by an hour, which meant I had to reconfigure some of my expert advisors in a hurry. However the ODL demo MT4 account that I use for testing purposes doesn't seem to have migrated in the same way. It still seems to be much as it was, except that when the markets opened for business last Monday quotes for a number of indices appeared to have stopped arriving.
That same email also instructed me to:
Download and install the FX Trading Station II (TSII) platform. While you will continue to place trades using the MT4 platform, you will use TSII to run official account statements and to access MyFXCM, your new online account management portal.
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Following the formal announcement yesterday of FXCM's takeover of ODL I've been chatting to both companies about what to expect from the new larger group, which must now be vying for the position of largest retail forex broker on the planet. As we pointed out previously, the enlarged FXCM is still a long way from being the largest retail broker in the world per se, but the likes of Interactive Brokers deal in an awful lot more than just spot forex.
The message coming from both ODL and FXCM is that my speculation yesterday about ODL's on exchange business is wide of the mark. It seems the driver for the deal is synergy between their respective forex businesses, and equities, futures and options are not as strategically important as I assumed. Time will tell on this one.
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Last night The Daily Telegraph reported that British forex broker ODL Group Ltd. has "agreed on terms to be acquired" by FXCM Holdings LLC. It looks as though the new brand of the combined organization in Europe is going to be "ODL Powered by FXCM – Bigger, Better, Stronger"
According to the Telegraph:
The founders of one of Britain's largest retail foreign exchange brokers have agreed to a takeover by a US rival as part of an ambitious plan to take on some of the biggest players in the highly-lucrative online trading market.
ODL Group's largest shareholders, Graham Wellesley and Lorenzo Naldini, have sold the business in which they own more than a 50pc stake to US-based global foreign exchange broker FXCM Holdings to create a business employing around 1,000 staff. Mr Wellesley… and Mr Naldini will remain partners with responsibility for overseeing the European operations.
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A user of one of our example robots informed us that a system called 1 Minute Daily seemed to be getting people on the forex forums excited, and asked us to look into it. Apparently, unlike so many other forex trading systems sold through ClickBank these days, this one doesn't come complete with a "robot". The way it was described to us it sounded an awful lot like a member of the group of range breakout systems often referred to as "London breakout systems".
Unlike our existing example range breakout robot, these strategies don't trade any breakout that comes along. Instead they look to trade breakouts that occur around the time volume and volatility start to increase when traders in Europe in general, and London in particular, sit down in front of their large screens in the morning.
I know from my own experience that such systems can indeed be profitable. My interest having been piqued I investigated further. Apart from anything else it is not entirely beyond the bounds of possibility that if enough retail forex traders all jump on the same bandwagon in a short space of time a previously profitable strategy might need a touch of tweaking to remain so. I will certainly be keeping a closer eye on Cable than usual after breakfast here in the UK from now on.
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Having ported our example moving average crossover MT4 robot to MetaTrader 5 following the recent launch of the MT5 strategy tester we've now taken the next step. We've rewritten the expert advisor using the object oriented framework supplied by MetaQuotes as part of MetaTrader 5. You can take a look at our source code and see if this new way of producing robots appeals to you or not.
As you would expect the backtest results are exactly the same as for the robot written using the "old fashioned" procedural style, so we thought we'd see if we could show you some results that are rather more impressive than ones that show your account emptying in less than 3 months! We didn't use the input settings recommended by Boston Technologies. Instead we plugged in the same numbers that worked well for the same robot in 2008. That was four hour bars with a fast period of 10 bars and a slow period of 100. Here's what the MetaTrader 5 strategy tester showed us:
Moving average crossover system for Q1 2009
270% profit in 3 months looks pretty good, wouldn't you agree? Certainly a lot better than a 100% loss!
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Now that MetaTrader 5 is finally able to perform backtests we've rewritten another of our example MT4 expert advisors to run on MetaTrader 5. Since the members of our forum seem to be particularly keen on moving average crossover systems at the moment, we've ported our robot example 3 over to MQL5 and tested it out using the MT5 strategy tester. If you want to try this for yourself please feel free to download our MQL5 source code.
We used exactly the same input settings as when we tested the MetaTrader 4 version in parallel with the Boston Technologies EA, and again used the first quarter of 2009 for our backtest period. This is what the MetaTrader 5 strategy tester showed us:
MetaTrader 5 strategy tester result for EUR/USD over the first quarter of 2009
More on Moving Average Crossover Robot Available on MetaTrader 5
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Over the weekend MetaQuotes released yet another new beta version of MetaTrader 5. This one is build 268, dated April 24th, and as we speculated earlier this month, at long last MetaTrader 5 now comes complete with a strategy tester!
We had one or two problems getting it up and running. The first was that MetaTrader 5 still contains no equivalent of the MetaTrader 4 history center. That's because it's no longer necessary! We discovered via the MQL 5 forum that one way to load historical data is by opening up a chart on a monthly timeframe and then scrolling back into the dim and distant past. I managed to get back as far as May 1993 that way. Alternatively you can also write a script to grab the data for you.
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The publicity battle over financial reform in the United States gets ever hotter. A variety of glossy magazines are currently sinking their teeth into Goldman Sachs following the news that the investment bank is under attack by regulators on both sides of the Atlantic. Although its articles are sprinkled with the word "alleged", Time seems to have already judged Goldman Sachs and the rest of Wall Street guilty as charged. In one article this weekend Time highlights the irony that Gary Gensler, a former Goldman Sachs partner and now chairman of the CFTC, is currently gunning for his previous paymasters. According to Time:
His tiny and obscure agency is slated to get vast new regulatory authority over big banks. Since September Gensler has given more than 40 speeches about these complex contracts that allow banks, investors and corporations to bet on future events, explaining the central role they played in the financial crisis.
Time also suggest that:
Derivatives regulation — once a technical Washington backwater — has moved to the center of Democratic efforts to curb Wall Street's worst financial excesses….. The banks have rallied a vast army of lobbyists to water down the legislation as it passes through Congress.
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Last Friday the U.S. Securities and Exchange Commission charged the investment bank Goldman Sachs and their London based Vice President Fabrice Tourre with fraud:
The SEC alleges that Goldman Sachs structured and marketed a synthetic collateralized debt obligation (CDO) that hinged on the performance of subprime residential mortgage-backed securities (RMBS). Goldman Sachs failed to disclose to investors vital information about the CDO, in particular the role that a major hedge fund played in the portfolio selection process and the fact that the hedge fund had taken a short position against the CDO.
The SEC alleges that one of the world's largest hedge funds, Paulson & Co., paid Goldman Sachs to structure a transaction in which Paulson & Co. could take short positions against mortgage securities chosen by Paulson & Co. based on a belief that the securities would experience credit events.
Over the weekend British Prime Minister Gordon Brown, who no doubt coincidentally is currently campaigning to keep that position in the forthcoming general election, demanded that the U.K. Financial Services Authority launch a formal inquiry into allegations of fraud by Goldman Sachs. According to The Times:
The Prime Minister accused Goldman Sachs of “moral bankruptcy” over plans to pay substantial bonuses and demanded that the FSA work with Britain’s US counterpart, the Securities and Exchange Commission, to ascertain whether the bank tricked investors into buying bogus mortgage securities.
More on “Morally Bankrupt” Goldman Sachs Investigated by SEC and FSA
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