Our regular readers will have gathered by now that we are based in the United Kingdom. As UK residents that means if we use a spread betting account to do our forex trading we pay no tax on our profits! This is obviously highly desirable, but there is a drawback. The vast majority of spread betting brokers don't allow you to use automated trading systems.
One exception is GFT, or Global Forex Trading (a Division of Global Futures & Forex, Ltd.) to use their full title. GFT provide users of their DealBook 360 platform with an additional piece of software called Chart Studio which allows you write your own indicators and strategies in what GFT call the Common Technical Analysis Language (or CTL for short). CTL is loosely based on the "Pascal" computer programming language, in the same same way that the MetaTrader MQL4 language is based on the "C" computer programming language. A CTL "strategy" is much the same thing as a MetaTrader "expert advisor" – the sort of thing internet marketers call a "robot" these days.
For the benefit of any of our UK readers who are attracted by the prospect of making tax free profits using an automated trading system we have started to translate our example robots from MetaTrader's MQL4 language into GFT's CTL. Click here if you would like to take a look at the CTL source code for our first educational robot, the one that uses random entries and fixed exits.
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On September 9th, which they refer to as a "Red-Letter Day", MetaQuotes announced on the MQL forum that the arrival of the long awaited MetaTrader 5 has just got one step closer. They have now started "closed beta-testing of the MetaTrader 5 terminal":
The new client terminal has been sent to some members of the MQL4.community for testing. They will help us find errors that unfortunately always accompany the developments of new products. Being created from scratch, MetaTrader 5 is not an exception.
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In our previous live test results for June and July the Forex MegaDroid MetaTrader 4 expert advisor did at least manage to make a profit. Sadly the "robot" seems to have lost it's way over the summer holiday season. In our live account at Alpari UK it lost money. In percentage terms it lost a lot of money!
Since the problems we had with the Droid's leaky memory we've been logging into our VPS every weekend and restarting the copy of MetaTrader that has the privilege of looking after the Droid. That has meant there have been no more mysterious robot failures or disappearances.
Despite the fact that it has been running without interruption, whilst the forex markets are open at least, our live Droid only traded four times in August. Three winners and one loser, and what a loser! Here is the MetaTrader 4 report on what Forex MegaDroid managed to achieve in August 2009:
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We've been told by some of our readers that whilst the idea of using some sort of "robot" to make money on auto-pilot holds a lot of appeal, they don't understand a single word of our course on how to build your own forex trading system.
If expert advisors, the NFA, OCO and FIFO are all Greek to you too, then we have some good news for you. We have just created the first lesson in a new course on how to get started trading forex.
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The Forex MegaDroid team seemed to think that the NFA's new FIFO regulations were going to cause their creation some problems. On July 5th they sent an email to their customers promising that:
We're working on a new release of Forex MegaDroid that'll allow it to continue trading once the new rules take effect.
We're a customer of theirs, but we never received that new release. Instead we received another email from them on July 31st that outlined a number of problems the new NFA regulations would supposedly cause, including:
No way to open orders with StopLoss and TakeProflt levels
As we found out when we took a look at the Interbank FX version of MetaTrader, build 225 released on July 10th had no problem opening orders with built in StopLoss and TakeProflt levels. I can only suppose the Forex MegaDroid team never got around to testing their robot with that version of MetaTrader. If they had tried it, surely they would also have rewritten their email that forecast "Kiss Your FX Trading Goodbye"?
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We've chosen Interbank FX as the first broker to examine in our status reports about what works and what doesn't following the long awaited implementation of the FIFO requirement of NFA compliance rule 2-43(b). We're looking at IBFX first because they made some impressive claims about MetaTrader 4 expert advisors in their July 20th announcement:
All of your Expert Advisors will continue to work.
We don't think it's that simple, so Interbank FX is where we started our tests.
We downloaded the MT4 installer from ibfx.com and ran it. It told us the software was called Interbank FX Trader 4.00 published by Interbank FX LLC. Then it asked us to accept a software license agreement which started out by telling us that:
MetaQuotes Software Corporation makes no warranty or representation, either express or implied,with respect to this software, the hardware, or documentation, including their quality,performance, merchantability, or fitness for a particular purpose.
We ticked the box to agree that we understood that, and pressed the "Next" button to continue to install the MT4 client software.
We chose to open an IBFX mini demo account, and when everything was up and running MetaTrader told us it was build 225, dated July 10th 2009. Interbank provide quotes to 5 decimal places, and we soon discovered that they allow you to trade with a lot size of 0.01 on their mini accounts. This equates to a position size of $100, which might well be of interest to those of you wanting to risk as little money as possible when experimenting with your first live account. Despite the fact that in scientific circles the prefix means a billionth, Interbank refer to them as nano-lots. Putting pedantry aside we set some of our "robots" loose, starting out with humble nano-lot position sizes. Here is what we discovered:
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At long last August 2nd has been and gone, and the dust has settled slightly. We'll cover what still works and what doesn't in a forthcoming post, but for today we're going to concentrate on who said what, and when. We'll do that by working our way down the list of retail forex brokers included in the CFTC report on the financial strength of Futures Commission Merchants. For some reason it seems the better capitalised a broker is the less it has to say about the FIFO fiasco!
We've mentioned before that most futures traders find it a bit difficult to comprehend the furore that the new NFA FIFO regulations have caused in the forex industry. They and their brokers have always done it that way! There are a variety of ways of entering a futures position, but at the end of the day there is only one way of exiting. Open an equal and opposite position and all of a sudden you're flat. Either that or you can look forward to receiving delivery of a truck load or two of soybeans and pork bellies! The best capitalised businesses on the CFTC list deal in futures, including currency futures, as well as spot forex. They seem to have had no need to frantically reprogram their trading platforms, or to spend large chunks of their big piles of cash on marketing.
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The headlines become more and more apocalyptic. Zero hour is almost upon us, and the Forex MegaDroid team have just sounded the loudest alarm call so far in the hype war over the new NFA FIFO regulations, which finally come into force this weekend. If you recall earlier this month Albert and John promised their long suffering customers that:
We're working on a new release of Forex MegaDroid that'll allow it to continue trading once the new rules take effect.
In their shock announcement today it was revealed that they were being somewhat economical with the truth on July 6th. The truth is now revealed to be that:
If your current broker is registered (and therefore regulated) by the NFA then there is a very, very high probability that any EAs that you might be using will cease to function.
More on The Forex MegaDroid Says "Kiss Your FX Trading Goodbye"!
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I logged in to my demo FXCM Trading Station this morning to see a very welcome sight, to us here at the Trading Gurus at least. It asked me if I wanted to upgrade to the latest version:
Version 01.05.072209
The updates to this release of the Trading Station are:
-OCO orders support
-Option to define Stop/Limit Orders in PIPs/Points
-Minor cosmetic and functional improvements
I didn't hit the "Cancel" button!
You may be wondering why I was so pleased? After all we're based in the UK, surely we're not affected by the NFA "hedging" and FIFO fiascos? The FSA hasn't inflicted similar restrictions on the forex industry on this side of the Atlantic. Why are we so keen to see the end of "hedging" and the advent of One Cancels the Other orders?
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A new version of FapTurbo Evolution has been released! This was extremely welcome news for us here at the Trading Gurus because backtesting the robot was proving to be something of a nightmare. According to the email we received announcing the new version it has:
Optimized Java code, making FapTurbo Evolution 20 times faster!!!
Whilst the speed increase is certainly welcome, it does make one wonder what was wrong with the Java code in the initial release of the robot. Helpfully the FapTurbo team provide a list of the other problems they've fixed:
- Fixed load time to reduce/eliminate occurences of ERROR 101
- Fixed GMT inconsistency bug
- Fixed rare bug "Label not unique"
- Fixed bug that prevented opening new orders at the same direction after Rejects
- Added auto-reconnect if there is no ticks. New parameter "Auto-reconnect Time period" added.
- Bug related to No Tick Error fixed
- Added multiple instances check (to prevent multiple copies of FAPT Evolution running on the same account)
- Fixed TradeMonday parameter to mean Monday-Tuesday night trading instead of Sunday-Monday night.
Since backtests that cover a few months no longer take all night we've managed to do quite a few now, and we've discovered some interesting things! Let's start with the EUR/GBP pair. Here's the equity curve we obtained from Dukascopy's JForex historical tester for the period from January 1st 2009 onwards.
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