In putting together a portfolio, how do I use the currency correlations to balance the portfolio in terms of currency pairs?

Hi RKR1...

When filtering through the signal providers, I would suggest focusing on a couple of columns :

Start Date : Make sure the provider has been producing trades for at least 12 months

RAR : Look for values between 2-10

Max Positions : You might be able to handle 3 max positions...you may want to focus on 1 or 2.

Max DD : Look for drawdowns that fit within your starting balance

As you can imagine, starting with the smaller balance does limit your options of providers where you can have 'staying power'. There are many good signal providers available. Many of the providers are discussed in the preceeding pages. However, traders often times don't have enough capital to support the provider they have chosen. The filters mentioned above will help identify some of those providers that tend to run more conservatively. If you have more capital available to start off with, then you could consider broadening the max positions and max dd filters above.

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*Past performance posted by Signal and Systems Providers (“Providers”), is not necessarily indicative of future results. No representation is made that any account is likely to achieve profits or losses similar to those shown. In fact, there are frequently sharp differences between hypothetical performance results and the actual results subsequently achieved by any particularly trading program. The composite monthly results are primarily hypothetical results of the master demo and its representation of the Providers, though performance results displayed may represent a combination of live and hypothetical results and are not exclusive to either. There are numerous other factors related to markets in general or to the implementation of any specific trading program that cannot be fully accounted for in the preparation of hypothetical performance results and all of which can adversely affect actual trading results. In the event that specific trades were simultaneously executed in hypothetical and live, real-time trading, the lesser of the two results will be displayed. There is no guarantee that one applying these methodologies would have the same results as the hypothetically posted. Since trading successfully depends on many elements including but not limited to a trading methodology and a trader's own psychology, the web site does not make any representation whatsoever that the above mentioned trading systems might be or are suitable or that they would be profitable for you. Please realize the risk with any investment and consult investment professionals before proceeding. The trading systems herein described have been developed for sophisticated traders who fully understand the nature and the scope of the risks that are associated with trading. Should you decide to trade any or all of these systems' signals, it is your decision.

Links to third-party sites are provided for your convenience and for informational purposes only. Forex Capital Markets LLC bears no responsibility for the accuracy, content, or any other matter related to the external site or for that of subsequent links, and accepts no liability whatsoever for any loss or damage arising from the use of this or any other content. Such sites are not within our control and may not follow the same privacy, security, or accessibility standards as ours. Please read the linked websites' terms and conditions.

Starting with the idea of diversification, if one provider is experiencing drawdown, then another provider selected MAY or MAY NOT be experiencing the drawdown. If the providers are no correlated, then their results tend to move independent of one another.

The good thing about using the FSS, you can use two signal providers who may trade correlated pairs. However, since the strategies of the signal providers may be completely different, each strategy may not be correlated to the other.

It is good to be aware the correlations between the currencies. You can find updates at this link :
DailyFX - Forex Correlations (October): How Do Currencies Trade In Relation To Each Other?

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*Past performance posted by Signal and Systems Providers (“Providers”), is not necessarily indicative of future results. No representation is made that any account is likely to achieve profits or losses similar to those shown. In fact, there are frequently sharp differences between hypothetical performance results and the actual results subsequently achieved by any particularly trading program. The composite monthly results are primarily hypothetical results of the master demo and its representation of the Providers, though performance results displayed may represent a combination of live and hypothetical results and are not exclusive to either. There are numerous other factors related to markets in general or to the implementation of any specific trading program that cannot be fully accounted for in the preparation of hypothetical performance results and all of which can adversely affect actual trading results. In the event that specific trades were simultaneously executed in hypothetical and live, real-time trading, the lesser of the two results will be displayed. There is no guarantee that one applying these methodologies would have the same results as the hypothetically posted. Since trading successfully depends on many elements including but not limited to a trading methodology and a trader's own psychology, the web site does not make any representation whatsoever that the above mentioned trading systems might be or are suitable or that they would be profitable for you. Please realize the risk with any investment and consult investment professionals before proceeding. The trading systems herein described have been developed for sophisticated traders who fully understand the nature and the scope of the risks that are associated with trading. Should you decide to trade any or all of these systems' signals, it is your decision.

Links to third-party sites are provided for your convenience and for informational purposes only. Forex Capital Markets LLC bears no responsibility for the accuracy, content, or any other matter related to the external site or for that of subsequent links, and accepts no liability whatsoever for any loss or damage arising from the use of this or any other content. Such sites are not within our control and may not follow the same privacy, security, or accessibility standards as ours. Please read the linked websites' terms and conditions.

The Sterling is notorious for its volatile swings. Today's signal provider (TidalWave) has handled the GBP well over the past 13 months. When I look through the listing of currencies TidalWave trades, I can't help but to notice the top 4 currencies are Sterling related. On the one hand, it is good to see a strategy work well over several different currency pairs. However, all of these currency pairs have a common thread which is the GBP. That means there could have been a strong GBP move which this strategy happened to capture the right side of.

Below I have provided a combined portfolio equity curve for TidalWave's top 4 pairs (GBPJPY, GBPUSD, GBPCHF, EURGBP). The second chart is of GBPJPY and the GBPUSD. In both situations, the resulting RAR value is near 2.0 A risk adjusted ratio between 2-10 certainly fits as a reasonable return relative to the risk involved. An aggressive trader would want to consider at least $15,000 - $25,000 of capital to trade these combined portfolios as their drawdowns have reached $7,000-$11,000...a more conservative trader would want to consider a higher starting capital amount.

Overall, I like the strategy. Keep an eye out if these providers start to deteriorate at the same time as that could be correlated to the GBP's price behaviour.

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*Past performance posted by Signal and Systems Providers (“Providers”), is not necessarily indicative of future results. No representation is made that any account is likely to achieve profits or losses similar to those shown. In fact, there are frequently sharp differences between hypothetical performance results and the actual results subsequently achieved by any particularly trading program. The composite monthly results are primarily hypothetical results of the master demo and its representation of the Providers, though performance results displayed may represent a combination of live and hypothetical results and are not exclusive to either. There are numerous other factors related to markets in general or to the implementation of any specific trading program that cannot be fully accounted for in the preparation of hypothetical performance results and all of which can adversely affect actual trading results. In the event that specific trades were simultaneously executed in hypothetical and live, real-time trading, the lesser of the two results will be displayed. There is no guarantee that one applying these methodologies would have the same results as the hypothetically posted. Since trading successfully depends on many elements including but not limited to a trading methodology and a trader's own psychology, the web site does not make any representation whatsoever that the above mentioned trading systems might be or are suitable or that they would be profitable for you. Please realize the risk with any investment and consult investment professionals before proceeding. The trading systems herein described have been developed for sophisticated traders who fully understand the nature and the scope of the risks that are associated with trading. Should you decide to trade any or all of these systems' signals, it is your decision.

Links to third-party sites are provided for your convenience and for informational purposes only. Forex Capital Markets LLC bears no responsibility for the accuracy, content, or any other matter related to the external site or for that of subsequent links, and accepts no liability whatsoever for any loss or damage arising from the use of this or any other content. Such sites are not within our control and may not follow the same privacy, security, or accessibility standards as ours. Please read the linked websites' terms and conditions.

Today's review is on PipSocietyII. The best pair they trade is the USDJPY. There are some interesting pieces of info on them...

First of all, they placed their first trade in April 2009. Secondly, they have averaged about 1-2 trades per week. Averaging 1-2 trades per week would make me think they are a swing trader. However, upon review of the trade details, they are in and out of trades within a day typically.

So this is interesting in that they hold the trades intraday, yet they make few trades. There is nothing inherently wrong with that, but it is a combination you don't run across often. For right now, it appears the risk is fairly tame on the strategy, but with too few trades in a short amount of time, we'll have to see how it looks after 1 year of trading. So I would pass on it for now.

Attached Thumbnails

 

__________________
Enroll in our online FX Power Course today and get personalized instruction from our team of expert traders 24 hours a day. We have taught over 25,000 students and in just eight lessons, we will teach you the fundamentals of Forex trading. Click here to get more information

*Past performance posted by Signal and Systems Providers (“Providers”), is not necessarily indicative of future results. No representation is made that any account is likely to achieve profits or losses similar to those shown. In fact, there are frequently sharp differences between hypothetical performance results and the actual results subsequently achieved by any particularly trading program. The composite monthly results are primarily hypothetical results of the master demo and its representation of the Providers, though performance results displayed may represent a combination of live and hypothetical results and are not exclusive to either. There are numerous other factors related to markets in general or to the implementation of any specific trading program that cannot be fully accounted for in the preparation of hypothetical performance results and all of which can adversely affect actual trading results. In the event that specific trades were simultaneously executed in hypothetical and live, real-time trading, the lesser of the two results will be displayed. There is no guarantee that one applying these methodologies would have the same results as the hypothetically posted. Since trading successfully depends on many elements including but not limited to a trading methodology and a trader's own psychology, the web site does not make any representation whatsoever that the above mentioned trading systems might be or are suitable or that they would be profitable for you. Please realize the risk with any investment and consult investment professionals before proceeding. The trading systems herein described have been developed for sophisticated traders who fully understand the nature and the scope of the risks that are associated with trading. Should you decide to trade any or all of these systems' signals, it is your decision.

Links to third-party sites are provided for your convenience and for informational purposes only. Forex Capital Markets LLC bears no responsibility for the accuracy, content, or any other matter related to the external site or for that of subsequent links, and accepts no liability whatsoever for any loss or damage arising from the use of this or any other content. Such sites are not within our control and may not follow the same privacy, security, or accessibility standards as ours. Please read the linked websites' terms and conditions.

I will be out of the country for a couple of weeks returning the week of Dec 22. Feel free to share your portfolio ideas with the other users. I'll pick up on reviewing more providers in this thread upon my return to the office.

Happy trading!

__________________
Enroll in our online FX Power Course today and get personalized instruction from our team of expert traders 24 hours a day. We have taught over 25,000 students and in just eight lessons, we will teach you the fundamentals of Forex trading. Click here to get more information

*Past performance posted by Signal and Systems Providers (“Providers”), is not necessarily indicative of future results. No representation is made that any account is likely to achieve profits or losses similar to those shown. In fact, there are frequently sharp differences between hypothetical performance results and the actual results subsequently achieved by any particularly trading program. The composite monthly results are primarily hypothetical results of the master demo and its representation of the Providers, though performance results displayed may represent a combination of live and hypothetical results and are not exclusive to either. There are numerous other factors related to markets in general or to the implementation of any specific trading program that cannot be fully accounted for in the preparation of hypothetical performance results and all of which can adversely affect actual trading results. In the event that specific trades were simultaneously executed in hypothetical and live, real-time trading, the lesser of the two results will be displayed. There is no guarantee that one applying these methodologies would have the same results as the hypothetically posted. Since trading successfully depends on many elements including but not limited to a trading methodology and a trader's own psychology, the web site does not make any representation whatsoever that the above mentioned trading systems might be or are suitable or that they would be profitable for you. Please realize the risk with any investment and consult investment professionals before proceeding. The trading systems herein described have been developed for sophisticated traders who fully understand the nature and the scope of the risks that are associated with trading. Should you decide to trade any or all of these systems' signals, it is your decision.

Links to third-party sites are provided for your convenience and for informational purposes only. Forex Capital Markets LLC bears no responsibility for the accuracy, content, or any other matter related to the external site or for that of subsequent links, and accepts no liability whatsoever for any loss or damage arising from the use of this or any other content. Such sites are not within our control and may not follow the same privacy, security, or accessibility standards as ours. Please read the linked websites' terms and conditions.

Hi Everyone. I'm new to FSS. Does anyone know how often the providers update their systems? Thanks. Rhett

Hello Jeremy, I hope you're back from a good stay in China.

Me, I'm getting seriously worried and some responsibility has to be taken by someone.

It's HidalgoFX, again. They declare a stoploss they don't respect. Now the 600 pip mark I was considering to be their real stoploss (by their history with GBP/USD) was exceeded, with AUD/USD. And there is a second position open, going the same way.

I was prepared to take the 600 pip loss, even twice, and leave this signal provider. But now what? What if they don't even have a stoploss? Am I supposed to let this ride until they ultimately blow my account? Should I close their trades?

One puts literally their money based on parameters and rules the providers commit to. When they fail us, who's accountable?

What kind of auditing does Tradency use that allows such gross violation of a provider's declared rules?

I'm at a loss here, please advise.



EDIT: I may not have been at my sharpest there - on the open positions, the entered stoploss is around 624 pips.

With that sort of sloppy discipline, I am surprised Hidalgo has a good equity curve or do they?. I have not looked at them in any detail before.

How is the rest of your portfolio going?

Hello HGray...

I don't have the answer and I don't think there is a one size fits all answer. There are multiple schools of thought in strategy usage. One discipline is to change your strategy as the market condition changes. Therefore, the developer may have multiple strategies available and flips them on and off according to the conditions.

The other school of thought is that a back tested and forward tested strategy has been thoroughly tested. Knowing that drawdowns would occur, the developer believes in their black box and therefore, they're not going to tamper with it. Oftentimes, when you have the benefit of back tested results, future drawdowns can be twice the size of your largest drawdown during the testing period. So a black box user isn't going to sweat drawdowns until they surpass twice the largest of the back tested period.

Many of the strategies in the FSS have actually been around longer than the start date listed. However, Tradency can only verify the trade results that have occured on their watch. As you look at past trading history (which does not always translate to future results), consider what the largest drawdowns have been like for the previous 5 year period if available. Many of the stats in FSS are just a year or two old. That is why I advocate systems with a longer history so you can determine the consistency and relative risk vs reward on their strategy.

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Enroll in our online FX Power Course today and get personalized instruction from our team of expert traders 24 hours a day. We have taught over 25,000 students and in just eight lessons, we will teach you the fundamentals of Forex trading. Click here to get more information

*Past performance posted by Signal and Systems Providers (“Providers”), is not necessarily indicative of future results. No representation is made that any account is likely to achieve profits or losses similar to those shown. In fact, there are frequently sharp differences between hypothetical performance results and the actual results subsequently achieved by any particularly trading program. The composite monthly results are primarily hypothetical results of the master demo and its representation of the Providers, though performance results displayed may represent a combination of live and hypothetical results and are not exclusive to either. There are numerous other factors related to markets in general or to the implementation of any specific trading program that cannot be fully accounted for in the preparation of hypothetical performance results and all of which can adversely affect actual trading results. In the event that specific trades were simultaneously executed in hypothetical and live, real-time trading, the lesser of the two results will be displayed. There is no guarantee that one applying these methodologies would have the same results as the hypothetically posted. Since trading successfully depends on many elements including but not limited to a trading methodology and a trader's own psychology, the web site does not make any representation whatsoever that the above mentioned trading systems might be or are suitable or that they would be profitable for you. Please realize the risk with any investment and consult investment professionals before proceeding. The trading systems herein described have been developed for sophisticated traders who fully understand the nature and the scope of the risks that are associated with trading. Should you decide to trade any or all of these systems' signals, it is your decision.

Links to third-party sites are provided for your convenience and for informational purposes only. Forex Capital Markets LLC bears no responsibility for the accuracy, content, or any other matter related to the external site or for that of subsequent links, and accepts no liability whatsoever for any loss or damage arising from the use of this or any other content. Such sites are not within our control and may not follow the same privacy, security, or accessibility standards as ours. Please read the linked websites' terms and conditions.

Hi Alec, thank you. I enjoyed the trip to China and it is good to be back at home and not living out of a suitcase.

I can understand your frustration with the information provided by the provider. My associate who works with them asked to have the info updated. I'm speculating that the infrequent updates to the information may be the result of legal issues. Perhaps Tradency doesn't want to be perceived as the one providing the signals so they stand at arms length without working too closely with the providers. I'm just guessing at possible reasons why there have been infrequent updates. On the other hand, I would think that updated info may get more clients excited to use the providers, so I agree that there are benefits to updated info.

Irregardless, we have to play with the cards we're dealt. You have a couple of options at your fingertips:

1) If you are comfortable with 300 or 400 or 600 pip stop, then you can override and enter your own stop loss. Left click on the stop price to enter your own stop level for each trade. With a fairly wide stop loss of 500-600 pips, you don't have to update your stop the moment the signal is sent. Also, in live accounts, you have the ability for trade signals to be emailed to you as they are placed in your account.

2) If you are still uncomfortable, then consider other signal providers. It is to the signal providers disadvantage to not be clear. The clearer they are, the more people will want to use them, the more commissions the provider creates.

Knowing this about Hildago, I would suggest setting your own stop levels that you are comfortable with. Hildalgo typically doesn't hold onto their trades very long, so to me, no sense in holding onto a losing position hoping it will turn a 500 pip floating loss into profit. If the trade isn't working, the cut bait and wait for the next opportunity...that's just my trading opinion.

__________________
Enroll in our online FX Power Course today and get personalized instruction from our team of expert traders 24 hours a day. We have taught over 25,000 students and in just eight lessons, we will teach you the fundamentals of Forex trading. Click here to get more information

*Past performance posted by Signal and Systems Providers (“Providers”), is not necessarily indicative of future results. No representation is made that any account is likely to achieve profits or losses similar to those shown. In fact, there are frequently sharp differences between hypothetical performance results and the actual results subsequently achieved by any particularly trading program. The composite monthly results are primarily hypothetical results of the master demo and its representation of the Providers, though performance results displayed may represent a combination of live and hypothetical results and are not exclusive to either. There are numerous other factors related to markets in general or to the implementation of any specific trading program that cannot be fully accounted for in the preparation of hypothetical performance results and all of which can adversely affect actual trading results. In the event that specific trades were simultaneously executed in hypothetical and live, real-time trading, the lesser of the two results will be displayed. There is no guarantee that one applying these methodologies would have the same results as the hypothetically posted. Since trading successfully depends on many elements including but not limited to a trading methodology and a trader's own psychology, the web site does not make any representation whatsoever that the above mentioned trading systems might be or are suitable or that they would be profitable for you. Please realize the risk with any investment and consult investment professionals before proceeding. The trading systems herein described have been developed for sophisticated traders who fully understand the nature and the scope of the risks that are associated with trading. Should you decide to trade any or all of these systems' signals, it is your decision.

Links to third-party sites are provided for your convenience and for informational purposes only. Forex Capital Markets LLC bears no responsibility for the accuracy, content, or any other matter related to the external site or for that of subsequent links, and accepts no liability whatsoever for any loss or damage arising from the use of this or any other content. Such sites are not within our control and may not follow the same privacy, security, or accessibility standards as ours. Please read the linked websites' terms and conditions.

When the currently open trades hit their stop, Hidalgo's equity curve wont be as pretty.

The rest of my portfolio is actually doing quite well, thank you. Last month they made 1084 pips, with Quants-Carnival EURUSD coming back from the dead and being a top performer.

This month, up to now, I'm 2293 pips in profit, but this result is partly due to 'extraordinary measures' (meaning temporary use of a risky system) to try make to up for the upcoming blow from the two HidalgoFX AUDUSD positions, potentially around a 1250 pip loss.

Below you can see the portfolio. Note that HidalgoFX AUDUSD is no-mo as it was deleted yesterday. The risky system I used for a few hours this month was Spread Plasma II GBPUSD, giving me an 'extra' 977 pips.

Then I show how the systems performed in November, in relation to that month's total profit.

I hope this post can be useful.

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That sounds pretty good. The fact that you can still make money even when one signal provider goes off the rails is good news.

How/Why did you decide to go with the risky system. If you had kept it, how would the performance look now. I have toyed with the idea of jumping in & out of these systems while they have a 'hot' hand.

Hi Jeremy,

As for Hidalgo, it's now out of my portfolio. When I analyze the systems, before I select them, I rely on their historical performance as well as the parameters that are provided to us in order to make an informed decision. Using Hidalgo was a risk, being that they're a fairly recent system provider. The fact that they don't respect their own rules only made it worse.

I'm not sure I'm up to being second-guessing how my systems manage their trades. I get an email for every position opened, that's a given, I'm on top of things. But I like to think I trust them to decide where to go with each trade. Besides, to modify the stops/limits of a system's trade invalidates the assessment of the system's performance in comparison to its history, MaxDD, RAR... It can be a valid way of using the systems - a semi-manual way - just not my way.

Not that I haven't interfered on a system's trade before - closed one position or another, or move a stop to break-even. In fact - and partly thanks to your advice - I changed the stoploss of HidalgoFX AUDUSD's positions, to cut the losses. But my confidence in the system had been broken already, my evaluation of it had changed (I can make a downgrade - yay!) and I was no longer working with it anyway.

Thank you for you helpful insight, Jeremy. Now the problem with my portfolio is the even higher overexposure to the EUR/USD pair, as I lost the AUD/USD system I had. I now have 3 EUR/USD systems 1 USD/CHF and 1 USD/JPY. Maybe I go for a (semi-manual) modified Hidalgo AUDUSD?

The fact is I didn't exactly find great alternatives.