System Reviews by DailyFX Course Instructors - Page 8

sureshvasudev · #**106** (**permalink**) 04-07-2009, 03:07 PM

I wish some feature that is currently missing in FSS

[1] An option for the customer to mention the MSP for a system. At present this option is not available and so it will definitely force the customers to exclude many good systems as the MSP is very high

[2] An option to specify the SL at system level in terms of pips or %. This is different from Fixed ratio. As a customer at the time of selecting a system can specify a max SL of say 50 pips. So whenever system place a trade, the SL given by the system will be overrided by the customer preference.

Is there any thing in the pipeline related / similar to these features? Or are you purely depending on tradency to provide this?

cheers

Jeremy Wagner · #**107** (**permalink**) 04-07-2009, 06:17 PM

Quote:

Originally Posted by sureshvasudev

I wish some feature that is currently missing in FSS

[1] An option for the customer to mention the MSP for a system. At present this option is not available and so it will definitely force the customers to exclude many good systems as the MSP is very high

[2] An option to specify the SL at system level in terms of pips or %. This is different from Fixed ratio. As a customer at the time of selecting a system can specify a max SL of say 50 pips. So whenever system place a trade, the SL given by the system will be overrided by the customer preference.

Is there any thing in the pipeline related / similar to these features? Or are you purely depending on tradency to provide this?

cheers

The MSP is provided to us from the system developer based on their strategy. The providers that open multiple trades (6 trades for example) typically will scale in/out of the position as their strategy calls for. So once the 6 positions are open, the strategy may peel off the positions one by one at differing times.

If the client limited the max positions to let's say 2, then the client's resulting equity curve would be vastly different than the equity curve with 6 trades. How would that equity curve with 2 max positions get calculated? Which 2 of the potential 6 trades do you show on your personalized equity curve? Again, this assumes the strategy scales in and out of positions and thus needs those multiple positions. Allowing the client to limit the max positions does add more moving parts to the equation. Besides, as a trader, you end up with a different strategy then what the developer intended.

For example, we have a strategy in the Trading the Majors course which opens 3 positions. If you trade with other than 3 positions, you compromise the strategy. It is a good strategy, but small accounts cannot effectively trade the strategy. The end result is that having the appropriate capital for the strategy is key.

Stop limits can be modified after the trades are opened. You have the option to modify open trades, though we don't recommend it. Typically, the reason a client selects a system is because of its curve and statistics. Altering the strategy by modifying stops and limits does alter your outcome relative to the equity curve...the equity curve is one of the considerations in the clients selecting the system.

Keep in mind that a great strategy with poor money management is likely to lose. Make sure you have enough capital to support the systems you select.

Jim Joss · #**108** (**permalink**) 04-07-2009, 06:47 PM

This is annoying because off the performance page it is MSP and on the account page it is called MP `Maximum Position` why can they not call it the same thing in both places. It is a small thing but very annoying.

Jeremy Wagner · #**109** (**permalink**) 04-07-2009, 06:53 PM

Quote:

Originally Posted by Jim Joss

This is annoying because off the performance page it is MSP and on the account page it is called MP `Maximum Position` why can they not call it the same thing in both places. It is a small thing but very annoying.

I will pass along your request to Tradency to use the same abbreviations.

Jeremy Wagner · #**110** (**permalink**) 04-07-2009, 08:08 PM

We are set and ready to go with our Trade a Day Portfolio. We are starting off with a $25,000 account and the portfolio has been set as indicated below. With the InsiderBreakout USDJPY system trading 6 max positions, this portfolio most likely will be offering the most contribution with regards to the number of trades. This portfolio is set and is ready to receive signals from these 3 signal providers.

sureshvasudev · #**111** (**permalink**) 04-08-2009, 10:30 AM

Quote:

Originally Posted by Jeremy Wagner

The MSP is provided to us from the system developer based on their strategy. The providers that open multiple trades (6 trades for example) typically will scale in/out of the position as their strategy calls for. So once the 6 positions are open, the strategy may peel off the positions one by one at differing times.

If the client limited the max positions to let's say 2, then the client's resulting equity curve would be vastly different than the equity curve with 6 trades. How would that equity curve with 2 max positions get calculated? Which 2 of the potential 6 trades do you show on your personalized equity curve? Again, this assumes the strategy scales in and out of positions and thus needs those multiple positions. Allowing the client to limit the max positions does add more moving parts to the equation. Besides, as a trader, you end up with a different strategy then what the developer intended.

For example, we have a strategy in the Trading the Majors course which opens 3 positions. If you trade with other than 3 positions, you compromise the strategy. It is a good strategy, but small accounts cannot effectively trade the strategy. The end result is that having the appropriate capital for the strategy is key.

Stop limits can be modified after the trades are opened. You have the option to modify open trades, though we don't recommend it. Typically, the reason a client selects a system is because of its curve and statistics. Altering the strategy by modifying stops and limits does alter your outcome relative to the equity curve...the equity curve is one of the considerations in the clients selecting the system.

Keep in mind that a great strategy with poor money management is likely to lose. Make sure you have enough capital to support the systems you select.

Your reply didn't sound like a honest one. It sounds to me only like a honest employee trying to defend his employer in all possible ways.
Majority of the systems I tried in FSS opens positions simultaneously or in a span of 10-30 minutes time. Dont worry out the PE curve of the customer portfolio. If FXCM is truly worried about customer investment, then "Macro" account should not be there in the first place.

It requires only commonsense to understand the fact that in FSS it is the system that place the trade and the risk:reward ratio can not be controlled (may be to a limited extend). It all depends on the system owner. Also we do have data for statistical analysis and that is all what we can thoroughly do.

My point was if i could find some system which I want to add to portfolio but MSP being high I have to ignore it. Ofcourse the PE curve for my data may get tampered, but i dont care. Moreover you can add it as a risk criteria.

I could see the same features available in other automated systems. One is Zulutrade. Whatever reasons you say please make it bit realistic and digestable. I would appreciate if you will say that it is not possible.

Anyway i got the point that this is not possible, but please dont beat around the bush

Jeremy Wagner · #**112** (**permalink**) 04-08-2009, 03:46 PM

Quote:

Originally Posted by sureshvasudev

Your reply didn't sound like a honest one. It sounds to me only like a honest employee trying to defend his employer in all possible ways.
Majority of the systems I tried in FSS opens positions simultaneously or in a span of 10-30 minutes time. Dont worry out the PE curve of the customer portfolio. If FXCM is truly worried about customer investment, then "Macro" account should not be there in the first place.

It requires only commonsense to understand the fact that in FSS it is the system that place the trade and the risk:reward ratio can not be controlled (may be to a limited extend). It all depends on the system owner. Also we do have data for statistical analysis and that is all what we can thoroughly do.

My point was if i could find some system which I want to add to portfolio but MSP being high I have to ignore it. Ofcourse the PE curve for my data may get tampered, but i dont care. Moreover you can add it as a risk criteria.

I could see the same features available in other automated systems. One is Zulutrade. Whatever reasons you say please make it bit realistic and digestable. I would appreciate if you will say that it is not possible.

Anyway i got the point that this is not possible, but please dont beat around the bush

I think you need to read the post a little closer. Indeed there are some systems that do not scale in or out of positions. However, there are some that do trade in a different sense. For example, check out the Cornerstone Zues....they do not open all positions at the same time. Their positions get scaled in and out. Bottom line is that you can't as a client limit the number of those positions.

As a trader, I would not want to use a system who's results are going to signficantly different than what I intended or expected. That is the risk you run when tampering with the max positions. That is an additional risk you would need to quantify and consider. Personally, I don't know how you would quantify it, but that is your choice. If you feel that feature gives you an edge and if you feel you can trade that edge successfully, then wonderful.

Our studies show that the more successful traders in FSS are those who do not tamper with the systems (stops, limits, etc). You are more than welcome to perform your own analysis and study.

Jeremy Wagner · #**113** (**permalink**) 04-08-2009, 04:13 PM

I just did an excel sort of all 1000+ systems. 373 of these systems have been around at least 1 year or longer. Of these 373 systems, nearly 222 are unprofitable. The majority of these unprofitable systems are showing significant losses (over 100 of them average -10 pips or worse per trade).

I bring this up because the next portfolio we are going to work on is using the REVERSE function of the platform. When this feature is activated, you are actually taking an opposing signal to the signal provider. Using the REVERSE function is a bit more complicated as the spread is brought into the equation. I would highly suggest demo trading the reverse function before entering into it cold. However, it can be useful to help widen our collection of tradeable systems.

hben37 · #**114** (**permalink**) 04-08-2009, 10:11 PM

Quote:

Originally Posted by Jeremy Wagner

I just did an excel sort of all 1000+ systems. 373 of these systems have been around at least 1 year or longer. Of these 373 systems, nearly 222 are unprofitable. The majority of these unprofitable systems are showing significant losses (over 100 of them average -10 pips or worse per trade).

I bring this up because the next portfolio we are going to work on is using the REVERSE function of the platform. When this feature is activated, you are actually taking an opposing signal to the signal provider. Using the REVERSE function is a bit more complicated as the spread is brought into the equation. I would highly suggest demo trading the reverse function before entering into it cold. However, it can be useful to help widen our collection of tradeable systems.

Thanks for taking on this topic, I am somewhat confused on how to interpret the data in Reverse mode. Hopefully in the coming posts I get a better idea.

sureshvasudev · #**115** (**permalink**) 04-09-2009, 12:43 AM

Quote:

Originally Posted by Jeremy Wagner

I think you need to read the post a little closer. Indeed there are some systems that do not scale in or out of positions. However, there are some that do trade in a different sense. For example, check out the Cornerstone Zues....they do not open all positions at the same time. Their positions get scaled in and out. Bottom line is that you can't as a client limit the number of those positions.

As a trader, I would not want to use a system who's results are going to signficantly different than what I intended or expected. That is the risk you run when tampering with the max positions. That is an additional risk you would need to quantify and consider. Personally, I don't know how you would quantify it, but that is your choice. If you feel that feature gives you an edge and if you feel you can trade that edge successfully, then wonderful.

Our studies show that the more successful traders in FSS are those who do not tamper with the systems (stops, limits, etc). You are more than welcome to perform your own analysis and study.

Jeremy. I understood exactly what you meant. The point here is you are not asnwering to the point. I wish it will be useful for me if i can control the MSP. I now understood that there is a limitation at your end and FXCM cannot provide it. Ok that is fine.

But you are arguing as if if this feature is provided it will end up in an armageddon. All the analysis we are doing including you are brittle enough to get blown up when Obama get an itch or Trichet get a cold. We have seen this last year.

And I also find it very silly when you quote a system which scales. I could give you 10 systems which opens positins simultaneously with no scaling logic but stillmake a descent profit. Also there are systems which opens only 1pos though its MSP is 2 or 3.

Please dont wast your time with all logics and reasons and sometimes it looks stupid. Sometimes a one word single line answer will be more meaningful and clear.

Jeremy Wagner · #**116** (**permalink**) 04-09-2009, 01:15 PM

Quote:

Originally Posted by sureshvasudev

Jeremy. I understood exactly what you meant. The point here is you are not asnwering to the point. I wish it will be useful for me if i can control the MSP. I now understood that there is a limitation at your end and FXCM cannot provide it. Ok that is fine.

But you are arguing as if if this feature is provided it will end up in an armageddon. All the analysis we are doing including you are brittle enough to get blown up when Obama get an itch or Trichet get a cold. We have seen this last year.

And I also find it very silly when you quote a system which scales. I could give you 10 systems which opens positins simultaneously with no scaling logic but stillmake a descent profit. Also there are systems which opens only 1pos though its MSP is 2 or 3.

Please dont wast your time with all logics and reasons and sometimes it looks stupid. Sometimes a one word single line answer will be more meaningful and clear.

If you understand exactly what I meant, then why do you need to continue the conversation? We can certainly have differing opinions as that is what markets are made of.

In the spirit of everybody's learning experience, it is time to move past this point.

Jeremy Wagner · #**117** (**permalink**) 04-13-2009, 02:23 PM

Today, we are going to introduce the topic of using the REVERSE function in the Forex System Selector. When this feature is activated, your account will take the opposite position of the system.

There are several uses of the reverse. I feel a trader can use it to have available more legitimate systems to choose from. Without the reverse, you would be focusing on those systems that have profitable results. What if we were to take the opposite side of trades of those systems with the worst results?

The use of the REVERSE feature in your FSS account is a bit more complicated and not as widely used. It may take some time to wrap your arms around how it works which is where your demo account will come into play. I would recommend the REVERSE in situations where you have a larger account and at least 3 other systems trading in the forward feature. If you hear me using the term ‘forward’ system, that would be a system traded as it was intended where you and the system provider are on the same side of the trade.

As you try systems in REVERSE, one outcome you will notice is that the results of the reverse feature are NOT the exact opposite trading in forward. This is because of the spread of the currency.

Take a look at the chart below (tic chart of the EURUSD). When you are buying, the top line is your price. When you are selling, the bottom line is the price used.

I have used a hypothetical trade of a system generating a long (buying) signal to open a trade (lower left hand corner in GREEN). The system closed out the trade several moments later at the blue line for a profit of 20 pips.

The red print represents how a REVERSE of that system would have resulted. Notice how the REVERSE would have sustained a net loss of 26 pips.

We can now conclude the first observation of the REVERSE feature.

I. The reverse results will NOT be the exact opposite of trading the system forward.

Typically, the REVERSE trade result will be worse than the opposite of trading forward. Based on the chart below, we can even suggest the difference between the forward and reverse results (in pips) will be approximately twice the spread in most situations. Here is an illustration to help you out…

These are actual reverse trades from February 2009. Column L (YELLOW) was the net p/l in pips. I went to the actual trades of the system and manually added column N (BLUE). The difference between yellow and blue column is the GREEN column.

There are 2 characterstics of the green column…
1) It is never the same from trade to trade, it is variable.
2) It is equal to roughly twice the spread…in this case of the USDCAD.

Tomorrow, we will look at another observation you will find when trading the reverse function.

hben37 · #**118** (**permalink**) 04-17-2009, 12:42 AM

Hello Jeremy,
The upward trend example depicts clearly how the spread is a disadvantage. When you have a chance can you give the example of a reverse strategy with a downward trend? Thanks

Jeremy Wagner · #**119** (**permalink**) 04-19-2009, 08:13 PM

Quote:

Originally Posted by hben37

Hello Jeremy,
The upward trend example depicts clearly how the spread is a disadvantage. When you have a chance can you give the example of a reverse strategy with a downward trend? Thanks

Here is a similar example when the system provider opens a short trade in a down trend (RED and GREEN print). The same result is that approximately twice the spread is 'missing' from the reverse trade.

Both of these examples were when the system provider had a profitable trade. To turn this around so emulate what it would be like for a system provider to have a losing trade, simply make the reverse trade the RED lettering. My second chart (ORANGE and BLUE print), shows when then system provider has a losing trade. The reverse trade is still 'missing' the 6 pips.

Reverse trading can open up some more opportunities, so chosing systems that are extremely unprofitable or have tight spreads will be a key.

Jeremy Wagner · #**120** (**permalink**) 04-20-2009, 03:53 PM

Taking the other side of a strategy's trade is a feature of the Forex System Selector. Last week, we reviewed a common observation and significant difference when searching for reverse systems.

Today, we will discuss another observation where the reverse trades will be significantly different than the opposite side of the trade. There is a feature of the FSS platform that if the signal provider does not provide a stop and limit when opening the position, the platform automatically adds a 300 pip stop loss. This does not mean your worse case scenario is 300 pips because it is possible the system provider may send in a 400 or 500 pip stop loss. Also, you have the ability to override the stops, so you can place a 400 or 500 pip stop.

Most systems do use stops and limits. However, this 300 pip platform stop is a safety net for when the provider does not send a stop with the opening signal.

Let's assume a trade where the signal provider opens a short position. The reverse trader has assumed a long position with a 300 pip stop. Notice how this trade worked in favor of the system provider and the reverse trader got stopped out long before the system provider 'took profit'.

This brings us to our 2nd observation

II. If the difference between forward and reverse is much larger than twice the spread, see if the position had the 300 pip platform stop triggered.

Look into your HISTORY tab and see if the pip P/L is near 300.