Forex Howto

You’ll have to excuse the fact that this post is not really at first glance much about FOREX, more about corporate cultural differences between Japan and western countries in general… which in a way is related to FOREX.

I read an interesting story about corporate culture at Toyota, even in tough times they don’t lay off workers, instead they train them, shift them to plants which are understaffed etc. In the last couple of years GM has laid off 34,000 workers, Toyota (in the US) ZERO.

At the bottom was a link to an old (2006) article about Honda. They really come across as the masters of diversification, and some very solid reasons why they will probably be around for a long time. It’s also interesting that they are run by engineers, where big car companies in western countries are run by accounting types.

Their slogan

“To be a company that society wants to exist.”

Not a bad goal, though it makes good survival sense

Honda believes that society does not cotton to companies that melt ice caps and kill coral reefs. Cars that create less pollution also cost less to fill up.

And interestingly they’ve never had a losing year. Would be interesting to see how the current economic climate has affected them.

Some months back I visited Japan and was very impressed with their efficiency (particularly the subways), when you compare it to Sydney or London their efficiency is amazing, everything is designed around getting things done quickly and efficiently. I should mention that this isn’t true for everything in Japan, try to get something out of the ordinary done that requires someone making a decision and chances are you’ll go crazy!

An interesting article about china showing signs of massively increasing their gold reserves. I’m taking this as another good sign for shorting the dollar soonish (long term perspective).

China’s fears that America’s $700 billion bailout plan may make the US budget deficit balloon to well over US$1 trillion this fiscal year.

The US government will fund the bailout by printing new money or issuing huge amounts of new debt, either of which will put severe pressure on the value of the greenback and on government bond yields.

Publishing my trading performance was a stupid decision, ever since I’ve gone backwards.

I’m a big fan of Jim Rogers, it seems all general world ideas I have are rather similar with his outlook on the world. There is one major difference (OK maybe more than one when you consider the differences in net worth etc. ), he knows about a LOT more asset classes than I do, so he actually knows how to make the correct plays.

This article has some good thoughts about where the dollar is going.

“The fact that the dollar is gaining rapidly is only temporary,”  Rogers recently told a group of private bank clients.

“Within a year you’ll have to get rid of the dollar,” he said.

Rogers has spent a career being one step ahead of mainstream investment thinking.  Amongst his many accomplishments, Rogers was co-founder with George Soros of Quantum Fund. During his ten years with the fund, the portfolio gained more than 4,000%, while the S&P rose less than 50%.

Years ago when I first got started with trading I did what everyone does which is experiment with lots of indicators, sometimes they give what appear to be good signals, most of the time they’re not really anything to write home about.

I think I may have found a use for them, by using an overbought/oversold indicator (in my case I’ve tried the CCI aka Commodity Channel Index) on the volatile pair of my trades it appears (in my ever so brief testing) that it provides a nice filter to tell me when to get in and out of my trades. This is of course in combination with my trading strategy indicator which gives me overbought/oversold signals in relation to other currencies.

Some good news is that I’m slowly climbing the ladder in the Automated Trading Championship. at present I’m in 52nd position with balance of $18k.

No sooner did I put up my trading performance for the last couple of months than I managed to wipe out last months gains!

My latest thoughts about filters are to only trade when both sides of the trade are at extremes (one is overbought, one is oversold, that way they should come together a bit better).

I’m also considering the posibility of position sizing based on volatility, at the moment I have all values balanced on the primary position size, however I’ve been noticing that the volatile pair appears to affect the trades a little more than I might like.

I was pleased to see that America elected Barak Obama to be their next president (and in such emphatic style), however I was surprised that the FOREX markets have barely reacted.

I can’t help wondering that perhaps the markets already had factored in his election.

Thinking very long term I’m guessing that his world citizen approach should help America which should be good for America. It’ll be interesting to see what happens in the years ahead.

Whether it’s a good idea or not (in the long term), I’ve decided to put up my trading performance for all to look and laugh at when I do poorly. At present there are only 2 full months online I started my strategy part way through August.

Bear in mind that my performance is based on part time trading, so it could probably be higher if I was doing it fulltime, though for the time being it’ll have to stay part time.

I’m using 30:1 leverage and the strategy is a relative value one.

Hopefully the gains remain positive!

One of the books I’ve got on my recommended books page is the (mis)behaviour of markets, by Benoit Mandelbrot. I found this video on Trader Mike’s blog and thought it was very interesting, I prefer Mandelbrot to Taleb (a bit too much sensationalism for my liking).

I have a bit of a love hate relationship with Metatrader. I love the fact that it’s free and that it will run on Linux (using Wine), however that is about the extent of my love for it. My list of dislikes about it are many, to summarise: I think from a technological perspective that their platform is very poorly designed.

There are numerous other automated trading software packages, the majority require payment, which is fine if you’re firstly trading large amounts of money and secondly making good money. For the majority of beginners, this is not the case, so we’re stuck with inferior tools to use during our learning.

One of the pieces of automated trading software you need to pay for is OpenQuant, I’ve known about it for some time and in the past I downloaded a demo version of their software had a quick play with it though gave up after I had some issues with getting external data into the program to use. I’ve just recently installed OpenQuant again to evaluate and really love the platform, coding is a dream (it’s c#) and rather simple yet powerful. There is full portfolio testing which is ideal for what I’m looking for.

My only issue is the data importation is not going very well, I’m trying to import 5 minute bars from CSV and I think it will take a couple of days to complete each currency pair, I have 3 which I want to import. I suspect that this may be partially due to the data being a bit dubious and OpenQuant is doing some kind of data cleaning. I’m getting my data from Metatrader (yup being cheap again) and from what I can see there are some decent sized gaps (I’m talking price gaps). We will see how I go in the next 27 days, I would really like to use OpenQuant to test my strategy before the demo period finishes, though if I can’t get it to import the data in a reasonable amount of time then I might resort to writing my own simulation software.