Currency Secrets

Thanks to a comment by Don Guy on my second post about ProSignal I thought I would offer an update to ProSignal so as not to deter any future forex traders from my old posts.

As mentioned by Don in his comment it seems Prosignal have taken on board the problems of using backtested performance figures in their reporting and, as per their web site now track their results real time, which means they INCLUDE the cost of the spread incurred in their trading results.

They state,
Back-tested Vs Real-time Past Performance: Since August 1st, 2005 the results listed in the performance table for the EUR/USD, GBP/USD and USD/CHF have occurred under real-time monitoring. Performance numbers prior to July 31st, 2005 were generated by back-testing on historical data. The EUR/JPY, released to the public March 2006, in its current configuration, has been running under real-time monitoring since January 2006. The results prior to January 2006 are generated on historical data.

Equally impressive is the following paragraph on their backtesting results, they state,
Performance Chart Reflects a 50% Profit Reduction in Back-Tested Returns: Back-testing plays a significant role in helping to validate and design profitable automated trading strategies. A back-tested result is a snapshot of what a trading strategy would have produced over a period of historical data. However, due to the benefit of hindsight and optimization, back-tested data often shows more profit than what you may expect in real time. To account for a potential difference between back-tested and real time outcomes, in the performance chart above, we deducted 216 pips from each month of back-tested data on the EUR/USD, 200 pips from each month of back-tested data on the GBP/USD, 225 pips from each month of back-tested data on the USD/CHF and 154 pips from each month of back-tested data on the EUR/JPY.

These deductions equal 50% of the total Net Profits over the period of hypothetical back-testing. Since August 1st, 2005 on the EUR/USD, GBP/USD & USD/CHF the results indicated in the table were produced in real-time and therefore, no deductions were made beyond August 1st, 2005 on those currency pairs. Since January 1st, 2006 on the EUR/JPY the results indicated in the table were produced in real-time and therefore, no deductions were made beyond January 1st, 2006 on the EUR/JPY. Using ProSignal’s charting software you can back-test all of our automated signals against historical data to review signal accuracy.

If this is true then their results are quite impressive and I wouldn’t hesitate recommending forex traders to their service.

Thank you Don for your comments.

Go to Prosignal.

If anyone has any comments on ProSignal that they’d like to add please feel free to add them below.

I have just finished reading Nicolas Darvas’ book How I Made $2,000,000 In The Stock Market, and I have to say there was a wealth of knowledge in that book that I wish I knew when I initially started out.

Although the book doesn’t touch on forex trading there are some important aspects to it that I think is pertinent to ANY trader no matter what they trade.

In fact, the compelling part of the book was Nicolas’ evolution as a profitable trader. For those that have read the book you will know that he became a better trader by being pragmatic about the situation.

He would often look at his results and SEE if what he was doing was making money, if it didn’t he would set about CHANGING his approach.

In many ways I saw the OLIAD Principle that I discussed several months ago with you all.

Initially Nicolas Observed the stock market through an employer that wanted to pay him his wage through stock instead of cash. From there he was hooked, and set about Learning how to make money from the stock market. From the knowledge he acquired he then put it to the test by Interacting with his new found knowledge. Luckily for Nicolas he Analysed his results often and then sought about Learning from a different angle (he went from receiving tips from friends/family, to receiving professional advice, to learning fundamentals, to learning technicals).

Eventually he got to the stage where he knew enough about the stock market that his conscience created his own Holy Grail - a system that was compatible with his personality and his goals. After a time he created his own unqiue system and then began tweaking it through time.

This created his success.

Now, even though this story has absolutely nothing to do with the forex market, it still can offer great insight into helping you becoming a successful trader and I highly recommend it.

Although I purchased the book you can read Nicolas’ book for free online from this web site: Nicolas Darvas