Currency Secrets

If you haven’t taken advantage of FXCM’s free forex videos, especially Rob Booker’s presentation then make use of them while they are still available and free.

I particularly enjoyed Rob’s seminar and there will be several things I’ll be expounding upon in the coming weeks that I learnt from his talk with the remainder of this post being the most prominent feature I learnt from him, and that is: being focussed.

Having being a trader for some 8 years I’ve pretty much done it all: I’ve had the “privilege” of wiping out a couple of accounts, reading a gazillion trading books, attending hundreds of seminars, purchasing hundreds of systems and subscribing to hundreds of signal vendors… etc etc. I suppose if I added up the amount of time and money spent it would easily be in the hundreds of thousands of dollars!

And do you know at what point I began becoming consistently profitable?

When I traded a system that I created from what *I* observed.

My profitability then increased further when I acquired a skill that allowed me to backtest my observations through programming, and increased yet again when I tweaked the system I had chosen to trade.

And this, I think, is at the heart of becoming successful as a trader: focus.

I remember the days when I would create a system, backtest it, like its results, trade it, encounter a string of losses (like… 2 in a row), panic, and then throw the system away.

How stupid was I?

Everything my mind had logged, trading that system, had now been erased. If the system was breaking down I could’ve gone back to the drawing board and thought about what common characteristics were prominent on trades that were losers. And this is when the penny dropped.

I stopped chasing the elusive holy grail and simply concentrated on what I liked using and what worked for me.

I then audited my trades on a consisent basis knowing that the markets are always changing and the precious experience my mind had acquired watching charts I could crystallise into an improved method for extracting profits out of the market.

After watching Rob’s presentation I began to realise that the real element of my success was the focus I put in on that ONE system. Without that focus I would’ve continued chasing my tail using a new system every month.

If that’s you, come in close, reeaaal close I need to tell you something very very important…

STOP!

Rob puts it best… “If we were to lock you in a room for six months and gave you historical data on ONE currency on ONE time frame with ONE indicator could you develop a PROFITABLE system?”

If you’re not profitable trading the forex market then why aren’t you doing that?

Focus.

Grab your favourite currency, plot it on your favourite time frame, use your favourite indicator and then stay focussed on creating your holy grail.

And this is what Jack Schwager’s FXCM presentation should have impressed upon you: there’s no ONE way of extracting profits out of the markets.

I know profitable forex traders who use only a MACD (or the Macdizzle as Rob put it!), traders who trade announcements (such as Felix), traders who trade bank opens, carry traders, CCI trades (such as Woodie)… etc etc.

It’s no hocus pocus… just focus.

FXCM had an expo in New York just recently and have made available some good videos of some of the presenters for free!

One particular video I enjoyed was Jack Schwager’s. If you’re familiar with Jack Schwager’s books Market Wizards and his second work New Market Wizards then you’ll be familiar with his presentation as he highlights some of the common elements of the successful traders.

Be quick dear friends to take advantage of FXCM’s free videos as I don’t know how long they’ll be keeping such good content for free for too long.

The video on Jack should take about an hour, but my connection was a little funny and it took about twice that time, I asked FXCM if they could offer some sort of facility where the video can be paused while it downloads, but I never heard back from them.

If anyone views the video and notices any pause button let me know, I’d like to watch the Jack Schwager video again without it stopping every 5 seconds.

There’s also a good video by famous forex trader Rob Booker too.

FXCM Expo has their next event is in December 2006 in Las Vegas.

Interactive Brokers is another popular forex broker outfit that has gained notoreity throughout the last couple of years. As IB already had a large trader base through its other trading divisions promoting their forex division wasn’t going to be too difficult to get off the ground.

As IB has been known around the world as a deep discount broker offering very competitive commissions to futures, options and stock traders, they have successfully moved their operations to incorporate forex trading.

Some of the highlights about Interactive Brokers Forex division are:

• Can trade the spot forex market PLUS the currency futures market from the same account (in fact, you can trade anything IB offers from the same account - i.e. stocks, options… etc)
• Advanced orders such as Stop Limit, Trailing Stop, Stop, Good Till Cancelled, Good After Time, Good Till Date/Time are allowed
• IB offer a free API to traders who open an account
• Spreads are relatively tight, I’ve noticed spreads of 1 pip between EUR/USD and USD/JPY crosses

Some of the things to be wary of are:

• US$25,000 minimum trade sizes (various for other currencies see here for detail)
• Interactive Brokers has two forex platforms: one for trading (IDEALPRO) and the other for exchanging currency between trading accounts/positions (and trying to understand how to balance a foreign currency position can be rather frustrating if you don’t know anything about foreign exchange) - this second platform is known as IDEAL
• The IB IDEALPRO forex platform has a kludgy feel about it, but this could just be me
• Commissions of 0.2 basis points on trade size value or US$2.50 (whichever is higher)

Interactive Brokers provides the ultimate platform from trading just about anything around the world, by adding a forex arm to their arsenal they sure have provided everything a trader could ever want.

Unfortunately though, there’s a big downside to IB, that isn’t apparent until you’ve opened an account and encountered a problem, and that is: their support sucks. I mean, really sucks. If you do open an account with IB ensure you’ve tested all facets of your trading (including depositing and withdrawing moneys and buying and selling the instruments you’re interested in trading in) before adding large amounts of money with them.

Opening an account at IB is relatively straight forward, and can be done in less than an hour or two.

It is difficult to pass IB up when they offer everything a trader would ever need from one central account, but as with all things cheap be careful of the old axiom - You get what you pay for.

If you’ve used Interactive Brokers FX then I’d like to know how your experience has been with them, please add your comments.