Currency Secrets

Another web site that was presented to me not so long ago was TopForexReview.com.

The site offers personal reviews by its owner Cindy on forex brokers, forex signal services, forex managed accounts, and forex training courses.

Now ordinarily I wouldn’t bother recommending something like this as there are a gazillion opinions on these things on the internet nowadays, however, there is something that’s a little different: Cindy provides free forex signals.

Now again, nothing extraordinary here, except for the fact that her signals aren’t half-bad – and she maintains quite a high accuracy (since July 2006 she’s hit 23 winners out of 27 trades!). The only negative with her service is that she doesn’t have any stop losses so some trades can experience large adverse moves against them.

But if you’d like to receive Cindy’s free signals (which she sends by email) then by all means go and register your name and email now!

Back in March Malcolm from Excalibur Forex offered readers of Currency Secrets free access to his signal service for a month.

Having now used Excalibur’s services for over 6 weeks I can provide my opinions on his service.

The things that I liked about Excalibur Forex was its simplicity of signals. Excalibur only trades the 4 major currency pairs, as well as the AUDUSD, the USDCAD, the EURJPY, and the GBPJPY. Each signal is sent out at 0000 GMT (and some times a little earlier) and even though there were days where I’d only access these signals an hour or two after they had been sent I still had no problems getting in (the market isn’t that volatile around that period). I will also add that the majority of exits where either through trailing stops set from the previous day or a target limit orders – with only one trade being exited at market during my sample.

The way in which I tested Excalibur’s system was by risking US$500 on each trade (which equated to 1% on my fresh demo Oanda account). I would then calculate the position size needed using Oanda’s FXMath Profit Calculator based on entry and stop loss prices.

Unfortunately during the testing period Excalibur wasn’t profitable. With risking US$500 per trade the account never went above starting capital and slipped to as low as US$45,022.60 (a tad under a 10% loss). The ending equity was US$46,174.16 (a 7.6% loss) and this excluded the profit/loss of the two open positions as at 30 April 2007.

Now I can understand the unfortunate luck of reviewing a service during a down month, so this isn’t my biggest concern, my biggest concern is whether what was reported as the ending profit/loss for the period was in fact what I had.

Excalibur report that the ending profit/loss in pips for April was -135.

My ending profit/loss in pips for April was +85 pips (BTW my opening balance as at 1 April 2007 was US$46,762.26 – so I still lost money)! Firstly the discrepancy for the difference in pips made lay in several factors: first there was an erroneously placed order on the web site to buy the USDCAD (Malcolm reported a stop loss higher than the entry price) I didn’t place a trade and informed Malcolm of the error, and by the time it was corrected the trade had already hit its stop loss – losing 60 pips). The other discrepancies lay in the EURUSD and USDCHF trades where it was by sheer luck on my part that I entered the order 2 hours late. I still kept the orders active, but the currencies never came back up and hit the entry price each losing 55 and 85 pips respectively.

Which brings us to an even stranger discrepancy: Why did you still lose money during April, even though YOU made 85 pips?? The best way to illustrate this is by using an example.

Let’s say that I have two trades on the GBPUSD and one loses 100 pips and the other makes 60 pips, netting me a loss of 40 pips. If my initial stop loss for trade #1 was 200 pips away, and my initial stop loss for trade #2 was 100 pips way what would my position size have been for each trade if I were willing to risk US$500 per trade?

We can easily do the math as follows:

Trade #1: U$500 / 0.0200 = 25,000 units
Trade #2: U$500 / 0.0100 = 50,000 units

Okay, now what would our net result be:

Trade #1: 25,000 x (0.0100) = (U$250)
Trade #2: 50,000 x 0.0060 = U$300

Our net profit = U$50.00 even though we’re net -40 pips. Even though the currency was the same, the pip value was the same, the risked amount was the same, we were still able to achive a net profit DOLLAR-wise compared to our net PIP losses.

It makes you think twice about forex signal services who provide performance statistics PIP based doesn’t it – especially if you trade their services as I have done with Excalibur by RISKING a fixed amount per trade. You’ll want to make sure that if you do employ a money management strategy such as this for a forex signal provider that you not only analyse their performance but also whether their initial stops are always a fixed distance away, or variable.

Anyway, getting back to Excalibur’s Forex I’d like to thank Malcolm for the opportunity and wish him the very best for the future with his service. If I could recommend one thing for his service it would be the capability to have alerts emailed to the user inbox, but that’s about it.

If you have similarly trialled Excalibur Forex and would like to detail your experience please do so below.

EasyForex are looking for someone to provide an honest review of their forex signal service in here.

If you have used EasyForex’s signals and would like to add your comments, please do so by entering them below and clicking on the “Add Comment” button.

Now that I have finished my review of Excalibur Forex, I will try EasyForex’s system as well, and would encourage others to get in contact with EasyForex so that we all can provide a review (as some of us live in different time zones where we would not be able to access their signals in a timely manner – from what I can gather their signals are sent at 0200 GMT and 1300-1800 GMT [go to World Time Zone if you need to know what this corresponds to in your local time]).

I’m also aware from other reviews that I’ve seen around the place that EasyForex has excessive drawdowns – although I also am of the understanding that EasyForex take positions where interest is earned and this can somewhat alleviate the pain of these excessive drawdowns. With this in mind ensure that if you do test this service that you do so with a demo account first.

The oddly titled ebook “Bird Hunting In Lion Country” by Dirk de Toit (aka DrForex) is a book about trading the forex market.

Unfortunately I was a little disappointed after I had finished reading the book because Dirk did a good job keeping me hooked during the early chapters, but when the meat came round it was just fairy floss.

But let’s first talk about what I liked about the book:

Certain key points that I thought Dirk did well in harbouring on were the importance of fundamentals in a strategy. I know in my trading that there are times when I can get a little too lost in chart patterns, or indicators, or support and resistance lines that when an economic announcement is released it doesn’t pay ANY attention to those things and rips through all technical reasoning.

I definitely liked Dirk’s PET & 4×1 philosophy – I think this is very sound and something that all forex traders should know.

But then that’s about it… unfortunately.

And that’s why the book finished disappointingly. There was nothing there where the user could see Dirk at wirk (ok, I was a little cute there), but with only one chart showing us his trading activity it just wasn’t enough and his book made his system seem very ambiguous.

I mean from what I could gather his method went something like: obtain the fundamental direction of a currency as this will be its trend, obtain a monthly hourly chart, divide it into quadrants, buy low, sell high (if trend signals to go long – inverse if trend is short). Hold mental stops, take a profit (whenever you can??) and partially jump out in bits if the position moves against you and margin gets to be a problem, or exit completely if the fundamentals change.

Being someone who prefers technicals, someone who can code ideas into a computer and have them spit out results it was a little frustrating.

I wouldn’t have minded as much with Dirk’s ambiguity if he had provided a lot MORE examples of trades he had taken. As I said before he gives one such period where he plots about 7-8 trades, but doesn’t really give any good reason for why entry was at those bars. It would’ve been great if Dirk had taken a screen shot of the market prior to entry detailing WHY he was going to initiate a trade (using his methodology that he had outlined in previous chapters), then his thought process when either the position hit its peak or trough during the trade (obviously you wont know the highest or lowest point in a trade, but it would be interesting nonetheless to know what Dirk’s thought process was during some of the trades that he had – especially when a trade moves several HUNDRED pips against you!), and then what the thought process was for getting out.

Although Dirk boasts an above average accuracy with his forex trading, and while I personally DO NOT doubt his track record and performance, I feel that people may not be fully aware that Dirk’s method incurs high drawdowns – which I think is why he’s a huge advocate of extremely low leverage, you’ll need the low leverage to combat the large drawdowns.

Lastly, I also felt that the book tried to lead the reader into taking the next step of discovering more about how Dirk profitably trades by trying to get them to take the next step of getting them involved in his mentorship program. No doubt my concerns of not seeing enough evidence of Dirk’s method in his book would be satiated with the mentorship program… I assume.

So please be aware dear friends that if you do purchase this book and you are of the technical mindset such as myself you will be sorely disappointed with the lack of meat in his book. If though you are starting out in forex and prefer the fundamental approach to forex trading then Dirk du Toit (aka DrForex) wouldn’t be a bad start.