Top 3 Ways To Fund Your Forex Account WealthResult.com
Top 3 Ways To Fund Your Forex Account WealthResult.com
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21 year old FUNAAB student in N11.3bn forex mess gets ...
Forex Masters - Forex Fun
Two Blokes Trading | Forex Trading Community
What is Two Blokes Trading? Two Blokes Trading is a fun and informative podcast and website for new and experienced home financial traders. It follows us, Tom and Owen, as we learn to trade profitably and consistently. We interview leading traders and trading industry insiders every week on the Podcast to give our listeners the best chance of becoming profitable traders.
Does anyone else cringe at all the ideas that come through here? Like “USD going down this week.” Not the ideas themselves but the mindset behind them. My thought process is we should be discussing concepts, stats, probabilities, psychology, etc. These ideas are just so focused on the “now.” Same thing when I see someone beating themseves up over 1 trade, or bragging about a string of wins. (Or even a backtest with like 50 trades...) Maybe its an automation vs discretionary mindset difference but unless there is a decent sample size, it means nothing to me as the predictability of forex is close to 0. Successful traders dont predict, they repeatedly put the odds in their favor — there is a difference imo. I guess there’s nothing wrong with discussing ideas but is that part of your process? Getting input from (mostly) unprofitable traders?
Former investment bank FX trader: news trading and second order thinking
Thanks to everyone who responded to the previous pieces on risk management. We ended up with nearly 2,000 upvotes and I'm delighted so many of you found it useful. This time we're going to focus on a new area: reacting to and trading around news and fundamental developments. A lot of people get this totally wrong and the main reason is that they trade the news at face value, without considering what the market had already priced in. If you've ever seen what you consider to be "good" or "better than forecast" news come out and yet been confused as the pair did nothing or moved in the opposite direction to expected, read on... We are going to do this in two parts. Part I
Introduction
Why use an economic calendar
How to read the calendar
Knowing what's priced in
Surveys
Rates decisions
First order thinking vs second order thinking
Introduction
Knowing how to use and benefit from the economic calendar is key for all traders - not just news traders. In this chapter we are going to take a practical look at how to use the economic calendar. We are also going to look at how to interpret news using second order thinking. The key concept is learning what has already been ‘priced in’ by the market so we can estimate how the market price might react to the new information.
Why use an economic calendar
The economic calendar contains all the scheduled economic releases for that day and week. Even if you purely trade based on technical analysis, you still must know what is in store. https://preview.redd.it/20xdiq6gq4k51.png?width=1200&format=png&auto=webp&s=6cd47186db1039be7df4d7ad6782de36da48f1db Why? Three main reasons. Firstly, releases can help provide direction. They create trends. For example if GBPUSD has been fluctuating aimlessly within a range and suddenly the Bank of England starts raising rates you better believe the British Pound will start to move. Big news events often start long-term trends which you can trade around. Secondly, a lot of the volatility occurs around these events. This is because these events give the market new information. Prior to a big scheduled release like the US Non Farm Payrolls you might find no one wants to take a big position. After it is released the market may move violently and potentially not just in a single direction - often prices may overshoot and come back down. Even without a trend this volatility provides lots of trading opportunities for the day trader. https://preview.redd.it/u17iwbhiq4k51.png?width=1200&format=png&auto=webp&s=98ea8ed154c9468cb62037668c38e7387f2435af Finally, these releases can change trends. Going into a huge release because of a technical indicator makes little sense. Everything could reverse and stop you out in a moment. You need to be aware of which events are likely to influence the positions you have on so you can decide whether to keep the positions or flatten exposure before the binary event for which you have no edge. Most traders will therefore ‘scan’ the calendar for the week ahead, noting what the big events are and when they will occur. Then you can focus on each day at a time.
Reading the economic calendar
Most calendars show events cut by trading day. Helpfully they adjust the time of each release to your own timezone. For example we can see that the Bank of Japan Interest Rate decision is happening at 4am local time for this particular London-based trader. https://preview.redd.it/lmx0q9qoq4k51.jpg?width=1200&format=pjpg&auto=webp&s=c6e9e1533b1ba236e51296de8db3be55dfa78ba1 Note that some events do not happen at a specific time. Think of a Central Banker’s speech for example - this can go on for an hour. It is not like an economic statistic that gets released at a precise time. Clicking the finger emoji will open up additional information on each event.
Event importance
How do you define importance? Well, some events are always unimportant. With the greatest of respect to Italian farmers, nobody cares about mundane releases like Italian farm productivity figures. Other events always seem to be important. That means, markets consistently react to them and prices move. Interest rate decisions are an example of consistently high importance events. So the Medium and High can be thought of as guides to how much each event typically affects markets. They are not perfect guides, however, as different events are more or less important depending on the circumstances. For example, imagine the UK economy was undergoing a consumer-led recovery. The Central Bank has said it would raise interest rates (making GBPUSD move higher) if they feel the consumer is confident. Consumer confidence data would suddenly become an extremely important event. At other times, when the Central Bank has not said it is focused on the consumer, this release might be near irrelevant.
Knowing what's priced in
Next to each piece of economic data you can normally see three figures. Actual, Forecast, and Previous.
Actual refers to the number as it is released.
Forecast refers to the consensus estimate from analysts.
Previous is what it was last time.
We are going to look at this in a bit more detail later but what you care about is when numbers are better or worse than expected. Whether a number is ‘good’ or ‘bad’ really does not matter much. Yes, really. Once you understand that markets move based on the news vs expectations, you will be less confused by price action around events This is a common misunderstanding. Say everyone is expecting ‘great’ economic data and it comes out as ‘good’. Does the price go up? You might think it should. After all, the economic data was good. However, everyone expected it to be great and it was just … good. The great release was ‘priced in’ by the market already. Most likely the price will be disappointed and go down. By priced in we simply mean that the market expected it and already bought or sold. The information was already in the price before the announcement. Incidentally the official forecasts can be pretty stale and might not accurately capture what active traders in the market expect. See the following example.
An example of pricing in
For example, let’s say the market is focused on the number of Tesla deliveries. Analysts think it’ll be 100,000 this quarter. But Elon Musk tweets something that hints he’s really, really, really looking forward to the analyst call. Tesla’s price ticks higher after the tweet as traders put on positions, reflecting the sentiment that Tesla is likely to massively beat the 100,000. (This example is not a real one - it just serves to illustrate the concept.) Tesla deliveries are up hugely vs last quarter ... but they are disappointing vs market expectations ... what do you think will happen to the stock? On the day it turns out Tesla hit 101,000. A better than the officially forecasted result - sure - but only marginally. Way below what readers of Musk's twitter account might have thought. Disappointed traders may sell their longs and close out the positions. The stock might go down on ‘good’ results because the market had priced in something even better. (This example is not a real one - it just serves to illustrate the concept.)
We know that interest rates heavily affect currency prices. For major interest rate decisions there’s a great tool on the CME’s website that you can use. See the link for a demo This gives you a % probability of each interest rate level, implied by traded prices in the bond futures market. For example, in the case above the market thinks there’s a 20% chance the Fed will cut rates to 75-100bp. Obviously this is far more accurate than analyst estimates because it uses actual bond prices where market participants are directly taking risk and placing bets. It basically looks at what interest rate traders are willing to lend at just before/after the date of the central bank meeting to imply the odds that the market ascribes to a change on that date. Always try to estimate what the market has priced in. That way you have some context for whether the release really was better or worse than expected.
Second order thinking
You have to know what the market expects to try and guess how it’ll react. This is referred to by Howard Marks of Oaktree as second-level thinking. His explanation is so clear I am going to quote extensively. It really is hard to improve on this clarity of thought: First-level thinking is simplistic and superficial, and just about everyone can do it (a bad sign for anything involving an attempt at superiority). All the first-level thinker needs is an opinion about the future, as in “The outlook for the company is favorable, meaning the stock will go up.” Second-level thinking is deep, complex and convoluted. Howard Marks He explains first-level thinking: The first-level thinker simply looks for the highest quality company, the best product, the fastest earnings growth or the lowest p/e ratio. He’s ignorant of the very existence of a second level at which to think, and of the need to pursue it. Howard Marks The above describes the guy who sees a 101,000 result and buys Tesla stock because - hey, this beat expectations. Marks goes on to describe second-level thinking: The second-level thinker goes through a much more complex process when thinking about buying an asset. Is it good? Do others think it’s as good as I think it is? Is it really as good as I think it is? Is it as good as others think it is? Is it as good as others think others think it is? How will it change? How do others think it will change? How is it priced given: its current condition; how do I think its conditions will change; how others think it will change; and how others think others think it will change? And that’s just the beginning. No, this isn’t easy. Howard Marks In this version of events you are always thinking about the market’s response to Tesla results. What do you think they’ll announce? What has the market priced in? Is Musk reliable? Are the people who bought because of his tweet likely to hold on if he disappoints or exit immediately? If it goes up at which price will they take profit? How big a number is now considered ‘wow’ by the market? As Marks says: not easy. However, you need to start getting into the habit of thinking like this if you want to beat the market. You can make gameplans in advance for various scenarios. Here are some examples from Marks to illustrate the difference between first order and second order thinking. Some further examples Trying to react fast to headlines is impossible in today’s market of ultra fast computers. You will never win on speed. Therefore you have to out-think the average participant.
Coming up in part II
Now that we have a basic understanding of concepts such as expectations and what the market has priced in, we can look at some interesting trading techniques and tools. Part II
Preparing for quantitative and qualitative releases
Data surprise index
Using recent events to predict future reactions
Buy the rumour, sell the fact
The trimming position effect
Reversals
Some key FX releases
Hope you enjoyed this note. As always, please reply with any questions/feedback - it is fun to hear from you. *** Disclaimer:This content is not investment advice and you should not place any reliance on it. The views expressed are the author's own and should not be attributed to any other person, including their employer.
Complying to a scammer, but not quite the way he wanted me to!
(To any moderator, I have anonymitised everything and made sure that it is according to rules of this subreddit,I wanna share this story so please let me know should further editing be required ! please Consider this person has likely stolen thousands and thousands of innocent people so i wanna spread awareness! So the other day (actually my birthday too :)) I found this account on IG, I saved him as Scumm in my phone but he claims to be an "Alex", hit him up if you wanna get rich it is a fiest. So i hit him up and be like: [19:00, 23/09/2020] OP: Hello sir I am Tom, I read a lot of things about Forex and crypto and your page in particular and just inherited some money from a relative , I heard so many good things I thought you might help me invest some of that money so it is not lost? Kindly [19:08, 23/09/2020] Scumm: Ok [19:08, 23/09/2020] Scumm: Welcome [19:08, 23/09/2020] Scumm: Where are you from? [19:09, 23/09/2020] OP: Germany [19:09, 23/09/2020] Scumm: Ok Tom [19:09, 23/09/2020] Scumm: We specialise on Stock And cryptocurrency trading, with the sole aim of making awesome profit from the rapid changes in price of the assets and currencies we trade. We are group of professional market analysts that studies the market picking the best assets to invest on, and as well the best cryptocurrency pairs to trade on. We have mastered risk management and as well best possible strategy to maximize our clients Profits [19:10, 23/09/2020] Scumm: With the minimum investment of 1 BTC you can make 3.8BTC in a month [19:11, 23/09/2020] Scumm: If I may ask do you have a Bitcoin Wallet address? Now you can see how this is a scam and no one should ever follow such ludicrous claims! 380% in a month, if sb knew how, they wouldnt share that ,not in this world, not in this century... So i amlike: [19:15, 23/09/2020] OP: I'd be willing to invest even 2 bitcoin but I would need your company credentials and iban to send money to [19:19, 23/09/2020] Scumm: I can only provide you a US account to make payment [19:19, 23/09/2020] Scumm: This if gonna be possible [19:19, 23/09/2020] OP: Hmm I'll see maybe that works [19:19, 23/09/2020] OP: Easiest would be IBAN [19:19, 23/09/2020] OP: Your company does not have any European bank accounts? [19:19, 23/09/2020] Scumm: IBAN [19:20, 23/09/2020] Scumm: Mate I always follow procedures so I have not accept Transfer for deposit [19:20, 23/09/2020] Scumm: But I will see to that ok You see where this is going I want some info and make him believe he or one of his mules at least gets sweet sweet cash. NOT SO FAST [20:49, 23/09/2020] Scumm: I’m waiting on my Colleague to forward details to me now [20:49, 23/09/2020] Scumm: Ok so you are not sending today? [20:49, 23/09/2020] OP: Thank u so much [20:49, 23/09/2020] OP: I can try but I have to call bank [20:49, 23/09/2020] OP: For over 1000 [20:50, 23/09/2020] Scumm: Ok ok mate [20:50, 23/09/2020] Scumm: Good [21:08, 23/09/2020] Scumm: XXXXXX XXXXXXXX XXX Bank Account number: 8XXXXX0 Sort code: XXXX IBAN: GBXXXXXXXXXXXXXXXXXX [21:08, 23/09/2020] Scumm: Are you there Mate? [22:43, 23/09/2020] OP: Yes hi thank u so much [22:43, 23/09/2020] OP: Let me chdck [22:46, 23/09/2020] Scumm: Ok mate [22:53, 23/09/2020] Scumm: Are you trying to send it now mate? Spinning it furtherly: I just tell some yada yada about how it takes time and a signature since its such a large sum! [11:46, 24/09/2020] OP: Do you have license [11:46, 24/09/2020] Scumm: 25BTC too small for even my students 😂 /\SURE buddy! */* [11:46, 24/09/2020] OP: NASAA 67? [11:47, 24/09/2020] OP: For financial advisor [11:50, 24/09/2020] OP: This [11:50, 24/09/2020] OP: Sorry was upside down [11:50, 24/09/2020] OP: ? [11:51, 24/09/2020] Scumm: I’m an independent expert trader and portfolio management in crypto market [11:52, 24/09/2020] Scumm: License only met to give out from head of Admin [11:52, 24/09/2020] OP: Ah kk [11:52, 24/09/2020] Scumm: Yes mate [11:52, 24/09/2020] OP: But normally 67 and 68 is required [11:52, 24/09/2020] OP: For normal managers? [11:53, 24/09/2020] Scumm: Yes [11:55, 24/09/2020] Scumm: have no worries mate [11:55, 24/09/2020] Scumm: 100% Now this is quite interesting NASAA 65 and 66 are licenses needed to be an account manager in the US so if he was he should know that i just made up 67 and 68! [19:20, 24/09/2020] OP: Ill makethe first payment asap, but i cant make my bank go faster sorry [19:21, 24/09/2020] OP: howeverone thing: [19:21, 24/09/2020] OP: most of the moneyigotis still in USD isit possible u said invest and send to USbank too? [19:21, 24/09/2020] OP: for 20kUSD and above [19:22, 24/09/2020] OP: its hard for me topurhcase that much bitcoin on my own right now [19:22, 24/09/2020] OP: but i see that i can trust you! [19:22, 24/09/2020] Scumm: Mate ASAP you said you make payment today and you didn’t so I don’t know if you even sure about this yet [19:23, 24/09/2020] Scumm: I don’t get you please [19:23, 24/09/2020] Scumm: You mean you want your profit sent to a US bank? [19:24, 24/09/2020] Scumm: You have no worries about that mate [19:24, 24/09/2020] OP: I am [19:24, 24/09/2020] OP: I signed the paper mate I am so happy [19:24, 24/09/2020] OP: That's all they need I told u [19:24, 24/09/2020] OP: To make payments international so large [19:24, 24/09/2020] Scumm: Yeah you said that mate [19:24, 24/09/2020] OP: I am beeing honest as well [19:24, 24/09/2020] OP: So I sent it back by post Today [19:24, 24/09/2020] Scumm: Ok mate [19:25, 24/09/2020] OP: But I am not at my banks city so post takes 1-2 days and then they can release [19:25, 24/09/2020] OP: Sorry to keep u waiting [19:25, 24/09/2020] Scumm: Ok mate [19:25, 24/09/2020] Scumm: Oh I see [19:25, 24/09/2020] OP: No what I meant: if I wanna start with more can j invest 20k USD too? I know u usually don't do and j ask very weird questions but I meant [19:25, 24/09/2020] OP: I am not always home have pc etc but I am in contact with u and my bank [19:26, 24/09/2020] OP: So is it possible? Otherwise I have to convert USD to euro or GDP [19:26, 24/09/2020] OP: 40k is sill in USD I have [19:26, 24/09/2020] OP: That would be even crazier profits 🤑🤑🤑 [19:27, 24/09/2020] Scumm: Now I’m understanding SO NOW HE IS UNDERSTANDING good good, and almost ready to screw one of his US mules too: [21:00, 24/09/2020] Scumm: Ok mate [21:04, 24/09/2020] Scumm: Can they send from US to the IBAN account? [21:05, 24/09/2020] OGOP: Hm I don't know it's a bit tricky BC I'm no us citizen [21:05, 24/09/2020] OGOP: I have one iban authorised to cash all out in euro [21:05, 24/09/2020] Scumm: Ok ok mate [21:06, 24/09/2020] OP: And US I think right now [21:06, 24/09/2020] Scumm: Ok mate please hold [21:10, 24/09/2020] OP Sure man [21:11, 24/09/2020] OP: Uff such a huge step for me [21:11, 24/09/2020] OP: I hope u do it real good 🤑🤑🤑 [21:12, 24/09/2020] OP Do you have customers in US too? [21:12, 24/09/2020] Scumm: Bank name: Teachers Federal Credit Union Bank address: XXXXXXX Account holder: XXXXXXXXXXXXXX Account Holders address: XXXXXXXXXXXXXXXXX XXXX Routing Number: XXXXXXX Account number:XXXXXXXXXX [21:12, 24/09/2020] Scumm: Sure mate //SO HE CLAIMS TO HAVE SCAMMED US CITIZENS! [21:12, 24/09/2020] OP: Nice [21:12, 24/09/2020] Scumm: Please make sure you send confirmation immediately So finally I did not send him payment proof,I sent him a spoofed link to fetch his IP with a link to "payment proof" and got his IP and location (cant showr a real link bc it has my IP in it...) And was like " oh hey how is the whether in Irele, Nigeria??" Needless to say he blocked me straight away after I called him a disgraceful sc*m but hey..... I still called the corresponding banks, the UK Fraud Action and the FBI just to make sure and shared all of the details without any editting :) Have fun "mate"! If they can freeze only 1 $ and return it to a likely victim, I am more then happy Cheers dont get scammed! TL/DR: Scammed a Nigerian scammer into sending me real accounts, names and details in UK and US (mules) to forward to the police and may or may not have donated 500 to charity.
Beating the UK brokerage via true arbitrage - £8k -> £98k ($128k) since 21st April
Alright you American autists, here's a gains post from the UK across the pond - listen up because it's pretty incredible, managed to screw over our broker to turn ~£8k into £98k / $128k USD by reading the small print, true u/fuzzyblankeet style. https://preview.redd.it/9mlup18v0q951.png?width=343&format=png&auto=webp&s=aea1393d304d16063d62d54d30cc5be9b23d937a Unfortunately, we don't have options trading, commission free robinhood which crashes, or any other US based degeneracy, but instead we British chaps can trade "CFDs" ie. 'contracts-for-difference', which are essentially naked long / short positions with a 10-20% margin (5-10x leveraged), a 'holding cost' and you could theoretically lose more than your initial margin - sounds like true wallstreetbets autism, right? Well grab a lite beer (or whatever you lite alcoholic chaps drink over there) and strap in for this stuff: So, CMC Markets, a UK based CFD brokerage, wanted to create a West Texas Intermediate Crude Oil 'Spot' product, despite WTI contracts trading in specific monthly expirations which can thus have severe contango effects (as all of you $USO call holders who got screwed know) - this was just a product called "Crude Oil West Texas - Cash", and was pegged to the nearest front-month, but had no expiry date, only a specific holding cost -> already a degenerate idea from their part. So in early April, just before when the WTI May-20 expiry contract 'rolled' at **negative** $-37, the "WTI Cash" was trading at $15 at the time, but the *next* month June-20 expiry was still $30+ we (I am co-running an account with an ex-Goldman colleague of mine) simultaneously entered into a long position on the "WTI - Cash" product, and went short on the "WTI Jun-20 expiry", a pure convergence play. Sure enough, the June-20 tanked the following week, and we made over £35k, realised profits. But meanwhile the May-20 also tanked, and we were down £28k. But rather than realise this loss, we figured we could just hold it until Oil prices recover, and profit on both legs of the trade. However, CMC Markets suddenly realised they are going to lose a lot of money with negative oil prices (Interactive Brokers lost $104m, also retards), so they screwed everyone holding the "WTI - Cash" product trading at $8 at the time, and pegged it to the December 2020 expiry trading at $30, with a 'discount factor' to catch up between the two. https://preview.redd.it/zjjzyahx0q951.png?width=517&format=png&auto=webp&s=9523bab878f06702133631f12c1109081f299f65 Now fellow autists, read the above email and try to figure out what the pure arbitrage is. CMC markets will charge us a 0.61% **per day** holding cost (calculated as the 10x levered value of whatever original margin you put up, so in our case £8k*10x=£80k*0.61% = £500 per day, £1.5k on weekends for extra fun) on our open positions, but also "increase" the position value by 0.61% per day vs. the **previous day's** WTI - Cash value. Got it yet? No? Still retarded? Here's where maths really helps you make tendies:-> If your 'cost' is fixed at 0.61% of your original levered position, but your 'gains' are 0.61% of the previous day's position, then your gains will be ever increasing, whereas your costs are fixed. So we added some extra £££ (as much as we could justifiably put into a degenerate 10x levered CFD account) and tried to see if it works. Long story short, it does. At this point in July we were making **over £1k per day on a £8k initial position*\* regardless where the WTI Dec-20 fwd moved. Unfortunately, eventually CMC markets realised what utter retards they were, and closed down the arbitrage loophole, applying the holding costs to the previous day's value. But not before we turned £8k into £98k, less holding costs. https://preview.redd.it/uh0f8knz0q951.png?width=553&format=png&auto=webp&s=c7e629f72de5aeb4e837ccef44ecae708f058bee Long story short, puts on $CMCX they're total retards, and given what a startup robinhood / other brokerages are, never assume that only they are the ones taking your tendies away, sometimes you can turn the tables on them!
I have a habit of backtesting every strategy I find as long as it makes sense. I find it fun, and even if the strategy ends up being underperforming, it gives me a good excuse to gain valuable chart experience that would normally take years to gather. After I backtest something, I compare it to my current methodology, and usually conclude that mine is better either because it has a better performance or the new method requires too much time to manage (Spoiler: until now, I like this better) During the last two days, I have worked on backtesting ParallaxFx strategy, as it seemed promising and it seemed to fit my personality (a lazy fuck who will happily halve his yearly return if it means he can spend 10% less time in front of the screens). My backtesting is preliminary, and I didn't delve very deep in the data gathering. I usually track all sort of stuff, but for this first pass, I sticked to the main indicators of performance over a restricted sample size of markets. Before I share my results with you, I always feel the need to make a preface that I know most people will ignore.
I am words on your screen. You cannot trust me. I could have edited this or literally just typed random numbers on a spreadsheet. Do your own research if you want to trust my conclusion.
Even if you trust me, you need to do backtesting for yourself. The goal of backtesting isn't simply to figure out whether a strategy has an edge: it's a way to get used to how the market flows (valuable experience you will bring on to any other strategy) and how the strategy behaves. You need to see it with your own eyes to allow your subconscious mind to be at ease when it comes time to trade it live: the only way to truly trust your strategy during a period of drawdown, is to have seen it work over hundreds of trades in the past.
Strategy I am not going to go into the strategy in this thread. If you haven't read the series of threads by the guy who shared it, go here. As suggested by my mentioned personality type, I went with the passive management options of ParallaxFx's strategy. After a valid setup forms, I place two orders of half my risk. I add or remove 1 pip from each level to account for spread.
The first at the 23.6 retracement.
The second at the 38.2 retracement.
Both orders have a stop loss at the 78.6 retracement.
Both orders have the same target at the -100.0 extension.
If price moves to the -38.2 extension, I delete any unfilled orders.
I do not scale out, I do not move to breakeven, I place my orders and walk away.
Sample I tested this strategy over the seven major currency pairs: AUDUSD, USDCAD, NZDUSD, GBPUSD, USDJPY, EURUSD, USDCHF. The time period started on January 1th 2018 and ended on July 1th 2020, so a 2.5 years backtest. I tested over the D1 timeframe, and I plan on testing other timeframes. My "protocol" for backtesting is that, if I like what I see during this phase, I will move to the second phase where I'll backtest over 5 years and 28 currency pairs. Units of measure I used R multiples to track my performance. If you don't know what they are, I'm too sleepy to explain right now. This article explains what they are. The gist is that the results you'll see do not take into consideration compounding and they normalize volatility (something pips don't do, and why pips are in my opinion a terrible unit of measure for performance) as well as percentage risk (you can attach variable risk profiles on your R values to optimize position sizing in order to maximize returns and minimize drawdowns, but I won't get into that). Results I am not going to link the spreadsheet directly, because it is in my GDrive folder and that would allow you to see my personal information. I will attach screenshots of both the results and the list of trades. In the latter, I have included the day of entry for each trade, so if you're up to the task, you can cross-reference all the trades I have placed to make sure I am not making things up. Overall results: R Curve and Segmented performance. List of trades: 1, 2, 3, 4, 5, 6, 7. Something to note: I treated every half position as an individual trade for the sake of simplicity. It should not mess with the results, but it simply means you will see huge streaks of wins and losses. This does not matter because I'm half risk in each of them, so a winstreak of 6 trades is just a winstreak of 3 trades. For reference:
Trades: 145
Profit Factor: 2.34
Return: 100.47 R
Strike rate: 48.28%
Average win: 2.51 R
Average loss: -1.00 R
Thoughts Nice. I'll keep testing. As of now it is vastly better than my current strategy.
For a quick, easier search - http://www.isthisanmlm.com/ has compiled this whole thread. Special thanks to u/SHIFTnSPACE. - This is now a part of the sidebar as a button widget!
What is an MLM?
Multi-level marketing (MLM), also called pyramid selling, network marketing, and referral marketing, is a marketing strategy for the sale of products or services where the revenue of the MLM company is derived from a non-salaried workforce selling the company's products/services, while the earnings of the participants are derived from a pyramid-shaped or binary compensation commission system. THIS LIST MAY CONTAIN COMPANIES THAT HAVE PREVIOUSLY HAD MLM BRANCH BUT MAY NO LONGER HAVE ONE. If you see a company and are not sure that it belongs on this list, please reach out. I have compiled this list from the sources listed at the bottom along with input from community members. This list may not be 100% accurate but the goal is to get it as close as possible. 31 - Bags 5Linx - Home & Business Services Abby & Anna - Clothing ACAN Pacific - Utilities ACN - Utilities ActiLabs - Skincare/Health Adornable.U - Accessories Advocare - Dietary Supplements AeroGrow - Garden Tools Agnes & Dora - Clothing AIM Global - Nutritional Supplements Akasuka (Japan) - Alcone - Beauty Alice's Table - Flower Arrangement Classes All'asta - Home Goods Allysian Sciences - Aloe Vera of America (Young Living) - Nutritional Supplements Aloette - Beauty Alphay Int - Nutritional Supplements AlureVe - Skincare/Health Amare Global - Nutritional Supplements Ambit - Utilities Amelia James - Ameo - Essential Oils American Income Life - Financial Amsoil - Motor Oil Amway - Health/Beauty/Home Goods Ann Summers - Product Ann Summers (UK) - Adult Novelties Anorak (UK) - Home Goods Anran (China) - Apollo (India) - Juice Apriori - Skincare/Health AquaSource UK - Nutritional Supplements Arbonne - Skincare/Health ARIIX - Water Purification Arsoa Honsha (Japan) - Fitness/Weight Loss Asea Global - Nutritional Supplements Asirvia (shut down) - Marketing Aspire/Digital Altitude - Marketing ATC Coin - Crypto Currency Athena's - Adult Novelties Atomy - Skincare/Health Ava Anderson - Ava Rose - Clot Avisae - Weight Loss Avon - Beauty b:hip Global - Health Bachar Nutrition - Nutritional Supplements Bamboo Pink - Jewelry Barefoot Books - Books Bath.Ologie - Bath Bombs Beach Body - Fitness/Weight Loss Videos BearCereju (Japan) - Cosmetics BeautiControl - Beauty Counter - Cosmetics Beauty Society - Beauty beCAUSE Cosmetics - Cosmetics Become International (US & AUS) - Cosmetics Bedroom Kandi - Adult Novelties Beever (UK) - Hair Care BelCorp (Latin America) - Cosmetics Bellame - Skincare/Health Bemer - Appliances Better Way Design/Imports - Clothing Biogreen Argentina - BioPerformance - Automotive (Fuel Pills) Bod-e Pro - Nutritional Supplements Body by Vi/Visalus - Health Body Shop at Home - Beauty Boisset Collection - Wine Boston Finney (shut down) - Bounce Life/Network - Insurance Bud Star (Canada) - CBD/THC Products BurnLounge (shut down as pyramid scheme by FTC in 2012) - Buskins - Clothing Butterfly Beauty - Cosmetics Cabi - Clothing Cambridge Weight Plan/Diet - Dietary Supplements CAN - Utilities Captain Tortue - Clothing Carico Int - Home Goods Celebrating Home - Home Goods Cellements - Skincare/Health CEO Movement (Not MLM but scammy) - Chalk Couture - Chalkboard Signs Chalky & Co - Home Goods Chandeal (Japan) - Clothing Charle (Japan) - Clothing Charlie's Project - Clothing Chef's Toolbox (AUS) (Insolvency) - Kitchen Accessories Cherish Natural Products - Chloe & Isabel - Jewelry Clever Container - Home Goods Close to My Heart - Scrapbooking Cloud 9 Parties - Adult Novelties Cobra Group/Appco - Cocoa Exchange - Food Color by Amber - Jewelry Color Happy - Color Street - Nail Wraps Colour Me Beautiful (UK) - Clothing Compelling Creations - Jewelry Conklin - Roofing Cookie Lee (shut down) - Cosway (Malaysia) - Health/Beauty/Home Goods Country Scents - Product/Candles Create Your Life - Health Creative Memories - Scrapbooking Credit Repair USA - Financial Crunchi - Cosmetics Cutco - Knives CVSL - Multiple Companies Daisy Blue Naturals - Personal Care Damsel in Defense - Product/Self Defense Darceys - Candles David Lerner Associates, INC - Financial Dazzle and Daze - Clothing Deutsche vermögensberatung/Dvag (Germany) - Financial Diana (Japan) - Dione Cosmetics - Cosmetics Direct Cellars/DC Nation - Wine Discovery Toys - Educational Toys Divvee/Nui - Dot Dot Smile - Clothing DoTERRA - Health/Oils Du Northing Designs - Clothing Dubli Network - Financial Dudley Beauty - Cosmetics DXN - Health/Beauty/Home Goods Dynamic Essentials - EcoWarehouse - Home Goods Elepreneuer - Elk River Soaps - Personal Care Ella Tina - Clothing Elli Kai - Clothing Elvacity - Nutritional Supplements EmGoldEx/Global Intergold - Enagic/Kangen Water - Ionized Water Endless Xpressions - Clothing/Accessories Enersource Int - Nutritional Supplements Enjo (AUS) - Cleaning Producs Envy Jewelry - Jewelry Epicure (Canada) - Food Equinox International (dissolved in 2001) - Ergo (Germany) - Insurance Essante Organics - Essential Bodywear - Clothing European Grouping of Marketing Professionals/CEDIPAC SA (dissolved 1995) - European Home Retail (dissolved 2007) - Evanescence Network - Health EVER Skincare - Skincare/Health Evolution Travel - Product EvolvHealth - Health Faberlic (Russia) - Health/Beauty/Home Goods Family First Life - Insurance Family Heritage Insurance - Insurance Fantasia - Adult Novelties Fantasia (Canada) - Adult Novelties Farmasi - FES Connect - Financial Fibi & Clo - Footwear Fifth Ave Collection - Jewelry First Fitness Nutrition - Dietary Supplements Fit4Mom - Clothing FITTEAM Global - Dietary Supplements Flamingo Paperie - Art Fleuresse - FM World (UK) - For Tails Only - Pet Supplies Forever Living - Health/Oils Forex Education (iMarkets Live branch) - Crypto Forex Entourage - Financial Fortune Hi-Tech Marketing (dissolved 2013) - Four Oceans - Health Fragant Jewels - Bathbombs FreeLife - Nutritional Supplements Frontrow - Fuel Freedom Int - Automotive Fund America (Bankrupt 1990) - Gano Excel - Nutritional Supplements GelMoment - Beauty Gemstra - Jewelry Genesis Pure - Nutritional Supplements Global Legacy Initiative - GoDesana - Pet Gold Canyon - Product/Candles Golden Days (China) - Health Grace & Heart - Jewelry Green HoriZen - CBD Greeting Cake Company - Cake Kits H2O At Home - Personal Care Hale - CBD Oil Hanky Panky Parties (Canada) - Adult Novelties Happy Coffee - Coffee Harvard Risk Management (Legal Shield) - Hayward's Gourmet Popcorn - Food HB Naturals - Health He(L)o - Health Healthy Peach - Dietary Supplements Heavenly Chia - Food Heka Corp - Fitness Helo Wristbands - Health HempWorx - Health Herbalife - Health Heritage Makers - Scrapbooking Hinode - Cosmetics Holiday Magic (shut down) - Home Interiors - Home Goods Honey - Beauty Honey & Lace - Clothing Hualin Biotech (China) - Health iCoinPro - Crypto Currency ID Life - Health Igniting Passion (Canada) - Adult Novelties iMarketsLive - Financial Trading Software Immunotec - Health Imperial Candles (UK) - Candles In a Pikle - Bags Income Advantage - India Hicks - Product/Accessories Infinitus - Health Initials, Inc - Bags Inkd Up Nails - Beauty innov8tive nutrition - Nutritional Supplements InteleTravel - Travel Intimo (AUS/NZ) - Adult Novelties Isagenix - Dietary Supplements ItWorks! - Health J. Elizabeth - Clothing J. Hilburn - Clothing J.R Watkins - Jafra - Beauty Jamberry - Beauty Jamby - Clothing Jamie at Home (shut down) - Janice Collection - Home Goods Java Momma - Coffee Javita - Coffee Jbloom - Jewelry Jequiti - Cosmetics Jerky Direct - Jeunesse - Beauty Jewel Kade (31) - Jewelry Jewelscent - Product/Candles JK Apparel (Canada) - Clothing Jordan Essentials - Beauty JoyMain (China) - Health Joyome (Plexus) - Beauty JuicePlus - Nutritional Supplements Jump Natural - Health Kaesar & Blair - Kalaia - Skincare/Health Kalo & Co - Pearl/Jewelry Kangen Water - Kannaway - CBD Oil Karat Bars - Gold Kaszazz - Scrapbooking Keep Collective - Jewelry Keep Me Safe - Cos KETO (Pruvit) - Keto Coffee - Coffee Ketones - Health Kirby - Vacuums Kleeneze - Home Goods Kobold (Vorwerk) - Kyani - Health Labella Baskets - Home Goods Lady Godiva Beauty - Cosmetics Lavylites - Beauty L'BRI - Beauty LeadUp Consulting - Legal Shield - Legal Services LegArt (Canada) - Leggings Legend Age (China) - Legging Army - Clothing Legging Girl - Clothing Lemongrass Spa - Beauty LeReve (Canada) - Cosmetics Le-Vel (Thrive) - Health Lia Sophia (dissolved) - Jewelry Life Abundance - Pet LIFE Leadership - Financial Life Tree World - Food LifeBrook - LifePlus (US/Germany) - Dietary Supplements Life's Abundance - Pet Supplies LifeVantage - Dietary Supplements Lilla Rose - Jewelry Limelife - Skincare/Health Limu - Health Limu - Nutritional Supplements Linen World - Home Goods Lion Crown - Lipsense - Beauty Liv International - Travel Live Sore - Clothing Longabeger Company - Baskets Longrich (China) - Beauty Lorraine Lee Linen - Home Goods Love Winx - Adult Novelties LR Beauty & Health - Beauty LuLaRoe - Clothing Lulu Ave - Jewelry Luminess - Cosmetics Lyconet/Lyoness - Lyoness - Financial M. Global (Jamberry) - Jewelry M. Network - Nutritional Supplements Maelle Beauty - Beauty Magnabilities - Jewelry Magnolia & Vine - Jewelry Makeup Eraser - Cosmetics Man Cave - Kitchen Accessories Mannatech - Dietary Supplements Mark. - Financial Market America - Health/Beauty/Home Goods Marly Ray - Pearl/Jewelry Marvelous Mouse Travels - Travel Mary & Martha - Home Goods MaryKay - Beauty Maskara - Beauty Matilda Jane - Clothing Max & Madeleine - Skincare/Health Maxwell Clothing - Clothing MCA - Financial Medifast - Nutritional Supplements Melaleuca - Health/Beauty/Home Goods Metabolife (dissolved in 2005) - MiA Bath and Body (Closed) - mialisia - Jewelry Miche EU - Accessories Miki (Asia) - Nutritional Supplements MOA Nutrition - Nutritional Supplements Modere - MojiLife - Essential Oils Monat - Hair Care MonaVie (went into foreclosure 2015) - Morinda Bioactives - Personal Care/Dietary Supplements Motives Cosmetics - Cosmetics Multpure - Water My Club 8 - CBD Oil My Daily Choice - Nutritional Supplements My LALA Leggings - Clothing myEcon - Financial National Safety Associates - Dietary Supplements National Wealth Center - Education Natura (Brazil) - Cosmetics Nature Direct (AUS) - Essential Oils Nature's Sunshine Products - Dietary Supplements Neal's Yard Remedies Organic - Beauty NeoLife - Dietary Supplements Neora (Nerium) - Nerium - Skincare/Health NeVetica - Pet Supplies New Era (China) - Nutritional Supplements New U Life - Health Neways - Personal Care Nikken - Noevir - Beauty Nomades - Jewelry Noonday Collection - Jewelry Norwex - Cleaning Producs Nouveau Riche (real estate investment college) (dissolved 2010 - Nspire Network - Feminine Products NuCerity - Skincare/Health NuSkin - Tooth Paste/Personal Care Nutriboom - NXIVM - Financial Nygard - Clothing Omnilife - Dietary Supplements One Hope Wine - Wine Optavia - Health Opulenza - Jewelry Organo Gold - Coffee Oriflame - Personal Care Origami Owl - Jewelry Our Hearts Desire - Jewelry Paid 2 Save - Travel Pampered Chef - Kitchen Accessories Paparazzi - Jewelry Paperly - Paper Park Lane Jewelry - Jewelry Party Girl - Candles Party Lite - Candles Party Time Mixes - Food PartyLite - Candles Passion Parties - Adult Novelties Pawtree - Pet Paycation - Travel Peach - Clothing Pearl Chic - Pearl/Jewelry Peekaboo Beans - Clothing Perfect (China) - Cosmetics Perfectly Polished - Beauty Perfectly Posh - Beauty Personally Poetic - Jewelry PHP - Insurance Pierre Lang - Jewelry Pink Zebra - Candles Piphany - Clothing PixieLane - Clothing Plexus - Health Plumeria Bath - Beauty Plunder - Jewelry PM International - Health Pola (Japan) - Skincare/Health Poofy Organics - Beauty Powur - Solar Panels Premier Designs - Jewelry Premier Financial - Financial PrimeMyBody - Health Primerica - Financial Princess House - Kitchen Accessories ProDoula - ProYoung - Health Pruvit - Health Pulse Cosmetics - Cosmetics Pure Haven - Cosmetics Pure Romance - Product PureHaven - Home Goods PUREly - Essential Oils Purium - Health Qnet - Nutritional Supplements Quanjian Natural (China) - Food RadiantlyYou - Rain International - Health Rainbow Vacuum - Vacuums Real Time Pain Relief - Health Red Aspen - Beauty RED Safety - Security Regal Home and Gifts - Home Goods Reliv - Health Reliv - Nutritional Supplements Renatus Real Estate - Education RevitalU - Coffee/Health Riway - Deer Placenta Robert Kiyosaki - Rodan+Fields - Beauty Roland (Vorwerk) - Rolmex (China) - Kitchen Accessories Royal Tongan Limu (dissolved in 2003) - Royaltie Gens - Marketing Ruby Ribbon - Clothing Saba - Health/Beauty Sabika Jewelry - Jewelry SafeGirl Security - Self Defense Salad Master - Home Goods SARSO (India) - Scentsy - Health/Oils Schneider's Gourmet World - Food Scout & Cellar - Wine Seacret - Beauty SendOutCards - Gift Cards Senegence - Skincare/Health Shakeology (BeachBody) - Dietary Supplements Shaklee - Dietary Supplements Shopping Sherlock - Shrimp & Grits - Clothing Signature Homestyles - Home Goods Silpada - Jewelry Silver Icing - Jewelry Simple Man - Personal Care Simply Success Elite - SimplyFun Games - Education Skinny Body at Home - Dietary Supplements SkinSanity/Tomorrow's Leaf - Skincare/Health Smart Circle - Smartway - Solavei (dissolved 2015)[ - Solvei (bankrupt) - Sophie Paris (France/Asia) - Clothing South Hill Designs - Jewelry Southern Living at Home - Home Goods SouthWestern Advantage - Education Sseko - Clothing Stampin Up - Paper Steam Energy - Utilities Steeped Tea - Tea Stella & Dot - Clothing Stream Energy - Financial Style Dots - Jewelry Success University - Education Sun Hope (China) - Sunrider - Health/Beauty/Home Goods Sunset Gourmet - Food Sunshine Empire (dissolved 2009) - Surge 365 - Travel Sweet Legs - Clothing Sweet Minerals - Beauty Symmetry Financial Group - Insurance Syntek Global - Automotive T.O.P Marketing Group - TAG Team Marketing - Taisei/Green Planet/Kaikisui (Japan_ - Purifiers Tara at Home - Home Goods Tastefully Simple - Food Tavala - Health Tealightful - Tea Team National - Financial TeDivina - Tea Telecom Plus (UK) - Utilities Telexfree (bankrupt 2014) - The Advert Platfrom - Crypto Currency The Body Shop at Home - Beauty The Landmark Forum - Health The Super Affiliate Network - Marketing Thermomix (Vorwerk) - Thirty One - Bags Thrive - Health Thrive Life - Food Tiber River Naturals - Beauty TKO WorldWide - Tocara (Canada) - Jewelry Tom James - Clothing Total Life Changes/TLC - Health TouchStone Crystal - Jewelry Touchstone Essentials - Dietary Supplements Tracy Negoshian - Clothing Trades of Hope - Jewelry Tranont - Financial Transformational Beauty - Cosmetics Travel Evolution - Travel Traveling Vineyard - Wine TraVerus Global - Travel TriVita - Nutritional Supplements Tropic Skin Care - Skincare/Health True Peak Revolution (Europe) - Truvision Health - Health TS-Life - Nutritional Supplements Tupperware - Tupperware Unicity - Health United Sciences of America (dissolved in 1987) - United Warehouse (UK) - US Health Advisors - Usana - Nutritional Supplements Usborne - Books Utility Warehouse (UK) - Utilities Valentus - Dietary Supplements Vantel - Product/Pearls Vasayo - Health VectoCutco - Knives Vemma - Dietary Supplements viaOneHope - Wine ViBella - Jewelry VIC Cosmetics - Vida Divina - Tea Vie at Home (closed) - Virtuity Financial Group (World Financial Group) - ViSalus (Body by VI) - Dietary Supplements Vitality Extracts - Essential Oils VivaMK - Cleaning Producs Volo - Health Vorwerk - Home Goods Votre Belle Maison (UK) - Giftware Voxxlife - Health Wakaya Perfection - Health WakeUpNow (dissolved 2015) - Watkins Inc - Health/Home Goods Wealthperx - Travel Wikaniko - Home Goods Wildtree - Food Willing Beauty - Beauty Winasun - Health Wine Shop at Home - Wine Wines for Humanity - Wine Wink Naturals - Health World Financial Group/Pinnacle Leadership Development - Financial World Leadership Group (dissolved in 2008) - World Ventures/Wealth Wave/TKO WorldWide - Travel WoTaBu - Travel XanGo/Ziji - Health Xerveo - Dietary Supplements Xoom Energy - Utilities Xooma - Weight Loss Xstream Travel - Travel Xyngular - Health Yanbal Int - Jewelry Yandi (China) - Nutritional Supplements Yelloow - Beauty Yevo (closed) - Yofoto (China) - Health Yoli - Health Yoonla - YOR Health - Weight Loss Young Living - Health Youngevity - Younique - Beauty YTB International - Travel Zepter - Zija - Health Zilis - Health Zinzino (Scandanavia) - Zrii - Skincare/Health Zurvita - Health Zyia - Clothing Zyn - Travel TOTAL COUNT = 594 This list will be continually updated (5/19/2020). 2018 Archived MLM Mega Thread Sources: https://mlmtruth.org/2018/02/08/the-mlm-master-list/ , https://en.wikipedia.org/wiki/List_of_multi-level_marketing_companies Special thanks to u/Copacetic1515 (I could not stick your thread) For income disclosure information: Updated 2019 Thread Other Helpful Links: Discussion about World Financial Group
Everything You Always Wanted To Know About Swaps* (*But Were Afraid To Ask)
Hello, dummies It's your old pal, Fuzzy. As I'm sure you've all noticed, a lot of the stuff that gets posted here is - to put it delicately - fucking ridiculous. More backwards-ass shit gets posted to wallstreetbets than you'd see on a Westboro Baptist community message board. I mean, I had a look at the daily thread yesterday and..... yeesh. I know, I know. We all make like the divine Laura Dern circa 1992 on the daily and stick our hands deep into this steaming heap of shit to find the nuggets of valuable and/or hilarious information within (thanks for reading, BTW). I agree. I love it just the way it is too. That's what makes WSB great. What I'm getting at is that a lot of the stuff that gets posted here - notwithstanding it being funny or interesting - is just... wrong. Like, fucking your cousin wrong. And to be clear, I mean the fucking your *first* cousin kinda wrong, before my Southerners in the back get all het up (simmer down, Billy Ray - I know Mabel's twice removed on your grand-sister's side). Truly, I try to let it slide. Idomybit to try and put you on the right path. Most of the time, I sleep easy no matter how badly I've seen someone explain what a bank liquidity crisis is. But out of all of those tens of thousands of misguided, autistic attempts at understanding the world of high finance, one thing gets so consistently - so *emphatically* - fucked up and misunderstood by you retards that last night I felt obligated at the end of a long work day to pull together this edition of Finance with Fuzzy just for you. It's so serious I'm not even going to make a u/pokimane gag. Have you guessed what it is yet? Here's a clue. It's in the title of the post. That's right, friends. Today in the neighborhood we're going to talk all about hedging in financial markets - spots, swaps, collars, forwards, CDS, synthetic CDOs, all that fun shit. Don't worry; I'm going to explain what all the scary words mean and how they impact your OTM RH positions along the way. We're going to break it down like this. (1) "What's a hedge, Fuzzy?" (2) Common Hedging Strategies and (3) All About ISDAs and Credit Default Swaps. Before we begin. For the nerds and JV traders in the back (and anyone else who needs to hear this up front) - I am simplifying these descriptions for the purposes of this post. I am also obviously not going to try and cover every exotic form of hedge under the sun or give a detailed summation of what caused the financial crisis. If you are interested in something specific ask a question, but don't try and impress me with your Investopedia skills or technical points I didn't cover; I will just be forced to flex my years of IRL experience on you in the comments and you'll look like a big dummy. TL;DR? Fuck you. There is no TL;DR. You've come this far already. What's a few more paragraphs? Put down the Cheetos and try to concentrate for the next 5-7 minutes. You'll learn something, and I promise I'll be gentle. Ready? Let's get started. 1.The Tao of Risk: Hedging as a Way of Life The simplest way to characterize what a hedge 'is' is to imagine every action having a binary outcome. One is bad, one is good. Red lines, green lines; uppie, downie. With me so far? Good. A 'hedge' is simply the employment of a strategy to mitigate the effect of your action having the wrong binary outcome. You wanted X, but you got Z! Frowny face. A hedge strategy introduces a third outcome. If you hedged against the possibility of Z happening, then you can wind up with Y instead. Not as good as X, but not as bad as Z. The technical definition I like to give my idiot juniors is as follows: Utilization of a defensive strategy to mitigate risk, at a fraction of the cost to capital of the risk itself. Congratulations. You just finished Hedging 101. "But Fuzzy, that's easy! I just sold a naked call against my 95% OTM put! I'm adequately hedged!". Spoiler alert: you're not (although good work on executing a collar, which I describe below). What I'm talking about here is what would be referred to as a 'perfect hedge'; a binary outcome where downside is totally mitigated by a risk management strategy. That's not how it works IRL. Pay attention; this is the tricky part. You can't take a single position and conclude that you're adequately hedged because risks are fluid, not static. So you need to constantly adjust your position in order to maximize the value of the hedge and insure your position. You also need to consider exposure to more than one category of risk. There are micro (specific exposure) risks, and macro (trend exposure) risks, and both need to factor into the hedge calculus. That's why, in the real world, the value of hedging depends entirely on the design of the hedging strategy itself. Here, when we say "value" of the hedge, we're not talking about cash money - we're talking about the intrinsic value of the hedge relative to the the risk profile of your underlying exposure. To achieve this, people hedge dynamically. In wallstreetbets terms, this means that as the value of your position changes, you need to change your hedges too. The idea is to efficiently and continuously distribute and rebalance risk across different states and periods, taking value from states in which the marginal cost of the hedge is low and putting it back into states where marginal cost of the hedge is high, until the shadow value of your underlying exposure is equalized across your positions. The punchline, I guess, is that one static position is a hedge in the same way that the finger paintings you make for your wife's boyfriend are art - it's technically correct, but you're only playing yourself by believing it. Anyway. Obviously doing this as a small potatoes trader is hard but it's worth taking into account. Enough basic shit. So how does this work in markets? 2. A Hedging Taxonomy The best place to start here is a practical question. What does a business need to hedge against? Think about the specific risk that an individual business faces. These are legion, so I'm just going to list a few of the key ones that apply to most corporates. (1) You have commodity risk for the shit you buy or the shit you use. (2) You have currency risk for the money you borrow. (3) You have rate risk on the debt you carry. (4) You have offtake risk for the shit you sell. Complicated, right? To help address the many and varied ways that shit can go wrong in a sophisticated market, smart operators like yours truly have devised a whole bundle of different instruments which can help you manage the risk. I might write about some of the more complicated ones in a later post if people are interested (CDO/CLOs, strip/stack hedges and bond swaps with option toggles come to mind) but let's stick to the basics for now. (i) Swaps A swap is one of the most common forms of hedge instrument, and they're used by pretty much everyone that can afford them. The language is complicated but the concept isn't, so pay attention and you'll be fine. This is the most important part of this section so it'll be the longest one. Swaps are derivative contracts with two counterparties (before you ask, you can't trade 'em on an exchange - they're OTC instruments only). They're used to exchange one cash flow for another cash flow of equal expected value; doing this allows you to take speculative positions on certain financial prices or to alter the cash flows of existing assets or liabilities within a business. "Wait, Fuzz; slow down! What do you mean sets of cash flows?". Fear not, little autist. Ol' Fuzz has you covered. The cash flows I'm talking about are referred to in swap-land as 'legs'. One leg is fixed - a set payment that's the same every time it gets paid - and the other is variable - it fluctuates (typically indexed off the price of the underlying risk that you are speculating on / protecting against). You set it up at the start so that they're notionally equal and the two legs net off; so at open, the swap is a zero NPV instrument. Here's where the fun starts. If the price that you based the variable leg of the swap on changes, the value of the swap will shift; the party on the wrong side of the move ponies up via the variable payment. It's a zero sum game. I'll give you an example using the most vanilla swap around; an interest rate trade. Here's how it works. You borrow money from a bank, and they charge you a rate of interest. You lock the rate up front, because you're smart like that. But then - quelle surprise! - the rate gets better after you borrow. Now you're bagholding to the tune of, I don't know, 5 bps. Doesn't sound like much but on a billion dollar loan that's a lot of money (a classic example of the kind of 'small, deep hole' that's terrible for profits). Now, if you had a swap contract on the rate before you entered the trade, you're set; if the rate goes down, you get a payment under the swap. If it goes up, whatever payment you're making to the bank is netted off by the fact that you're borrowing at a sub-market rate. Win-win! Or, at least, Lose Less / Lose Less. That's the name of the game in hedging. There are many different kinds of swaps, some of which are pretty exotic; but they're all different variations on the same theme. If your business has exposure to something which fluctuates in price, you trade swaps to hedge against the fluctuation. The valuation of swaps is also super interesting but I guarantee you that 99% of you won't understand it so I'm not going to try and explain it here although I encourage you to google it if you're interested. Because they're OTC, none of them are filed publicly. Someeeeeetimes you see an ISDA (dsicussed below) but the confirms themselves (the individual swaps) are not filed. You can usually read about the hedging strategy in a 10-K, though. For what it's worth, most modern credit agreements ban speculative hedging. Top tip: This is occasionally something worth checking in credit agreements when you invest in businesses that are debt issuers - being able to do this increases the risk profile significantly and is particularly important in times of economic volatility (ctrl+f "non-speculative" in the credit agreement to be sure). (ii) Forwards A forward is a contract made today for the future delivery of an asset at a pre-agreed price. That's it. "But Fuzzy! That sounds just like a futures contract!". I know. Confusing, right? Just like a futures trade, forwards are generally used in commodity or forex land to protect against price fluctuations. The differences between forwards and futures are small but significant. I'm not going to go into super boring detail because I don't think many of you are commodities traders but it is still an important thing to understand even if you're just an RH jockey, so stick with me. Just like swaps, forwards are OTC contracts - they're not publicly traded. This is distinct from futures, which are traded on exchanges (see The Ballad Of Big Dick Vick for some more color on this). In a forward, no money changes hands until the maturity date of the contract when delivery and receipt are carried out; price and quantity are locked in from day 1. As you now know having read about BDV, futures are marked to market daily, and normally people close them out with synthetic settlement using an inverse position. They're also liquid, and that makes them easier to unwind or close out in case shit goes sideways. People use forwards when they absolutely have to get rid of the thing they made (or take delivery of the thing they need). If you're a miner, or a farmer, you use this shit to make sure that at the end of the production cycle, you can get rid of the shit you made (and you won't get fucked by someone taking cash settlement over delivery). If you're a buyer, you use them to guarantee that you'll get whatever the shit is that you'll need at a price agreed in advance. Because they're OTC, you can also exactly tailor them to the requirements of your particular circumstances. These contracts are incredibly byzantine (and there are even crazier synthetic forwards you can see in money markets for the true degenerate fund managers). In my experience, only Texan oilfield magnates, commodities traders, and the weirdo forex crowd fuck with them. I (i) do not own a 10 gallon hat or a novelty size belt buckle (ii) do not wake up in the middle of the night freaking out about the price of pork fat and (iii) love greenbacks too much to care about other countries' monopoly money, so I don't fuck with them. (iii) Collars No, not the kind your wife is encouraging you to wear try out to 'spice things up' in the bedroom during quarantine. Collars are actually the hedging strategy most applicable to WSB. Collars deal with options! Hooray! To execute a basic collar (also called a wrapper by tea-drinking Brits and people from the Antipodes), you buy an out of the money put while simultaneously writing a covered call on the same equity. The put protects your position against price drops and writing the call produces income that offsets the put premium. Doing this limits your tendies (you can only profit up to the strike price of the call) but also writes down your risk. If you screen large volume trades with a VOL/OI of more than 3 or 4x (and they're not bullshit biotech stocks), you can sometimes see these being constructed in real time as hedge funds protect themselves on their shorts. (3) All About ISDAs, CDS and Synthetic CDOs You may have heard about the mythical ISDA. Much like an indenture (discussed in my post on $F), it's a magic legal machine that lets you build swaps via trade confirms with a willing counterparty. They are very complicated legal documents and you need to be a true expert to fuck with them. Fortunately, I am, so I do. They're made of two parts; a Master (which is a form agreement that's always the same) and a Schedule (which amends the Master to include your specific terms). They are also the engine behind just about every major credit crunch of the last 10+ years. First - a brief explainer. An ISDA is a not in and of itself a hedge - it's an umbrella contract that governs the terms of your swaps, which you use to construct your hedge position. You can trade commodities, forex, rates, whatever, all under the same ISDA. Let me explain. Remember when we talked about swaps? Right. So. You can trade swaps on just about anything. In the late 90s and early 2000s, people had the smart idea of using other people's debt and or credit ratings as the variable leg of swap documentation. These are called credit default swaps. I was actually starting out at a bank during this time and, I gotta tell you, the only thing I can compare people's enthusiasm for this shit to was that moment in your early teens when you discover jerking off. Except, unlike your bathroom bound shame sessions to Mom's Sears catalogue, every single person you know felt that way too; and they're all doing it at once. It was a fiscal circlejerk of epic proportions, and the financial crisis was the inevitable bukkake finish. WSB autism is absolutely no comparison for the enthusiasm people had during this time for lighting each other's money on fire. Here's how it works. You pick a company. Any company. Maybe even your own! And then you write a swap. In the swap, you define "Credit Event" with respect to that company's debt as the variable leg . And you write in... whatever you want. A ratings downgrade, default under the docs, failure to meet a leverage ratio or FCCR for a certain testing period... whatever. Now, this started out as a hedge position, just like we discussed above. The purest of intentions, of course. But then people realized - if bad shit happens, you make money. And banks... don't like calling in loans or forcing bankruptcies. Can you smell what the moral hazard is cooking? Enter synthetic CDOs. CDOs are basically pools of asset backed securities that invest in debt (loans or bonds). They've been around for a minute but they got famous in the 2000s because a shitload of them containing subprime mortgage debt went belly up in 2008. This got a lot of publicity because a lot of sad looking rednecks got foreclosed on and were interviewed on CNBC. "OH!", the people cried. "Look at those big bad bankers buying up subprime loans! They caused this!". Wrong answer, America. The debt wasn't the problem. What a lot of people don't realize is that the real meat of the problem was not in regular way CDOs investing in bundles of shit mortgage debts in synthetic CDOs investing in CDS predicated on that debt. They're synthetic because they don't have a stake in the actual underlying debt; just the instruments riding on the coattails. The reason these are so popular (and remain so) is that smart structured attorneys and bankers like your faithful correspondent realized that an even more profitable and efficient way of building high yield products with limited downside was investing in instruments that profit from failure of debt and in instruments that rely on that debt and then hedging that exposure with other CDS instruments in paired trades, and on and on up the chain. The problem with doing this was that everyone wound up exposed to everybody else's books as a result, and when one went tits up, everybody did. Hence, recession, Basel III, etc. Thanks, Obama. Heavy investment in CDS can also have a warping effect on the price of debt (something else that happened during the pre-financial crisis years and is starting to happen again now). This happens in three different ways. (1) Investors who previously were long on the debt hedge their position by selling CDS protection on the underlying, putting downward pressure on the debt price. (2) Investors who previously shorted the debt switch to buying CDS protection because the relatively illiquid debt (partic. when its a bond) trades at a discount below par compared to the CDS. The resulting reduction in short selling puts upward pressure on the bond price. (3) The delta in price and actual value of the debt tempts some investors to become NBTs (neg basis traders) who long the debt and purchase CDS protection. If traders can't take leverage, nothing happens to the price of the debt. If basis traders can take leverage (which is nearly always the case because they're holding a hedged position), they can push up or depress the debt price, goosing swap premiums etc. Anyway. Enough technical details. I could keep going. This is a fascinating topic that is very poorly understood and explained, mainly because the people that caused it all still work on the street and use the same tactics today (it's also terribly taught at business schools because none of the teachers were actually around to see how this played out live). But it relates to the topic of today's lesson, so I thought I'd include it here. Work depending, I'll be back next week with a covenant breakdown. Most upvoted ticker gets the post. *EDIT 1\* In a total blowout, $PLAY won. So it's D&B time next week. Post will drop Monday at market open.
I'm looking to get a little more tuned into investing. For the past several years I've been doing the Canadian Couch Potato strategy of e-series index funds with TD in both my RRSP and TFSA. Each of those accounts has about $30k in it, and I also have a LIRA with about $20k that is invested the same way. I recently moved my TFSA to Tangerine and put it in a savings account (partly to take advantage of a high-interest offer they had, but mostly because I'm planning on purchasing a detached home in the very near future and wanted to keep that money in cash). I already used $25k of my RRSP a few years ago for part of the downpayment on my current home, so the $30k I have in there now is really only going to be used for retirement. I also plan on making larger contributions to the RRSP going forward once I buy my next home (I've been skimping on my annual contributions recently to save for my next downpayment). Basically, that RRSP is going to get bigger (well...hopefully) and I will probably not be withdrawing that money for 30+ years until I retire, so I have a high tolerance for risk with that account. The TFSA is going to be emptied for the new house, but I'll probably build it back up slowly with low-moderate risk e-series index fund or ETF. Lately I've been thinking of taking the RRSP out of TD and moving it to Questrade to dabble in ETFs and stocks. I know stocks aren't very highly recommended here, so maybe I'm just being naive. I was thinking of doing something like keeping half the RRSP (~$15k) in a high growth ETF like XGRO, and then the other half (~$15k) in US stocks that I can play around with...mostly for fun, but I'd be lying if I said I didn't have a couple friends who did pretty well with Tesla and other similar stocks recently and their enthusiasm about it is a bit infectious. As I contribute to the RRSP, I'll probably aim to keep that mix of half going to the ETF and half to stocks. I plan to keep all the stocks within my RRSP to avoid the withholding tax on US dividends, and also use Norbert's Gambit to avoid the forex fee on that initial conversion of $15k CAD to USD. Additional context: I'm 31, married (dual income), make about $120k myself (I'm only investing my own money), no debt apart from mortgage, no kids (but could happen in the next couple years). Am I crazy to do this? Should I just stick to index funds and / or ETFs? Maybe I'm being overzealous with the amount I want to potentially gamble away with stocks?
Disclaimer: None of this is financial advice. I have no idea what I'm doing. Please do your own research or you will certainly lose money. I'm not a statistician, data scientist, well-seasoned trader, or anything else that would qualify me to make statements such as the below with any weight behind them. Take them for the incoherent ramblings that they are. TL;DR at the bottom for those not interested in the details. This is a bit of a novel, sorry about that. It was mostly for getting my own thoughts organized, but if even one person reads the whole thing I will feel incredibly accomplished.
Background
For those of you not familiar, please see the various threads on this trading system here. I can't take credit for this system, all glory goes to ParallaxFX! I wanted to see how effective this system was at H1 for a couple of reasons: 1) My current broker is TD Ameritrade - their Forex minimum is a mini lot, and I don't feel comfortable enough yet with the risk to trade mini lots on the higher timeframes(i.e. wider pip swings) that ParallaxFX's system uses, so I wanted to see if I could scale it down. 2) I'm fairly impatient, so I don't like to wait days and days with my capital tied up just to see if a trade is going to win or lose. This does mean it requires more active attention since you are checking for setups once an hour instead of once a day or every 4-6 hours, but the upside is that you trade more often this way so you end up winning or losing faster and moving onto the next trade. Spread does eat more of the trade this way, but I'll cover this in my data below - it ends up not being a problem. I looked at data from 6/11 to 7/3 on all pairs with a reasonable spread(pairs listed at bottom above the TL;DR). So this represents about 3-4 weeks' worth of trading. I used mark(mid) price charts. Spreadsheet link is below for anyone that's interested.
System Details
I'm pretty much using ParallaxFX's system textbook, but since there are a few options in his writeups, I'll include all the discretionary points here:
I'm using the stop entry version - so I wait for the price to trade beyond the confirmation candle(in the direction of my trade) before entering. I don't have any data to support this decision, but I've always preferred this method over retracement-limit entries. Maybe I just like the feeling of a higher winrate even though there can be greater R:R using a limit entry. Variety is the spice of life.
I put my stop loss right at the opposite edge of the confirmation candle. NOT at the edge of the 2-candle pattern that makes up the system. I'll get into this more below - not enough trades are saved to justify the wider stops. (Wider stop means less $ per pip won, assuming you still only risk 1%).
All my profit/loss statistics are based on a 1% risk per trade. Because 1 is real easy to multiply.
There are definitely some questionable trades in here, but I tried to make it as mechanical as possible for evaluation purposes. They do fit the definitions of the system, which is why I included them. You could probably improve the winrate by being more discretionary about your trades by looking at support/resistance or other techniques.
I didn't use MBB much for either entering trades, or as support/resistance indicators. Again, trying to be pretty mechanical here just for data collection purposes. Plus, we all make bad trading decisions now and then, so let's call it even.
As stated in the title, this is for H1 only. These results may very well not play out for other time frames - who knows, it may not even work on H1 starting this Monday. Forex is an unpredictable place.
I collected data to show efficacy of taking profit at three different levels: -61.8%, -100% and -161.8% fib levels described in the system using the passive trade management method(set it and forget it). I'll have more below about moving up stops and taking off portions of a position.
And now for the fun. Results!
Total Trades: 241
Raw Winrates:
TP at -61.8%: 177 out of 241: 73.44%
TP at -100%: 156 out of 241: 64.73%
TP at -161.8%: 121 out of 241: 50.20%
Adjusted Proft % (takes spread into account):
TP at -61.8%: 5.22%
TP at -100%: 23.55%
TP at -161.8%: 29.14%
As you can see, a higher target ended up with higher profit despite a much lower winrate. This is partially just how things work out with profit targets in general, but there's an additional point to consider in our case: the spread. Since we are trading on a lower timeframe, there is less overall price movement and thus the spread takes up a much larger percentage of the trade than it would if you were trading H4, Daily or Weekly charts. You can see exactly how much it accounts for each trade in my spreadsheet if you're interested. TDA does not have the best spreads, so you could probably improve these results with another broker. EDIT: I grabbed typical spreads from other brokers, and turns out while TDA is pretty competitive on majors, their minors/crosses are awful! IG beats them by 20-40% and Oanda beats them 30-60%! Using IG spreads for calculations increased profits considerably (another 5% on top) and Oanda spreads increased profits massively (another 15%!). Definitely going to be considering another broker than TDA for this strategy. Plus that'll allow me to trade micro-lots, so I can be more granular(and thus accurate) with my position sizing and compounding.
A Note on Spread
As you can see in the data, there were scenarios where the spread was 80% of the overall size of the trade(the size of the confirmation candle that you draw your fibonacci retracements over), which would obviously cut heavily into your profits. Removing any trades where the spread is more than 50% of the trade width improved profits slightly without removing many trades, but this is almost certainly just coincidence on a small sample size. Going below 40% and even down to 30% starts to cut out a lot of trades for the less-common pairs, but doesn't actually change overall profits at all(~1% either way). However, digging all the way down to 25% starts to really make some movement. Profit at the -161.8% TP level jumps up to 37.94% if you filter out anything with a spread that is more than 25% of the trade width! And this even keeps the sample size fairly large at 187 total trades. You can get your profits all the way up to 48.43% at the -161.8% TP level if you filter all the way down to only trades where spread is less than 15% of the trade width, however your sample size gets much smaller at that point(108 trades) so I'm not sure I would trust that as being accurate in the long term. Overall based on this data, I'm going to only take trades where the spread is less than 25% of the trade width. This may bias my trades more towards the majors, which would mean a lot more correlated trades as well(more on correlation below), but I think it is a reasonable precaution regardless.
Time of Day
Time of day had an interesting effect on trades. In a totally predictable fashion, a vast majority of setups occurred during the London and New York sessions: 5am-12pm Eastern. However, there was one outlier where there were many setups on the 11PM bar - and the winrate was about the same as the big hours in the London session. No idea why this hour in particular - anyone have any insight? That's smack in the middle of the Tokyo/Sydney overlap, not at the open or close of either. On many of the hour slices I have a feeling I'm just dealing with small number statistics here since I didn't have a lot of data when breaking it down by individual hours. But here it is anyway - for all TP levels, these three things showed up(all in Eastern time):
7pm-4am: Fewer setups, but winrate high.
5am-6am: Lots of setups, but but winrate low.
12pm-3pm Medium number of setups, but winrate low.
I don't have any reason to think these timeframes would maintain this behavior over the long term. They're almost certainly meaningless. EDIT: When you de-dup highly correlated trades, the number of trades in these timeframes really drops, so from this data there is no reason to think these timeframes would be any different than any others in terms of winrate. That being said, these time frames work out for me pretty well because I typically sleep 12am-7am Eastern time. So I automatically avoid the 5am-6am timeframe, and I'm awake for the majority of this system's setups.
Moving stops up to breakeven
This section goes against everything I know and have ever heard about trade management. Please someone find something wrong with my data. I'd love for someone to check my formulas, but I realize that's a pretty insane time commitment to ask of a bunch of strangers. Anyways. What I found was that for these trades moving stops up...basically at all...actually reduced the overall profitability. One of the data points I collected while charting was where the price retraced back to after hitting a certain milestone. i.e. once the price hit the -61.8% profit level, how far back did it retrace before hitting the -100% profit level(if at all)? And same goes for the -100% profit level - how far back did it retrace before hitting the -161.8% profit level(if at all)? Well, some complex excel formulas later and here's what the results appear to be. Emphasis on appears because I honestly don't believe it. I must have done something wrong here, but I've gone over it a hundred times and I can't find anything out of place.
Moving SL up to 0% when the price hits -61.8%, TP at -100%
Winrate: 46.4%
Adjusted Proft % (takes spread into account): 5.36%
Taking half position off at -61.8%, moving SL up to 0%, TP remaining half at -100%
Winrate: 65.97%
Adjusted Proft % (takes spread into account): -1.01% (yes, a net loss)
Now, you might think exactly what I did when looking at these numbers: oof, the spread killed us there right? Because even when you move your SL to 0%, you still end up paying the spread, so it's not truly "breakeven". And because we are trading on a lower timeframe, the spread can be pretty hefty right? Well even when I manually modified the data so that the spread wasn't subtracted(i.e. "Breakeven" was truly +/- 0), things don't look a whole lot better, and still way worse than the passive trade management method of leaving your stops in place and letting it run. And that isn't even a realistic scenario because to adjust out the spread you'd have to move your stoploss inside the candle edge by at least the spread amount, meaning it would almost certainly be triggered more often than in the data I collected(which was purely based on the fib levels and mark price). Regardless, here are the numbers for that scenario:
Moving SL up to 0% when the price hits -61.8%, TP at -100%
Winrate(breakeven doesn't count as a win): 46.4%
Adjusted Proft % (takes spread into account): 17.97%
Taking half position off at -61.8%, moving SL up to 0%, TP remaining half at -100%
Winrate(breakeven doesn't count as a win): 65.97%
Adjusted Proft % (takes spread into account): 11.60%
From a literal standpoint, what I see behind this behavior is that 44 of the 69 breakeven trades(65%!) ended up being profitable to -100% after retracing deeply(but not to the original SL level), which greatly helped offset the purely losing trades better than the partial profit taken at -61.8%. And 36 went all the way back to -161.8% after a deep retracement without hitting the original SL. Anyone have any insight into this? Is this a problem with just not enough data? It seems like enough trades that a pattern should emerge, but again I'm no expert. I also briefly looked at moving stops to other lower levels (78.6%, 61.8%, 50%, 38.2%, 23.6%), but that didn't improve things any. No hard data to share as I only took a quick look - and I still might have done something wrong overall. The data is there to infer other strategies if anyone would like to dig in deep(more explanation on the spreadsheet below). I didn't do other combinations because the formulas got pretty complicated and I had already answered all the questions I was looking to answer.
2-Candle vs Confirmation Candle Stops
Another interesting point is that the original system has the SL level(for stop entries) just at the outer edge of the 2-candle pattern that makes up the system. Out of pure laziness, I set up my stops just based on the confirmation candle. And as it turns out, that is much a much better way to go about it. Of the 60 purely losing trades, only 9 of them(15%) would go on to be winners with stops on the 2-candle formation. Certainly not enough to justify the extra loss and/or reduced profits you are exposing yourself to in every single other trade by setting a wider SL. Oddly, in every single scenario where the wider stop did save the trade, it ended up going all the way to the -161.8% profit level. Still, not nearly worth it.
Correlated Trades
As I've said many times now, I'm really not qualified to be doing an analysis like this. This section in particular. Looking at shared currency among the pairs traded, 74 of the trades are correlated. Quite a large group, but it makes sense considering the sort of moves we're looking for with this system. This means you are opening yourself up to more risk if you were to trade on every signal since you are technically trading with the same underlying sentiment on each different pair. For example, GBP/USD and AUD/USD moving together almost certainly means it's due to USD moving both pairs, rather than GBP and AUD both moving the same size and direction coincidentally at the same time. So if you were to trade both signals, you would very likely win or lose both trades - meaning you are actually risking double what you'd normally risk(unless you halve both positions which can be a good option, and is discussed in ParallaxFX's posts and in various other places that go over pair correlation. I won't go into detail about those strategies here). Interestingly though, 17 of those apparently correlated trades ended up with different wins/losses. Also, looking only at trades that were correlated, winrate is 83%/70%/55% (for the three TP levels). Does this give some indication that the same signal on multiple pairs means the signal is stronger? That there's some strong underlying sentiment driving it? Or is it just a matter of too small a sample size? The winrate isn't really much higher than the overall winrates, so that makes me doubt it is statistically significant. One more funny tidbit: EUCAD netted the lowest overall winrate: 30% to even the -61.8% TP level on 10 trades. Seems like that is just a coincidence and not enough data, but dang that's a sucky losing streak. EDIT: WOW I spent some time removing correlated trades manually and it changed the results quite a bit. Some thoughts on this below the results. These numbers also include the other "What I will trade" filters. I added a new worksheet to my data to show what I ended up picking.
Total Trades: 75
Raw Winrates:
TP at -61.8%: 84.00%
TP at -100%: 73.33%
TP at -161.8%: 60.00%
Moving SL up to 0% when the price hits -61.8%, TP at -100%: 53.33%
Taking half position off at -61.8%, moving SL up to 0%, TP remaining half at -100%: 53.33% (yes, oddly the exact same winrate. but different trades/profits)
Adjusted Proft % (takes spread into account):
TP at -61.8%: 18.13%
TP at -100%: 26.20%
TP at -161.8%: 34.01%
Moving SL up to 0% when the price hits -61.8%, TP at -100%: 19.20%
Taking half position off at -61.8%, moving SL up to 0%, TP remaining half at -100%: 17.29%
To do this, I removed correlated trades - typically by choosing those whose spread had a lower % of the trade width since that's objective and something I can see ahead of time. Obviously I'd like to only keep the winning trades, but I won't know that during the trade. This did reduce the overall sample size down to a level that I wouldn't otherwise consider to be big enough, but since the results are generally consistent with the overall dataset, I'm not going to worry about it too much. I may also use more discretionary methods(support/resistance, quality of indecision/confirmation candles, news/sentiment for the pairs involved, etc) to filter out correlated trades in the future. But as I've said before I'm going for a pretty mechanical system. This brought the 3 TP levels and even the breakeven strategies much closer together in overall profit. It muted the profit from the high R:R strategies and boosted the profit from the low R:R strategies. This tells me pair correlation was skewing my data quite a bit, so I'm glad I dug in a little deeper. Fortunately my original conclusion to use the -161.8 TP level with static stops is still the winner by a good bit, so it doesn't end up changing my actions. There were a few times where MANY (6-8) correlated pairs all came up at the same time, so it'd be a crapshoot to an extent. And the data showed this - often then won/lost together, but sometimes they did not. As an arbitrary rule, the more correlations, the more trades I did end up taking(and thus risking). For example if there were 3-5 correlations, I might take the 2 "best" trades given my criteria above. 5+ setups and I might take the best 3 trades, even if the pairs are somewhat correlated. I have no true data to back this up, but to illustrate using one example: if AUD/JPY, AUD/USD, CAD/JPY, USD/CAD all set up at the same time (as they did, along with a few other pairs on 6/19/20 9:00 AM), can you really say that those are all the same underlying movement? There are correlations between the different correlations, and trying to filter for that seems rough. Although maybe this is a known thing, I'm still pretty green to Forex - someone please enlighten me if so! I might have to look into this more statistically, but it would be pretty complex to analyze quantitatively, so for now I'm going with my gut and just taking a few of the "best" trades out of the handful. Overall, I'm really glad I went further on this. The boosting of the B/E strategies makes me trust my calculations on those more since they aren't so far from the passive management like they were with the raw data, and that really had me wondering what I did wrong.
What I will trade
Putting all this together, I am going to attempt to trade the following(demo for a bit to make sure I have the hang of it, then for keeps):
"System Details" I described above.
TP at -161.8%
Static SL at opposite side of confirmation candle - I won't move stops up to breakeven.
Trade only 7am-11am and 4pm-11pm signals.
Nothing where spread is more than 25% of trade width.
Looking at the data for these rules, test results are:
Winrate: 58.19%
Adjusted Proft % (takes spread into account): 47.43%
I'll be sure to let everyone know how it goes!
Other Technical Details
ATR is only slightly elevated in this date range from historical levels, so this should fairly closely represent reality even after the COVID volatility leaves the scalpers sad and alone.
The sample size is much too small for anything really meaningful when you slice by hour or pair. I wasn't particularly looking to test a specific pair here - just the system overall as if you were going to trade it on all pairs with a reasonable spread.
Raw Data
Here's the spreadsheet for anyone that'd like it. (EDIT: Updated some of the setups from the last few days that have fully played out now. I also noticed a few typos, but nothing major that would change the overall outcomes. Regardless, I am currently reviewing every trade to ensure they are accurate.UPDATE: Finally all done. Very few corrections, no change to results.) I have some explanatory notes below to help everyone else understand the spiraled labyrinth of a mind that put the spreadsheet together.
I'm on the East Coast in the US, so the timestamps are Eastern time.
Time stamp is from the confirmation candle, not the indecision candle. So 7am would mean the indecision candle was 6:00-6:59 and the confirmation candle is 7:00-7:59 and you'd put in your order at 8:00.
I found a couple AM/PM typos as I was reviewing the data, so let me know if a trade doesn't make sense and I'll correct it.
Insanely detailed spreadsheet notes
For you real nerds out there. Here's an explanation of what each column means:
Pair - duh
Date/Time - Eastern time, confirmation candle as stated above
Win to -61.8%? - whether the trade made it to the -61.8% TP level before it hit the original SL.
Win to -100%? - whether the trade made it to the -100% TP level before it hit the original SL.
Win to -161.8%? - whether the trade made it to the -161.8% TP level before it hit the original SL.
Retracement level between -61.8% and -100% - how deep the price retraced after hitting -61.8%, but before hitting -100%. Be careful to look for the negative signs, it's easy to mix them up. Using the fib% levels defined in ParallaxFX's original thread. A plain hyphen "-" means it did not retrace, but rather went straight through -61.8% to -100%. Positive 100 means it hit the original SL.
Retracement level between -100% and -161.8% - how deep the price retraced after hitting -100%, but before hitting -161.8%. Be careful to look for the negative signs, it's easy to mix them up. Using the fib% levels defined in ParallaxFX's original thread. A plain hyphen "-" means it did not retrace, but rather went straight through -100% to -161.8%. Positive 100 means it hit the original SL.
Trade Width(Pips) - the size of the confirmation candle, and thus the "width" of your trade on which to determine position size, draw fib levels, etc.
Loser saved by 2 candle stop? - for all losing trades, whether or not the 2-candle stop loss would have saved the trade and how far it ended up getting if so. "No" means it didn't save it, N/A means it wasn't a losing trade so it's not relevant.
Spread(ThinkorSwim) - these are typical spreads for these pairs on ToS.
Spread % of Width - How big is the spread compared to the trade width? Not used in any calculations, but interesting nonetheless.
True Risk(Trade Width + Spread) - I set my SL at the opposite side of the confirmation candle knowing that I'm actually exposing myself to slightly more risk because of the spread(stop order = market order when submitted, so you pay the spread). So this tells you how many pips you are actually risking despite the Trade Width. I prefer this over setting the stop inside from the edge of the candle because some pairs have a wide spread that would mess with the system overall. But also many, many of these trades retraced very nearly to the edge of the confirmation candle, before ending up nicely profitable. If you keep your risk per trade at 1%, you're talking a true risk of, at most, 1.25% (in worst-case scenarios with the spread being 25% of the trade width as I am going with above).
Win or Loss in %(1% risk) including spread TP -61.8% - not going to go into huge detail, see the spreadsheet for calculations if you want. But, in a nutshell, if the trade was a win to 61.8%, it returns a positive # based on 61.8% of the trade width, minus the spread. Otherwise, it returns the True Risk as a negative. Both normalized to the 1% risk you started with.
Win or Loss in %(1% risk) including spread TP -100% - same as the last, but 100% of Trade Width.
Win or Loss in %(1% risk) including spread TP -161.8% - same as the last, but 161.8% of Trade Width.
Win or Loss in %(1% risk) including spread TP -100%, and move SL to breakeven at 61.8% - uses the retracement level columns to calculate profit/loss the same as the last few columns, but assuming you moved SL to 0% fib level after price hit -61.8%. Then full TP at 100%.
Win or Loss in %(1% risk) including spread take off half of position at -61.8%, move SL to breakeven, TP 100% - uses the retracement level columns to calculate profit/loss the same as the last few columns, but assuming you took of half the position and moved SL to 0% fib level after price hit -61.8%. Then TP the remaining half at 100%.
Overall Growth(-161.8% TP, 1% Risk) - pretty straightforward. Assuming you risked 1% on each trade, what the overall growth level would be chronologically(spreadsheet is sorted by date).
Pairs
AUD/CAD
AUD/CHF
AUD/JPY
AUD/NZD
AUD/USD
CAD/CHF
CAD/JPY
CHF/JPY
EUAUD
EUCAD
EUCHF
EUGBP
EUJPY
EUNZD
EUUSD
GBP/AUD
GBP/CAD
GBP/CHF
GBP/JPY
GBP/NZD
GBP/USD
NZD/CAD
NZD/CHF
NZD/JPY
NZD/USD
USD/CAD
USD/CHF
USD/JPY
TL;DR
Based on the reasonable rules I discovered in this backtest:
Date range: 6/11-7/3
Winrate: 58.19%
Adjusted Proft % (takes spread into account): 47.43%
Demo Trading Results
Since this post, I started demo trading this system assuming a 5k capital base and risking ~1% per trade. I've added the details to my spreadsheet for anyone interested. The results are pretty similar to the backtest when you consider real-life conditions/timing are a bit different. I missed some trades due to life(work, out of the house, etc), so that brought my total # of trades and thus overall profit down, but the winrate is nearly identical. I also closed a few trades early due to various reasons(not liking the price action, seeing support/resistance emerge, etc). A quick note is that TD's paper trade system fills at the mid price for both stop and limit orders, so I had to subtract the spread from the raw trade values to get the true profit/loss amount for each trade. I'm heading out of town next week, then after that it'll be time to take this sucker live!
86 Trades
Date range: 7/9-7/30
Winrate: 52.32%
Adjusted Proft % (takes spread into account): 20.73%
Starting Balance: $5,000
Ending Balance: $6,036.51
Live Trading Results
I started live-trading this system on 8/10, and almost immediately had a string of losses much longer than either my backtest or demo period. Murphy's law huh? Anyways, that has me spooked so I'm doing a longer backtest before I start risking more real money. It's going to take me a little while due to the volume of trades, but I'll likely make a new post once I feel comfortable with that and start live trading again.
(To any moderator, I have anonymitised everything and made sure that it is according to rules of this subreddit,I wanna share this story so please let me know should further editing be required ! please Consider this person has likely stolen thousands and thousands of innocent people so i wanna spread awareness! So the other day (actually my birthday too :)) I found this account on IG, I saved him as Scumm in my phone but he claims to be an "Alex", hit him up if you wanna get rich it is a fiest. So i hit him up and be like:
[19:00, 23/09/2020] OP: Hello sir I am Tom, I read a lot of things about Forex and crypto and your page in particular and just inherited some money from a relative , I heard so many good things I thought you might help me invest some of that money so it is not lost? Kindly [19:08, 23/09/2020] Scumm: Ok [19:08, 23/09/2020] Scumm: Welcome [19:08, 23/09/2020] Scumm: Where are you from? [19:09, 23/09/2020] OP: Germany [19:09, 23/09/2020] Scumm: Ok Tom [19:09, 23/09/2020] Scumm: We specialise on Stock And cryptocurrency trading, with the sole aim of making awesome profit from the rapid changes in price of the assets and currencies we trade. We are group of professional market analysts that studies the market picking the best assets to invest on, and as well the best cryptocurrency pairs to trade on. We have mastered risk management and as well best possible strategy to maximize our clients Profits [19:10, 23/09/2020] Scumm: With the minimum investment of 1 BTC you can make 3.8BTC in a month [19:11, 23/09/2020] Scumm: If I may ask do you have a Bitcoin Wallet address?
Now you can see how this is a scam and no one should ever follow such ludicrous claims! 380% in a month, if sb knew how, they wouldnt share that ,not in this world, not in this century... So i amlike:
[19:15, 23/09/2020] OP: I'd be willing to invest even 2 bitcoin but I would need your company credentials and iban to send money to [19:19, 23/09/2020] Scumm: I can only provide you a US account to make payment [19:19, 23/09/2020] Scumm: This if gonna be possible [19:19, 23/09/2020] OP: Hmm I'll see maybe that works [19:19, 23/09/2020] OP: Easiest would be IBAN [19:19, 23/09/2020] OP: Your company does not have any European bank accounts? [19:19, 23/09/2020] Scumm: IBAN [19:20, 23/09/2020] Scumm: Mate I always follow procedures so I have not accept Transfer for deposit [19:20, 23/09/2020] Scumm: But I will see to that ok You see where this is going I want some info and make him believe he or one of his mules at least gets sweet sweet cash. NOT SO FAST [20:49, 23/09/2020] Scumm: I’m waiting on my Colleague to forward details to me now [20:49, 23/09/2020] Scumm: Ok so you are not sending today? [20:49, 23/09/2020] OP: Thank u so much [20:49, 23/09/2020] OP: I can try but I have to call bank [20:49, 23/09/2020] OP: For over 1000 [20:50, 23/09/2020] Scumm: Ok ok mate [20:50, 23/09/2020] Scumm: Good [21:08, 23/09/2020] Scumm: XXXXXX XXXXXXXX XXX Bank Account number: 8XXXXX0 Sort code: XXXX IBAN: GBXXXXXXXXXXXXXXXXXX [21:08, 23/09/2020] Scumm: Are you there Mate? [22:43, 23/09/2020] OP: Yes hi thank u so much [22:43, 23/09/2020] OP: Let me chdck [22:46, 23/09/2020] Scumm: Ok mate [22:53, 23/09/2020] Scumm: Are you trying to send it now mate?
Spinning it furtherly: I just tell some yada yada about how it takes time and a signature since its such a large sum!
[11:46, 24/09/2020] OP: Do you have license [11:46, 24/09/2020] Scumm: 25BTC too small for even my students 😂 /\SURE buddy! */* [11:46, 24/09/2020] OP: NASAA 67? [11:47, 24/09/2020] OP: For financial advisor [11:50, 24/09/2020] OP: This [11:50, 24/09/2020] OP: Sorry was upside down [11:50, 24/09/2020] OP: ? [11:51, 24/09/2020] Scumm: I’m an independent expert trader and portfolio management in crypto market [11:52, 24/09/2020] Scumm: License only met to give out from head of Admin [11:52, 24/09/2020] OP: Ah kk [11:52, 24/09/2020] Scumm: Yes mate [11:52, 24/09/2020] OP: But normally 67 and 68 is required [11:52, 24/09/2020] OP: For normal managers? [11:53, 24/09/2020] Scumm: Yes [11:55, 24/09/2020] Scumm: have no worries mate [11:55, 24/09/2020] Scumm: 100%
Now this is quite interesting NASAA 65 and 66 are licenses needed to be an account manager in the US so if he was he should know that i just made up 67 and 68!
[19:20, 24/09/2020] OP: Ill makethe first payment asap, but i cant make my bank go faster sorry [19:21, 24/09/2020] OP: howeverone thing: [19:21, 24/09/2020] OP: most of the moneyigotis still in USD isit possible u said invest and send to USbank too? [19:21, 24/09/2020] OP: for 20kUSD and above [19:22, 24/09/2020] OP: its hard for me topurhcase that much bitcoin on my own right now [19:22, 24/09/2020] OP: but i see that i can trust you! [19:22, 24/09/2020] Scumm: Mate ASAP you said you make payment today and you didn’t so I don’t know if you even sure about this yet [19:23, 24/09/2020] Scumm: I don’t get you please [19:23, 24/09/2020] Scumm: You mean you want your profit sent to a US bank? [19:24, 24/09/2020] Scumm: You have no worries about that mate [19:24, 24/09/2020] OP: I am [19:24, 24/09/2020] OP: I signed the paper mate I am so happy [19:24, 24/09/2020] OP: That's all they need I told u [19:24, 24/09/2020] OP: To make payments international so large [19:24, 24/09/2020] Scumm: Yeah you said that mate [19:24, 24/09/2020] OP: I am beeing honest as well [19:24, 24/09/2020] OP: So I sent it back by post Today [19:24, 24/09/2020] Scumm: Ok mate [19:25, 24/09/2020] OP: But I am not at my banks city so post takes 1-2 days and then they can release [19:25, 24/09/2020] OP: Sorry to keep u waiting [19:25, 24/09/2020] Scumm: Ok mate [19:25, 24/09/2020] Scumm: Oh I see [19:25, 24/09/2020] OP: No what I meant: if I wanna start with more can j invest 20k USD too? I know u usually don't do and j ask very weird questions but I meant [19:25, 24/09/2020] OP: I am not always home have pc etc but I am in contact with u and my bank [19:26, 24/09/2020] OP: So is it possible? Otherwise I have to convert USD to euro or GDP [19:26, 24/09/2020] OP: 40k is sill in USD I have [19:26, 24/09/2020] OP: That would be even crazier profits 🤑🤑🤑 [19:27, 24/09/2020] Scumm: Now I’m understanding SO NOW HE IS UNDERSTANDING good good, and almost ready to screw one of his US mules too: [21:00, 24/09/2020] Scumm: Ok mate [21:04, 24/09/2020] Scumm: Can they send from US to the IBAN account? [21:05, 24/09/2020] OGOP: Hm I don't know it's a bit tricky BC I'm no us citizen [21:05, 24/09/2020] OGOP: I have one iban authorised to cash all out in euro [21:05, 24/09/2020] Scumm: Ok ok mate [21:06, 24/09/2020] OP: And US I think right now [21:06, 24/09/2020] Scumm: Ok mate please hold [21:10, 24/09/2020] OP Sure man [21:11, 24/09/2020] OP: Uff such a huge step for me [21:11, 24/09/2020] OP: I hope u do it real good 🤑🤑🤑 [21:12, 24/09/2020] OP Do you have customers in US too? [21:12, 24/09/2020] Scumm: Bank name: Teachers Federal Credit Union Bank address: XXXXXXX Account holder: XXXXXXXXXXXXXX Account Holders address: XXXXXXXXXXXXXXXXX XXXX Routing Number: XXXXXXX Account number:XXXXXXXXXX [21:12, 24/09/2020] Scumm: Sure mate //SO HE CLAIMS TO HAVE SCAMMED US CITIZENS! [21:12, 24/09/2020] OP: Nice [21:12, 24/09/2020] Scumm: Please make sure you send confirmation immediately
So finally I did not send him payment proof,I sent him a spoofed link to fetch his IP with a link to "payment proof" and got his IP and location (cant showr a real link bc it has my IP in it...) And was like " oh hey how is the whether in Irele, Nigeria??" Needless to say he blocked me straight away after I called him a disgraceful sc*m but hey..... I still called the corresponding banks, the UK Fraud Action and the FBI just to make sure and shared all of the details without any editting :) Have fun "mate"! If they can freeze only 1 $ and return it to a likely victim, I am more then happy Cheers dont get scammed! Have a wonderful day! TL/DR: Scammed a Nigerian scammer into sending me real accounts, names and details in UK and US (mules) to forward to the police and may or may not have donated 500 to charity.
[META] Recent scam/spam trends.. Or, a peak inside what it's like to moderate /r/forex
After a few...especially trying...interactions with unhappy ban recipients today, I thought it would be fun to share a little info on what moderators do to keep this place clean. :) The forex industry is full of shady characters. Any industry sitting on the intersection of financial independence, work, and money, is bound to attract them. There are many reasons for this; the lower barrier to entry compared to other markets, the lack of public knowledge on the subject, and greedy human nature to name a few. Moderating a subreddit dedicated to forex (or anything trading realted for that matter,) presents extra challenges beyond your regular sub. Marketers and scammers are super motivated, and MLM / referral marketing is extremely popular right now, which can turn everyday regular users into sources of spam. How we currently tackle this problem involves technology (scripts, bots, and automod,) a mod review workflow, and some smart sleuthing when needed. The mod team and our scripts aren't perfect though... but the few false positives we get are a very, very small fraction of all mod actions taken (~1%.) Unfortunately, that means some otherwise sincere members get handled roughly, and that can really suck.. I wish there was a better way, but the alternative is this place becomes a wild west and starts looking like your gmail spam folder. That said, here's my personal stats for JUST the last 24 hours:
Bans: 14[edit:16 nowbefore day's end, two more responding to a 'where can I learn how to trade' post.]
All mod actions (including bans, post and comment removal, etc..): 63
Ban appeals: 2
And I'm just one of the mods. . . So what scammer and marketing trends are we seeing lately?
Content marketing - Infographics with instagram handles watermarked in them, or a blog-like post with a embedded links to their own site.
Personal/direct selling - trying to move the conversation out of public view, usually by taking things to DM, or promoting a 3rd party chatroom where the rules here no longer apply.
Shills - Fake accounts used to boost the credit of another user, or service. It's no coincidence that a user asking about 'ULRA PRO SIGNALZ' will quickly have 5+ replies by low karma, new users, saying how great the service is. [edit:here's an example I just caught..]
Fake P/L Porn - We see this quite often. It's easy to fake MT4 account statements and MT4 Mobile screenshots, and new users can't tell the difference so these posts will get a lot of undeserved attention. When people ask how OP made such mad cash, a sales pitch is usually coming right up.
Honestly, it can be really frustrating at times.. luckily the scripts we have in place make weeding out ~80% of these jokers quite easy and quick. Heck, we had one scammer who blew through 12+ accounts over the last few days trying to scam people but none of their posts ever saw the light of day thanks to the spam triggers I've written. What motivates the mod team to keep this place clean? That's an easy answer: The majority of users here are new to trading. Making sure they aren't food for the wolves is important. But even with all the measures we take, some bad actors still get through. So here's where you can help: Use the report button! Anytime you see something that you think fits the descriptions listed above, or violates our sidebar rules, just report it. Even if you're not 100% sure, don't be afraid to use the report tool.. The worst thing that can happen is the mod team reviews and approves it, but the best outcome is you directly help keep this place clean and humming! :) And the mod team is always looking to improve where it can: I've already talked about what we do to scrub away bad actors, but one place we could do better is education. The plan is to rewrite a good portion of the wiki to include the following sections:
Spotting scams and scammers
How to properly compare brokers and regulatory bodies
The real reason why your old high school friend wants you to sign up to IML, and 10 ways to politely tell him to pound sand
No, that hot instagram model won't sleep with you if you buy her online course
Why all signal services are trash and can die in a fire
(Titles above are a work in progress ;P) Are you a good writer and want to help out with this? Think you can write up a killer wiki article on spotting scam artists? Message the mods and let us know! Finally, a reminder, we are still interested in taking on more moderators and will be revisiting that very shortly. If you'd be interested, read through this post and reply accordingly: https://www.reddit.com/Forex/comments/h7ok6k/seeking_more_mods_recruitment_thread/
Building your own algotrading Forex platform in Python for fun - blog series
Hey everybody, I've started to post stuff about how to build an algotrading platform for fun (and maybe profit). This is targeted to engineers with so and so knowledge of Forex. Any feedback? Thanks
FOREX.com is a registered FCM and RFED with the CFTC and member of the National Futures Association (NFA # 0339826). Forex trading involves significant risk of loss and is not suitable for all investors. Full Disclosure. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. The Fun-Loving Forex Trader is the next psychological type of trader in our series on Dr.Van K. Tharp’s trader personality type series. This type of trader is characterized by a great deal of optimism and is generally a very playful and social person who enjoys the simple things in life. Forex trading is basically the specialty of buying and selling foreign trading. The one and only reason for this is that Currencies are traded in pairs. All you need to know is that the first currency symbol in the pair is BASE CURRENCY. Forex Trading Education is very interesting to know. Although almost 75% of Forex trading in the world is currently carried out by the banks, individuals are still able to trade Forex with as little as $1,000 and make profit. All you need is to acquire the technical ‘know how’ through training and online tutorials on how to start Forex trading for beginners. Here is the list of some of the forex enterprises who have investors within and outside Nigeria but have shut down as they were middle men under Vickson Multiconcept; Rex Fx, Tasky Fx,Beloved Fx,Faaji Enterprises, Oja Oyingbo,Kunlexs-p Enterprises, Irene Scents Fx,Greenearth Investments, Omoowo Forex, M invest, Hemmy Enterprises, Damzy Fx, etc
Learn more here: https://bit.ly/2ShPRPx Here' why you'll never make money in Forex. It's all because of the Forex cycle of doom. Many aspiring traders who ar... If you're new to Forex trading, have less than a year of experience, or you want to learn more about Forex markets, then this course is for you. ** FREE TRAD... Glad this video helped, no more products for sale no more courses either, study the videos they will teach you everything you need to become a 6 and 7 figure... Forex Humor http://www.profitf.com/forex-humor/fu... Turtle soup pattern in forex. 1967 Shelby GT500 Barn Find and Appraisal That Buyer Uses To Pay Widow - Price Revealed - Duration: 22:15. Jerry Heasley Recommended for you
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