live trading performance
We teach Wall Street methods of investment and risk management that a layperson can understand easily and practice them effortlessly.
No jargon, no hype, no secrets. No hindsight trading.
No fee charged for teaching of fx trading including Algo modelling.
Looking for highly motivated learners who can contribute their skills and time to development of inexpensive elearning courses, e-trading/algo programming lab.
We Walk the Talk
We trade on Interactive Broker's Mobile trading platform that facilitates transactions of Chicago Mercantile Exchange-traded Currency futures, Fx futures options, and OTC spot forex.
For semi-automated spot currency trading, we intend to execute it on a regulated Metatrader 4 broker's platform. We are testing the strategies since last 3 years and are ready to go live soon. The semi-automated system is an adaptation of years of manual random trading experience. Presently, spot fx trades are being executed manually on the Interactive Brokers platform.
...and making us beneficiaries too
- Breakout 0pportunity for buying futures options - expecting maximum 8 opportunities in one year. Risk, probable profit and loss all defined in advance.
- Opportunistic fx spot, futures and future options trades based on our assessment of interplay of the short-term Correlations, Volatility, liquidity and Positioning in the Currencies market. Maximum 4 trades in a week. 180 trades in a year.
- Combinations of selling/buying options and spreads for directional trades to control costs, risks and deploy capital efficiently. Maximum: 8 trades in a year. Defensive in nature, the intention is to extract value from losing positions of bought options or fx futures.
- Selling options on both sides for income when we have a bias for range trading. Maximum: 8 opportunities in a year. Range-trading or Channel trading is a tried and tested way of making regular income by selling strangles, inverted strangles and doing re-adjustments/rollovers to keep them profitable until maturity.
- Semi auto-trading on spot fx platform that supports hedging: Randomly trading 400 trades a month with no directional forecast. The major requirement is that the market should be driven by high momentum and be trending strongly. Momentum is preferable to volatility.
Super specialization and maintaining consistency is our open secret
- Trading only in fx asset class for 35 years
- Sticking to three instruments - fx spot, fx futures and fx future options
- Trading only in two symbols (a) EURUSD for futures and futures options (b) GBPJPY for spot fx
- Extensive experience in using Leverage, Margin, Positions, Hedging, and managing liquidity:
- Using smaller positions for entries and waiting for the trade to happen
- Hedge adverse spot positions on non-FIFO platforms that permit buying and selling without closing the trades.
- Cover with fx futures and/or fx future options on FIFO platform that offers all the three instruments to trade.
- Experience in varying lots to recover adverse trades
- For futures and options, utilize strategies to make the most out of Chicago Mercantile Exchange's SPAN margin system. The margin system maximizes liquidity and sellers receive the option premium in advance which augments margin capital. Sometimes the premium is good enough to nurture a trade without really accessing maintenance margin money until the expiration date of the options.
- Primarily, we focus on risk management rather than on the risk-to-reward ratio. Getting better returns by optimal liquidity management is the goal.
The timing of trades
- Option trades are taken if they meet the predetermined value of theta and delta. We have developed our own mechanics and metrics.
- It is largely based on our own daily assessment of fundamental macro-economics and geopolitical events.
Price Action trading involves
- Reading the market without using any technical indicators. Strategies used are suitable for trending and ranging (or flat) markets.
- Locating price points where the risk of losing money is lower.
- Measuring the length of previous price swings to estimate the duration of trades in terms of price and time.
- Assessing price locations having a strong probability of momentum taking birth so that a breakout-like result can be obtained for purchased options quickly without getting hurt by time-value decay.
Choice of symbols
EURUSD: It is easier to manage this major currency pair because of its strong mean-reversion tendency. It is the most liquid currency pair with the least possibility of a flash crash we have witnessed in past two years. We trade this pair manually using both futures and futures options for comfortable risk control. Adjustment is an art that comes from practice.
GBPJPY: It is the most volatile currency pair for various reasons but still generates a lot of momentum-driven trading opportunities - on an average 150 pips daily high-low range and various swings (random trading) causing a turnover of 600 pips to 1,000 pips (depending on the size of the swing) in a day or at least 150,000 pips in a year. Consolidation periods are relatively far and few between for this currency cross-pair. JPY, being a financing currency, accounts for 20-22% of the global volume of the forex market. GBP volume share is 12-15%. To extract profit from this pair we will soon use semi-automated trading. The hybrid auto-trader will enter trade randomly as soon as it is launched. Risk will be managed manually.
Balance between Equity and Growth
Equity Growth is what we focus on. Balance Growth just gives us an indication of space we need to trade optimally.
Conservatively, our monthly goal for semi-automated trading is 15% growth in equity for a spot fx account. Loss from outset will not exceed 5% of the equity.
Equity drawdown will be kept to less than 10% (or a month's growth).
If we succeed in accumulating profits to around 30% then we will be in a strong position to maintain the maximum gap of 20% between the balance and equity growth with the banked profits growing consistently.
We use hedging platform for spot fx and don't employ stop-loss. We will utilize 30:1 leverage (3.34% initial margin) as permitted by European Securities and Markets Authority (ESMA ) regulations. Presently we are using 20:1 leverage (5% initial margin) as permitted by Hong Kong SFC regulations without hedging which is not available on the Interactive Broker's platform.
Equity Profit Taker and Equity Stop Loss will remain in place all the time. If the net profit target is met, floating trades will be liquidated and no hedging will be done. Profit booking or Accounting period will depend upon the profit target. It could be daily, weekly or even monthly.
Usually, we don't take a prolonged pause in trading because we feel the equity should keep growing even when positions have been locked in to control margins and protect equity decay. That is why our losing trades take longer period to end. Around 4 times more that than that of the winners. This kind of unconventional hedging strategy does exert pressure on us, but we have extensive experience in making continual trade adjustments.
In options trading, we compare the returns with margins employed . We keep 50% as a buffer for trade rollover adjustment management. Target is 60% a year on the account or 120% on the margin.
In spot fx semi-automated trading, our focus is not on analyzing the market and catching any particular trend. The focus is just on managing risks. We will not use stoploss and hedging will be our main tool. The idea of hedging is to extend timeline and gain extra time for the market to move in our favoured break-even or profit zone.
Hedging spot fx is quite challenging. It is easier to handle a momentum-driven trending market than a volatile range trading one. Planning of the trading lot size and the quantity is important so as not to stall the trading when floating loss positions are locked in. Timing is very important. The holding period of losing trades also matters. Size of the profit target has to be chosen carefully to generate quick wins.
Options selling without any directional bias requires continual account monitoring and the account should have a buffer margin to handle the stressed unfavourable side of trading. While making the adjustments or rollovers, the focus is on getting financed by the credit received rather than shelling out money from the pocket. Traders like Currency Options guru Dr Naga Mummaneni, are known to have handled 10 consecutive runs of EURUSD moving in the same direction without taking any loss.
I have worked on Price following as well as price prediction setups.
I chose Brexit to trade and compare the returns. Symbol: GJ
Returns in Price following system (hybrid) were quite superior : 44% in 82 days
Returns in Price prediction (manual) were subdued: 32% in 82 days
Price following: I demo-traded on MT4 through an EA which entered trades based on fixed strength measurement . 2 pip per tick+min 4 symbols triggered both buys and sells within a few seconds with me being a mute spectator.
Trading started on 21 Jan and lasted till March 31 when I had the opportunity to take profit (Balance) and quit. However, as part of the testing process I continued and the profit (Balance) mark hit again on May 10 after a drawdown of initial equity 18% and absolute drawdown of 42% of balance equity.
How many trades were won?
Won 552 out of 602 trades
92% win rate
8% loss rate
Daily Pips gain average: 147 based on active trading of 50 days. 32 days of trading with drawdown .
Profit Factor: 2.74
Average Win: 15.79 pips
Average Loss: 27.07 pips
Lots traded: 127.92 for 50 days or 2.56 lots per day
Average frequency of trades: 12 trades a day
Average Trade length: 2 days
Commissions plus Interest fee: 30% of gains made because of trades remaining locked in drawdown .
Goal of Yearly target of making $50,000 profit from a capital of $20,000: 19% done in 82 days
Actual Statistics ( from Jan 21 to 10 May 2019)
Starting Equity: 20,500
Leverage 1; 200
Absolute Gain: 47.6%
Absolute Profit: $9766 on a capital of $20,500
80 days of trading (trading days in a year 240 estimated)
140 lots used during 80 days
600 trades turned over (90% won 10% loss ) 540 trades resulted in a profit
Gross: 9720 pips (TP 18 pips gross per trade)
Nett: 6480 pips (Nett TP 12 pips after spreads, swaps and commission costs)
Risk of ruin: 27 consecutive losing trades at 10%, 40 trades at 15% (outset loss).
No Stop Loss used, so Risk Reward ratio can't be established.
Total 615 trades (including 597 from Jan 21)
22 trades drawdown between 464-300 pips
25 trades drawdown between 300-200 pips
58 trades drawdown between 200-100 pips
91 trades drawdown between 100-50 pips
52 trades drawdown between 50-30 pips
37 trades drawdown between 30-20 pips
40 trades drawdown between 20-10 pips
23 trades drawdown between 10 - 1 pips
115 trades no drawdown
90 trades no drawdown recorded because of quick exit
67 trades no drawdown recorded exit between 1 second to 3 minutes
Exit accuracy: 100% -238
0% - 125 Not recorded quick trades
250 -150 pips - 3 trades
150-100 - 10 trades
100-50 - 29 trades
50-30 - 33 trades
30-20 - 60 trades
20-10 - 53 trades
10-05 - 50 trades
05-00 - 59 trades
00-00 - 228 trades
00-00 - 90 days quick profit
Price Prediction : Trading conducted on Interactive Brokers live and I don't have the kind of detailed statistics that are provided by journals like myfxbook.
Whatever statistics I have I am reproducing here by way of graphs: