MetaTrader Platform

MetaTrader is a standalone trading platform used primarily for trading Forex and also supports Futures, Stocks, and CFDs.

The MetaTrader platform has everything one would expect: trading, charting, technical analysis, etc. The company's foundation began with MetaQuotes, and over the years has brought them to MetaTrader 5. Hundreds of brokers support the platform, and if you have traded forex before, I assume you already are familiar with MetaTrader.

The software can be downloaded for free, then you simply install it, link your online broker account, and trade. The default setup is with FXCM, a popular forex broker, so if you do not have a broker account, this is the broker they sign you up with (I recommend StockBrokers.com for broker comparisons).

Quick note: I have never personally traded using MetaTrader, this is because I do no trade Forex or Futures, which is the platform's primary focus. For a list of the trading products and services I use, see my 2013 Trade Tools post.

Automated Trading

One of the primary reasons traders use MetaTrader is to build their own automated trading systems. These systems effectively analyze forex quotes or stock quotes and execute trades automatically; a trading robot if you will.

In fact, automated trading is such a big part of MetaTrader that MetaQuotes hosts an Automated Trading Championship each year. Traders build their own systems, enter them in the competition, and the highest return at the end takes the prize. Here are the results from 2012 Championship,

Trading Signals Service

Given the MetaTrader's community's focus on automated trading, MetaQuotes recently launched Trading Signals, a social trading / trade mirroring service provided through MetaTrader.

Using Trading Signals for MetaTrader 4 and 5, clients can pay for a system created by a fellow community member and run it thereafter to automatically trade their own accounts.

When browsing the available systems, I found there was little to choose from and the prices varied dramatically. I assume this is because the offering is new. 1 credit is $1.

Now, before becoming euphoric over the idea that you can purchase a system that will automatically trade your way to quick riches, a few key points should be immediately noted:

1. Forex can be is certainly is crazy is extremely risky. When trading stocks, typically you trade with whatever cash you have in your account or use margin to leverage up 2:1. Forex on the other hand utilizes leverage of up to 500:1. 
2. Automated trading is rarely a ticket to riches. Just because a system worked in the past does NOT mean it will work in the future. I repeat, past performance is not indicative of future returns.
3. Trading systems often used skewed data. If I had access to the weather data of every day for the last 100 years, I am sure with some data mining I could come up with a great stat such as, "On every 3rd Wednesday of the month during leap years in English speaking countries, the weather is sunny 52.63% of the time." I completely made this up, but the point is that when creating a system, the data can be skewed to show a desired effect.

For example, take a look at this system, Freak, which is currently featured 1st for its five star reviews. The system costs 1139 credits ($1,139) to buy. Note the performance data, because apparently this system turned $1,000 into over $17 million over the course of three years.

If this was the case, and this author, Freak Universe, had created an automated system that could turn $1,000 into millions, then why the heck would he or she sell it at all, let alone for a measly $1,139?

Now, take a look at this Free system, ADXSign. The system has as clear cut formula using a common market sentiment indicator, "Implementation of the Average Directional Movement Index (ADX) indicator described in the book 'New Concepts in Technical Trading Systems' by Welles Wilder."

While I have no idea if this system actually returns profits over the long haul, I have far more initial credibility off the bat for this system since it is using a clear cut formula that I can understand.

My Bottom Line

All in all, the concept of the Trading Signals services makes sense on a macro level: MetaTrader is a platform used by traders to create automated systems for trading forex, futures, etc, so now traders can sell their systems directly to the community and help others make money.

However, just because a trader made a system with a gazillion percent return using historical data, doesn't mean it will work in the future.

Forex trading is extremely risky business. The reality is that significantly more traders lose money than make money trading over the long haul.

With that said, for those trading Forex and Futures, MetaQuotes has been in the business for over a decade, their platforms MetaTrader 4 and MetaTrader 5 are supported by hundreds of brokers, and thus the platforms are certainly worth a consideration.

And, for traders who have been in the game for a long time, understand the risks, and understand how automated trading systems work, not too mention how to select winners, Trading Signals by MetaQuotes could be an asset.

For everyone else, me included, it's probably best to stick to buying and selling stocks and options.

Original post: Trading Signals for MetaTrader Review

A preliminary reading of the Thomson-Reuters/University of Michigan consumer-sentiment index for May rose more than expected to help fuel Friday's rise. And the Conference Board's Leading Economic Index for April increased, exceeding forecasts.

You can see with the indexes we continue to hover at or even above the top end of this channel it has been in (with the exception of a pitstop in mid April) since November 2012.  One of the stronger rallies in recent memory that is for sure.   In the S&P 500 a break over the double top at 1597 set up a strong move off the jobs report in early May; that turned into a 4 day bull flag from which we cleared over 1636 and now we did not even rest at the index level (although individual sectors had small corrections) just going sideways for a day before a new high.

To put in perspective how overbought the market is in a longer term sense, the lack of any correction since November has pushed the S&P 500 way above its monthly bollinger band.  This is a measurement popular in the land of technical analysis to mark overbought or oversold.  Here is a 15 YEAR chart of the S&P 500 - even in 1999 and late 2006/mid 2007 the index hovered at or just above the upper bollinger band.  You can see we are not hovering now - we have broken clear above.   So on a long term perspective, the inability for any meaningful rest for this market has led to the most overbought conditions in at least a decade and a half by this measure.  Rare air indeed.

Today was an excellent day for breadth as almost every sector participated.   Some interesting names below:

SolarCity (SCTY) which was founded by the same person who founded Tesla - Elon Musk has seen the speculative money flow into it of late.  It appears investors see the magic of Tesla and want to be in anything associated with Musk.  (For those who don't know Musk, he was part founder of Paypal - which Ebay eventually bought, founder of Tesla, founder of a service to send people into space, and even has been used as a reference for the character for Iron Man!)

There were breakouts in refiners (which should mean higher has prices at your local pump soon!)...

... in auto stocks...

... in energy related names....

You name it, it was moving.

The only area to really completely avoid right now remains the precious metals.  They have been a horror show in 2013, and remain so.

Original post: STTG Market Recap May 17, 2013

Here is a sampling of the economic data today - a few years ago this sort of cocktail would have led to a -2% type of day.

Weekly jobless claims jumped,climbing at the fastest pace in six months, according to the Labor Department. Meanwhile, housing starts fell 16.5 percent in April to a 853,000-unit annual rate. Adding to woes, factory activity in the U.S. mid-Atlantic region unexpectedly contracted in May, according to the Philadelphia Fed index.

The S&P 500 and NASDAQ had what are called "inside days" - that is simply a day of rest in which the index did not go above the previous day's high or low.  In fact the S&P 500 has not traded below the previous days low since May 1, quite remarkable.

All in all, a lot of bad economic news this week but the market continues to march higher.  A pullback to the most recent breakout area near S&P 1636 would actually be a nice change as these straight up moves with no consolidation create an unstable base to work from. But the index could fall all the way back to the major breakout level of 1597 and still be in a bullish pose.

The rotational nature of this market shows up in the NYSE McClellan Oscillator - even as the major indexes are mere points away from all time highs reached yesterday and at the top of their channels, we have a reading near 0 again.  So we are getting corrections in sectors, but as one sector sells off, another takes it place - hence the indexes remain uber strong.

A great example of this is the biotechs which today took it to the chin - the sector ETF (IBB) was down 2%, far outpacing the market.  If this market pattern continues in a few days they will be back to being leaders while something else corrects.

Here is the move in Cisco Systems (CSCO) today.  This once technology leader ramped to levels last seen in 2010.

In the currency markets most of the attention has been in the swan dive of the yen but lately we've seen a rally in the dollar.  In fact it's back to peaks of summer 2012.  A move over these levels would be an important trend change.

Meanwhile the very overbought 3D printing stocks took a break today as an analyst downgraded them - here are 3D Systems (DDD) and Stratasys (SSYS).

Both stocks were cut to Underperform from Market Perform by William Blair‘s Brian Drab this morning, writing that although he has a “positive outlook for the additive fabrication industry,” nevertheless expectations are too high for both companies. The shares fetch 45 and 49 times, respectively, his earnings projection for this year, which he notes is above long-term average multiples of 30 to 32 for both.  Drab attributes health in the stocks of late to media frenzy about the trend to low-cost manufacturing, and the limited number of “pure plays” to invest in — DDD, SSYS, and The ExOne Company (XONE), and the companies themselves have contributed to that hype

Original post: STTG Market Recap May 16, 2013

Our index charts just continue to grind higher along the top of their ranges; even the most minor of selling intraday is met with buying.

After the bell Cisco Systems (CSCO) reported and has jumped 8% in the after hours session to just under $23; this takes it to highs of the year.  There is nothing super special about the report but it's just bull market action:

The networking equipment manufacturer reported earnings of 51 cents a share, excluding one-time items, on revenue of $12.22 billion, edging past expectations for 49 cents a share on sales of $12.18 billion. Meanwhile, the company handed in current-quarter earnings guidance that matched Wall Street expectations and said it expects revenue growth of between 4 and 7 percent versus estimates for 7 percent.

Google (GOOG) exploded today as it announced plans for an online music service:

Google Inc. unveiled a streaming music service called All Access that blends  songs users have already uploaded to their online libraries with millions of  other tracks. Google made it available in the U.S. Wednesday for $8 a month to  early birds who sign up for service before June 30.

Tesla (TSLA) announced plans for a stock offering after the bell - usually this pushes the stock down, but it is actually up nearly 7% in after hours to the $90 area.   Unique here is the plan for the CEO to buy shares.

Tesla Motors Inc. said it is planning a stock and notes offering that includes plans for its CEO and co-founder, Elon Musk, to buy a chunk of the shares himself.  Tesla said that it will offer 2.7 million shares of its common stock and $450 million in convertible senior notes.  Musk plans to buy $100 million worth of shares at the same public offering price. About $45 million will be purchased in the offering and $55 million will  be purchased directly from Tesla. He currently holds about 27 million shares, nearly 24 percent of the company's outstanding shares.

On the not so happy side was Apple - which was most likely pressured by the Google news - after a nice rally off lows, it seems to be rolling over again.

Original post: STTG Market Recap May 15, 2013

Here is video of the first part of Tepper's interview:

http://video.cnbc.com/gallery/?video=3000168067

As for our indexes - they roared again to new highs. The S&P 500 broke out of a 4 day "bullish hammer" where S&P 1623 was the floor for those very short term oriented traders and once this index broke the upside of the 4 day range a flood of buying came in.

Obviously things are extended in terms of our channel, even as we are not immediately overbought on some secondary indicators.  But the bigger story is the indexes are in healthy condition after major issues in mid April and this allows for individual stocks to flourish.  We are due for some pullback at some point as this has been almost a straight shot 8% rally since the lows in April.

In a perfect scenario you want to see leadership from the cyclical sectors - we are now getting that, even energy joined along today.  Other areas: financials, consumer discretionary, and industrials.  We saw a bit of a rest today in technology but again as one sector rests, another takes over that day - that is bullish activity.

Original post: STTG Market Recap May 14, 2013

Retail sales rose 0.1 percent in April, better than the 0.3 percent drop that  had been expected and returning to growth following a decline in March.  Excluding autos, gasoline and building materials, core sales rose 0.5 percent.

Other than being near the top end of their ranges there is little to add to these index charts.  For the S&P 500 we now have a 4 day mini range where S&P 1623 has held as a low in each session; that would be a place to take note of for the very shortest term of traders.

Note the NYSE McClellan Oscillator got red hot middle of last week with reading of upper 58 and 60 back to back.  Now we have seen a correction in the market via time rather than price as certain groups fall back but other groups rally each day.  It is not apparent in the indexes but overbought stocks are correcting; this is quite healthy action.

After resting a bit the previous week, the biotechs have come back with a vengeance the past two days - this is exactly why the indexes continue to hold in - one group rests, another takes over.

A lot of short squeezes continue - the amazing run by Tesla (TSLA) continues.  Look at the volume spike the past 3 sessions.

It's CEO is also the chairman of SolarCity (SCTY) which is getting attention due to that space being hot and Elon Musk being affiliated with the company.

Netflix (NFLX) squeezed shorts yet again.

Original post: STTG Market Recap May 13, 2013

As for U.S. markets we continue to grind up almost every day - both the S&P 500 and NASDAQ are near/at the top of an ascending channel.

Here is the yen situation which many have their eyes on...

In return, Japan's market has been on absolute fire.

We are seeing far better internals than in late February through late April when defensives led the market.  Now we have small caps regaining leadership along with a host of cyclical sectors.

Further bonds have been hit very hard this week - for a while there they were rallying with stocks which has not been a common situation in the past few years.

Gold and silver continue to be poor areas to be even with all the quantitative easing going on.  Until something changes in their charts these are not areas to be exposed to.

Original post: STTG Market Recap May 10, 2013

Both the NASDAQ and S&P 500 are butting their heads with the top of their ascending channels....

The McClellan Oscillator came in nearly 30 points despite very mild selling; a bit surprising.

Aside from some names we mentioned with earnings in the after hours yesterday, the ramping of heavily short sold stocks across the market continued - popular names such as Sodastream (SODA) and Lululemon (LULU) had strong days.

Priceline.com (PCLN) reported after the bell, initial reaction was poor with the stock down 3% to the $715 area.

Priceline (PCLN) crushed first-quarter earnings forecasts, but shares fell 3% late Thursday after the online travel agency gave weak Q2 sales and profit guidance. The company earned $5.76 a share minus special items, up 35% from the year-earlier quarter. That beat the consensus of analysts polled by Thomson Reuters by 49 cents. Priceline beat by 23 cents in Q4 2012.  Revenue surged 26% to $1.3 billion, narrowly topping analyst views of $1.28 billion on strong international bookings. It was the second straight quarter of accelerating growth.  But for the current quarter Priceline expects revenue growth to slow to 15%-22%, with adjusted earnings per share of $8.87-$9.45. Those are below analyst expectations for 23.3% revenue growth on EPS of $9.58.

Original post: STTG Market Recap May 9, 2013