• ChampionHub (formerly SmartForex) has  a website at: http://www.championshub.com
• Forex Exchange Trading Education (FXTE) launches forex trading education in Singapore
• Another place to learn technical analysis at v3go
• KAIZEN Trading Systems introduces a new managed account trading service. Started by 2 good friends Seeni and Max. Max develops awesome EAs.
• Found AchieverLife from Facebook ads. Looks pretty new.
• ChartNexus has always been aggressive in giving free courses and at the same time selling their charting software.
• Normally I don’t list brokers as brokers usually only offer education to clients but I notice Phillip Securities is giving out lots of free education!
• SGX Education has always been rolling out education at meagre fees. Recently, the courses taught by ex-SIMEX floor traders Tom Yuen and Leonard Kok caught my eye.
• Ray Barros offers the Habit of Success Webinar but he also teaches in Singapore once a year. This year the seminar is changed to webinar due to personal reasons.
• SIAS has been offering education to its members. Membership fee is only at S$28 per annum. After signing up, we can get access to the education it provides.

Also don’t forget to check out the free Asian Investment Conference this mid July!

So sign up at the top right hand corner of blog to get the latest list of trading courses in Singapore!

In a presentation I gave to a group of over 140+, I talked about how I sieved out better quality trading resource. Traders who demonstrate success of their trading strategy/system with statistics always catch my attention. Scott Andrew is one such trader. Furthermore, he specializes in something close to my heart - GAPS. Yeap, I traded gaps for over a year before giving it up altogether.

During that time, I also did a fair amount of research on gaps. But I never thought of doing it Scott’s way. Well, in the first place, I was taught to trade gaps in a unorthodox way. Scott fades gaps primarily. He has with him tons of statistical research on which gap patterns are risky and which gap patterns have a high probability of winning. His statistics are significant because of the large sample size. I am blown away.

Now, Scott shares some of his research at his blog - this is free He also runs a paid service at MasterTheGap.com. But allow me to point you to the free Gap Trading Video section where videos related to gaps are posted up daily. A free great learning resource! You may also want to check out his presentation at the Traders’ Expo 2009 that talked about 10 patterns that every trader should know. Also check out his trading results.

I am truly inspired.

In my clarifications, he also mentioned the following points:

• For the charts shown, the same indicators are used for both entries and exits
• The same lot size is used for the experiment
• The timeframe used is the 4-hourly timeframe
• He performs this quantitative test every weekend on a rolling basis. Then he will send the information to his subscribers on Sunday or Monday, equipping his subscribers for the new trading week ahead
• Not all financial products exhibit repeated patterns. In his research, financial products that exhibit repeated patterns are AUDUSD, USDJPY, EURJPY, EURUSD, Silver and gold. USDCAD, USDCHF, oil and GBPUSD used to show repeated patterns but not in recent weeks

The gist of the method that he advocates:

• Certain currency pairs show repeated patterns with certain indicators
• However, the same indicators don’t work forever for the same currency pair
• We can use historical results to determine the indicators to use for the next week or so

I’d also like to highlight some challenges:

•  Which indicators to try next? - I believe it takes a bit of experience here to decide which indicators to try next since there are thousand and one indicators out there
• Subjectivity of backtest result - I queried with Brendan on why he did not select Commodity Channel (to trade with USD/JPY) since its equity graph is also a upward slope. His reply was: “Yes you are right CCI is working well as well but I see that equity values start to fall, this is why I rather not. But then again, it may work next week. I will monitor closely on CCI for USDJPY.”

Then again, I believe, if we do it long enough, we would have the experience to overcome the challenges.

Since Brendan shared such a valuable piece of knowledge with us, I also decided to return him a favour by advertising for his new e-book: “Our Trading Secret: BL TS System“. It is not everyday that one get to read a e-book written by a former bank trader - who else knows the trade more? With the focus on practical trading knowledge, I believe the book is a good read, especially now it is going at a promotional price of US$20 only!

Disclaimer: jmot does not get a single cent from promoting the above merchandise.

Information Overload

With the advert of the internet, web 2.0 and so on, we can find trading knowledge all over the place eg, blogs, forums etc. There are specialized websites that show us thousand and one trading strategies and even which candlestick patterns work better! And if we also look at the number of books, courses and seminars on trading available, we are really spoilt for choice. End up, i believe most of us have spent a hell lot of time reading and testing but yet to find THE working formula.

Teachers teach what work for them only

Then we begin to think: “Hey, perhaps I can spend some money (or a lot of money) to find someone who is already good in the trade to teach me.”. Recently, I realized that most, if not all, of the teachers teach what work for them as individuals, isn’t it? The chances of fully replicating a teacher’s trading style and strategy is near zero due to our unique up-bringing and cultural influences. Chances are one will need to attend a few courses and if he were lucky, he would be able to mix and match, and improvise what he had learnt to find THE WAY. What is needed: more time.

Rogue information

Some of our time are also sucked up by articles or teachers that teach rubbish.

Too many parameters to tune

I truly believe what’s underlying that makes trading difficult is simply because there are too many parameters to tune. By parameters I am talking about:

• type of instrument - options, stocks (local or overseas) , futures, forex, CFD, warrants etc
• timeframe to trade - 5 min, 15 min, 30 min, hourly, 4 h, daily etc
• lot size - a couple of position sizing techniques are mentioned in Dr Van Tharpe’s book
• entry strategy - which timeframe to enter, what and how many indicators to use, which candlestick/chart pattern to look out for?
• exit strategy - we have the same amount of choices as for entry strategy

If you were to mix and match the above, we have unlimited possibilities! Not to mention there are over hundred types of indicators and candlestick/chart patterns! Now, how much time do we really need?

Difficult to discuss

When aspiring traders come together, we usually talk about what work and what don’t. However, because of the short acquaintance, traders usually don’t spell out the entire context. For instance, a aspiring trader sharing with his friend may say: “The MACD indicator works for forex.”. But… in what timeframe, what parameters, which currency pairs etc. I think you know what I mean. And those who are listening to him may take his “recommendation” and go back to do their own testing and wasting time as a result.

When something doesn’t work it is normal

In my personal opinion, this is the most challenging issue to tackle. Let me illustrate with the following scenario:

I backtested a system, and it worked for historical data. And when I traded it live, things don’t turn out as well. Explanation: Well, past performance don’t gaurantee future result, market condition changes, anyway, best traders only have success rate of 60% at best, etc

If I come to think of it, we can’t have a clue to what’s working what not!?!?

Do you have any personal experience to share?

in post image by bensonkua

• InfinityYield Forex - equity curve tells us that we may not make profits every week
• BK Forex Advisors - equity curve tells us that we may not make profits every month
• Ray Barros - equity curve tells us that we may not make profits every year

So what does this mean?

To live off trading, we need a good sum of starting capital

Let’s use OptionPundit’s equity curve as case study. Let’s use his May 08 to Apr 09’s results for discussion sake. That will be average of 5.5% gain monthly (which is quite good!).

Let’s say I need US$5000 to maintain my family’s and mine current lifestyle. I would require US$90909 in trading capital.

We also need to cater additional funds for our livelihood

We have seen from the above equity curves that no trading strategy can guarantee profits weekly, monthly nor yearly. So, in reality, we will have to set aside funds to tide over those months when the trading account suffers from losses. Even if we look at OptionPundit’s equity curve, there was a month with 1.7% profit (not to mentioned -13% for Aug 08!) which will not give us the US$5000 to pay for our bills, mortgages, food etc.

So what is the GOOD SUM of capital to start with?

• Jorge from Investing Adventures feels that he will be comfortable to start with $200,000 
• Nerdyhomme estimates that USD$131,000 is the good amount
• Chris Perruna also suggests a six figure sum to start with

So our objective now as a part time trader should be accumulating that six figure amount so that we can trade full time. And…forget about starting with US$3000 capital and go full-time after demo trading for 6 months…

in post image by AMagill

Most, if not, all trading strategies don’t work

Now we have strategies based on fundamentals, technical indicators, mere price action, or even magazine covers… Have you ever come across a trading strategy that has a success rate of 80% or more? Now, I have to qualify this. If it is a trading strategy based on daily charts, then it has got to have that success rate for more than 3 years. If it is a trading strategy based on 5-minute charts, then it has got to have that success rate for more than 3 months. Ok, the above values are fictitious, but you get what I mean. The period for judging the success rate of that strategy has to be significant enough. One hit wonders don’t count.

If you subscribe to tradersinterview.com, you would hear that most of the successful traders trade with strategies that wins at most 60% of the time, and that is considered very good already!

Then came along a EXPERT expert advisor (EA) developer friend. Since he started EA development 2 years back, he had coded over 30 strategies into EAs (some from well-known forex educators too) and unfortunately, not many could even hit the 50% mark.

Most, if not, all technical indicators don’t work

For the same EA developer friend, getting EAs to backtest with technical indicators is a simple task. And when he does backtesting with an EA, he is not merely looking at 6 months or 1 year or historical data. He can get his EA to run over 5 or 10 years worth of historical data in 1 night! From his very mouth: “INDICATORS DON’T WORK”.

Trailing stops are not the most effective

This one is difficult to stomach. It seemed so profitable at first. You know, when you are profitable, keep on adjusting your stops as the price continues to move in your direction and capture as much profits as you can. This same EA developer friend (again!) has deduced from his EA that for the long term, trailing stops are not as effective as “soft stops” (This is proprietary, so don’t ask me what is it).  Mainly because it is tough to determine the right value to trail behind with as the market changes and this limits profits.

It is difficult for humans to trade emotionlessly

This is from Ray Barros. He shared that even traders at his level can also be affected by emotional disturbances. In particular, he shared an instance of how he forgot to put a stop when he had to rush to the airport on hearing that a relative is critically ill. In the end, a winning position turned into a losing position. How true, certain circumstances is really inevitable.

Position sizing is the key

If you had attended our meetup back in Feb 09, you would have already be blown away by a pro EA developer friend’s presentation. Here are his presentation slides (Registering for an account at Meetup.com and joining the Automated Forex Meetup group is required to download the slides). In essence, he showed the equity graph of trading a pivot strategy without and with proper position sizing. And the equity graph with proper position sizing applied is a up, up and away 45% equity graph!

Ebb and flow

This concept is up for discussion. Only 2 traders told me about this to date. Ray Barros discussed Ebb and Flow in his blog. Essentially, the concept behind is to take a larger position when things are going your way and vice versa.

Now, any other proven concepts that you would like to share?

in post image by ĻiĻ Pië

I wonder if a buy and a sell position at different price levels for the same currency at about the same time constitutes a hedging position too.

Nonetheless, I guess this will affect how some of us trade and may render some hedging EA useless.

This is the second big news that hit EAs. The earlier one was on IBFX introducing 5th decimal pricing. Big time on the EAs that were poorly designed!

New courses on the block:

• Price Pattern Forex by Benny Neo
• Millionaire Investor Program - The Warren Buffett Way by Ken Chee and Clive Tan

New course  review:

• Tactical Trading Academy by Brendan Lee

As usual, to download the above, subscribe at the top right hand corner of my blog.

Why Online Trading Education?

Time is the biggest problem nowadays for people. Most people who want to try trading are often busy with other aspects of life to take care of. They probably do not have the time to attend a course. Therefore, an online education is more suited.

Since it’s online, you can take your time to read and digest the information at your own pace. Also most of the basics of online trading can be found online for free. There are tons of websites that provide free courses and tutorials.

One of the most important part of an online trading education is real life trading environment. It is a fact that no matter how well you understand foreign exchange trading, the real deal comes when you actually start trading.

This is a guest post by Brendan from Tactical Trading Academy. Brendan is the founder and CEO of TradingEducationProgram.org. Brendan used to work as an investment manager in a hedge fund. Brendan’s forte is in forex trading, forex market analysis, technical analysis and creating simple, yet powerful forex trading systems. Read more about Brendan here.

Disclaimer: jmot is not affiliated and did not receive compensation of any kind from Tactical Trading Academy.