Making use of seasonal patterns in forex

January 31st, 2014

As those who have followed my work over the last several years are aware, I have done some research into so-called “seasonal” patterns in the foreign exchange market. This was motivated by observing a tradeable pattern in one of my favorite pairs and using it to make a fair bit of money. Out of curiosity, [...]

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Expectancy vs. MAR

January 29th, 2014

I had this question come in recently: Strategy A has better risk-adjusted returns (measured by Annual returns/Max Drawdown, aka the MAR ratio), but lower expectancy than strategy B. It manages to achieve this by having a larger number of trades, even though the backtest period is the same for both. Which of the two performance measures [...]

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Book Review: Beating the Indexes by Bill Feingold

July 23rd, 2013

A book about convertible bonds may not strike one as being particularly related to trading. There are aspects to it, though, which definitely fit. That’s why I decided to have a look at by Bill Feingold. The first part of the book is a bit scatter shot. It has the primary focus of outlining the [...]

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Book Review: The Secrets of Economic Indicators by Bernard Baumohl

July 22nd, 2013

It’s taken me about a year, but I’ve finally gotten around to having a look through the 3rd edition of Bernard Baumohl’s book . Now that I’ve done so, I really which I’d dug in sooner. This book answers the question a lot of new and developing traders have in terms of what economic indicators [...]

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I am desperate, says a trader

February 25th, 2013

I received the following note the other day with the subject “I am desperate”: Dear John. Thank you very much for your services, – you are doing a great job! The reason that I am writing you right now is that I am desperate to loosing a half of my modest $2000 option trading account [...]

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Credit card bans and the future of US retail forex

February 4th, 2013

Last week I brought up the subject of a prospective new NFA ban on the use of credit cards to fund accounts in retail forex. There has been considerable discussion about this, as tends to be the case any time the regulators come out with new rules (or at least plans for them). Once more [...]

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Forex Trading – Volatility, Regulation, and Survivorship

January 28th, 2013

There’s been considerable talk over the last few years about whether US regulators are killing (intentionally or otherwise) the retail forex business in the States. The latest round comes on the heels of word going around (thanks to LeapRate) that the National Futures Association (NFA), the industry overseer of most US forex brokers, is looking [...]

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Forex broker profitability figures likely overstate trader performance

January 21st, 2013

A couple weeks ago I began a discussion of retail forex trader profitability with my post Starting to detail forex profitability data, which generated some meaningful exchanges in places like (Trade2Win, FXStreet, and BabyPips). That post was really the tip of the iceberg, however. I am going to continue to post on the subject moving [...]

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Starting to detail forex profitability data

January 8th, 2013

Each quarter US forex brokers are required to report customer account profitability figures, a requirement which went in to force in 2010 (with data back to 2009). As of this writing, the most recent update available is for Q3 of 2012, which you can find over at Forex Magnates. On average, these reports show that [...]

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More evidence of wrong-way retail

January 3rd, 2013

At the request of my PhD supervisor, I’ve been working on a document that will no doubt be part of my overall dissertation. It’s meant to explain retail spot forex in an academic manner (meaning multisyllabic words and copious formulas), with an eye toward setting the stage for my research into individual trader performance from [...]

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Most Popular Essentials of Trading Pages in 2012

January 2nd, 2013

Every year I like to look back and see which blog posts got the most readership. Here is the overall list, which includes a number of oldie-but-goodie entries. An Introduction to the Fixed Income Market Most Traded Currency Pairs Forex is a Scam! Most Active Currency Pairs My Top 5 Trading Books Should I Become [...]

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Ideas for your 2013 trader reading list

January 1st, 2013

Happy New Year and welcome to 2013. Since I know many of you probably have gift cards for Amazon and the like burning a hole in your pocket, I thought I would help you spend that money by offering a up a few suggested purchases. Here is a list of the books which readers of [...]

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Book Review: Bond Girl

December 17th, 2012

Got an interest in Wall Street and want some fairly light-weight fiction to read? If so, this might be a book worth getting.

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Learning to ask the right questions about your trading

November 26th, 2012

I had the following note come in over the weekend. Not only does it say nice things about my book but is also addresses some very important points. Hi John, I bought your book because I’ve recently started trading index futures but my inner voice said something was not quite right. I started with a [...]

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Margins on forex hedges

November 20th, 2012

There’s a story on Forex Magnates about how FXCM has decided to require margin for forex “hedge” positions. That’s right. Even though these positions have no directional risk whatsoever (in as much as they represent complete offsets), the broker is going to require that margin be posted. Specifically, they will require the margin that would [...]

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Help to avoid setting your stops too tight

November 9th, 2012

I’ve written before on how tight stops make me nervous because too often those who employ tight stops are thinking about how many points or pips they are willing to risk on a given trade, having already decided how big a position they are going to trade (“I’m trading a standard lot of EUR/USD, and [...]

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The Rise of the Machines

November 6th, 2012

I recently came across the blog post Million-Dollar Traders Keep Getting Replaced By Machines and immediately got concerned. As the title suggests, it talks about how human traders are being replaced by algos doing their jobs. Now don’t get me wrong. I’m all for increased efficiency and cost savings and all that, but some caution [...]

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New book out from Market Wizards author Jack Schwager

October 31st, 2012

Jack Schwager is back on the bookshelves once again. Only a few months after the release of his latest Wizards book, , which came out in May, he now has . I had a note from Jack describing the new book in this way: Market Sense and Nonsense is my personal compendium of the widely [...]

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What the Crash of 1987 Taught Me

October 22nd, 2012

There’s been a lot of talk the last few days about the Crash of ’87, which is natural given the 25th anniversary passed on Friday. Plenty of other sites, news broadcasts, and the like have discussed what happened to cause the event, so I won’t bother going into that. I just want to share my [...]

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Update Digest for Week of 2012-10-13

October 13th, 2012

Updates from the past week shared via Facebook and Twitter: Investors Should Beware The Role Of ‘Availability Bias’ Just goes to show there can be flash crashes without algo involvement. There Was A Massive Flash Crash In India Here’s a pretty good discussion of different types of forex brokering platforms. After Shrinking All Year, Investors [...]

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Update Digest for Week of 2012-10-06

October 6th, 2012

Updates from the past week shared via Facebook and Twitter: Where are we in the volatility cycle? The starting research plan How Much Do Market Peaks Lead Business Cycles? A Basic Theory About Age And Investing Has Been Debunked On Safe Havens and Currency Pair Correlations The recency effect is one of the psychological biases [...]

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On Safe Havens and Currency Pair Correlations

October 3rd, 2012

I usually think the stuff put out by OANDA is pretty solid, but a post on their blog yesterday definitely fell short of that standard. Using their correlation matrix – which I do think is very useful and which I posted about on Facebook and Twitter not long ago – the author looked to make the [...]

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The starting research plan

October 2nd, 2012

I had my initial formal meeting with my PhD supervisor over the course of Friday and Monday to set the path for my research and development, at least initially. Basically, that means working out where I need to enhance my research skills (read econometrics in this particular case) and defining at least the basic framework [...]

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Update Digest for Week of 2012-09-29

September 29th, 2012

Updates from the past week shared via Facebook and Twitter: Can Traders Achieve a Work-Life Balance? Transitioned to England Rebalancing the Economy in Response to Fiscal Consolidation Lessons from Behavioral Finance If you like this post or find it informative, I encourage you to sign-up for the newsletter. Also subscribe to the blog feed and/or [...]

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Transitioned to England

September 24th, 2012

Well, here I am in England. Between moving out of my apartment near Boston, getting over here, and getting the admin stuff sorted out on this end it’s been an intense couple of weeks. Things are starting to settle out, though. By the end of this week I should have an idea of what my [...]

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Update Digest for Week of 2012-09-15

September 15th, 2012

Updates from the past week shared via Facebook and Twitter: 3 Things Everyone Gets Wrong About Valuing Stocks What’s the most important question you should ask yourself every day? What’s the second most important question you should ask yourself each day? A most-excellent Fed QE timeline EUR/USD on a Fed quantitative easing timeline A very [...]

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Update Digest for Week of 2012-09-08

September 8th, 2012

Updates from the past week shared via Facebook and Twitter: If You Love Charts, Then This Is The Coolest Room In The Entire World The Billion Dollar Day: A Forex Documentary featuring Chris Pavlou and Richard Hill at Barclays Bank (very old school!) It’s been boring, but now’s the time to watch EUR/CHF again Making [...]

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Update Digest for Week of 2012-09-01

September 1st, 2012

Updates from the past week shared via Facebook and Twitter: Where Has the Retail Investor Gone? Interest on Excess Reserves and Cash “Parked” at the Fed The most overrated and underrated economic indicators How many of these psychological reasons do you think also contribute to bad trading? 27 Psychological Reasons Why Good People Do Bad [...]

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Update Digest for Week of 2012-08-25

August 25th, 2012

Updates from the past week shared via Facebook and Twitter: This makes the case I’ve made repeatedly that teaching ability often is not correlated to trading performance… Crap traders can make great teachers Retail forex volume seen down 10.5% last month. No real surprise there. The History Of The World’s FX Regimes In One Infographic [...]

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Update Digest for Week of 2012-08-18

August 18th, 2012

Updates from the past week shared via Facebook and Twitter: Why Do Fed Officials Talk So Much In Advance Of Action? New Rules Of HFT Trading A bit more economics than trading, but interesting nevertheless STUDY: Financial Crises Always Come From Ballooning Private Debt Another market-related movie debuting this week. COSMOPOLIS (2012) – Official Trailer [...]

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Optimism in trading is good, to a point

August 15th, 2012

Jess at Rogue Traderette recently posted on the subject of optimism as a key requirement of traders for long-term success. I tried leaving a comment, but it was either lost in the system or deleted, so I figured I would post my thoughts here. First, I generally agree with Jess that a certain sense of [...]

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Update Digest for Week of 2012-08-11

August 11th, 2012

Updates from the past week shared via Facebook and Twitter: Run Your Own Race Like this forex heat map, but could do with variable time frames 13 Things They Didn’t Tell Me About Being A Trader Here’s some fun conspiracy reading The 12 Most Infamous Economic Conspiracy Theories OANDA defends its policy not to offer [...]

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Update Digest for Week of 2012-08-04

August 4th, 2012

Updates from the past week shared via Facebook and Twitter: How to Become One With Your Trading System NY Fed just released results from its semi-annual forex volume survey If you’re curious about how futures margin requirements have changed over time, check this out. Stocks seem to be following a predictable election year pattern Insights [...]

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Update Digest for Week of 2012-07-28

July 28th, 2012

Updates from the past week shared via Facebook and Twitter: The Li(e)bor Rigging Scandal Infographic For Dummies Q2 2012: profitability of forex traders keeps dropping, OANDA back on top Someone forgot that Treasury, not the Fed, does USD exchange rates. Not that the Fed can’t influence them their way … Merrill: Fed’s nuclear option–selling dollars? [...]

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Responding to a Forex Rant

July 26th, 2012

What you are about to read below came from a comment that someone left. The spam filter caught it, and likely with good reason given the lack of a real name associated with it. Basically, it’s a rant against trading forex. There are some legitimate points made, but also so errors. I figure it represents [...]

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Update Digest for Week of 2012-07-21

July 21st, 2012

Updates from the past week shared via Facebook and Twitter: What FCMs can be trusted by futures traders? 3 Psychological Differences between Demo and Live Trading Calls are coming for UK regulators to put caps on leverage available to retail forex traders Time for regulator to move on retail FX trading Would you add any [...]

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Update Digest for Week of 2012-07-14

July 14th, 2012

Updates from the past week shared via Facebook and Twitter: Another futures broker demonstrates that even regulated markets have major risks. NFA publishes MRA action against PFG – over $200 million may be missing RT Before our IT guy (and everyone else got the boot) he “unlocked” the site @SFOmag back issues here no login [...]

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Update Digest for Week of 2012-07-07

July 7th, 2012

Updates from the past week shared via Facebook and Twitter: This relates to the review I posted of Broken Markets a couple weeks ago… Joe Saluzzi: HFT Parasites Are Killing The Market Host Taking a Look at What the Commodity Currencies are Saying How would you rate the Wall Street/trading movies? I think there’s at [...]

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Update Digest for Week of 2012-06-30

June 30th, 2012

Updates from the past week shared via Facebook and Twitter: Trading as Character’s X-Ray Budding student trader query No Surprise from the Fed, But Signals at Risk on Twist Extension Battling HFT in the forex markets I did a poll on per-trade risk back when I was Content Editor for Trade2Win. Some interesting results A [...]

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Battling HFT in the forex markets

June 26th, 2012

I just had something come across my desk that is really interesting and ties in with the stuff in the book Broken Markets which I posted a review for the other day. One of the issues brought up by the authors of that book is the impact of decimalization on the stock market since its [...]

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Budding student trader query

June 25th, 2012

The following was posting on a trading forum site. Hello all, im looking to start trading, i am going to try trading full time in July and August and then part time when i return to university in September. I have £1000 set aside to begin do you think this is adequate? I am going [...]

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Update Digest for Week of 2012-06-23

June 23rd, 2012

Updates from the past week shared via Facebook and Twitter: The False Deities of Economists If you’ve got a bit of time, give this a read. The Widespread Economic Myths Destroying the Economy Risk Tolerance and How It Affects Your Investment Strategy How to tell if you’re over-trading This relates to a book I’m currently [...]

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Book Review: Broken Markets

June 22nd, 2012

A critical look at the actions and impacts of high frequency trading in the US stock market with thoughts on how to fix it.

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Dang! I did it again

June 21st, 2012

A very experienced trader who shall remain nameless made a rookie mistake yesterday. This individual put on an option trade by way of rolling forward a long trade from a well in the money strike price to something at the money in order to lock in gains and reduce risk. Basically, the plan was to [...]

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How to tell if you’re over-trading

June 20th, 2012

A trading forum poster recently asked the question “How do I know if I’m over-trading”. Over-trading is a trap many of us fall into, especially during our early developmental stages in the markets. At that point we haven’t gotten a hold on the emotional side of things quite yet (though sometimes we don’t even realize [...]

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Update Digest for Week of 2012-06-16

June 16th, 2012

Updates from the past week shared via Facebook and Twitter: Book Review: Hedge Fund Market Wizards The Biology of Bubble and Crash What Traders’ Testosterone Tells Us About Markets I don’t necessarily agree with all the conclusions, but there are good points in this post: Everything You Know About Markets Is Wrong? You got yourself into [...]

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One broker is so nervous it’s shutting down

June 14th, 2012

The following got mailed out to customers of the forex broker Oanda yesterday: Due to the extreme volatility some market analysts foresee could result in the coming days, OANDA fxTrade will not accept any trading activity from 6:00 AM EST until approximately 3:00 PM EST, on Sunday, June 17, 2012. OANDA believes the convergence of [...]

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You got yourself into this mess; get yourself out

June 13th, 2012

One of the guys at ForexLive posted this Tuesday: Don’t ask us what we think of your trades. They suck. That’s why you’re asking us… You got yourself into this mess; get yourself out… It’s snarky, perhaps, but it makes an important point. If you’re asking someone else for advice on a position you’ve put [...]

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More than just basic free trading advice

June 12th, 2012

In the process of preparing for the review of Hedge Fund Market Wizards I posted yesterday I went back and read some of the reviews of prior Market Wizards books. I have long been an advocate of the series, and remain so with the addition of the new book, it’s worth seeing what those who [...]

Posted in The Basics, Trader Resources, Trading Tips | 1 Comment »

Book Review: Hedge Fund Market Wizards

June 11th, 2012

This latest addition to the the Market Wizards series is a good read no matter where you are on the spectrum of market experience.

Posted in Trading Book Reviews | 3 Comments »