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Trading signals and softwareThe FOREX Marketplace You cant always get what you want, and if you try sometime you find you get what you need. Rolling Stones The growing popularity of FOREX trading has spawned a very large online marketplace of products and services. Sorting through this vast plethora of information is a daunting task; services come and go rapidly, changes and upgrades are frequent, and the sheer volume is constantly increasing. Most of the material may be divided into these categories: Portals, forums, and reviews Charting and technical services FOREX education Trading signals and software News and announcement boards and calendars Live data streams Historical data System development tools Management services Odds and ends Broker-dealers often partner with third-party vendors. For example, a broker-dealer may offer a charting service that will integrate into its trading platform and vice versa. The selection and reviews in this chapter are intended as a sampler of what is available. The inclusion of a web site should not be considered a recommendation of it, and the exclusion of another should not be considered disapproval. Space is limited. My editor works on a one-martini-lunch budget, and I am reminded of it constantly. Reviews of all the services now offered would require a complete booka very large one. I have generally omitted categories not pertinent to beginners, such as robots and automated order-entry tools. My emphasis is on web sites with content for traders who intend to do their own thing, although I have included a section on money management for those who wish to explore the option of having a professional trade FOREX for them. I have endeavored to exclude web sites with annoying pop-ups, but always beware; a reliable pop-up blocker is recommended when cruising the Internet. Almost all of these web sites have advertisements; many of them are quite obtrusive and distractive. Welcome to Capitalism 101. Organizing Your Bookmarks There are several good programs for organizing your web site links. Bookmark Buddy, www.urlorg.com: Most FOREX web sites offer content on more than one of the subjects listed above. Ive found Bookmark Buddy to be very good for organizing this information with its Category/Sub-Category/Bookmark arrangement. The purchase mechanism is convoluted and time-consuming, but it is a good product. LinkStash, www.rosecitysoftware.com: A new flavor, the social bookmark, assumes someone else can surf the Web better than you can or that a thousand surfers are better than one, www.del-icio-us.com. The Onfolio, www.onfolio.com: A bookmark organizerperhaps the best ever offeredwas purchased by Microsoft and is now integrated into the Microsoft Live Toolbar. You must download the toolbar before you can download and install Onfolio. Unfortunately, some of the features were stripped away, including the wonderful Publisher tool. Go slowly when installing anything from Microsoft. If you do not deselect options you will be accepting all sorts of MS services, not the least of which is changing your default web site! Cross-Category Services To make things even more interesting, many services fall within two or more categories. A single service may offer trading, charts, technical services, data, and development tools such as www.strategybuilder.com, www.tradestation.com, and www.dukascopy.com. Portals, Forums, Reviews These sites offer link lists (directories) as well as reviews of FOREX services, products, and broker-dealers. Forums allow traders to communicate on a variety of issues and have become enormously popular. As anyone who has surfed the Internet realizes, there is enormous crosspollination of links. If you find one or two good directories or link lists on a subject, they will lead you to many others. The key is keeping everything organized so you arent constantly backtracking or cruising down dead-end cyber roads. Regarding Broker-Dealer Reviews Traders are more likely to complain than compliment. A small sample of reviews may not be meaningful. The same information from different web sites is generally most reliable. In doing a broker-dealer due diligence (Chapter 7), it may be a good idea to throw out the top one or two reviews and the bottom one or two reviews to make the sample more reliable. Look for issues occurring multiple times on more than a single review board over a significant period of time. Focus on broker-dealers who meet your initial requirements as a trader. As you zero in on two or three prospects, dont be afraid to e-mail them and inquire about issues on the reviews of concern. How they respondor even if they domay tell you as much as what they actually say. Forum Dos and Donts Do carefully read the forum rules before subscribing. Read your posting over once or twice before submitting. Dont say something on a forum you would not say in person. Before posting, check your facts, and be sure you can substantiate the information. Do not waste your time engaging in polemics with professional forum trawlers who have nothing better to do. Forums can be very useful, but dont get hooked on them; they are addictive. I take one hour each week to scan the forums. www.global-view.com: This is the granddaddy of FOREX portals and forums, and is loaded with excellent content; a recent web site redo makes navigation easier. If you are new to FOREX this web site is a one-stop-shop. Jay Meislers site also offers excellent links, educational, and resource and advisory tools. Unlike most others where new traders reign, many of the industrys movers and shakers frequent the GVI forms. Jay, like many forum operators, is a stickler about his rules and etiquette. (See Figure 13.1). www.goFOREX.net: Operated by Steve Moxham from New Zealand, this is a fine resource, with a new design; slick and well organized. The Articles repository is superior and the Links directory is representative. It is becoming somewhat commercialized, but that is the name of the game in portals. I was booted from the Askan-Expert e-column for my nonmainstream ideas but it is still a must-see beginners reference. Source: Global Viewpoint, Inc., www.global-view.com. www.fxfisherman.com: Relatively new. Not very well developed but active forums with an emphasis on MetaTrader. www.moneytec.com: Perhaps the most popular of the forum web sites. It also is a portal. Some people love it, some dont. (See Figure 13.2.) www.FOREXpeacearmy.com: Formerly www.forexbastards.com. Felix Homogratus web site. Recently redesigned and solid content. The most active review board around todaybrokers, signals, and education topics. Felix promotes his own servicesthey are excellentbut makes that clear to avoid conflict-of-interest issues. www.currencysecrets.com: Great coverage on specific topics but lacks breadth. www.FOREXreviews.org: Read reviews on FOREX brokers, trading signal providers, courses, eBooks and managed FOREX accounts. Limited content but clean format. www.piptrader.com: Strength is reviews but an informative portal, also. www.FOREXfactory.com: Excellent and very active forums. www.fxstreet.com: Excellent content and a longstanding member of the FOREX online community. www.trade2win.com: Lots going on here but very commercial. www.FOREX-ratings.com: Relatively new. Not much action but shows promise; especially reviews. www.dailyFOREX.com: Strength is reviews. Brokers rated by a number of useful categories. www.FOREXmagazine.com: This site started strong but appeared in stasis at the time of this writing. Leland Liu had a good concept; I hope FOREXMagazine is able to get rebooted. Charting and Technical Services These services generally are combined into a single entity especially if they are live, but not always. They can be expensive and are difficult to justify if you are, for example, trading a mini-account with $500. A significant issue is how your charts will integrate into your trading platform. If you are using a live chart service, the data stream may be different from the data stream on which you enter orders with your broker-dealer. It is best if you can integrate your charting service into your trading platform or at least your broker-dealers data stream. In Chapter 7 I noted the broker-dealers who offer integrated third-party charts and technical tools. For many traders, the charting and technical tools offered with the brokerdealers trading platform are sufficient. Next best is a third-party vendor whose service is integrated into the brokers platform or at least reads the brokers data feed. Dont be overwhelmed. As a new trader Keep It Simple is your touchstone to success. Chart services are either (1) live, (2) daily (End-of-Day), or (3) historical. Some services offer a combination of chart types. Most live services and daily services offer historical charts. Daily data is not of much use to the FOREX trader. I suggest the new trader try to be happy with his or her broker-dealers charts, at least initially. www.Intellichart.com: Superior charting service with a strong set of tools and parameter settings. The service is named FXtrek and integrates with several broker-dealer platforms. Customer service a weak area in FOREXis lightning fast at IntelliChart. (See Figure 13.3.) A simple scripting language for testing new trading tools is in development. I would not be without it. www.esignal.com: This service has been around for many years. Its early life was difficult but it is a reliable service today. It caters to stock and commodity traders but offers a wealth of charts and technical tools; a FOREX data stream is available. Their Formula Script 2 (EFS2) for development of technical indicators and methods is weaker than TradeStations EasyLanguage. The web site is difficult to follow, and I found sales support poor. www.tradestation.com: Like eSignal, a difficult early life but solid now. Strength is to stocks and commodities, but they offer both trading and a FOREX data feed (through Gain Capital). For system developers, their EasyLanguage script is well developed and documented. Support is excellent. www.metastock.com: Now owned by Reuters. MetaStock integrates with several retail broker-dealer trading platforms. Live or EOD. A popular question on forums is Who is a good MetaStock broker? indicating the charting service is worth sticking with even if the broker is a disaster. www.dailyfx.com: Online charts in a Java environment. www.barchart.com: Offers stock, commodity, and FOREX charts. EOD and historical. Web site is confusing, but the charting services are very good, and customer support is decent. FOREX Education Most of the larger retail broker-dealers offer some level of educational experience for beginners. Supplement any training or mentoring you do with at least mini-account trading. Experience is the ultimate teacher. www.FOREXlearner.com: FOREX portal for beginners. Very well organized content. www.hawaiiFOREX.com: This Introducing Broker offers an integrated educational tract along with their FOREX trading services through GFTFOREX. Derek Ching works hard to find the best instructional programs and does very substantial due diligence before offering a new service. His current program is based on the technical analysis work of Joe DiNapoli. Perhaps your accountant will approve expenses for a trip to Hawaii for one of his excellent seminars. Aloha! http://www.FOREXinterbank.com/: This is a very comprehensive training and mentoring program with some good reviews. http://www.theFOREXtrader.net/: Basic tutorials and beginner articles. http://www.FOREXtradingandeducation.com/: Tutorials, coaching, and mentoring. www.FOREXforay.com: This web site has a page of FOREX calculation links. Good practice to get your feet wet making and understanding basic FOREX calculations; www.FOREXcalc.com has a good instructional video with their calculator. You may also use the Demo trading platforms of most broker-dealers for practice. http://www.babypips.com/: A truly excellent beginners resource. Well maintained and organized. (See Figure 13.4.) COLLEGE Multiple Trading Personality Disorder Trading News Market Sentiment U.S. Dollar Index Carry Trade The Lazy FOREX Traders Way to Riches Be a FOREX Traders Not a FOREX Sucker The Number One Cause of Death for FOREX Traders Trading Signals and Software This is a huge market today. It speaks to some degree to peoples desire to make money without effort. I recommend beginners roll their own with a KIS system of charts and a few indicators. With these products the question is: If its so good, why are you selling it for $99.00? These may be subdivided into either manual or automated tools. I am not convinced of the appropriateness of automated systems for beginners. I have been trading since 1973 and still dont trust automated execution programs. ServicesInternet-Based www.FOREXdiamonds.com www.secretFOREXsociety.com www.secretnewsweapon.com Three services are offered by Felix Homogratus who also operates www.FOREXpeacearmy.com, an excellent general resource for signal and software. If you trade the news, you should definitely consider www.secretnewsweapon.com as an execution-timing tool. Technical Analysis-Based Service I offer these as a sampling of what is available. Request as much documentation as possible along with referrals. Try to determine how the services do in a wide range of markets. A reasonable possibility is to use a service as a check on your own trading method. www.kingFOREXsignals.com www.cashmonster.com www.fxtrendtrader.com www.gfsignals.com SoftwareDesktop-Based Because retail FOREX is an online experience, there are more vendors of signals than of software. www.stealthFOREX.com www.leveragefx.com News, Announcement Services, and Calendars Most broker-dealers offer a news and announcement service, and it is enough for most traders. My take on the news is this: Dont try to trade it, but watch how the market reacts to it for trend indications. Remember the initial price impact of news is often dramatic, but it may take several hours to be fully absorbed. It is not uncommon for prices to react sharply in one direction initially, then gradually trend in the opposite direction for much of the trading session. This phenomenon is called Price Trace Dispersement (PTD). It is quantifiable and useful to traders. Your daily trade plan should always note relevant news and announcements for the pairs you trade. If you must trade the news, use one of the news trading tools available. Perhaps the best is Felix Homogratus www.secretnewsweapon.com. www.global-view.com: Offers an e-mail calendar to subscribers. www.econoday.com: The best subscription service for serious traders. They offer a few basic services at http://basic.econoday.com. If you trade on fundamentals, here is the depth of information you require. www.tradethenews.com: Offers a News Squawk (audio) service through your computer speakers. Close your eyes, and its 1970, againsquawk boxes were a feature of old-time retail brokerage houses! www.FOREXeconomiccalendar.com: Well organized and useful news web site. www.afxnews.com: Out of London. Very comprehensive news source. Live Data Streams Live data streams typically come bundled with some other service such as live charting. If you receive the data stream or feed by itself it is called an API. Most broker-dealers offer an API service, but it is not inexpensive or is only offered to clients with large accounts. API data streams are used if you plan on developing your own trading system(s). APIs also drive web-based tools, or applets. Similar to a charting service, your API should closely match the feed from your broker-dealer, otherwise your trading signals will not match the prices offered to you on your trading platform. The best solution is to get the API from your broker-dealer for system development. Dont mess with this unless you are an experienced programmer. Integrating data I/Os and caching algorithms are not for the squeamish. If you plan on purchasing an API for system development, be sure you can receive thorough documentation and support; each has their own little quirks. You will also want a good communications channel with the vendors technical people. The primer development tool, NinjaTrader, www.ninjatrader.com, offers live data from Gain Capital but can interface with many others. www.oanda.com: An excellent API from a broker-dealer but pricey. www.hotspotfx.com: Their API is available to traders who generate significant daily trading volume on a monthly look-back basis. www.netdania.com: Excellent and expensive. www.olsendata.com: Also good. Also expensive. www.cqg.com: One of the oldest data vendors and very reliable. www.tenfore.com: Very expensive, but most are in this category. www.efxgroup.com: Their API is free for proprietary applications. Historical Data If you are developing a trading system, begin with historical data available by CD or download. It is much less expensive than an API. You also at least postpone the programming headaches of an API. Most charting and testing platforms also offer historical data. A strong correlation with your brokers data feed is not as important for systems testingif you use a sample including a wide range of market environments. www.disktrading.com: Not the cleanest data available, but the price is right, and customer service is very good. www.dukascopy.com: Dukascopy offers many FOREX services. It is somewhat difficult to decipher all their web site offerings and how they are related and priced, and I found support to be unsatisfactory to my needs. www.csidata.com: A seasoned and reliable vendor. Clean data but currently only EOD. www.cqg.com: Also offers historical data. www.snapdragon.co.uk: Exceptionally clean historical data but not cheap. Offers other excellent services to the FOREX trader and developer. Founder Adam Hartley is very knowledgeable and helpful. A new product offering integrates TradeStation with Oanda. System Development Tools Somewhere over the rainbow is the perfect trading system; I hope you find it! When testing any trading systemyours or someone elsesbe sure to test it over a wide range of market environments. The article Backtesting and Market Environments is available from www.fxpraxis.com in the Currency Codex area. Most back tests fail in real time because the test data is not representative of a wide range of market environments. www.ninjatrader.com: NinjaTrader is a free application for advanced charting, market analytics, automated strategy development, and trade simulation. Many traders already consider it to be the Cadillac of system development tools, because it does everything and does it all well. Traders can use live data from Gain Capital, TradeStation, eSignal as well as many other broker-dealers and data vendors. It includes a very nice strategy wizard for basic strategy development and uses NinjaScriptTM, a C#-based scripting language for advanced work. Support is awesome. NinjaTrader charts visualize all your orders and positions in addition to standard market data. All your working orders, positions, and executions are plotted on the chart with bars and intelligently marked labels. With NinjaTrader Charts, you can instantly see how far or close your stops and targets are relative to key support and resistance levels. From www.ninjatrader.com. www.equis.com: MetaTrader. Very popular and integrated with many broker-dealer platforms. A common comment on the forums, I like MetaTrader, but the broker is awful. www.FOREXtester.com: FOREXTester is also a new kid on the street and trying harder. FOREXTesters software simulates actual market conditions with historical data for strategy testing; think of it as a flight simulator for FOREX traders! It has a great deal of potential because it integrates with a full-featured Pascal-like programming language, Delphi 7, and also C++. Support is superior; a refreshing surprise in this industry. Condition1 = Low Low of 1 bar ago; Condition2 = Close Close of 1 bar ago; If Condition1 and Condition2 then Buy; About EasyLanguage Since its introduction just over a decade ago, EasyLanguage has become an industry standard used by professional traders to test trading strategies. FOREXTester allows traders to reproduce historical currency rate fluctuations with the regulated speed of price updating. Thus, a trader can make trading decisions on history, manually test trading ideas, and monitor trading results in the form of trading statistics and equity line. www.tradestation.com: Tradestations EasyLanguage is very well developed. There is a significant amount of documentation and literature, as well as third-party programmers. You may wish to have someone write a trading method for you from your own basic idea and design. www.esignal.com: The eSignal scripting language is called EFS2; eSignal is a third-party vendor at different levels for several brokerdealers. Some traders love eSignal, some do not. My experience in attempting to gain information about their products from them has been uniformly poor, and I find the web site confusing. www.gordago.com: An easy to use visual systems-building system although the toolset is not extremely robust. Good for the nonprogrammer who simply desires to manipulate indicator batteries. www.wealth-lab.com: Advertises for stock traders, but I assume it can be used for currency trading. Lots of documentation and help online but the web site appears somewhat chaotic. Probably worth digging deeper, however. www.strategybuilder.com: Currently a contender with TradeStation and MetaStock for the most popular venue in this category. FOREX Managed Accounts The premise of this book is that you desire to make your own FOREX trading decisions. It is also possible to have your account managed by a professional money manager. Be leery of managed accounts promising too much. Fifty percent a yearconsistentlyis big money. $10,000 invested is over $75,000 in five years at 50 percent, $320,000 at 100 percent. Look for consistency in performance more than how much a manager made in his or her best year. Generally, the more the manager aims to make, the more risk involved. Carefully analyze a managers performance, and look for market environments that may be an Achilles heel. See Chapter 16 for more on market environments. Be sure costs are subtracted from gross performance. Costs will also give you an idea of how frequently the manager trades. Inquire if the manager is participating in the brokers pip spread income. Such an arrangement might encourage a manager to trade frequently. Managed accounts may be individual or aggregated in a fund. Fund participation typically begins at $5,000 and individual managed accounts at $25,000. Most of the major broker-dealers offer management services. They have already completed a thorough due diligence, but do not let that stop you from doing your own. The CFTC does not currently require FOREX money managers to registeras they do futures money managersso it is up to the client to do his or her own research. Two Approaches to Performance Analysis Performance analysis asks this core question: How much can I make for how much risk?; basically, this is the Risk/Reward Ratio of a money manager. The conventional approach to performance analysis has become extremely complex, involving numerous mathematical and statistical methods and ratios. The most common is the Sharpe Ratio. Sharpe Ratio This popular performance ratio was developed by Nobel laureate William F. Sharpe. The Sharpe ratio typically is calculated by subtracting a risk-free investment rate, such as the 10-year U.S. Treasury bond, from the rate of return for an investment or portfolio, then dividing the result by the standard deviation of the investment or portfolio return. Sortino, Calmar, and Treynor are some of the many alternatives to Sharpe. I use Market Environments (ME) to analyze performance. ME divides all markets into functions of Directional Movement (DM) and Volatility (V). If each is rated on a scale of 1 to 10 from very low to very high, it gives a matrix of 100 market environments (10 10). Look for money managers who have done well in a broad spectrum of MEs instead of just a scattered few. Performancegood or badthat clusters in a mostly contiguous area of the matrix can tell you much about the managers trading methods. See Chapter 16, Tactics and Strategy, for more on ME applications to trading. The Big Three all offer a number of money management programs. Peter Panholzer One of the most respected names in the managed FOREX business is Peter Panholzer. Mr. Panholzer is the founder of Dynex Corp and commands the fees and account minimums that long-term success in the markets confer. A number of companies track individual and fund FOREX account performance. www.parkerglobal.com www.managedfutures.com www.mainfo.org Odds and Ends Spread Betting It has been said that retail FOREX market makers are essentially bookmakers. You might wish to consider spread betting on currencies. Be sure to check the legality of spread betting where you reside. www.deltaindex.com: Originally iPan, deltaindex.com offers spread betting on a wide range of financial instruments, including foreign exchange. www.fxbt.com: This web site offers binary options in a number of markets, including FOREX. You take a yes or no side to a financial question such as, Will the EUR/USD go over 1.3700? Or you can speculate on the likelihood of a hurricane. Government regulated and open only to U.S. citizens. www.hedgestreet.com: Trade the political, financial, and weather events that make up at least part of the fundamental picture for currencies. www.intrade.com: Many retail firms offer contests for clients only. The ones below are free to enter. FOREX Search Engine www.search-FOREX.com: A FOREX-specific search engine. Online Encyclopedias www.investopedia.com: Superior reference on technical analysis, charting, and other aspects of trading. www.linnsoft.com Magazines and Newsletters Almost every magazine and newsletter today is either online or available online. Gone forever are the good old days of the hardcopy Harry Schultz Letter, Dines Letter, Holt Advisory, and Myers Energy and Finance. www.currencybulletin.com: An interesting FOREX Newsletter/ Advisory with a very long track record in FOREX. www.TradersJournal.com Online FOREX Magazines www.currencytradermag.com www.euromoney.com www.e-FOREX.net: By subscription, pricey but excellent if you are serious about the inner workings of the FOREX industry. www.tradersjournal.com: Dickson Yaps Traders Journal is not devoted exclusively to FOREX but offers a wealth of information on technical analysis. These four periodicals offer articles on FOREX and technical analysis. Futures is just a shell of its former self; the glory years were when it was edited by Darrell Jobman, but it still offers occasional content of value to currency traders. www.futuresmag.com www.activetrader.com www.traders.com www.fxweek.com Books I would be remiss if I did not accord especial mention to Ed Dobsons Traders Press, www.traderspress.com, which has been around for decades. They carry a number of FOREX-specific books as well as hundreds of newly published and reprinted books on technical analysis. www.traderspress.com www.forex-books.com www.global-view.com For specific titles and out-of-print books, see www.abebooks.com, www.amazon.com, www.bn.com, www.alibris.com, and, of course, www.ebay.com. Summary As I stated at the beginning of the chapter, this is but a small sampling of what is available to the currency market participant. Armed with these links and a reliable bookmark manager, you should be able to navigate to almost anything in the burgeoning FOREX marketplace. Begin with some idea of what you want and need, but be open to new ideas, also. |
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