Metatrader Programming Lesson 3

I've been producing a series of Metatrader programming videos for a private forum which I thought that I would share here. They're designed to take people from scratch through to being able to program EA's, scripts and indicators. 

This lesson is on if statements and selecting orders.

MetaTrader Programming Lesson 2

I've been producing a series of Metatrader programming videos for a private forum which I thought that I would share here. They're designed to take people from scratch through to being able to program EA's, scripts and indicators. 

Lesson 2 of the programming series. This one is on variables and functions.

MetaTrading Programming Lesson 1

I've been producing a series of Metatrader programming videos for a private forum which I thought that I would share here. They're designed to take people from scratch through to being able to program EA's, scripts and indicators. 

Lesson 1
How to write your first script

Naked Forex Now

The Naked Forex Now forum is a great forum that has been set up by Walter Peters, author of the book "Naked Forex - High Probability Techniques for Trading Without Indicators". His background is in psychology but he got bitten by the forex bug and has spent many years researching and developing his trading approach. His main idea is to throw away all those indicators and just to rely on price action itself, hence the "naked forex" in the title. What is so refreshing about his site is that he doesn't preach trading in any one style, rather the idea is that one should come to ones own method of trading that suits one's own personality and his site is all about going through that process. Firstly, I should mention that this is a private forum for which you pay a fee to access it. Whilst many wannabe traders may balk at this prospect I suggest that you at least read through until the end before dismissing it out of hand.

The site is set up in different sections. To start with there are the "house experts", currently Mr. Peters himself, Darren Littlewood and Jorge Espinosa who each have a different trading style. They each post their trades and answer questions on their trading approach and are generally very accessible. Walter uses support and resistance lines on daily and weekly charts for his set-ups, Jorge uses the "4E" strategy, a short term swing approach whereas Darren trades using his "Flow Method", an unusual form of stop and reverse trading which has a refreshingly unique philosophy behind it. Each expert posts regular video updates (Walter often doing two updates a day) on their trades. They are also very willing to answer any questions that you may have and will go out of their way to help.

As well as this there is also a whole host of teaching material from Walter. He's developed a vast number of courses over the years and all these are on offer as part of the membership of the site. These include the trading set-ups that Walter uses as well as a great psychology course that is a must-do for any trader (I can testify to this!). There are hundreds of hours of video material all available for members to view.

But what makes the Naked Forex Now forum stand out from others is the community feel. There is a supportive and encouraging atmosphere from the various members like nothing I've found anywhere else on the web. What's more these other members post some great content of their own. There are a number of trading journals from people, some of whom are really expert traders. "Rupin9999", a very successful trader who trades for a living, did a webinar for the forum a while back which blew people away and she now has a thread on the forum dedicated to followers of her methodology. "Martin" has taken some of Darren's ideas and made them his own with some very profitable tweaks that you can follow within his journal. "James" is a professional fund manager who has joined the forum and who kindly shares some of his many techniques within another thread. There are many others who have taken some of the basic ideas and have made them their own and then are only too happy to share their ideas with members. 

This does illustrate the core idea behind the forum, namely that of finding something that suits your personality and then making it your own. The basic process is that you take a look at the many approaches that are on offer, have a go at trading them using ForexTester which is a great bit of software that allows you to back-test bar by bar, making your trading decisions and then seeing how they play out. Gradually you should start to adapt these approaches to suit your own psychology and to make them your own before trading a demo account, then a small live account and finally a full-sized live account. There is a lot of emphasis on the psychology side of things all the time, with constant mention of how important it is to find something that suits your personality otherwise at the first sign of trouble you're going to dump it.

One point I should mention is time-frames: most of the traders on here tend to be trading off at least 4 hour charts if not longer. Walter often has daily or weekly set-ups and whilst Darren has traded off 1 hour charts he's presently doing 4 hour as well. For short term traders or scalpers you might find relevant content rather thin on the ground. There has recently been a webinar on a short-term scalping approach and people have been doing journals on high frequency EA trading but the general focus does tend to be on slightly longer term stuff. This also applies to automated trading as well - there isn't a great deal of content on this though there are one or two people who are posting regularly about this.

To add to the mix, on the forum there are regular webinars, sometimes from the house experts but often from either guest speakers or from members of the community themselves who want to share a trading approach. Walter also does a regular Non-Farm Payrolls trading webinar where he uses a simple trading approach off 5 minute charts to trade this news release. As an aside, if you want to learn more about what Walter and Darren think about trading then they post weekly podcasts under the title "The Two Traders", well worth a listen!

In conclusion, this is a fantastic site for supporting traders on their quest to becoming profitable and successful and I personally have been a member since April 2015. By way of full disclosure I should mention that I've been posting so regularly that Walter has promoted me to one of the regular "house posters" for which I get modest compensation and free membership. Having said that, I can definitely say that I would willingly pay for membership - it's one of the best investments a trader can make to help them on their way to becoming successful.

Some Thoughts on the UK EU Referendum Outcome

I thought that I'd just take the time to post some thoughts on the whole EU referendum situation as it's really a huge deal here in the UK. Half the country is mortified at what we've voted to do and it feels like a very divided nation at present. Personally I think that there are several factors at play here in how we got to this point:

1. In my opinion this outcome all stems back to the 2008 financial crisis and the subsequent austerity that has been imposed on the country. The conservative party have been preaching a "sound national finances" line and have imposed round after round of cuts in the public sector. Remarkably, the country seemed to take all this very quietly with no protests or riots or anything. However, this kind of austerity hurts the poorest the most and away from the affluent south of the country these poorer regions voter overwhelming to "Leave". In that respect it's very much a protest vote - if we'd been in the midst of a huge economic boom at the time then the outcome would surely have been different.

2. One of the most controversial aspects of the EU is the free movement of people within it. What it has effectively meant is that people from eastern europe have come over to the UK where they are more than happy to work for the minimum wage which to them is a pretty good amount. Now, here in the UK people probably wouldn't be prepared to work for this little but the migrants are effectively undercutting them and keeping wages down. That's how free competition in the job market works but it can be brutal when you introduce this migration factor. Incidentally, the even Conservative government realised that the working people were suffering when the raised the minimum wage quite a bit - most uncharacteristically generous for the Conservatives! Anyway, so when the down-trodden workers get a chance to vote down this whole free movement thing naturally they seize on it with both hands. Of course, whether they'll actually get rid of this economic migration as a result very much remains to be seen.

3. David Cameron, the British prime minister, has a lot to answer for. The Conservative party has been suffering for years from political in-fighting with the euro-sceptic right of the group and with Mr. Cameron only having a slim majority he decided for once at for all to lance this boil with a referendum, to have it out once and for all so that he could get on with governing the country. However, there were several areas where he went wrong:

i) His timing was very poor (for the reasons that I've stated in points 1 and 2)

ii) He meant to use the threat of the referendum to get a better deal from Europe which would give everyone an incentive to vote Remain. However Europe didn't take the Leave vote that seriously and called his bluff so he came away with next to nothing

iii) The campaigns on both sides were terribly negative with all sort of ridiculous claims which were complete speculation (or even down-right lies). I quickly switched off completely from listening to either of them. One of the worst things to see was George Osborne (the UK chancellor) threatening a "punishment budget" of tax rises and more austerity should we all not do as we were told. That man seems to have a real political blind spot about some of his actions and basically with this blunder (and the Leave outcome) he finished his political career.

The bottom line is that David Cameron bet the entire country on a gamble to sort out his party's in-fighting and he lost. He will go down in history as the man who drove the UK out of Europe and possibly even lead to the break-up of the United Kingdom with Scotland now almost certain to hold another independence referendum and this time they'll probably win (though quite how they'll balance their books now that oil is half the price it was at the last referendum is beyond me). Northern Island too is deeply unhappy about suddenly having an international border to police on its frontier and Wales will surely not stay united when everyone else has left. He might even become the man who breaks up the whole EU (see point 5).

4. Ed Milliband too has a lot to answer for though he can't really accept as much blame as Cameron. Had he not stood against his brother David, the Labour party might have been a more credible opposition. Who knows what the outcome of the election might have been with David not Ed at the helm. If we'd had another coalition government (as had been predicted) then this referendum never would have taken place.

5. Europe too must shoulder some of the blame. The truth is that the EU is very far from perfect. It's bureaucratic and unaccountable and doesn't seem to care at all what the people of Europe want but just keeps ploughing on with its grand vision of a united states of Europe. Now, don't get me wrong, I still think that on balance Europe is a good idea: the Single Market and the peace aspect are all real boons and in these troubled times it pays to stand together in larger multi-nation groups and for this reason I voted Remain. However, it is in desperate need of reform but because of it's lack of accountability, doesn't seem to see the need to do so. Any national government this unresponsive to its people would have long ago been kicked out but it doesn't seem possible to do that to the Eurocrats so nothing changes. Over the years there have been various national treaty votes and occasionally the people of one country have stood up and said actually enough is enough and we don't really share this united states of Europe vision. What do the Eurocrats do? Why they sidestep the vote, make the treaty change by the back door etc. This typifies their attitude. And as for the Euro, whilst it's great to have a single currency to conduct trade with, the whole point about a free-floating currency is that it can adjust to take up the slack in the rise and fall of the fortunes of a nation's economy. However with the one-size-fits-all Euro, Germany prospers whilst other countries go bust. There is of course no easy answer to this problem and for some reason the single currency seems to be inextricably tied up with the whole european identity but eventually something has to give and it will be messy when it does. Through this lack of reform, Europe has now lost one of its strongest economies and now that the genie is out of the bottle other countries are starting to talk about their Brexit as well. It's not impossible that the whole thing might unravel. One point of light in all this darkness is that one of the EU ministers said yesterday in the EU summit something along the lines of "perhaps we should actually start paying attention to what the people of europe want from now on". Let's hope it's not too late.

So that's my analysis of how we got to this point. What is going to happen next it anyone's guess and it's still not certain that Brexit will happen for sure. I might write some more on what might happen next in due course but it's been good to get all this stuff out on paper which has been rattling around in my head for days now.

Choosing a Broker - Safety of Funds

There's one aspect to choosing a broker that often gets overlooked which is safety of funds. Sadly, when you place your money with a broker your money is at risk from the broker going bust. Now, you may think that this a very remote possibility and of course it is but during the 20 odd years that I've been trading (very much on and off) I've had two brokerage accounts go bust on me so it does happen. You only have to look at the "Francageddon" incident to see what can happen in extreme circumstances and quite a few brokers went bust when the Swiss Central Bank suddenly pulled the plug on their EURCHF line-in-the-sand that they'd been supporting for quite some time. The thing that you have to remember is that a broker takes on the liabilities of its clients so if a few clients get into serious trouble and go bust then the broker is suddenly dumped with those losses. Sometimes it's a rogue trader who racks up huge losses and keeps doubling down to try and make it back (à là Nick Leeson). If this person happens to be trading with your broker and they don't spot it then again the broker can go under. Now of course you'd expect that all brokers would have proper risk management in place to spot all this but sadly it does still happen. All scary stuff!

How safe is your money with your broker?

Fortunately, here in the UK we have the Financial Conduct Authority (FCA) who oversee financial institutions. They have minimum capital adequacy regulations (basically each broker much have sufficient funds to cover such contingencies) and there is a compensation scheme which means that you'll get back the first £75k or so of your money should they go bust. This is a very re-assuring thing for UK investors and which leads me on to my general rule when choosing a broker that you should choose someone in a good jurisdiction where there's proper regulation and a reasonable chance of getting your money back should they go bust. I wouldn't personally invest in some small off-shore brokerage company in a country that I've not even heard of and quite frankly you're asking for trouble if you do this.

There's one more thing to consider, namely that some brokers are down-right dishonest. I've heard of one case of an off-shore broker that, when clients try to withdraw their money, they suddenly decide retrospectively to adjust all their fills, slipping each trade by a few pips on every trade they've done so that suddenly all the profit that was sitting in their account has vanished. All completely illegal of course but whether you can do anything about it depends on whether they're regulated at all. Again, it's worth looking at the broker's business model: if they're an ECN then they're not going to do something like this as they don't care about the trading as long as they get their commission. A bucket-shop type of market maker on the other hand is going to have more of an interest in you doing poorly. Of course such blatant dishonesty isn't a viable long-term business model and word does get around but you should be wary of reviews in public forums as they can be posted by the brokers themselves. A good sign of this is a broker review from a new member who's only done one post - very dodgy! 

So, in conclusion, the safety of your funds in the worst case scenario is an important part of choosing your broker.

FX Broker Review: LMAX

LMAX are a UK-based ECN broker that I have used and at the time of writing still do use. I first came across them via some promotional material and was blown away by how tight their spreads seemed to be. Up until now most of the retails brokers that I'd come across were Market-maker type of brokers but LMAX were an ECN operation with a very low cost of entry (see the post here for the important difference between Market-maker and ECN brokers). I did further research and decided that I liked them and opened an account. 

It turns out that LMAX are actually primarily (or at least originally) a platform developer and they have some super-fast technology for matching orders etc. so in a sense they are offering their own exchange. They also offer a brokerage service and their web-platform gives you access to their exchange with all the usual functionality that you'd expect. They offer all the major and minor FX pairs that you might expect with quotes from a number of different liquidity providers as well as some CFD offerings on the major indices and commodities etc. All well and good and I had no complaints about their service. After a while I switched over to their Mt4 offering which too all worked fine.

The LMAX web platform - click to enlarge

So how are LMAX compared to other brokers? Well, firstly they're an ECN broker which is important to me. Their pricing is pretty tight (though I've since come across tighter) which is what you expect and hope for from an ECN offering. During news releases the spread quickly reverts back to reasonable levels and there aren't any horrible "air pockets" of liquidity when you're trading. Commissions are reasonable and on the couple of occasions when I've had to ring them up they've been competent and dealt with my queries quickly and accurately.

So, is everything wonderful with LMAX? Well, sadly not. Firstly, their CFD offering are market maker driven and are therefore prone to the usual price manipulation. In fact the example of price manipulation in the Crude Oil CFD contract that I wrote about was on the LMAX platform (see original article here). Fair enough - the CFD's aren't on their ECN and one knows what to expect from a market-maker broker. 

Secondly, and this for me is the killer, LMAX overnight swap rates are outrageous - they're by far the worst ones that I've come across and for me they're a total deal-breaker when it comes to holding positions overnight. Now, I know that swap rates aren't the first thing that people think about when choosing a broker and that's precisely why brokers can be rather devious with these charges (see the article on swap rates here). I did query them with LMAX, kind of expecting that they'd reduce them for me since I'd actually pointed out how expensive they were - but they didn't seem to care.

So, in conclusion, they're a decent enough broker but only if you don't use their CFD's and you don't hold positions overnight.