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Wednesday, February 24, 2010

Automated Basket Forex Trading

This service allow me to send over the trade signal for open & close the trade for the subcriber. This is best services for those who do not have much time for trading but still want to get some baits in this forex market. For the services, please refer to my blog site at the top right " Forex Trading Signal Services" for more information.


Although there are many reasons to trade with zipsignals, auto-executing trades in your MetaTrader (MT4) Account is by far the most desired feature. Our state-of-the-art Expert Advisor (EA) or "robot" program interprets trading signals and executes the signals' instructions in your account without your intervention. This means you do NOT have to wake up or be near a computer 24 hours a day to trade along with a professional. Better still, the automated Forex trading signals are executed in around 5 seconds so you get the best fill possible.

Using the zipsignals automated Forex trading platform, you don't have to give your money to a fund manager or open an account with a broker that is less than reputable. You choose your broker and you keep control of your money.

Many people find that EAs or robots offer the best solution to trading Forex due to their hands-off approach, but have found that most if not all commercial EAs come up short in actual performance. This is due to the inherent limitation in all trading programs - lack of fundamental data when entering and exiting trades. EAs traditionally work by analyzing technical data to trade and do not know about the underlying fundamentals governing these movements. We solve this problem by putting an actual human at the helm. So, in essence, you get an experienced professional Forex trader, trading your account for you, 24 hours a day!

Determining Order Size
Every order in zipsignals contains an Order Size Percent (%) from 1% to 10%. This allows the trader to weigh certain trades over others. This value is interpreted by our Expert Advisor (EA) to determine the lot size.

For example, if you have a standard account balance of $5,000 with 1:100 margin, a 2% order would open 0.1 lot or 2% of your account balance times margin.

5000 * 100 * 0.02 = $10,000 or 10% of a standard $100,000 lot

There are three ways you can customize the EA to interpret the order size percentage into a lot size your comfortable with:


  • Actual Balance - will use your actual account balance to determine lot size. This is the setting to use if you wish to compound. As your account balance raises so does the lot size on new orders.

  • Fixed Balance - will use a fixed balance of your choosing to determine lot size every time.

  • Fixed Lot Size - you can select a fixed lot size that the EA will use to open all orders. If you select a fixed lot size of 1.0, a 2% order will issue a 1.0 lot size and a 10% order will still issue a 1.0 lot size.

Research Forex Trading Systems and Signal Providers
zipsignals gives you the tools you need to research Forex systems and Signal Providers to determine which are right for you based on your risk tolerance. All trades are documented and reported, not just the winners. You will find for each system: trading weeks, total return, max drawdown and monthly average.

Open trades are included in all profit and drawdown calculations so you can see the ACTUAL risks involved. This point is very important as most other sites offering Forex trading systems do not include actual open trade drawdown. Without this data you CANNOT make an informed decision about how much to trade or whether you should trade the system at all.

For instance if "Trader A" enters a trade that goes 1000 pips negative before climbing back to negative 50 pips and closes the order, most other sites will report the 50 pip drawdown. This is not the REAL drawdown as you will experience a REAL margin call (trade liquidation) if you traded this trade with too many lots.

The only data needed to determine if and how much to trade a trading system is REAL drawdown and average monthly return. Of course, length of time is important as this validates the historical drawdown and return data.

For example, "Trading System 1" has a 5% average monthly return with a historical drawdown of 10%. If you have an account valued at $10,000 you could expect $500 a month return on average with the potential to see your account equity reduced by $1,000. This is not exactly true as the system may experience a new historical low while you are trading with it. This is why length of time is important as it validates the historical data.

You won't find the TMI (Too Much Information) here that tends to conceal the risks involved. It may be hard to believe, but you don't need all the junk metrics you see on other sites. All of this data is only useful in distracting and misleading you away from the REAL drawdown.








Thursday, February 11, 2010

Holy Grail - Money Mangement

Money Management. Trade safe building stable gains

Money management is a way traders control their money flow: in or out of pockets... Yes, it's simply the knowledge and skills on managing a personal Forex account.

There are several rules of good money management:



1. Risk only small percentage of total account

Why is it so important? The main idea of the whole trading process is to survive! Survival first, and only then making money on top.

One should clearly understand, that Big traders first of all are skillful survivors. In addition, they usually have deep pockets, which means that under unfavorable conditions they are financially able to sustain big losses and continue trading. For the ordinary traders, the majority of us, the skills of surviving become a vital "must know" platform to keep trading accounts alive and, of course, to make good stable profits.

Let's take a look at the example that shows a difference between risking a small percentage of capital and risking a bigger one. In the worst case scenario of ten losing trades in a row the balance of trader's account will suffer this much:

Trades Account balanceRisking 2%
of total account per trade
1 Start — 5000 100
2 4900 98
3 4802 96
4 4706 94
5 4612 92
6 4520 90
7 4430 89
8 4341 87
9 4254 85
10 4169 — 17% of the account has been lost



Trades Account balanceRisking 10%
of total account per trade
1 Start — 5000 500
2 4500 450
3 4050 405
4 3645 364
5 3281 328
6 2953 295
7 2658 265
8 2392 239
9 2153 215
10 1938 — over 60% of the account has been lost



Apparently, there is a big difference between risking 2% and 10% of the total account per trade. A trader who has made 10 trades risking only 2% of balance per trade, under the worst conditions would lose only 17% of the total account. The same trader who had been exposing 10% of balance.



2. Rebuilding of a shrinking account is harder that it may seem to be

Let's take a look at calculations where a trader has lost some part of his account. How much effort will it take to recover the original account balance?

Account% of account lost New balance Need to make
$ 500025%$ 375035% of the new balance ($ 1250) to cover losses
$ 500050% $ 2500100% of the new balance ($ 2500) to cover losses
$ 500075%$ 1250300% of the new balance ($ 3750) to cover losses
Note that it's only to cover losses: Who is going to make money then..? And when?


Now, there is a challenge: try on your demo account to rise up 300% or at least 100% of your original account trading as it would be real money. Will that be easy? I don't think so. Can you prove me wrong?


3. Calculate risk / reward ratio before entering a trade

When chances to win in a trade are smaller than potential losses, don't trade! Remember — staying aside is a position.
For example: 40 pips to lose versus 30 pips to win, 20 pips to lose versus 20 pips to win — all that is a clear sign of bad risk management.
Before entering each trade, reassure that risk / reward ratio is at least 1:3, which means that chances to lose are tree times less than promises to win. For example: 30 pips of possible loss versus 100 pips of potential win is a good trade to consider entering.
Adopting this money management rule as a must, in the long run will dramatically increase trader's chances to succeed in making stable gains.
Next chart shows the "risk / reward" rule in practice. Ten trades based on 1:3 risk / reward ratio were conducted. A trader was losing only $ 100 in each trade when he was wrong, but won $ 300 in each profitable trade.

TradesLosing tradesWinning trades
1+300
2-100
3-100
4+300
5+300
6-100
7+300
8+300
9-100
10-100
Total- $500+ $1500
Grand Total+ $1000 in profit



As we can see, constantly using 1:3 risk / reward ratio and being successful only 50% of the time, trader will still make a profit. The higher the reward ratio ( compared to risk ratio ) the better are chances to end up in profit.


4. Learn to use protective stops

About protective stops and their importance for good money management continue reading: Learn to use Stop Loss effectively.


5. And now let's study the example of applying money management rules:

So, risking no more than 2-3% of the total account per trade... How does it work in practice? Let's use an example to understand this idea completely.

We have opened a trading account of 1000 dollars with a broker and got 20:1 leverage. So, now we have 20 000 dollars to trade with.

More "money" — more trading opportunities. Correct. But, more trading opportunities also means more risks, and when we talk about risks we talk about real account value which will shrink with each losing trade. So, when we say risking no more than 2-3% of total account value we mean real account value — which is 1000 dollars in our case.

Well, let's start trading and do the math. For our example, we have decided to always risk 2% of the account in each trade. 1000 x 2% = 20 dollars. So, when the price goes against us, we will be out of the trade once we are -20 dollars.

One note before we move on. To make our next calculations simple we will use simple values which can be different in the case with your broker.

Ok, time to trade and our trading potential measures 20 000 dollars ( thanks to our leverage ) .

Let's try to trade them all at once: for one 20 000 dollar order our broker gives us a pip value of 2 dollars. This means that with each pip gained we will have +2 dollars in our pockets.


Source: Forex-money-management.com