EURUSD - 2012-08-27

Moving averages are funny things. Below we have a daily EURUSD chart with high & low 100 period moving averages plotted. Price climbed for a while, then hit the lower average, and looks like it's now reversing. A fairly clear sell signal.

Daily EURUSD chart

But what's happening on the lower time frames? With the same averages plotted on the 60 minute chart, we can see price descended  and bounced off the lower moving average.

60 minute EURUSD chart

Where's it going to go now? It's a little difficult to tell. While price appears to be making lower highs on the 60 minute chart, it's not making lower lows. There is a bullish trend line on the daily chart, but price would have to push through both moving averages.

GBPUSD & EURAUD (not shown) look to be in up trends for the moment, but their momentum has stalled.  We'll just have to wait and see.

We're looking for price to exceed 1.26, or better yet, 1.27, or drop below 1.247, which is below Fridays low and also the lower 60 minute 100 period moving average.

EURUSD - 2012-08-24

EURUSD broke out of it's nice little triangle formation and along with some other pairs has been trending upwards nicely this week.

Daily EURUSD chart

News that the US may start printing more money soon has probably lead to this movement. What we want to know now is how far it's likely to go up. 

Looking at the daily EURUSD chart above, we can see price has just touched the lower 100 period moving average line. 

There may be a slight reversal before continuing up along the bullish orange trend line, or it may collapse below it and continue along the main down trend of the last few months. 

EURAUD, EURGBP (not shown) indicate continued EUR strength, while USDJPY indicates possible USD weakness. Things are looking good for continued EURUSD momentum, but we'll want to see price clear these moving averages first. 

Mirror Trading

Here's a good article about mirror trading - linking your Forex account to another traders, which copies their trades and (hopefully) makes you money for a very small commission.

It lists several mirror trade providers, and makes an interesting point about ZuluTrade, a system I have had experience with.

... "the vast majority of so called “traders” on their platform are incredibly bad traders, who use vastly excessive leverage to boost their performance returns.  Thus whilst their ‘headline’ performance return maybe several hundred percent, the reality is that it might only take 1 or 2 losing trades to wipe out your entire account."

So if you trade with ZuluTrade, be careful. While they have added more filters and safeguards, you'll want to carefully check their traders statistics. Generally you want to see large trade profits with very small draw down. Win ratio isn't as important.

The other systems I have had no experience with, but they sound interesting also, especially Currensee.

AUDUSD - 2012-08-21

It's mostly just soup on EURUSD, the chart we usually review here, so let's look instead at a different currency pair. 

Here is the AUDUSD. 

Daily AUDUSD chart

As you can see, a trend line is easily added to the nice, regular bullish trend pattern. AUDUSD has been behaving itself nicely! After regularly watching EURUSD for a long time, you'd be forgiven for forgetting that currency pairs can actually behave and form proper technical patterns.

A slight break has appeared below the orange trend line. Given that this is a daily chart, it should be a fairly reliable signal. Sell below 1.04.

Some fundamental reasons not to sell are the fairly high interest rate paid for carrying the AUDUSD over night, and that the Australian economy continues to do quite well. Also, where else will people put their money?

Still, with such a strong technical signal, it's probably worth placing at least a small sell trade using a pending sell stop order.

danw2 - pending + 5-8 ema mtf v0.11 EA

Here's an EA I threw together quickly after reading this thread on Forex Factory.

The idea was to get the trend from a higher time frame, and when the trend matches on a lower time frame, place a pending order above/below the high/low of candle going against the trend.

It didn't generate many orders in back tests with the settings suggested by the thread, so the time frames were adjusted to the 4 hour and daily.

Results, after optimization, weren't bad. Some profit across the year. Was too scared to try it on any other pairs, as they usually all show horrible results, which possibly indicates my EURUSD history data used for back testing is too optimistic somehow.

Back-test on EURUSD, 1-1-2011 to 1-1-2012

Robot Results to 2012-08-16

Regularly reviewing several automated robots over the last few months has been fun, and it's also been a good learning experience. 

Some robots run well for a while, then ultimately fail when left to run long enough due to a changing market. Some bugs have been found, some settings changed, and some good comparisons between systems have been made. 

We've come to a point where we can easily see that most of the regularly reviewed robots have failed, and there's no more point continuing. While it's possible they may yet recover and start posting gains again, it seems a better idea to focus on the one robot which has been consistent through this whole process - the Inside Bar robot. 

I have many other robots currently undergoing testing, and I may revive regular reviews and post results from some of them too. 

Additionally, I started a spread sheet so as to more easily see robot performance over time, and this seemed like a good idea. However there's several good websites which allow the collecting of results directly from the trading platform, and this might be a better idea for future reviews. We'll give it some time and see what is decided. 


Let's do a final review.


Inside Bar

This is the Inside Bar robots current results. Remember that this is the second iteration of this particular demo account, the first having expired with an approximately $2,000 gain from a $5,000 account. Currently it's about half way through it's second three month demo period, and is up another $1,200.

This robot is running on two currency pairs only, with different stop loss and trailing stop settings, with fairly high margin.

Because of the success of this robot, several variations of this robot were coded and put onto demo charts, and they haven't done well. 

Additionally, we started manually trading this system as well, and it experienced quite a bit of success with minimal effort. Pondering why this should be, bugs were found in the automatic trailing stop and stop loss settings of these other robots. 

These bugs are now fixed, but the systems continue to do poorly. The manual account hasn't had much luck the last few weeks either, and we're thinking this is due to market conditions. 

However, we also noticed positive trades seem to cut off too soon. We realized the margin filter was closing these down. Because of the high leverage and because the robots are running on more than just two pairs, margin became a problem. 

This is also fixed now, so hopefully in the next few months we should see some positive results. If we don't, then this will be very perplexing!

Pending Reversal Candle 

This robot returned poor results in back testing, then was erratic during demo testing, but ended it's first demo account run up $2,000. So we let it run. It's now down $1,000. Don't know what it's deal is, not really bothered by it, either. We have several other robots which incorporate similar principals, so there's no need to focus on this one any more



Daily Close Break Out 

This robot underwent a minor and then a major revision, but continued to perform poorly. It was discontinued some time ago.


Weekly Close + ATR 

Believe it or not, this one was up $1,000 just a few short weeks ago, but profits were whip-sawed away.

Bugs were fixed in this robot, but performance didn't improve. It really is sort of similar to the inside bar robot anyway, except the inside bar robot can move around a little more.

I'm still inspired by these robots, but with the terrible performance, I don't think we can justify keeping them running. 

Weekly Break Out 2 

Pretty much what I wrote for the above robot is true for this one, too. 

--

The Open-Close H4 and Daily Close Break-out bots were discontinued some time ago, and so there's no results to post for them. Just know that they were terrible!

So there we have it. Out of 6 robots, 1 continues to show promise, even through tough conditions. It works well as a manual system, works well as an automated system, but care has to be taken with stop loss and take profit levels, as well as watching leverage and choosing the pairs it runs on wisely.

We'll keep you updated on the performance of the current Inside Bar robot, as well as it's derivatives from time to time. We may also add a few more robots that we currently have under wraps.

EURUSD - 2012-08-16

It's August, and trading volumes have dropped off. I tried to trade in August last year, and it was a horrible nightmare. 

But, let's press on with a quick EURUSD analysis. I haven't done one of these for a while, since I've started focusing more on other currency pairs, and am finding them a little easier to trade. EURAUD was trending nicely for a while, and GBPUSD was lending itself quite well to breakouts, generally following the EURUSD but moving further and enabling the breakout systems to catch a few pips. 

I'm a little surprised that there are some actual patterns on EURUSD. It sort of seemed like a mindless soup. I've been using the high & low 100 period moving averages as a reference on 1 hour and 4 hours charts when I do look at EURUSD, and noting highs and lows near where prices cross these lines.

EURUSD, 4 hour chart

If I were to trade EURUSD, I'd be looking for a break above 1.2390 or below 1.2240.

With a few hastily drawn trend lines in there, we can see a triangle forming:

EURUSD, 4 hour chart

So this can serve as a little better guide, and we'd be looking for a big breakout with a lot of momentum above 1.2350 or below 1.2250, or basically any big move through the trend lines.

Updated Inside Bar Indicator

Here is an update to the inside bar indicator. In addition to the arrows indicating which bars are inside bars, it draws a box around it including the user set buffer, and text below the box tells you the size in pips of both the inside bar and buffer zone.

You can also tell it to use push alerts, to send notifications to your smart phone via the mobile MetaTrader 4 app.

This particular indicator calculates inside bars as the high and low being "inside" the high and low of the previous candle.

The colours and text locations are not user adjustable, but if there's interest, I can modify it to include these features.

Another Robot Bug

After realizing the automatic stop-loss and trailing stops weren't adjusting between trades, fixing the bug, and letting the automated robots run for a few more weeks, nothing really changed. They continued losing at approximately the same pace.

It wasn't until I noticed I had much better success with a series of robots when I adjusted the trailing stop manually, that I eventually realized there's another bug concerning the automatically adjusting trailing stop.

The bug is that the trailing stop - when set to automatic - adjusts to current price action on the screen. 

For example, if the stops are calculated from the range between some highs and lows, then when the order is placed, the stop loss is set correctly, but the trailing stop is recalculated at the next bar. If the range has increased then so has the trailing stop. 

This only affects robots using automatic settings for trailing stop, and only if they're not calculated using the ATR. 

Unfortunately this is a large percentage of my robots, so I'll have to fix the bug and let the tests continue.