Q: How are trading signals entered?

A: Trades are generated using the same Tradestation strategy for each of the currencies traded. Trades can occur any time from Sunday afternoon when Forex trading begins, continuously until trading closes Friday afternoon. Trades can be both long or short. I typically close the trades manually since there is no profit target generated by the strategy. For protection, there is a trailing percent stop loss generated after a trade is made.


Q: What currencies are traded?

A: Trade alerts will be long/short for GBP/USD, EUR/USD, USD/CHF and USD/JPY.


Q: What is the time frame the trades are generated on?

A: Each currency is analyzed separately on 60 minute bars, 24 hours per day from the open on Sunday afternoon until the close on Friday afternoon. Trades typically last from a few hours to a few days. It all depends on how the price is trending. Historical trades show that trades will last on average a few hours. I personally like to get in and get out if the profit is there.


Q: What is a typical trade signal like?

A: Signals are stop based instead of market orders. If the entry price is not met, it may be altered by the system on the next 60 minute bar. When trades are exited, it may end up with a reversal signal (e.g. exit long and enter short). A downfall to this system is that stop orders are added, altered and cancelled by the strategy quite often before a trade is made. This may test your patience if you are following the signals manually!


Q: What would be the preferred method to use this system?

A: Due to 24 hour trading of the currency market and the use of stop orders for entries/exits, it is recommended that the signals be traded as closely to the time that the order becomes valid. The most accurate results will occur if the signals are auto-traded, if the Instant Trade Messenger is used or if the trade signals are sent to you by e-mail or to a mobile device. There are brokers who accept Collective2 signals for Forex auto-trading. I have the C2 signals routed to Interactive Brokers through Tradebullet and am pleased with the consistency of orders getting routed properly and timely.


Q: What are the trade sizes used?

A: Since subscribers are using their own money (as am I!), I want this service to start out with minimum drawdown, so we will start with trading 10 mini-lots of $10,000. As the account balance increases, so will the number of mini-lots we trade. We will maintain realistic trade sizes though. I could have easily used the entire theoretical $100,000 in this account, but who really has that much to start with? With each mini-lot traded we risk $1 per pip of the base currency, thus 10 mini-lots is $10 per pip. It is your option to use larger or smaller trade amounts. Just adjust typical trade results that are listed accordingly.
10/26 - Have upped trades to 20 mini-lots
2/27 - to 25 mini-lots
5/19 - to 50 mini lots


Q: How about those drawdowns in early November and December of 2005?

A: The 2 drawdown periods certainly were disappointing. It required a closer look at the strategy to better optimize it. A strategy change went into affect on Monday 12/19 and it has been performing fairly well since. Note that this change was not to just tweak the parameters in order to get a curve that worked for the past. I read a bit on Larry Williams and considered his theory on "trade day of the week".


Q: And the big loss in June, 2006?

A: After a large run up in the preceeding weeks I got cocky and added big to a losing position. It took 2 months to recapture the equity, so you could say I learned a very valuable lesson that wont be repeated. I will stick to the initial Stop Loss posted and will not add to a position.


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