Saturday, June 4, 2011
Currency Cash Machine Review
Currency Cash Machine is the name of the new mirror trading service from Mike Maffei, who is a professional hedge fund trader. He has access to the order flow data of all of the major banks such as Bank of America, Barclays, Citibank and UBS, etc (who help drive the prices of the various different currency pairs), and has a huge advantage because he is obviously able to make profitable trading decisions based on this data.
He has been making huge profits trading this data based on his own proprietary trading system for a few years now, and is now going to help others profit from this data as well.
He is not offering access to this bank flow data, or indeed the trading system that he uses. However what he is offering (through the Currency Cash Machine membership) is the opportunity to mirror trade every single one of his trading signals automatically in your trading account.
So in other words every time that he opens or closes a trade, it is automatically replicated in your own forex trading account at the same time. Considering he made more than 4000% profit in 2010 and some equally impressive gains in 2011, this seems like an excellent deal. In fact it seems almost too good to be true.
However he provides an in depth look at his three different trading accounts, that have all been verified by an independent body, and the results do look genuine.
I am always sceptical of huge profit claims even when the results have been independently verified, but the fact that he uses bank order flow data, which gives you a huge advantage and is very hard to get hold of, does make these kinds of gains more achievable in my opinion.
Anyway the good news is that you can try out these automated trading signals risk free, either in a live trading account or a demo account, for 90 days.
If you would like to take up this offer, or simply want to find out more about this service, you can do so by visiting the official Currency Cash Machine website. Here you will find a video that will explain everything in a lot more detail.
Determining Your Risk When Spread Betting The Forex Markets
Many people trade the forex markets using a traditional forex broker, but I am well aware that lots of people, particularly here in the UK, like to trade using a spread betting company instead. I nearly always trade this way and it's a fairly simple way to trade because you don't need to worry about lots or anything like that. You simply choose your stake, ie £1 or £10 per point for instance, and enter your position long or short.
Anyway in this article I want to discuss how you can determine your risk when spread betting the forex markets, and subsequently how much you should be staking per point. It is quite straight forward, but it can be slightly difficult if you are new to spread betting.
The first thing you need to do is to determine how much of your account you are prepared to risk per trade. The common advice is to risk no more than 2-3% per trade, and I myself rarely risk any more than this except on very rare occasions where I am extremely confident about a particular position.
So let's assume that you have £5000 in your spread betting account and you are prepared to risk 3% per trade. Your maximum loss from this trade is therefore £150 (3% of £5000).
The next step is to look at your stop loss for this particular set-up. If you are planning to enter a position with a stop loss set at 50 points, then your stake would be £3 per point because 50 points @ £3 per point would give you a maximum loss of £150, which is the 3% that you were prepared to risk on this trade.
Similarly if you intend placing a stop loss just 15 points away, then you would therefore be looking to enter a position at £10 per point to give you the same maximum loss of £150.
Of course there is always the chance that you may not be automatically closed out at this exact stop loss due to slippage, in which case your loss may be slightly more than £150. However you can hopefully see the point I am trying to make.
In summary then, if you want to determine your risk when spread betting, you simply work out how much you are prepared to lose based on a percentage of your capital, and then determine how many points away you are going to place your stop loss. You can then work out your stake per point fairly easily and enter your trade.
Forex Day Trading Using Price Action And Pivot Points
Today I want to talk about how you can day trade the forex markets using nothing more than price action and pivot points. I sometimes visit a few trading forums and often come across some really complicated trading systems that use many different indicators. However the fact is that you can do just as well stripping away all of these indicators and just following price action, using pivot points for additional guidance.
So you basically want to set up a basic 5 minute candlestick chart and add pivot points to this chart.
Then if you simply study these charts really closely on a daily basis for the major currency pairs, you should start to see the same sort of patterns reoccurring, and you will soon have enough confidence to start opening and closing positions.
I actually placed a few trades today on the GBP/USD pair earlier today, which will hopefully show you my own thought processes when trading these shorter time frames. First of all let me show you the chart:
I should point out that I will only consider trading the 5 minute chart if the overnight trading range is small (in comparison to the average daily range) . Luckily this was the case today.
The overnight trading range between 12.00 and 08.00 (UK time) was approximately 40 points, compared to a daily average of around 120 points (according to the Average True Range indicator on the daily chart). This means that there was always likely to be a decent sized breakout either upwards or downwards at some point during the day, so there were plenty of points available.
You can see from the chart that there were 4 points of interest:
FALSE BREAKOUT - The price broke down through the pivot point and closed below the overnight trading range (as indicated by the blue lines) just before 8.00. So this was a high probability trade and a great opportunity to go short. However after opening a short position at 1.6139, it turned out to be a false breakout and I closed out for -14 points after the price closed back above the pivot point.
INITIAL UPWARD BREAKOUT - After looking as if it might have another crack at breaking downwards, the price then moved sharply higher and closed above the overnight trading range. At which point you basically have two options. You can either enter a long position and hope that the breakout continues, or you can wait for confirmation. I personally went long straight away at 1.6198 after the breakout candle closed.
CONFIRMATION BREAKOUT - There was then a short period of consolidation followed by a confirmation breakout. So if you hadn't already entered a long position on the initial breakout, you could have taken a long position with more confidence at this point.
CLOSE POSITION - The obvious exit point for this trade was always going to be the first line of resistance, ie R1, and you can see that the price just about touched this resistance level at around 1.6241 before falling back downwards again. So in the end I banked a profit of 43 points from this particular trade.
Of course if you subtract the spreads and the loss from the false breakout earlier, the total profit is only around 23 points. However it was still a profitable trading day overall, and hopefully you can see how easy it can be to bank a decent profit on days like today when the overnight trading range is relatively small.
Weekly Trading Update - 09-13 May 2011
With regards to my forex trading, it's been a rather lacklustre week this week. My main 4 hour trading system (see right for more details) did manage to squeeze out a decent profit thanks to one good trade on the GBP/USD pair, but this was negated somewhat by the Forex Morning Trade system, which had a rare losing week and ended up losing 40 points in total. The full results of this early morning trading system for this week are as follows:
Monday: no trade
Tuesday: no trade
Wednesday: -40 points
Thursday: +40 points
Friday: -40 points
Going back to my 4 hour system and as I say, there was just the one trade on the GBP/USD pair. This pair is now in a downward trend (according to the Supertrend indicator on the daily chart), so I was looking to go short on a downward EMA crossover on the 4 hour chart.
This occurred on Wednesday afternoon and I was initially cautious about opening a short position because the crossover candle was pretty long, but I did eventually decide to take a position. I waited for a pull-back and went short at 1.6360.
I had to leave it running overnight so I set my target price at 1.6300, but thankfully this wasn't triggered and I could revert to my usual strategy the next morning. So I ended up closing half the position for 50 points and letting the other half run, moving my stop loss to break-even. The price then dropped sharply and I decided to close the position once it was 100 points in profit.
There have also been a few downward EMA crossovers on the USD/JPY pair but I really think we are close to the bottom for this pair, so I decided not to take any positions.
As regards my share trading, I have started building positions in BP and dabbled with a few spread positions in Tesco, but there's not much else to report. It's frustrating seeing the FTSE meander between 5800 and 6100. I wish we would see a big breakout one way or the other so I could either bank some big profits or pick up some juicy bargains.
Anyway that's just about it for another week. Have a great weekend.