Wednesday, July 29, 2009

A new Likely Long Term Profitable Trading System : My modified Trend Finder Daily System

Well everyone, I have been working hard this past month to get some new expert advisors to test for my newsletter subscribers, you saw the first results in my last post about GBP/JPY daily breakout system and now you'll see another interesting result using the trend finder daily trading system. This system was suggested to me by a newsletter subscriber too (thank you very much for all those wonderful suggestions !)

The first think I noticed when I started to research this system was that it started on forex factory as yet another Awesome oscillator, stochastics, SMA based system. It is really common to find systems based on this particular combination of indicators as they are known to give some very good trend following signals. The reason why this happens is because the combination of indicators is mathematically sound. If you know where the Awesome oscillator, stochastics and SMA come from (how they are calculated and what they mathematically mean about price) you will notice that it makes sense to use these three types of indicators together. Such systems include but are not limited to such systems as the Ozfx and trend finder daily.

Ok, I have to admit that I wasn't this excited about the system since I have programmed myself the Ozfx and similar systems without any long term profitable results. The system does get some beautiful trend following trades but then it gets absolutely killed by changing market conditions which the indicators themselves cannot filter out. Well, the solution normally people use to tackle these problems is simply to add more indicator filters (which is not a good thing to do if you just add random things and hope some will work) but a much better solution was found for this system in my case.

First, we need to know what is definetely wrong with the Trend finder daily, what is exactly being neglected ? Again and again, EA creators on forums show their classical way of thinking on forums, the system entry rules are explained in a crystal clear way but the money management and order placing just seems to be a randomly thrown number. The author suggests 100 pip stops and 50 and 100 pip take profits. Really ? Why did he come up with this number and why is he using it for all currency pairs ? Well the answer is just that most people on forums underestimate the importance of these values.

Again, my first try on the simple adaptation of SL and TP values as well as the lot size against the ATR indicator which is a measure of market volatility. This somehow improved the system but did not actually make it profitable in backtesting from 1999 (the original system crashed like no other with wipe out results and breakeven in the best cases I could get). The new system was still losing but there was some hope. The answer was pretty simple, let your profits run ! Having a fixed TP was making the biggest trades end prematurely so I decided to add an ATR adjusted TL to the mix and there you go, a profitable trading system since 1999. Again, my point sees to be proven as most system that make some sense and try to follow daily trend can be made profitable by the addition of ATR adjusted values and often some type of volatility filtering mechanism. You can check the results below (backtesting from 1999 to 2009 with 90% modeling quality).

Of course, this system is being tested and is available to anyone who purchases my ebook or to any newsletter subscriber,. This system will be demo traded for at least 1 year before starting a live test. If you would like to learn more about automated trading system profitability and how the correct strategies and thinking can bring you profit in the automated trading forex market please consider buying my ebook on automated trading or subscribing to my weekly newsletter to receive updates and check the live and demo accounts I am running with several expert advisors. I hope you enjoyed this article !

Monday, July 27, 2009

A new Likely Long Term Profitable Trading System : The GBP/JPY daily breakout system

As many of you may know, I am always on the search for new automated trading systems to test and increase the size of our profitable trading portfolio. My criteria before testing has luckily saved me from testing useless expert advisors that would have never been profitable because of their unsound logic, money management, etc. However, some systems have gone through my extensive searching criteria and are now going to be subject of a 2 years long forward testing on one of my virtual private servers.

Today I would like to introduce you to one of this likely long term profitable expert advisors which is the GBP/JPY daily system which was pointed out to me by a newsletter subscriber. The system which was originally proposed to me was however not long term profitable since it simply relied on entering positions on breakouts of the first N bars of each week's trade on the GBP/JPY and trading then using a fixed SL, TP and money management.

Testing of this strategy gave profitable results for most 2008 and 2009, nonetheless the expert failed dramatically before 2008 as a consequence of a change in market conditions which did not favor the expert advisor. My solution was quiet straightforward, I adjusted every variable of the expert advisor to be adjusted dynamically according to the range of the "box" formed between the high and low determined by the first N bars of the week on the one hour chart.

Testing revealed however that the system was still missing something to be profitable since no matter what we did, the system did not seem to profit between 2000 and 2007. Then it was perfectly clear that the system does not work when the GBP/JPY behaves as a carry trade and only works when it behaves as a trending pair like the EUR/USD. The solution then seemed quiet straightforward. I included both ATR and ADX volatility filters which kept the EA out of all the large losing periods while letting it trade profitably during the times where it would get the most profit. The results ? You can see them below (backtesting from 1999).
It is evident from this that you can take almost any system that is not long term profitable and with the right thinking in mind turn it into a long term profitable expert advisor. Of course, this system will start to be tested and all my newsletter subscribers will get access to it as well as my weekly comments on it's trading and performance.
If you want to learn more about profitable expert advisors and the criteria I use to create them please consider buying my ebook on automated trading or subscribing to my weekly newsletter to receive updates and check the live and demo accounts I am running with several expert advisors. I hope you enjoyed this article !

Saturday, July 18, 2009

Ebook Update Instructions

If you have purchased my automated trading ebook before and would now like to update to the latest version please follow these instructions :

  • Open the original pdf of the ebook and go to the last page. Take note of the first 4 words of the third line of the last paragraph and write them down (without spaces between them and all in low caps) this will be your login password to update.
  • Download the Filezilla free FTP client (
  • Please fill the dialogues on the top of the screen with the following information : Host :, Username : ebook, Password : (the password you wrote down before goes here) and Port : 21.
  • The program should now open a connection to the ftp and the ebook compressed zip file should appear in the right hand side browser
  • Drag and drop the ebook to whatever directory you want on your computer (which is shown on the file browser at the left side of your screen)
Hopefully you will be able to download the ebook. Please make sure you try at least 5 times during a 5 hour span to make sure you can connect (settings the ftp connection mode to active on filezilla may also help if you experience any problems). If you still cannot get the ebook please send me an email and I'll send it to you using Again, I would like to thank you all very much for all your purchases and your trust ! I hope this ebook is even more useful and filled with information than the first !

Sunday, July 5, 2009

What would you like to know about automated trading ?

Last week, I announced that I am working on a new version of my forex automated trading ebook. This version is not only an update but mainly a full rewrite of my efforts to help retail traders out there in the world of forex expert advisors. Before finishing my new ebook (which will be released on July the 19th) I want to make sure I include as many things as I can that may help the retail trader out there know the ins and outs about automated trading.

For this reason I decided to write this small post. The objective of this post is to ask you, fellow traders (both novice and experienced) , what would you like to know about forex automated trading ? If you want to cooperate and help me bring quality information to the world of retail forex traders please leave a comment answering one or as many as you want of the following questions (you can also email me at if you find trouble leaving a comment).
  • What has been the hardest for you in the world of automated trading ?
  • What specific things would you have liked someone to explain to you before you ventured into this area.
  • What questions do you find unanswered in your quest for automated trading profitability ?
  • What would you definetely like to know about automated trading ?
I would like to thank the people who take the time to answer these quetions in advance, your help will most likely make my ebook much better for both experience and novice forex traders. It is my goal that with this new version of the ebook many people will be saved from losing their money and will have a much clearer idea of how much and how money can be made by using automated trading systems. I will also probably use your answers to write a few blog posts about the questions mentioned above :)

If you would like to purchase the actual ebook at a lower price (you get all future updates for free, including the one commented on this post) or learn more about automated trading systems please consider buying my ebook on automated trading or subscribing to my weekly newsletter to receive updates and check the live and demo accounts I am running with several expert advisors. Thanks again for your answers !

Thursday, July 2, 2009

No Stoploss or Limit Orders for US brokers

I was a little bit shocked and surprised when a customer sent me an email earlier today regarding a new regulation that will be taking effect on July 31, 2009 that forbids the use of Stoploss and other limit orders on US forex broker accounts. After reading a lot more on the subject I realized that apparently only FXCM has issued a warning to their customers telling them that they will be unable to use these type of orders from July 31. What does the regulation exactly do and what can you do to protect yourself and your automated trading system ?

Well, as I said before the regulation prevents you from assigning any stoploss or takeprofit levels to your orders, that is, you cannot issue any pending orders with these values or place these values on existing trades. This means that in order to avoid risk, if you are manually trading, you are required to stay in front of the screen a longer amount of time. Expert advisors can also emulate the stoploss and take profit values simply by closing orders at predetermined price levels calculated by their logic but this is quiet risky and requires you to have an extremely reliable internet connection (that is, you need a very robust vps) because a failure to do so may leave your account opened to terrible loss levels and unmanaged risk.

What options do you have ? You can either migrate to a non-US broker and continue trading in the same fashion, you can simply use expert advisors to manage your stop loss and take profit levels (if you are manually trading) or you can modify your current expert advisors if you are auto trading so that they too can emulate and manage your orders according to the takeprofit and stoploss levels.

As retarted as this regulation may sound, it does provide a safer trading level for traders in that it absolutely prevents the ability of brokers to stop hunt trading positions and thus eliminates whatever influence brokers may be having in price, that is, it eliminates the artificial movements some brokers may be creating in order to make trades reach stop loss levels. This will probably make the market easier to trade on US brokers with the added pain of having to manage your risk in alternative fashions. Nonetheless, these brokers will lose a fairly good amount of their customers to off shore brokerages.

As far as my expert advisors go, I will modify the god's gift ATR to comply with the rule and use an internal mechanism to close orders according to stoploss and takeprofit values. Other expert advisor creators should do the same in order to maintain their systems at a good level. What do you think, will you adapt or migrate ?

If you would like to learn more about the god's gift ATR and other expert advisors please consider buying my ebook on automated trading or subscribing to my weekly newsletter to receive updates and check the live and demo accounts I am running with several expert advisors. I hope you enjoyed the article!

Daniel Fernandez's Expert Author Email Alerts
Sign up to receive email alerts of Daniel Fernandez’s latest articles from!

Email Address: