Trading this week

We again will not be trading client funds live this week. Market conditions are extraordinarily unsettled and doing so would be gambling.

The recent developments in World economic policy (ie U.S. Bailout plan, Joint 0.5 point rate cut by major Central banks, injection of billions of $$ into financial system by central banks, etc.) have been fascinating to watch to say the least. And while this is not the forum to give political opinion, I will say that what has been done does not seem to be working. Lets hope that the steps taken this week have the affect we are all hoping for and things begin to calm down.

Moving Forward

The S&P 500 and DOW have experienced the biggest fall since 1937. As you know we are not trading live money with the exception of a partner's account and on Monday morning early we placed that account on hold as well. Many are asking how exactly all of this turmoil really affects our system. Our trending strategies are actually helped by the market craziness. Our ranging system however is very much hurt by these conditions. Our plan moving forward over the next few weeks is to continue to assess the situation, not trade the ranging strategy until the market completely settles down, and continue to trade our trending strategies. We do expect to place 3-5 high probability entries on our partner's account this week.

Alpari Demo Server STILL Down

Many have asked what has happened with the Alpari demo. The Alpari UK demo server continues to be down with no word on when it will be running again. We have not abandoned that demo. As soon as the server is back online the trading will resume on that account. The Varengold demo is still running but has taken a pretty sizable hit as it attempts to weather this market mess.

Credit Crisis Deepens

The credit crisis is deepening as it is becoming clear the economic problems are not confined to the U.S. The news drastically affected prices over the weekend and continues to do so even before the open of the European markets today. For example, since the Asian markets opened, the AUD/JPY has dropped 450 pips. To put that into perspective, only a hand full of weeks all year have seen 450 pips worth of drop or climb from the AUD/JPY and we have seen that in a matter of hours. The case is similar with many other pairs which more than likely means we are in for an amazing day.

We continue to hold off on trading live clients.

Here are some additional links of interest:

$68 billion German bailout of Real Estate investment firm.
Bank writeoffs could triple?
The Carry-Trade is Dead.

Market Update

The U.S. equity markets regained some of their losses from yesterday's record day on speculation an alternative "rescue plan" (bailout) may pass. With so much focus on the markets and banks failing at a faster rate then ever, the currency market has been volatile and unpredictable. Our system continues to hold up reasonably well considering the circumstances.

Alpari Demo Server Down

Alpari is doing maintenance on their demo server. The demo server went down over the weekend and has not come back online yet. We have been told that it should go live again today but as of right now it is still offline.

Continued Market Uncertainty

It appears that the political leaders in the U.S. have settled on a $700 billion bailout package. This should translate into a short term strengthening of the Dollar. However, how rapidly this will happen is unknown. We also do not yet know how Non-Farm payroll this Friday will affect volatility in the market. The Forex market continues to react violently to the historic changes in U.S. economic policy and world economic policy. Everyday through the last month and a half has seemed to bring with it a new surprise that has the effect of sending certain currencies trending strong in one direction.

We decided to trade today but with an added degree of caution. As you know, we are trading live on just $100,000 of our partners funds. As for the rest, we continue to wait until the markets calm down sufficiently to go 100% live.

Also, Alpari is performing maintenance work on their demo server and will be offline most of the day. The Varengold demo is running as expected.

Today - A quick glance

It isn't expected to be an especially volatile day today. We have one major economic report coming out today - U.S. Existing Home Sales at 10:00am EST. The market has pretty well priced in a bad number so the risk really is that a stronger than expected number comes out. However if that were to happen it would strengthen the dollar and help with some of the drawdown trades we are in. Other than watching to see what happens with that report we expect it to be a quiet day (at least we hope).

Return to a range

The market returned to a range and gave our system the ideal conditions it needed to pull out of the drawdown. The Alpari account(one month and one week) is back up 42% in closed balance and 9.4% in equity. The Varengold account(two weeks) is back up 19.7% in closed balance and 4.5% in equity.

Also, we have started trading one of our partner's accounts live. We have not gone live on the rest of the client accounts because the risk for excessive market movement is still there. We will keep you informed as to when we will go live on all accounts. (That partner's account is up 3.2% in balance and 2.7% in equity on the day).

The Turmoil Continues

It seems we have been seeing these types of headlines almost everyday for the last few weeks. As long as the market continues to make historic movement we will be sitting on the sideline. We were seeing a glimmer of hope that we could go live at the end of last week until the SEC decided to restrict short-selling of financial stocks sending the markets into an even heavier flurry.

Historic market movements continue

"U.S. stocks surged, extending the biggest two-day global rally since 1970" and the U.S. SEC restricted short selling on nearly 800 U.S. companies. Again, while this may be good news for the U.S. Financial market, these continue to be unstable markets far outside the normal trading conditions that are ideal for our system. We again are experiencing above normal drawdown as a result of this ultra high volatility market.

Emotion Free Trading/Investing

I have posted on this point before but I thought today, with things being slow, would be a good day to reiterate the point. (Originally Posted Feb 28, 2008 as part of my Trading System post)

Emotion Free Forex Trading. Forex trading can be VERY stressful for both the trader and the investor. Our system is designed to take all of the emotion out of the trade. Every possible trade scenario has a rule attached that indicates to the trader what to do. My job as lead trader is 1) analyze the market prior to the open to determine if any fundamental factors require placing the system on hold that day and 2) to analyze the effectiveness of the system and strategies making changes when/where necessary. These changes however are NOT made on a daily basis since not every trade will win and no system will win every day. These changes are typically made monthly.

Emotion Free Forex Investing. Is there such a thing? I doubt it. But there are ways to reduce the daily stress of Forex investing. First, NEVER invest money you can't afford to lose. I can't even imagine the stress and emotion that would go along with that. Second, only check your account weekly. I know this sounds easier than it is, but you will find that Forex is a 6 steps forward 5 steps back process. If you are checking it daily you will be on such an emotional roller coaster that you won't be able to happily live your life. You will find that on winning days I am your favorite person and on losing ones your least favorite. But you shouldn't have to go through that kind of emotional daily ride. Third, knowledge is power. Learn everything you can about Forex. Understand the risk, the reward, and the fundamental reasons why currencies do what they do. If you get so good that you decide to pull your money and trade on your own, I welcome you to do it. If not, I am happy to continue to trade your funds. Just learn so that you know what your investment is (Here is a good place to start).

Why we continue to wait.

You may wonder why we continue to hold off going live. The reason is is that our system relies on reasonably stable market conditions to perform at its peak. It is true that the system has had remarkable success over the last few days through turbulent conditions but the exact opposite very easily could have occurred had we been positioned in the opposite direction of the market. To give you a better idea of how crazy things are right now, take a look at this weekly volatility index showing the spike in volatility over the last month.



We will continue to monitor the situation and "pull the trigger" when we feel that conditions have settled down. I am still optomistic that that will happen this week.

Terrific Day

The market continues it's uncertainty but our system ended the day up again. As of this post the Alpari Demo (30+ days trading) account is up 7.25% equity and 30.2% closed balance. The Varengold Demo account (approximately 1 week trading) is up 7.2% equity and 7.4% closed balance.

At 12:30 PM EST today we closed all unhedged trade sequences and waited for the U.S. Interest Rate announcement release. As expected the U.S. Federal Reserve kept the Fed rate at 2.00% and in it's statements was dovish about future interest rate decisions. The market is pricing in a rate cut expected before the end of the year.

Now to when we will go live. We have been saying that we would wait for the announcement to come out and then make a decision. And while the system has performed remarkably well considering the violent market circumstances it has faced over the couple months, we are still wary about conditions and would prefer to stall going live with our own funds until the storm has for the most part subsided. Russia's markets nearly collapsed today, AIG is teetering on the brink of bankruptcy, crude oil continues its drastic drop - down another 4.8% today after losing about 7% yesterday, and "the Reserve Market Fund became the first money market fund in 14 years to expose investors to losses". So after what happened yesterday (now being called Black Monday) and continued into today, we would prefer to continue to "wait and see". As always, our commitment to our clients is that we won't trade your money if we aren't comfortable trading our own. And so we wait...

The best trading system in the hands of an undisciplined trader is a losing system. - Jake Bernstein

Today - A quick glance

To give you some idea as to the possibilities for the unexpected awaiting us today, take a look at the economic calendar slated for today.


Red = High Impact
Orange = Moderate Impact
Yellow = Low Impact

Now in a typical day we may see one high impact(red) financial report being released with usually 3-5 total per week. Today we have 8! This just underscores the sentiment in the market right now as investors try to determine what to do next after the largest bankruptcy in U.S. history yesterday, a possible US Fed rate cut, and other major Financial institutions (see AIG, Merrill Lynch amongst others) feeling the same heat Bear Stearns and Lehman Brothers did. To say that this will be a volatile day is a drastic understatement. Let us sit back and enjoy.

Stocks fall most since 9/11 - System holds up VERY well.

Well, as expected, it was an exciting day to say the least. The U.S. financial markets endured what was one of their worst days in history. All in all, our system held up extraordinarily well. We finished the day still up 5.5% equity and 9.5% closed balance(since Sept 10th) on our Varengold demo account and still up 4% equity and 38% closed balance(since Aug 15th) on our Alpari demo account. Our system was not designed for the historic volatility we have seen over the last few weeks but considering everything it continues to weather the storm. We will now be looking to see what the U.S. Federal Reserve does with it's interest rate statement tomorrow before officially going live.

Expect More Turbulence (WITH UPDATES)

With Hurricane Ike unexpectedly cutting U.S. refining capacity by 20% and the Forex spot market being closed over the weekend, we are expecting a significant gap in price from where we closed on Friday versus where price will likely reopen on Monday morning. This gap could have a significant impact on our demo accounts. We also expect to see an "interesting" week of trading. This all means we will continue to hold off trading live money until the markets calm back into a range. As you know, we have been looking for an ideal opportunity to begin trading again and due to the turbulent market conditions over the last month we have as yet been unable to start.

Also, although we have been trading the last few weeks on our demo account, we would NOT have traded these conditions with live funds. We have kept the demo account running because we are needing to test the system's resilience to unstable market conditions and considering what has happened over the last month it has held up remarkably well.

UPDATE (Monday, 1:45 AM EST): I should also note, how wall street reacts to the Lehman Brothers financial situation should have a huge impact on currencies early this week. Before going live we will be waiting for the markets to price in a reaction to the Hurricane, the Lehman Brothers situation, and for the U.S. interest rate announcement to come out Tuesday at 2:15pm EST.

UPDATE (Monday, 2:15 AM EST): Well, the Frankfurt market opened about 15 minutes ago and we are seeing some pretty drastic price movements. To put the action so far in perspective, we have seen as much movement on average per pair in the last 15 minutes as we typically see in an entire day. This could be a very rocky day. Again, no real money trading until things calm down.

Varengold Live Demo Account

We have received multiple requests to start a live demo using the broker where our live real accounts will be traded. So we have opened a demo trading account at Varengold which is in addition to our Alpari demo account. Because the demo account will be traded using the exact same price quotes as our live trades it will be a much more accurate depiction of potential results. We will continue to trade the Alpari demo but for those of you who would like to watch a demo traded using the exact same price quotes as our live accounts click here.

Proceed with Caution

With markets still adjusting to the Fannie/Freddie news we will again stay out of live trading today. At the close of the NY session today we will assess the situation and determine whether we will begin trading live Tuesday night or stay out of the market even longer.

Delay going live due to Fannie Freddie News

As many of you know, the U.S. Federal Reserve took control of Fannie Mae and Freddie Mac over the weekend adding more fuel to an already volatile market. We have made the decision to wait until things calm back down before going live on our trading accounts. We anticipate going live Tuesday afternoon. I highly recommend you read the link above to the story about the Fed intervention. We are seeing historic moves by the Fed that will have dramatic impacts on mortgage industry since Fannie and Freddie "make up almost half of the $12 trillion U.S. mortgage market."

Historic Movement and the effects on our system

The moves we have seen over the last 4-6 weeks and especially those by the U.S. Dollar and Japanese Yen pairs have been historic. Both the Yen and the U.S. Dollar have made historic gains against their counterpart currencies. Such large, fast, and direct moves do not play well with our system which relies so much on a currency making sufficient retrace movement and eventually returning to a range. For this reason I warned on Monday that we were in for a "roller coaster" ride this week. We would not have traded this week had we been trading live money but I saw this as an opportunity to test the limits of our system against extreme market conditions.

Well, yesterday alone proved to be close to, if not, a worst case scenario for our system as we saw one of the signal largest gbp/jpy and eur/jpy moves in those currencies pairs' history combined with a larger than normal move by the U.S. Dollar. Over the last 6 weeks we have watched the U.S. dollar gain nearly 20% against the Australian Dollar, over 12% against the Euro, and over 13% against the British Pound while the Yen has picked up over 11% against the Euro, nearly 14% against the British Pound, and nearly 19% against the Australian Dollar.

What does this all mean? Well, I am personally esctatic at how well the system has held up considering the circumstances (as of this post our demo account is only down 9% from our original balance). And while we may not have seen the bottom of these moves yet, it is comforting to know that this drawdown will come back and we still have most of our original balance. I think what is important to learn from the past week is that each one of us as investors of the system must come to decide for ourselves what our maximize personal risk really is. Weeks like these reinforce the importance of not trading money we can't afford to lose and understanding the risk involved with Forex.

So, we look forward to getting today's news (the largest of the month) and a potential rocky weekend past us. Monday will soon come and bring with it a new week and an opportunity to put this one behind us.

One last hurdle to finish the week.

Well, as we predicted it has surely been a roller coaster ride this week. With the hurricane on Monday, crude oil dropping $10 a barrel on Tuesday, 4 interest rate statements including both the Euro and Pound announcements today, a second hurricane looming, and speculation on how the U.S. job numbers will come in on Friday, we have seen some of the largest swings of the year. And considering everything the system has held up well. Yes it is floating a drawdown and equity is currently 2% less than when we started this demo 2 weeks ago, but considering everything I am ecstatic at how well it has held up and the drawdown will come back to profit. As I posted before this week began, we are not trading live money this week. We have one last hurdle before the week is over; U.S. Non-Farm Payroll Report. And so, on Monday we will officially begin trading client funds.

Opening an Account with Varengold

We have had numerous requests for additional instructions on the process of opening an account with Varengold Bank FX. Here are the steps you will need to take.

1. Use this "Account Setup Walk Through Guide" created to help you through the steps below.
2. Click here and fill out the online application at Varengold to get started.
3. Once you have completed the application an email will be sent to you with additional instructions.
4. Follow very carefully the instructions in the email and use the walk through guide to assist you.
5. Print and Sign the "Limited Third Party Management Mandate" and "Pay Agent Instructions"
6. Mail all necessary documentation to Varengold Bank FX in Germany.
7. Continue with the "Steps to Trading Your Money Live".

Live Trading Week of September 1, 2008

It is most likely going to be a roller coaster ride the next couple days until Hurricane Gustav blows through the gulf region. Over the weekend we saw HUGE moves in after market hours because it became probable that the hurricane could be the worst the gulf region and specifically the oil/gas platforms located in the gulf have seen in a very long time(worse than Katrina or Rita). That huge move has caused us some temporary headaches/drawdown on our demo account. Until the Hurricane passes and it's damage is assessed we are most likely going to see continued strength from the US dollar, the Euro, and the Yen which is contrary to the direction we need to see from those currencies in order to get back to profit on our drawndown trades.

We also have 5 news announcements with the potential to significantly move the market and potentially cause some trouble for our system. The 5 announcements include 4 interest rate announcements and the U.S. non-farm payroll numbers report coming out Friday.

Any money deposited this week will NOT be placed into live trading until next Monday because of the higher than normal possibility for large adverse swings this week.

"Steps to Trading Your Money Live"

We have added the "Steps to Trading Your Money Live" to help simplify the process.

Backtest Results with Current Settings

As you know, we have drastically changed our trade settings and so I wanted to post the updated backtest results. Here they are.

New Live Demo (UPDATE)

UPDATED: We've had numerous requests to have the live demo account running at the broker that live real accounts will be traded. So we have opened a demo account at Varengold Bank FX and have changed the below instructions accordingly. If you were watching the previous demo at Alpari you can continue to do so.

We have a new live demo running. Follow these steps to watch:

INSTRUCTIONS TO OPEN AND VIEW DEMO ACCOUNT (Updated September 10, 2008):

1) Download Varengold Bank FX Metatrader 4 Platform here. (This is different from our previous demo)

2) It will ask you if you want to save MT4setup.exe. Click Save File. Save the file to a directory where you will be able to find it easily.

3) Once the file is downloaded, open the file from the directory you saved it in. Complete all necessary steps for installing the MT4 platform.

4) Open the Varengold Bank FX Metatrader 4 program.

5) A window will pop up allowing you to 'Open an Account'. You do NOT want to open a new account so click 'Cancel'.

6) The Metatrader 4 program may ask you if you want to update. Click yes and wait for the update to complete and restart. If not, proceed to the next step.

7) Click the 'File' menu in the upper left-hand corner, move down and select 'Login'

8) A window will pop open asking for the 'Login', 'Password', and 'Server'. Insert:
Login: 11013443
Password: 1nvest0r
Server: Varengold-Demo

if you would prefer to continue to watch the Alpari demo the login information is:
Login: 252305
Password: 1nvest0r
Server: AlpariUK-Demo
(You must download the AlpariUK Metatrader platform here)

9) Once you are logged into the demo account. You can select 'Terminal' from the 'View' menu to look at the Open Trades as well as the Account History.

10) To learn more about the Metatrader software and how to use it, download the user guide here.

Live Trading

We are currently accepting clients for account management. Make sure to watch the live demo that will be running from here on out (click here for the updated live demo information). See your Tradewinds representative for details.

We will no longer be posting regular updates to this blog and so we encourage potential clients to follow the live demo to get an idea about how the system is performing.

Full System Live Testing Update

I just got back from a week and a half in Panama to find the autotraders stopped running. We believe we have the problem fixed and will get them up and running again for tonight. So far for the month, the system is slightly above breakeven. If we were to take out the 2 days we traded when we normally wouldnt we would be up about 4% for the month.

Full System Live Testing Update

Well, not much to report other than that the system continues to trade. The results were mixed. It was a very flat week for the market and the system finished slightly better than breakeven. I wish I had more to say but again its just a matter of getting through until the end of the month so that the autotraders and the system have some time to prove themselves.

July and August Results

We will not be posting results for either July or August. We hope to begin posting results again in September.

Full System Live Testing Update

At this point, our updates are pretty limited. We are just simply waiting for a few weeks of straight demo trading before we take our next step. We have been adding minor security features to the auto traders and preparing an off site server. Other than that, it is more a matter of watching and waiting. You can, of course, watch the system as it trades real time (click here). We are currently experiencing a minor drawdown which is typical and hope to soon see the market break out of it's lull and give us some (fake) profit. :-)

Full System Live Testing Update

The auto traders continue to perform as they should. Now it is just a matter of letting the system run. We are currently in a drawdown period. I calculated that the "No Trade Days" lost about 2.7%. If we were to take that amount out of our current drawdown we are down nearly 4%. One of the questions that was unable to be answered through our backtesting is what is the typical drawdown across the system as a whole. We know what the drawdown of each individual pair has been but it is impossible to backtest the pairs collectively. I anticipate 10-15% will be the maximum drawdown of the system as a whole but we just don't know for sure.

While the auto traders trade we have been working on a few additions that will make them more stable and possibly more profitable. I will update you if any majors changes are made that drastically alter our existing backtest results.

Full System Live Testing Update

Another successful trading day. This time all strategies and auto traders functioned correctly and we made up most of the losses from trading two "no trade days"(NFP news day on Thursday and 4th of July Holiday on Friday). As of this post, we are still in 2 EUR/USD positions. One will be closing in about an hour and a half and the second could rollover to tomorrow. If you haven't yet downloaded, installed, and logged into the live demo - click here.

Full System Live Testing Update

The auto traders traded flawlessly last night. We saw no conflicts between the different strategy codes and every pair entered as they should. Unfortunately trading a 'no trade day' resulted in a 3% account drawdown but that was expected.

Reminder - Trading 'No Trade' Day

Just a reminder that we will be demo trading the Fourth of July even though, under normal circumstances, we would not. The reason is, is that we are still testing how the individual Auto Traders react to one another when trading on the same platform. There is a high probability that the system as a whole will lose tonight/tomorrow. If the losses are so large that it drastically effects the accuracy of our results than we may consider starting the demo account back over one more time. For those in the United States we'd like to wish you all a happy and safe 4th of July!

Full System Live Testing Update

The entire system ran without problems today. Our rules would normally NOT have us trade today (release of non-farm payroll report). However, since a conflict between auto traders has been occurring over the last few days, I wanted to see if our fixes had actually worked - and they did! Of course, the profit results because we traded a 'no trade day' were not impressive drawing the demo account down 2%. But at this point it is more important to use everyday to improve the system than to log accurate trade performance.

Tomorrow is the fourth of July, another day we typically would not trade. But again, right now we are testing for more than just results and so we will trade the 4th just to continue checking for bugs in the execution of the auto traders.

Conflict between Auto Traders

There seems to be some sort of conflict when all three auto traders are trying to trade simultaneously. Of course, it is 1:00am MST and so our programmer is asleep and won't be able to address the problem until tomorrow. That leaves us with only one trade for the entire day and all three auto traders unwilling to cooperate. It is rather frustrating but this is why we test, test, and retest. On the positive side, the trade that did enter was a winner.

UPDATE (1:40AM): Well, I've rebooted all three traders to see what effect that has. I am going to bed now and hopefully our computer report log will give us some sort of clue as to what conflict might be occurring. Either we'll wake up in the morning with everything having traded as planned, everything a mess, or no new trades at all. The suspense is killing me. :-)

UPDATE (8:30AM): After reseting everything, when I woke up this morning the 10-pair Intraday was running smooth. The EUR/USD Daily was running smooth. But the GBP/USD strategy was not. The conflict may be the fact that the code was created with only the GBP/USD in mind and since we have added the EUR/USD under the same parameters in may be causing the conflict. Our programmer is looking into it and hopefully will have it corrected for tonight.

June 2008 Hypothetical Results

Here are the results of how the full system would have performed had we used in June the settings we are currently using on our three strategies (10-Pair Intraday, EUR/USD Daily Strategy, and GBP/USD Strategy using same rules also for EUR/USD).

The new EUR/USD daily strategy performed abnormally well. Historically this strategy does not produce even half as much as these results. The Intraday strategy had a below-average month and both the GBP/USD and EUR/USD using the GBP/USD strategy ended the month about average.

Based on $100,000 account
Intraday Strategy	Profit	Profit %	Max Drawdown
EUR/USD	$5,264.01	5.26%	-$2,002.00
GBP/USD	-$248.00	-0.25%	-$3,674.00
USD/CHF	$1,253.04	1.25%	-$1,471.58
USD/JPY	-$1,149.12	-1.15%	-$1,355.46
EUR/GBP	-$1,001.02	-1.00%	-$4,898.80
EUR/CHF	-$2,451.92	-2.45%	-$4,198.90
EUR/JPY	$2,326.36	2.33%	-$2,755.08
GBP/CHF	$402.30	0.40%	-$2,939.56
GBP/JPY	$5,710.78	5.71%	-$5,787.68
CHF/JPY	-$1,361.01	-1.36%	-$2,163.22
Total	$8,745.42	8.75%	----------
GBP/USD Strategy	Profit		Max Drawdown
EUR/USD	$11,117.46	11.12%	-$6,715.00
GBP/USD	$11,939.44	11.94%	-$7,328.00
Total	$23,056.90	23.06%	----------
EUR/USD Daily Strategy	Profit		Max Drawdown
EUR/USD	$32,237.28	32.24%	-$5,642.42
Total	$32,237.28	32.24%	----------
Tradewinds System	Profit
Intraday Strategy	$8,745.42	8.75%	----------
GBP/USD Strategy	$23,056.90	23.06%	----------
EUR/USD Daily Strategy	$32,237.28	32.24%	----------
Total	$64,039.60	64.04%	----------

Keep in mind this is not taking into account slippage, extreme market conditions, etc. Also our auto back tester is not able to test all pairs combined which means these results are not cumulatively compounded.

Based on $100,000 account
Intraday Strategy	Wins	Losses	Win %
EUR/USD	32	42	43.24%
GBP/USD	34	76	30.91%
USD/CHF	12	12	50.00%
USD/JPY	2	14	12.50%
EUR/GBP	24	56	30.00%
EUR/CHF	10	24	29.41%
EUR/JPY	16	20	44.44%
GBP/CHF	24	40	37.50%
GBP/JPY	32	42	43.24%
CHF/JPY	8	24	25.00%
Total	194	350	35.66%
GBP/USD Strategy	Wins	Losses	Win %
EUR/USD	43	41	51.19%
GBP/USD	50	55	47.62%
Total	93	96	49.21%
EUR/USD Daily Strategy	Wins	Losses	Win %
EUR/USD	18	4	81.82%
Total	18	4	81.82%
Tradewinds System	Wins	Losses	Win %
Intraday Strategy	194	350	35.66%
GBP/USD Strategy	93	96	49.21%
EUR/USD Daily Strategy	18	4	81.82%
Total	305	450	40.40%

755 Trades were taken with a win percentage of about 40%.

Full System Live Testing Update

I hope everyone was able to successfully download, install, and log in to the latest full demo now at Alpari-US. It took about 24 hours to get the autotrader back up and running on the new server and so only the GBP/JPY pair traded last night with a small 1/2% gain on the day. Tonight we should have full functionality (knock on wood). We currently have a EUR/USD trade open and the Intraday strategy starts in about 4 hours. The GBP/USD strategy begins at midnight. If you have trouble seeing the live demo contact your Tradewinds Rep.

2nd Quarter Results

Since our 2nd quarter has mainly been used to test the updates to the system and no live trading has occurred, we will not be posting results for this quarter.

Tradeview Server Errors - CHANGE DEMO ACCOUNT

After assessing the problems experienced last night, we have come to the conclusion that it would be best to move our live trading demo account to a more stable demo server. This will require those of you watching the demo trading live to download the software from an entirely different company. Here are the new instructions.

We chose to trade our demo account with Tradeview because our broker of choice, FXCM, only allows real money accounts and Tradeview has spreads similar to those that we expect to receive from FXCM. Unfortunately, Tradeview is a new Forex company and continues to have problems. On Friday for instance, the servers went down for 2 hours in the afternoon. It didn't have any effect on our trading because we had closed all but one trade by that point. However, with more problems last night drastically effecting our ability to accurately track the effectiveness of the strategies we decided it better to change companies early on rather than continue to fight these problems. We are putting in place error alerts so that if this were to happen on a live account server with real money the trader monitoring the accounts at that time would know instantly of the problem and would be able to resolve the error quickly.

Full System Live Testing Update

I woke up this morning to find that the auto trader had stopped working around 2:00AM for no apparent reason. Looking through the server log we get a connect error around that time and from then on out no new trades were entered and the trades we were in did not close as expected. I believe the bug has to do with the transition from the market close on Friday to the open on Monday. This is the first time we had run the program during the closed weekend period. I will reboot the auto trader and we should begin to get new trades again starting this evening. In the mean time, we will work to find the bug that caused the problem last night so that we won't have it happen again.

Full System Live Testing Update

The full system traded last night with only a few minor glitches. Due to an error on my part the GBP/JPY pair was taken out of trading early on. Also, the AUD/USD was not fully functional. Other than that, the system traded exactly as expected. The results were not real exciting as it turned out to be a rather slow Friday, but it was exciting to see the auto traders executing their orders per our desired settings. As you can see on your demo platform, at this very moment we still have 6 trades open and the account equity is sitting right at $100,100. As soon as the day has officially ended I will post the results. (Here are the instructions for watching the account in real time).

UPDATE (4:02pm EST): Here is the updated trade report for those not watching the demo live. There remains one open trade with a floating profit of $750.50 that will not close until Monday. As of this minute, the account has a closed balance of $99,868.02 and equity of $100,618.52.

Full System Live Testing Update

I activated each strategy and the corresponding auto trader last night. The 10-Pair Intraday ended the day up 0.12%. The EUR/USD and GBP/USD auto traders, however, did not execute their trades. This is disappointing considering both would have had sizable wins. We are assessing the problem and hope to have it fixed in time for tonight's session.

If you have not downloaded the platform to watch the trades in real time, you can do so by following the instructions here.

If you would prefer not to download the platform you can see the updated trade report here.

Watch the system run on a live demo account!

As you know we have been live testing the 10-pair Intraday strategy for nearly two weeks and the EUR/USD strategy for 5 days now and both seem to be running as we had hoped. We have also reached a point in the programming of the GBP/USD auto trader that it is ready to begin it's live testing period. I thought all of you might find it useful to have access to the demo account trading the system as a whole. The account will be running live starting tonight at midnight MST. Keep in mind, there will continue to be changes made daily to the different strategies as we find ways to make them more efficient and profitable.

Update: With the problems we have had with Tradeview's servers, we have opted to change our live demo trading to Alpari-US. As you know, we have been approved with FXCM for our actual real money trading but they do not give the option of trading demo accounts.

INSTRUCTIONS TO OPEN AND VIEW DEMO ACCOUNT (UPDATED JUNE 30th):

1) Download Alpari-US Metatrader 4 Platform here.

2) It will ask you if you want to save MT4setup.exe. Click Save File. Save the file to a directory where you will be able to find it easily.

3) Once the file is downloaded, open the file from the directory you saved it in. Complete all necessary steps for installing the MT4 platform.

4) Open the Alpari-US Metatrader 4 program.

5) A window will pop up allowing you to 'Open an Account'. You do NOT want to open a new account so click 'Cancel'.

6) The Metatrader 4 program may ask you if you want to update. Click yes and wait for the update to complete and restart. If not, proceed to the next step.

7) Click the 'File' menu in the upper left-hand corner, move down and select 'Login'

8) A window will pop open asking for the 'Login', 'Password', and 'Server'. Insert:
Login: 56289
Password: zosk1ul
Server: AlpariUS-Demo

9) Once you are logged into the demo account. You can select 'Terminal' from the 'View' menu to look at the Open Trades as well as the Account History. You can also open the following currency charts to see the trades in action.
GBP/USD; EUR/USD; USD/JPY; USD/CHF; GBP/EUR; GBP/JPY; GBP/CHF; EUR/JPY; EUR/CHF; CHF/JPY; AUD/USD

10) To learn more about the Metatrader software and how to use it, download the user guide here.

Live Testing Results - Intraday Strategy

Here are the results through today, June 25th. Up 2.4% in 8 trading days. It was a pretty flat day in the market as market players waited to see what the Fed would do with interest rates at their monthly meeting today.

Live Testing Results - Intraday Strategy

Here are the results through today. Up 2.1% since we started 7 trading days ago.

Live Testing Results - Intraday Strategy

Here are the results for the 10-Pair Intraday strategy through today. Up a little over 1.5% since June 16th.

GBP/USD Strategy Update

The GBP/USD is nearly debugged. It is to a point where I can backtest it and so I have been doing so. I have tested since 2005 with promising results. Here are the reports for the last 12 months and since the beginning of 2008.

There are some changes that are being programmed that will adjust the results some. As soon as those changes are complete I will post updated reports. We will also beginning live testing this auto trader later this week.

Possible EUR/USD Strategy

While researching different money management plans used by other traders, I came across a EUR/USD strategy that really intrigued me. I have discussed this strategy with the other 3 and we are strongly considering using it as part of our overall system. Again, this strategy is NOT mine. I tend to shy away from using other people's strategies for one main reason. Every strategy works because of certain fundamental factors. And when the market changes such that those fundamentals no longer have the same effect, the strategy will stop working. If I am using someone else's strategy, I may not know what those fundamental factors nor be able to make parameter adjustments to meet the changing market. However, this EUR/USD strategy is extremely simple and I know the reason why it works and why it doesn't work. I believe adding it to the mix would help diversify our system to be profitable across multiple market types.

Here are the preliminary backtest results for 2008 and for the last 12 months.

Live Testing Results - Intraday Strategy

Here are the results of the entire week. Finished up about 1/2%.

Live Testing Results - Intraday Strategy

Above breakeven for the week again. Here is the report through today.

Progress Report (WITH UPDATES)

The Intraday 10-Pair Mini Trending Strategy has had two losing days in a row now due to a flat market. As we had noted in previous posts, the problem with this strategy is that it depends on mini-trends to win and we have seen very few in the last two days. Our overall direction is to line up several strategies that win in varying market conditions. The GBP/USD strategy that relies on entirely different market conditions has been programmed and we are currently working on it's unique and exciting new money management plan. We have also done some preliminary programming on a version of our Intraday strategy that will utilize 6 pairs to win during ranging markets such as yesterday and today. That strategy would most likely only be traded when both the European and U.S. markets are closed since it would not fair well during trending periods.

So here is a summary of our progress thus far.

1) Intraday 10 Pair Mini-Trend Strategy - Programmed; Debugged; Backtested; Being live demo tested currently

2) Intraday 6 Pair Ranging Strategy - 90% Programmed;

3) GBP/USD Strategy - Programmed; In the process of being debugged; Adding new money management plan

UPDATE (July 1, 2008) - We have since added a daily EUR/USD strategy that takes about one trade per month. The Intraday 10 Pair is ready to go. The Intraday 6 pair ranging strategy is still in development and is unlikely to be traded live within the next 60 days. The GBP/USD Strategy is programmed, debugged, backtested, and being tested live alongside the EUR/USD Daily and the Intraday 10 Pair.

Live Testing Results - Intraday Strategy

Here are the results for the Intraday Strategy today.

Live Testing Results - Intraday Strategy

Here is the latest trading report.

Live Testing Results - Intraday Strategy

We finished the lot size/cash management engines for the Intraday Strategy auto trader last week and now the program is running flawlessly. I have opened a new and separate account and will run that account non-stop all this week posting the daily results as they come in. Attached is the link to the results for today. Keep in mind, the updated GBP/USD strategy is not completely debugged yet and so I will not be posting those results until it is running as it should.

June 16, 2008 Statement

Note: This demo account (fake money traded in real market time with real market pricing) is at Rosenthal Collins/Tradeview Forex because FXCM does not have the ability to run demo accounts yet. I would post live results with real money but in order to accurately gauge money management, this system needs to be run on a minimum of $50,000 and I am not comfortable running it on $50,000 live just yet.

Forward Testing Update

We have been running the auto trader, without stopping, for over a week. We have found numerous additional errors that have been corrected. We will continue this process until we have one week straight without any bugs, problems, or errors. We have had some difficulty calculating lot sizes for the 10 different currency pairs we are testing and so our results are not accurate. In spite of the bugs/errors, inaccurate lot size orders, etc, the system has been profitable over the last week. I am sorry I don't have more to report but at this point it is a matter of allowing the live market to work out the remaining problems.

Balance vs. Equity - Closing accounts prematurely

I have included, in previous posts, about a dozen links to the standard print off that our auto trader gives when it completes a backtest. Included with that report is a graph showing the movement of the results daily balance. I want to take a moment and make sure everyone understands how to read the graph. While the graph for the most part is very straightforward, there are a couple aspects worth noting including the balance line vs equity line. So here is a basic run down of how to read and understand the graph.

(Click on the image to enlarge it)
Attached is a graph representing the balance changes of the GBP/JPY Daily extension strategy from December 6, 2007 - April 6, 2008. The numbers on the right represent the overall balance, the numbers on the bottom represent the trade transaction number. You can find the actual trade numbers on the report list and use that number to match up the date. There are two lines, the blue balance line, and the green equity line. I really wanted to write this post so that I could point out that green equity line. If we decide to implement this strategy into the overall system, we will have times when our balance is higher than our equity. What that means, is that we have trades open that are in the red that if closed, would shrink our balance to the equity figure. Our current strategy does not have trades open overnight and so this really has not been a factor. If we choose to add this strategy, we all need to understand that there will be times when we have losing trades open for weeks. If someone chooses to close their account, that losing trade would be closed prematurely and the balance would shrink to that equity number.

For comparison sake, here is a graph of our Intraday strategy that does NOT carry positions overnight. Notice no green equity line.

System Extensions Testing

As I had mentioned in an earlier post, we are working on a few system extensions that would hopefully smooth out the profits vs losses. I spent most of the day testing the auto trader created for our potential GBP/JPY daily time frame extension. The exciting thing about this extension is that it is NOT as heavily influenced by changes in markets. Using the same triggers over the last two years it has consistently returned profits. Keep in mind, this is an extension using a daily timeline. What that means is that while the majority of our trades are closed within just a few hours, this extension takes trades based off of daily signals and includes trades that are open for weeks and sometimes months. It has not been decided whether we will trade this extension. While the past returns are impressive, the downsides of having trades rolling over from one month to the next may out way the positives of a extension such as this one.

The extension trades the GBP/JPY. Here is the 6-month past performance, and the 24-month past performance.

Detailed Intraday Backtest Results

I have found a way to post the HTML files that contain the detailed data for the results of each of the 10 intraday pairs from December 1, 2007 - May 31, 2008. Click the pair you wish to see below to be redirected to the link containing each individual report.

EUR/USD
GBP/USD (Intraday strategy only)
USD/CHF
USD/JPY
EUR/GBP
EUR/CHF
EUR/JPY
GBP/CHF
GBP/JPY
CHF/JPY

Some things to note about the back test results:

First. Take a look at the Past/Hypothetical Performance Alerts post again. Past results do not guarantee future performance. It will require constant assessment of the triggers to keep the system profitable.

Second. The back testing was done using a different broker(Alpari - UK) other than FXCM. The reason for this is that FXCM does not have precise data going back further than 30 days. This should not have a significant impact on our results but I wanted everyone to be aware of that fact. Alpari's spreads are higher than those being quoted by FXCM and so, in theory, the results would have been better had FXCM been able to provide past data.

Third. While the strategy as a whole is based off of the same specific indicators/signals, the way these indicators are used is distinct for each pair depending on the tendencies of that pair. For instance, the GBP/JPY is more likely to trend (thus be profitable) than the EUR/USD from 4:00 - 8:00am London time because the GBP/JPY is more heavily traded during the Japanese session. Therefore, the GBP/JPY is traded during that time while the EUR/USD is not. Slight variations have been attributed to each pair so as to maximum that pair's potential.

GBP/USD Strategy Upgrade Update

For those wondering how our autotrader for the GBP/USD strategy is coming along, here is the latest. The strategy has been programmed but needs debugging. Now that we have begun running the Intraday live testing, we will have more time to finish up the GBP/USD upgrades and get it testing live as well.

Month by Month Intraday Strategy Backtest data

Here is the attached, month-by-month, results of the individual tests done of each pair. We have cut the number of tradeable pairs to 10 due to overly high spreads on the other 3. Keep in mind, this does NOT include the upgraded GBP/USD which still has a little work left before it will be ready to backtest. (UPDATE: Here is the link to the post containing the actual detailed data.)

	Currency	Starting Balance	Ending Balance	Profit	Return %
Dec	EUR/USD	$100,000.00	$103,912.00	$3,912.00	3.91%
Dec	GBP/USD	$100,000.00	$101,879.00	$1,879.00	1.88%
Dec	USD/CHF	$100,000.00	$102,068.00	$2,068.00	2.07%
Dec	USD/JPY	$100,000.00	$99,932.00	-$68.00	-0.07%
Dec	EUR/GBP	$100,000.00	$99,955.00	-$45.00	-0.05%
Dec	EUR/CHF	$100,000.00	$102,400.00	$2,400.00	2.40%
Dec	EUR/JPY	$100,000.00	$105,162.00	$5,162.00	5.16%
Dec	GBP/CHF	$100,000.00	$100,674.00	$674.00	0.67%
Dec	GBP/JPY	$100,000.00	$102,626.00	$2,626.00	2.63%
Dec	CHF/JPY	$100,000.00	$100,809.00	$809.00	0.81%
			Month End Total	$19,417.00	19.42%
	Currency	Starting Balance	Ending Balance	Profit	Return %
Jan	EUR/USD	$103,912.00	$103,740.00	-$172.00	-0.17%
Jan	GBP/USD	$101,879.00	$103,354.00	$1,475.00	1.45%
Jan	USD/CHF	$102,068.00	$101,471.00	-$597.00	-0.58%
Jan	USD/JPY	$99,932.00	$101,526.00	$1,594.00	1.60%
Jan	EUR/GBP	$99,955.00	$103,247.00	$3,292.00	3.29%
Jan	EUR/CHF	$102,400.00	$100,969.00	-$1,431.00	-1.40%
Jan	EUR/JPY	$105,162.00	$108,297.00	$3,135.00	2.98%
Jan	GBP/CHF	$100,674.00	$100,553.00	-$121.00	-0.12%
Jan	GBP/JPY	$102,626.00	$109,332.00	$6,706.00	6.53%
Jan	CHF/JPY	$100,809.00	$102,113.00	$1,304.00	1.29%
			Month End Total	$15,185.00	14.61%
	Currency	Starting Balance	Ending Balance	Profit	Return %
Feb	EUR/USD	$103,740.00	$106,560.00	$2,820.00	2.72%
Feb	GBP/USD	$103,354.00	$101,769.00	-$1,585.00	-1.53%
Feb	USD/CHF	$101,471.00	$101,709.00	$238.00	0.23%
Feb	USD/JPY	$101,526.00	$101,656.00	$130.00	0.13%
Feb	EUR/GBP	$103,247.00	$104,457.00	$1,210.00	1.17%
Feb	EUR/CHF	$100,969.00	$101,096.00	$127.00	0.13%
Feb	EUR/JPY	$108,297.00	$109,301.00	$1,004.00	0.93%
Feb	GBP/CHF	$100,553.00	$104,655.00	$4,102.00	4.08%
Feb	GBP/JPY	$109,332.00	$110,965.00	$1,633.00	1.49%
Feb	CHF/JPY	$102,113.00	$101,606.00	-$507.00	-0.50%
			Month End Total	$9,172.00	8.84%
	Currency	Starting Balance	Ending Balance	Profit	Return %
Mar	EUR/USD	$106,560.00	$109,521.00	$2,961.00	2.78%
Mar	GBP/USD	$101,769.00	$104,019.00	$2,250.00	2.21%
Mar	USD/CHF	$101,709.00	$100,449.00	-$1,260.00	-1.24%
Mar	USD/JPY	$101,656.00	$103,239.00	$1,583.00	1.56%
Mar	EUR/GBP	$104,457.00	$108,169.00	$3,712.00	3.55%
Mar	EUR/CHF	$101,096.00	$100,869.00	-$227.00	-0.22%
Mar	EUR/JPY	$109,301.00	$111,905.00	$2,604.00	2.38%
Mar	GBP/CHF	$104,655.00	$105,897.00	$1,242.00	1.19%
Mar	GBP/JPY	$110,965.00	$112,876.00	$1,911.00	1.72%
Mar	CHF/JPY	$101,606.00	$99,156.00	-$2,450.00	-2.41%
			Month End Total	$12,326.00	11.57%
	Currency	Starting Balance	Ending Balance	Profit	Return %
Apr	EUR/USD	$109,521.00	$114,896.00	$5,375.00	4.91%
Apr	GBP/USD	$104,019.00	$104,259.00	$240.00	0.23%
Apr	USD/CHF	$100,449.00	$106,210.00	$5,761.00	5.74%
Apr	USD/JPY	$103,239.00	$103,155.00	-$84.00	-0.08%
Apr	EUR/GBP	$108,169.00	$109,602.00	$1,433.00	1.32%
Apr	EUR/CHF	$100,869.00	$106,877.00	$6,008.00	5.96%
Apr	EUR/JPY	$111,905.00	$113,336.00	$1,431.00	1.28%
Apr	GBP/CHF	$105,897.00	$109,474.00	$3,577.00	3.38%
Apr	GBP/JPY	$112,876.00	$117,885.00	$5,009.00	4.44%
Apr	CHF/JPY	$99,156.00	$99,264.00	$108.00	0.11%
			Month End Total	$28,858.00	26.35%
	Currency	Starting Balance	Ending Balance	Profit	Return %
May	EUR/USD	$114,896.00	$117,058.00	$2,162.00	1.88%
May	GBP/USD	$104,259.00	$107,544.00	$3,285.00	3.15%
May	USD/CHF	$106,210.00	$109,154.00	$2,944.00	2.77%
May	USD/JPY	$103,155.00	$102,592.00	-$563.00	-0.55%
May	EUR/GBP	$109,602.00	$108,055.00	-$1,547.00	-1.41%
May	EUR/CHF	$106,877.00	$107,297.00	$420.00	0.39%
May	EUR/JPY	$113,336.00	$114,984.00	$1,648.00	1.45%
May	GBP/CHF	$109,474.00	$109,754.00	$280.00	0.26%
May	GBP/JPY	$117,885.00	$121,003.00	$3,118.00	2.64%
May	CHF/JPY	$99,264.00	$99,712.00	$448.00	0.45%
			Month End Total	$12,195.00	10.61%