"Interesting followup in the Age Newspaper 21-12-2016
CBA and NAB admit impropriety in foreign exchange trading."
Thanks for the article, WTJ.
Hi Norm,
Proximal = the nearest month’s futures. These are (to all intents and purposes) the same as spot forex, except that they’re centrally traded and therefore “volume” and “order flow” are available.
The prevalence of all the HFT arbitrageurs in the market predicates that any difference between the nearest “future month’s” price and the spot price is going to be extremely brief (milliseconds) and very small, so it’s reliable enough, to be able to judge the buying pressure and selling pressure (which is of course exactly what “order flow” signifies).
You would access it through a data-feed linked to the CME, where the futures are traded.
I believe that if you’re not actively trading them, but want them only for “information”, it costs only about $5 per month, so it’s not a huge deal.
It may even be possible to get a free trial, for a while, to see if it’s helpful, and you could do that by opening a demo account with a futures broker (such as AMP, NinjaTrader Brokerage, or whatever).
I don’t know how long the free demo of futures data would be for (but it’s clearly not going to be “time-unlimited” like a demo spot forex account with Oanda or wherever, because providing the data for order-flow and volume does actually cost the broker [I]something[/I], even if it’s pretty nominal).
Mine, on the other hand, doesn’t [I][U]at all[/U][/I].
Success in trading competitions is dependent on [B]totally different[/B] parameters from those applying to successful retail/indpendent traders, Norm.
One is about [I]risk management over profit maximisation[/I], and the other is the [B]diametric opposite[/B].
Really - they’re not just “different approaches”: they’re totally opposed and [B]directly[/B] conflicting approaches.
This is why “competition winners” very often make [B]dreadful[/B] trade managers, and why there are so many “investment accidents” involving them.
I’ll say no more about Nial Fuller, since you seem to be such an enthusiast, and offer another example, instead, of the kind of thing that’s (sadly) all too typical … someone called Larry Williams, of whom you’ve perhaps heard, did exactly the same kind of thing: he won promotional trading contests with gains of around 400-500% and profits of nearly $1,000,000. Following this, some people (actually [I]many[/I] people!) didn’t quite appreciate the difference between the “high-risk, profit-maximisation success” of winning competitions and the “risk-management, safety success” of retail trading, and were foolhardy enough to invest on the strength of his competition success in his “managed fund”, and lost all their money (there was litigation about it - it’s a fairly well known story).
And again, in July 1988, the Larry Williams Financial Strategy Fund was launched, followed in March 1989 by the World Cup Championship Fund, managed by Larry Williams, Jake Bernstein and two others. The 1988 fund lost more than 50% of its clients’ equity in barely one year, as reported in the October 1989 issue of [I]Futures[/I] magazine. The 1989 fund also lost more than half of its original equity by May 1990. This surprised and disappointed the investors, of course: [B]they were people who had become impressed with him based on competition-success[/B], and they didn’t quite appreciate that competition success is absolutely [B][U]no[/U][/B] indication of anything other than being able to win competitions (often with large numbers of entries!). :23: :58:
What impresses some people is rather a [U]red flag[/U] to others … I’m “just saying” … think whatever you like about Nial Fuller, Norm, but for myself, it isn’t logical at all to be impressed with him as a [I][U]teacher[/U][/I] because he’s won a competition - the two things are unrelated! :8:
Had to laugh at this.
I so agree with you on this. Everyone is a scalper IMO even these lofty folk that only look at 8hr and day charts because ‘that is where the most reliable signals are’ and because keeping trades open for days is ‘the proper way’ and defines you as a true trader. Load of crap. compare any chart on the day and then the minute chart and you will see exactly the same movement and signal opportunities. People want to look at day charts and take one trade a week - goooo for it. They are not mentally suited to watching quicker timeframes as it fries their brain circuitry. They have exactly the same odds of success as playing the minute chart because this is not about getting the perfect setup where the angelic choir is singing, trumpets are blowing, you are bathed in the warm glow of absolute certainty. I mean imagine waiting days for the perfect setup which you take and then BAM you get roasted. Try get back on and BAM youre roasted again.
Id rather play on the lower time frames where I can be in and out. If I get a string of losses I can quickly analyse whats wrong and adapt to the situation.
Regarding the original question, I dont know if I believe in stop hunting, in fact its irrelevant to me because sometimes it works in my favour and I get a spike that hits my target. When I do get one of those spikes… well it happens and it goes on my spreadsheet. Next trade.
I had to laugh at this too.
Your comments are incredibly floored.
Just spotted a li’l problem here that we may have overlooked…
Your SL was set at 1.04793 as you say. Highest price on my brokers’ platforms, as I’ve pointed out, was 1.04788 meaning that your broker’s price was at the time 0.6 pips higher @ 1.04794. And as a direct result of this slightly higher price, from your understanding, your stop loss was triggered.
However, even if your broker’s highest price was also 1.04788 it was highly likely if not certain - unless the spread was anything less than 0.5 pips - that you would have been stopped out anyway since your SL @ 1.04793 was positioned just 0.5 pips away from said high.
Note that when shorting a pair the spread must be added to the desired SL level since your SL is in essence a buy order and when you buy the broker gets paid the spread. For example, if you want an effective 10 pip stop selling EURUSD and the spread is 2 pips, your SL should be positioned, at a minimum, 12 pips away from the entry price.
When buying a pair though, you don’t have to make this this provision as you’ve already paid the spread at the point of entry.
Ran a little experiment on a 30 trade sample Demo during the week…
2 dice (12)… Every roll 6 or below was a sell signal, every roll 7 or above was a buy signal.
Result (12 buys -18 sells) pure math (chance) gives a close to central result.
Set a position of $0.10 per pip on the hour charts being a 30pip TP - 20pip SL which allows for 12 win to 18 loss break even (RR 1/1.5 with $2.00 risk)
Used 5 FX Majors and 5 FX Minors with a mix of Asian, European and US pairs.
Ok, applied 30 trades 10 on Monday Asian session, 10 on Wednesday during the Euro session and 10 on Thursday evening (Aust Time) the US session.
The results… 29 out of 30 trades stops were hit.
4 trades being stopped out after 1-2 hours (wrong direction).
18 trades closing after 4-7 hours with 5 reaching +28 pips before reversing to stop (volatility).
7 trades ran for over 12 hours ranging around before moving toward the stop and closing (who knows…)
1 trade closed in profit within 90 mins when price spiked up from 12 points away hit the TP and then continued away…
Result -$58 loss against a $3.00 profit…Pure math would give the odds of a profit after an experiment like this with a chance of 15 trades being in each direction, 18/12 losing trades would be classed as acceptable maybe even 25/5 as unlucky… but 30/29 shows…
I am going to run this set up each week for the next 4 weeks…
Just want to make sure I’m tracking with you, WTJ, so please don’t take this as insult.
Am I correct that your hypothesis is that with no factor other than chance dictating a position, with SL and TP set at a fixed level (2:3 RtR), a trader would generally be at break-even or close to it?
Basically that the market moves traders to break-even, or that odds are that the market moved traders to break-even?
I think I can predict that your experiment will be inconclusive at best, but will most likely generate very negative results. I would be interested in seeing the results, but I don’t think they would be helpful in proving anything about the broker. Even if true that random chance and market moves will mathematically work out to neutrality, I imagine that it would take a significant amount of time to see that play out.
Hi ToJas… no insult taken… this experiment is not aimed at the brokers, just FX as a viable income.
My hypothesis is that chance dictates market direction and set at a fixed level (2:3 RtR), a trader should be at break-even or close to it?
I am currently profitably scalping but would like to put less screen time in, so have been trading the higher time frame charts (with crap results).
I have found that for newbie’s picking market direction and an exit point (volatility) prior to entry is possibly the biggest issue. Hence the discussion on the distance of a SL. So to take the guess work out of direction I have substituted the dice as the traders decision process.
It could also be shown that a 30pip TP is to big to be effective against a 20pip SL. The week before I ran the same experiment on a smaller batch sample with a TSL and the results were roughly the same with far less dollars lost… I didn’t track the results.
The fact that you mention neutrality is where I would expect the results roughly to be, but the experiment is showing that this is far from the case.
I agree that the batch size of 30 trades I have used this week is to small to show anything conclusive, so I will continue it (after holidays) for a few weeks just to see where the data goes.
Thanks for the clarification, WTJ.
I would be interested in further results, should you care to post them after the holiday.
Had the price gone 1 - 10pips past my SL I would have gone yep… OK… But the fact it took out the stop by .00001 in one 5m (11.1pip) candle and then moved away an uninterrupted 55pip’s… Not buying it…
I have just bought the winning lotto ticket, staying inside so I don’t get hit by lightning…
Many people would feel the same.
Please excuse my mentioning that [I]in one sense[/I] this illustrates an advantage of trading forex futures rather than spot forex.
You’ll be ok, unless you have a [I]history[/I] of being struck by lightning: it [B]always[/B] strikes in the same place twice.
Hi Lexys,
You’ve made some good points about competition trading vs. teaching safe trading. Many thanks.
You’re obviously far more experienced and knowledgeable about trading than I am, and I’ve learned to value your input, so please don’t hold back. I am not a Nial Fuller groupie or a groupie of any other teacher. I recently thought I’d be ready to trade live, but more recently realized that I am not. After studying all the basics and the math and all the magical indicators (though some are useful), I realized that I need to learn price action, and that’s what I’m concentrating on, and Nial is obviously a price action guy. Over the last couple of years - I have very little time to do forex - I’ve studied, more or less, Kathy Lien, Sam Seiden, Nick Bencino, Dale Woods “the forex guy,” Casey Stubbs, etc. - not that I’m looking for someone to parrot, but for principles and techniques I could learn from each one. I’ve come across some whose attitudes are snotty, condescending, impatient, curt, exploitative, etc., and various combinations and permutations thereof; but I haven’t rejected them because of that. If I did, I’d have to reject the entire human race - except for myself, of course! I learn what I can and go on.
Now, please don’t hold back. I’m far past retirement age, and am still working. I’ve got a small sum I can invest in forex, and I’m on a roll to learn it as fast as I can and earn as fast as I can - yes, I’ll do risk management! - so I can earn something to have a retirement on. Now, if you will, please tell me what you think I should know about Nial Fuller so I could avoid some pitfalls. Don’t hold back - about Nial or anyone or anything else. Also, if you have some aces up your sleeve about good teachers you could recommend with lots of FREE lessons on their websites, or any other advice, fire away!
A friend you’ve won,
Norm
This might be correct but only if you had zero spread…As I’ve indicated in my previous post, whenever shorting a pair you must add the spread to your SL level… So, unless you have zero spread, in theory (and under normal market conditions), your stop will always be triggered at a price point BELOW your SL level (SL level minus spread). In other words, when in a short position under normal trading conditions, market price does not need to equal or ever move beyond your SL level to take you out of a trade .
In your case for example (assuming no price and spread manipulation), your SL @ 0.04793 with a 2 pip spread would have been triggered at [B]0.04773[/B], with a 1 pip spread at [B]0.04783[/B], 0 at 0.[B]04793[/B] (exactly your SL level).
Hence I’ve made the point - while agreeing that the higher market price on your platform may point to broker shenanigans - that unless your spread was anything less than 0.5 pips, your stop would still have been triggered even if the high of the candle on your platform was 0.04788 as opposed to 0.04794 - due to the fact that your SL @ 0.04793 would have been positioned just 0.5 pips away from the high of 0.04788.
So in a nutshell, if at the time your spread was less than 0.5 pips then yes, you may have good reason to feel aggrieved as your loss may be attributed to the higher market price on your broker’s platform. But if your spread was greater than 0.5 pips then the difference in high price on your broker’s platform in this particular instance compared to say, Oanda’s, is of no consequence…
Lol, haven’t we all … (and importantly from my own perspective, I know that on occasions I’ve come across that way, myself, partly through having Asperger’s syndrome and being insensitive, partly through not being nearly as well-suited to forum-posting as you’d very reasonably expect given my post-count here, and partly through not always taking the care I should … but I digress :8: ).
I’m not familiar enough with his work (by comparison with that of other authors) to comment intelligently, Norm, but that’s “self-selected” in that I wasn’t impressed with the things I’ve seen. Personal opinion only, of course. But hearing that he was a big competition winner certainly doesn’t endear him to me, and increases my suspicion-level significantly for the reasons I mentioned above.
Here, on the other hand, I ought to be able to help you (being entirely a price action trader, myself, too).
It’s the “free” that makes it a little hard.
I can recommend several really good non-free sources in the form of books (from Amazon, or wherever - I don’t mean self-published “books” at inflated prices - just normal “book prices”, so let me know if those recommendations will help.
For “free” … there’s some information on the websites of Joe Ross (tradingeducators.com), Al Brooks, Bob Volman and Lance Beggs.
There’s a PDF available of a substantial chunk of one of Bob Volman’s books, from his site (it’s his “promotion”: he gives a big chunk of the book free hoping that it will give people enough of the flavour for some to buy it, but the “free sample” itself is genuinely valuable.
Lance Beggs has free information on his site.
More importantly, he has a huge (really, really huge) free PDF available, which he calls his “lost blogs posts” (strange name: I can’t quite remember the story behind it), which is pretty good. As I remember, you do have to supply an email address to get it, but he’s not a spammer and that’s perfectly safe to do.
There’s a little free information on Al Brooks’ website (his textbooks are excellent but really heavy going).
There’s a free PDF called “The Law of Charts” by Joe Ross which is more introductory but still good (it’s a great explanation of “1-2-3- formations” and “Ross Hooks”, both of which I regularly trade myself from fast charts and both of which regularly give me good profits) … you can download it here <— Note: this link directly downloads a 25-page PDF, it’s not just a link to a “page from which” you can download it.
There’s also Ross’s free “Traders Trick Entry” PDF here (again a direct-download link).
I’d suggest to you not to be put off price action information that may not immediately seem relevant to the kind of trading you do in terms of instruments or time-frames. For example, Bob Volman trades fast-moving forex from tick charts, but everything he teaches also applies to time-charts; Al Brooks trades index futures from 5-minute charts but everything he teaches also applies to forex charts, etc. etc. “Charts are charts”, and they’re mostly fractal anyway, so context isn’t always quite as relevant as it seems.
Anyway, the Lance Beggs “lost blog posts” PDF will certainly keep you busy.
Sorry not to have links at the moment for the other things I’ve mentioned, but I expect Google will produce them, anyway.
Christmas greetings! 
Lexy
I recommend Lance Beggs as well, I occasionally comment on his twitter postings or reply to his emails and he always responds even though I haven’t paid for any of his courses.
Id like to also recommend tradeciety. Excellent free stuff on their website. I dont think they charge for anything. The knowledge they have and the videos they put out is really brilliant. I get the impression that they do it for the love of the game and because they really want to help other traders.
Seasons greetings 
Wow, Lexys,
Thank you for such an information-filled reply!
Concerning Nial, two things:
- Though a competition winner is not necessarily a great teacher, the guy’s got to have something going for him since he won a major competition; and
- this article about the type of guy some believe Nial to be is worth considering: Learn To Trade The Market Review - Trading Schools.Org.
Thanks for that great list. I will definitely follow up. In fact, I’m printing out the information sections of this post and tacking it to my wall, and will also copy it to file.
If my “free” stipulation has caused you to hold back on any non-free sources, please don’t let that stop you; and yes, please do name those books. It’s just that I’ve learned to keep my defenses up so as not to spend all my forex money on books, courses, etc., and then have no money to trade with! But I’m willing to consider recommendations from traders I respect of which, I have noted, you are one. So, let it rip if anything else comes to mind.
Merry Christmas, Santa, and have a Happy New Year!
Norm
Thanks, grantx. I’ve gotten some good info from Tradesciety. Also, I’ll follow up on Lance.
Take care, and seasons greetings to you.
Norm
Thank you, Norm … you also … 
Well, what that tells me he has going for him is the ability to trade with extreme risk, an emphasis on profit-maximisation, and almost no regard at all for money-management; and honestly those are all strong negatives, for myself. I know my perspective probably sounds unusual or even a bit weird, but seriously, knowing that he won a big competition [U]actively[/U] puts me off him, because of what it suggests to me about how and why he wants to try to promote himself as an “educator” and what sort of customers he wants to attract.
I suspect you may not know about the “pedigree” and antecedents of that site and its compiler, Norm? Call me biased (which I undoubtedly am) but I put no credibility at all in anything on that site. I do have reasons for this attitude. Generally, I deeply mistrust the site, and specifically, the few things I’ve read on that site have made me despair: appalling reviews of something I know to be good and ethical, and glowing reviews of things I know to be scams. I’d [I]almost[/I] go so far as to say that a good review there would instinctively put me off anything (because I suspect they may be paid-for reviews), but that would perhaps be slightly over-egging the pudding. It’s really important, in my opinion, to bear in mind that what’s online, on a commercial website, is there because the site’s owner wants it to be there, and his reasons for that may not always be apparent and one shouldn’t, perhaps, make too many otherwsie reasonable assumptions about them.
The specifically “price action” books that most helped me, and enabled me to trade profitably, were …
Understanding Price Action: Practical analysis of the 5-Minute Timeframe (Bob Volman - its contents apply also to other timeframes!)
Forex Price Action Scalping (also Bob Volman - not really so much about what I’d call “scalping”, myself)
[I]Naked Forex: High-Probability Techniques for Trading Without Indicators[/I] (Alex Nekritin & Walter Peters)
[I]Daytrading[/I] (Joe Ross) (this is an updated re-issue of an earlier book - “Trading by the Minute”, I think it was called)
[I]Trading The Ross Hook[/I] (Joe Ross) (I keep coming back to this one again and again, because it’s simple and logical and helpful, and the whole concept is based on one of the soundest principles of price action trading, namely “buy the dips in an uptrend and sell the rallies in a downtrend”)
Trading Price Action Trends - Technical Analysis of Price Charts Bar by Bar for the Serious Trader (Al Brooks)
[I]
Trading Price Action Trading Ranges - Technical Analysis of Price Charts Bar by Bar for the Serious Trader[/I] (Al Brooks)
[I]
Trading Price Action Reversals - Technical Analysis of Price Charts Bar by Bar for the Serious Trader[/I] (Al Brooks)
Al Brooks’ set of three textbooks is kind of badly written and very badly edited (especially considering who the publisher is), and pretty difficult to plough through, but their content’s excellent, so those are a kind of “mixed recommendation”: I think his online video course is actually much better and more helpful and more approachable than his textbooks (very unusually: the opposite is much more common!), but it’s also a [U]lot[/U] more expensive ($250, I think - but that’s still very good value, though, in my opinion, for about 37 hours of instructional videos): [B]https://brookstradingcourse.com/[/B]
Indeed … which is quite easily done; I hear you there!
Hi Lexys,
Thank you for your recommended books. This list, as well, I’ll save to file.
You wrote, “I suspect you may not know about the “pedigree” and antecedents of that site and its compiler, Norm?” Are you referring the the site I found the Nial Fuller review on? If so, you’re right. I don’t know them. Care to clue me in in summary form?
Thanks,
Norm
I think it wouldn’t be appropriate for me to run down another site in detail, using this forum to do so (let me put it this way: if I owned this forum, I probably wouldn’t want what I’d say about that site on the board), but I’ll dig out a link or two and send you a private message over the next day or so, Norm.