An algorithm must be seen to be believed

The above is a quote from Donald Knuth.  He’s an absolute genius computer scientist, mathematician, and professor emeritus at Stanford University.  Now I have seen our auto trader in operation for a couple of weeks, I understand what he means.  It hasn’t had a losing day in 10 days.  I’m wondering how come?  I was expecting at least one.  BUT I have spent hours tuning it to trade for each contract and the results are starting to look cool.

These are two nice trades here.  The only two today on GBPUSD.
The purple dots are entries on the first trade (it adds to a winning position) with a single exit on reaching the target.  That gave us 92 ticks profit.  The second trade was 2 half position entries (marked in orange) and that gave us a 4 tick loss.

This just ONE strategy.  We have five more under test.  And they can all be configured.  For risk, for risk/reward, for a move to breakeven etc etc etc.  It’s a VERY serious tool.

And just for giggles here is GBPAUD making us 141 ticks.  No more trades here either.  This is set to run in conservative mode also (the other modes are moderately aggressive and aggressive).   Keep watching.

We are now testing indices, stocks and of course (and I hasten to add we don’t trade them) cryptos.  So why do them?  Because some people want to.  Our job is trading what we want and enabling our members to trade whatever the heck they want.

We are very close to release date now.  We are testing with REAL money.  24 hours a day.  When we are confident to raise our own trading to $200k clips of forex and 5 S&P then we will release the product simultaneously on Ninja and Sierra.

We’re excited people.

Why Oscar Wilde would have made a great algo trader

To paraphrase Oscar Wilde, trend-following hedge fund computers know the price of everything, but the value of nothing. This means human investors who focus on value over the long term, rather than price trends, should always be able to profit.

I would agree with that.  But I’m not interested in the long term value of stocks or currencies or commodities.  I’m a trader.  I want to make my return then take my profits and move those money into other investments like property.  

I have traded manually for years at home.  You may ask why when I have worked for banks and hedge funds. Why?  Because the computer power needed to algo trade effectively 10 years ago was over $100k.  Now I am doing it on a water cooled PC that just cost me $4k.

And the results are spectacular.  Full auto trading.  100% machine based trading.

Today for example from Midnight to 4pm UK time the EnigmaSignal auto trader had made 90 pips on GBPAUD alone (see below).  By 9pm that was 150 pips.

How much screen time have I spent doing this?  Zero.  Read that again.  Zero screen time.

Sure I had to set up the parameters.  That took me a couple of hours.

Parameters like:  move stop to break even. minimum profit target, risk: reward ratio etc.

But now I have this strategy set …. the machine will execute the strategy ruthlessly and without emotion.  When I saw a couple of these trades I wondered how in the heck it had taken them.  I could see the setups were good, but I would never have taken them manually. 

And so as we move flat (another parameter for the end of the US markets) I am over 160 pips to the good or put it another way $3200.  Will all days be this good?  Maybe not.  But this was just one currency pair.  

For the first time ever I now feel we truly have the power to deliver a personal algo trading machine for every trader.  To allow you to achieve consistency in your trading to a level that most traders have never seen.  It’s a trip.  Existing users will be upgraded free of charge.  new users will be able to lease or purchase the product.  

For now, the testing continues.  Real money.  Real trades.  Nothing at all is hidden.  Those of you who know the address can screen share and watch it live.  Those that have done so already are ready to be upgraded today!! 

Be patient.  We’re almost there.  We have everything running on Sierra Charts.

Soon we hand the algos over to our Ninja Trader platform programmer.  

By end June we will be live on Sierra and Ninja.  They have the power to handle the complex math.  MT4 is just not up to the job.  Other platforms we will consider in due course.

And finally.  Remeber in all of this, the human is still in the loop.  The machine trades YOUR orders.  Its just trades faster, without emotion and it always follows the rules.  You still need to fit the system to your personality and risk profile.  That’s why all new EnigmaSignal members will still have the opportunity of 1:1 coaching and a complete boot camp course.

At EngimaSignal we dont just backtest the trades.  We backtest the traders.

No blogging but profits and some serious developments

Its been crazy busy past few days so I have had no time for anything other than a few trades and mainly, developing the latest versions of EnigmaSignal.  The big news is I now have the Sierra Charts and NinjaTrader 7/8 versions in beta test.  And they look great.  Some nice changes to the graphics and I’m also developing an auto trader as well. 

That will recognise setups and load them up into an interface for you to simply hit trade/no trade.  I’ve also been testing it in fully automatic mode, with real money, on Sierra charts.  The results are good so far but need tuning.  Two of the trades are shown below.  The charts are still using Ensign in the diagrams because I have that setup for auto screenshots in Sierra. 

The entries are not perfect, and the exits are certainly not.  Plus it missed a major short on the GBP/AUD that it should have caught.  BUT that said … its made a profit every day for a week.  Ninja will follow Sierra.  

And there we have it.  Ready for release in 3-4 weeks on Sierra, sortly afterwards on Ninja.  Along with (shortly afterwards) a brand new website.  We’ve also amended the sentiment indicator so that it shows directly on the chart and colours itself according to the strength of the sentiment (third chat below). 

And finally …. we will be showing sentiment from another timeframe on the chart at the same time.  So you can see the 5 minute and 15-minute sentiments or 15 & 60 etc simultaneously.

 Sierra Charts with money management entries marked.
Sierra Charts with money management entries marked.

New trader update – results continue to improve

It’s about 8 weeks since we last mentioned our new 19 year old trader.  Then he was brand new to trading and started off nervously but making small profits every day.  Where are we today?  Well.  Here is his trade screen.  A few tiny losses but a raft of profits. 

You’ll notice the trade summary is from his phone.  Why?  because he trades from the phone.  And he gets his chats from the broadcast unit that we have for all of our traders when they are on the move.  

He started with a $10k account and is averaging 4% per week returns.  That means he gets his money back on EnigmaSignal in just 12 weeks, trading very safely.  What a great way to trade and make a second income?  Way to go Samsung and EnigmaSignal.

 

 

Two Hearts

Two hearts, believing in just one mind
Beating together till the end of time

Those are lyrics from a Phil Collins song, for the movie “Buster”, which was, of course,  about The Great Train Robbery.  But it could just as easily have been written about the movements of the S&P and USD/JPY.  These two instruments are highly correlated – in fact, the USD/JPY is almost a proxy for the S&P.  

Have a look at the chart below.  On here you can see the chart shows the S&P500 with the USD/JPY overlayed in blue as a line chart showing the closing price of USD/JPY over the same time period. Notice how they move very closely together.  

Why is this useful information?  Two reasons.

First off, be very careful if you see a chance to trade both of these at the same time.  You could double your profits of course – but your losses will go the same way.  Be patient and trade the chart that looks the best.

Secondly.  If you have a smaller account and trading an eMini is a little rich for you at $50 a point, then trade a smaller amount of USD/JPY.  You’re going to be able to get in on the moves, but with a lower level of risk.  And there is nothing wrong with that.  Consider it a way to build up your account until you are ready to trade the eMini or just keep trading forex. 

Either way, EnigmaSignal will give you high-quality trades.  And plenty of them.

eMini and GBPUSD profits

Not a lot to say today.  The markets were a lot quieter.  I actually didn’t trade all day as I has so many meetings and a blinding headache.  CNBC was a great meeting though, and I look forward to being a regular commentator on their active trader show.  I think we can really add value to that.  I was sitting on a couple of positions from yesterday to see if they really made gains.  They did OK (see below) but didn’t pull up any trees.  So.  A short blog.  The new training course (completely free) launches soon.  That should be exciting.  Other than that … a very quiet day.

Interest rates up. Markets go berserk. We know where they are going.

Many years ago I spent a lot of time at Disneyworld Florida.  I went every two weeks when I lived there.  It was quite awesome.  Between there and Busch Gardens I got a real taste for roller coasters.  I was really glad of that today as the markets delivered a seriously wild ride.

Interest rate warnings were issued in the USA.  In this case, we’ll show the eMini chart.  Before the announcement, the eMinis were gently rising.  Then the announcement came and we saw a 13 point rise in 15 minutes.followed by 3o minutes of not a lot (marked in purple).  We were stuck in the swarms and trying to break out of them. 

When we couldn’t make the break, then what we see 80% of the time happened. 

We left them violently. 

45 minute after the announcement we were out of the swarms and we had impulse targets predicting a drop to between 2719 and 2714 (highlighted in orange).  That’s a full 14 points. 

We were there in 15 minutes and then we were predicting an impulse of 2698 – 2689 (marked in blue).  That was another 21-31 points away. 

Now, as our regular traders will know the lower target there would have taken us deep into the third swarm.  Unlikely. 

So … taking profits at the conservative level of 2698 made sense.  And by jingo we made it!!!! 

35 points on the S&P.  With a single contract that’s $1750.  Or put in another way, you just paid for 1/3rd of the entire Master Traders Course and Software.  IN ONE TRADE.  Oh, and don’t worry.  We get these trades all the time.  It’s not a one off.