Day trading the news or “news trading” usually refers to the popular practice in the forex market of day trading online a specific currency after the release of an economic report or statistic.

Each potentially market-moving report is released at a specific date and time every month – and there’s a consensus estimate for each released figure. Generally speaking, how much higher or lower than the estimate the actual numbers come in will dictate how a day trader will react (by buying or selling a particular currency).

Note that day trading the news is not the opening of a position before the report is released betting on a particular outcome. That is more like gambling (or financial suicide). No one knows in advance where the numbers will come in, so trying to predict the outcome is an extremely dangerous and futile endeavor.

Even though forex news day trading is risky by nature, the use of some specific tools might slightly increase the odds of day trading the news successfully. Some of these are: using a fast, reliable news service like Bloomberg, day trading online on a platform that offers one-click execution, and using limits rather than market orders to enter the market.

News day trading is not for the faint-hearted trader, but it can make forex online trading very profitable for those who approach it correctly.

The Strategy Runner account is already funded. Strategy Runner is supposed to enable our Currenex login on their server today. This was supposed to happen late last week, but it didn’t (for reasons beyond our control – I hate those). We might be able to day trade tomorrow.

The MT4-Currenex solution I discussed in my previous post is not ready yet. While I wait for that, I’m also looking at a second firm that is promising institutional pricing via MT4 (but I’ll believe it when I see it).

Last week, I also discussed bringing additional day traders on board. I’m still running a few traders through some final live tests. It is important to note that unless these traders pass all my tests, I won’t work with them. I’m very picky when it comes to these things and won’t settle for mediocrity when it comes to trading.

Some of you have asked why these traders won’t get shut down on MT4 while Nigel’s scalping program was. The reason is that they will hold on to trades for at least a minute or two longer than Nigel – something that we cannot force our existing managed account program to do or it won’t work.

Some have also suggested using HotSpot or MB Trading / EFX Group. I have spoken to HotSpot in the past about their institutional product (HotSpotFxi), but they don’t have the same liquidity as the Currenex brokers we work with. MB Trading and their subsidiary, EFX Group, don’t have a PAMM or master account available; which means that we won’t be able to try them out for managed accounts until they do.

I assure you that we have probably looked at most forex trading platforms and liquidity pools out there. The information I usually provide in this blog is just an iota of what we deal with on a daily basis – not because I don’t want to give you all the details, but because I do not have time to write about every single little thing.

FXLQ – Transferring Accounts to Another Broker

FXLQ has agreed to transfer your forex accounts to another broker when you request it. Since we don’t know right now where we’ll finally wind up, I ask you to simply stay put a bit longer. We’ll let you know when you should move your money out of FXLQ soon.

Yesterday’s post (“Forex Robot hits the Road – Trades Credited” explains why we are considering various alternatives for our managed day trading online program. If you haven’t read the previous post yet, please do so at this time.

Please keep in mind that the options I’ll be telling you about today are not mutually exclusive; i.e., you might decide to participate in more than one, whether you are an existing client or a new investor. Part of the reason I’m providing these options to you is because some of you might not qualify (“for reasons beyond our control”) for our existing online trading program going forward.

For a while, I have been considering the Strategy Runner-Currenex combination as an option for our current scalping program. We are already set up at a Currenex firm that works with Strategy Runner (SR) and funds for live testing should be coming in tomorrow or Thursday. If all goes well, live test trading might start late this week or early next week. If these live tests are successful, this might certainly be an option for Nigel’s program. I’ll have a better idea by next week.

At the end of this month, a Currenex firm that we’re working with is supposed to launch a true Currenex-MT4 combination (unlike what we had at FXLQ). If successful, this will be the first of its kind (to my knowledge) – an ideal environment to run the current forex scalping program. Having said that, here are our future options:

Trading with Strategy Runner – Strategy Runner is fast and works well with Currenex. It offers one-click execution and the ability to automate stops. The disadvantage of this option is that the account minimum for the Currenex broker we’re working with is US$25,000. This will leave many investors with $10,000 out of this program.

Trading on Currenex via MT4 (when ready) – In about three weeks, this option might be ready. This would be an ideal scenario because all of the indicators and “gizmos” used for the current scalping program are written in MT4 language. The problem with this option is that the broker might run into unexpected difficulties that delay the program launch. Remember that MT4 was not really designed to execute on Currenex. It must be rigged to work with it. Another drawback of this program is that a minimum of US$25,000 (possibly $50,000) is also imposed by the brokerage firm.

Using a Different Day Trading Program on MT4 – Nigel’s scalping program is no doubt excellent, but only the above two options are available right now to trade a certain amount of capital with it. All existing MT4 firms will shut us down once Nigel starts trading more than a few lots at a time. This might change in the near future, but it’s the reality right now. In the future, it might also be possible for us to accept $10,000 again for our current program (using the first two options), but not at this time. That’s why I have been filtering many traders in the background. I have four that I’ll be running through our final analysis this week; two running fully-automated robots and two manual day traders. Their systems will work with another MT4 firm that we have started working with already based on the recommendations of various system day traders that we know and trust. These systems are very short-term in nature, but operate in a way that won’t get them shut down by the brokerage firm. While these programs won’t replace our current scalping program with Nigel, they complement it and provide further diversification for our existing clients.

Please feel free to call our office to discuss these options. If you are an existing client, I ask that you give me until early next week to make a final recommendation.

To more prosperous days ahead!

Whether or not FXLQ’s new multi-bank MetaTrader (MT4) system will solve our current day trading problems remains to be seen.

This morning, FXLQ was supposed to go live with their new day trading system (at least that’s what we were told). If all goes well, we should be trading currencies tomorrow with the new setup. This is not a sure thing yet; nor is it certain that the new system will eliminate the delayed executions and huge number of trade rejections we’re experiencing.

Yesterday, the problem with the delayed executions resurfaced. As a result, there are two trades that we want FXLQ to reverse. Let me explain (please note, all times are in London time):

Yesterday, a trade was placed at 15:00:41 to buy 25 lots of EURUSD at 1.3235. The trade was not accepted by the server until 15:01:34; 53 seconds later! Throughout these 53 seconds, the trader was held in “limbo,” not knowing if the trade was going to get filled or not. By that time, the price had dropped to 1.3227 or lower, which should have led to a trade rejection – since the price had moved beyond the 2-pip deviation setting that’s supposed to be present on our MT4 system; instead, there was a fill at 1.3235 (a price that occurred 53 seconds earlier)! We asked FXLQ to immediately bust this trade and are still waiting on the outcome. Here’s the corresponding section of the log:

Click here to see the chart of the EURUSD during this incident. The crosshairs point to the one-minute bar (15:00) when the trade was placed and shows the 1.3235 and 1.3227 price levels (horizontal lines).

In today’s trading session, the delays were also present. This led to a losing trade that we are also asking FXLQ to reverse. I’ve added the section of the corresponding log below with comments in between.

In the first section of the trading log, the order took 37 seconds to be opened (from 08:30:59 to 08:31:36)! Once the order is placed, it should be filled right away or time out in a few seconds (see below).

1st attempt to exit trade at 1.3188 – placed at 08:32:08.

Order held for 1 minute and 30 seconds before getting off quoted! (see below) – This is not acceptable. The trader should have been out way before this time, as would have been the case on any other trading platform or system.

2nd attempt to exit at 1.3194 – order placed at 08:35:20.

Order held for 61 seconds before getting off quoted! (see below) – This is not acceptable. Again, there’s no reason to still be in this trade at this time.

3rd attempt to exit at 1.3196 – order placed at 08:36:32.

The order was held for 11 seconds before getting executed at 1.3196; 8 pips worse than it should have been executed over 4 minutes earlier (see below).

For a chart that illustrates the problem above, click here.

Day trading results so far this week are slightly negative. “Off quotes” are still coming up quite a bit on the MT4 platform, but at least the rejections are pretty fast.

We are still waiting for FXLQ’s launch of their new MetaTrader day trading system. We were supposed to receive a demo with their new, improved feed last week. We didn’t. We don’t know what’s going on and nobody has contacted us to give us an update. Tic…toc…tic…toc…

We are also in talks with a few other firms that are working on providing Currenex pricing through MT4. One Currenex firm that has very tight spreads and good liquidity told me that their MT4 platform should be ready in March (next month). If this is the case, we will have more options to diversify. Since our platform of choice is MetaTrader, this should be a big plus for the robot program.

I am also in talks with a few talented algorithmic (automated) traders that have all their day trading systems written in MetaTrader language. The ability to access a clean Currenex feed through MT4 will allow us to allocate some funds to them and accept more client capital.

Currenex Trading System Does Not Work

Today we put at end to the live tests with the Currenex Trading System. Even though the platform that was designed for us was pretty good (in theory) for manual scalping, the Currenex data was getting delayed during active forex market periods (like after news releases). For some reason, receiving Currenex pricing data over the internet (even while using DSL or Cable) is problematic.

It seems that we’ve exhausted many scalping options already. Here are the possibilities I see going forward for the DTT robot program:

• FXLQ’s new MT4 system – Hopefully it will allow us to increase the lot size we are trading.
• Strategy Runner plus Currenex – Strategy Runner can connect us to Currenex using Radianz, so it should be a lot faster than going through the regular internet. We might be testing this in a week or so.
• MT4 plus Currenex – This will be huge if any of the firms I’m in talks with pull it off. It might actually be the best scalping solution out of all three – and a sure blessing for automated day trading systems.

We keep pressing forward in our day trading journey!

FXLQ made some changes at their end that eliminated some of the trade delay problems.

Even though there were still many “off quotes,” both trade executions and rejections were relatively fast. Whatever FXLQ did seems to have gotten rid of the long delays we were experiencing when orders were being submitted.

Four forex scalping trades were generated – three positive; one breakeven (which should have also been profitable – I’ll explain below). So what’s the problem, you ask?

The biggest problem I noticed today is that a huge number of “off quotes” is generated when exiting trades if the market is not moving much. When you look at the trading log (click here to see it), this will become apparent. Look at the entry in the trading log at 14:12:32. That’s the first time when the order to close the short 25.00 EURUSD position (order #200373) was submitted. The order was rejected 18 straight times with an “off quotes” message even though the price was barely moving. These are the prices at which the trade rejections occurred (in order): 1.3095, 1.3095, 1.3094, 1.3095, 1.3095, 1.3096, 1.3096, 1.3096, 1.3095, 1.3095, 1.3095, 1.3096, 1.3096, 1.3097, 1.3097, 1.3098, 1.3099, and 1.3099. Notice that from one rejection to the next, the price never moved away by more than 1 pip; so the rejections were not because the market was moving fast.

Instead of getting out the first time at 1.3095 with a 4-pip profit, the trade wound up being a breakeven trade.

Currenex Platform Update – Incorrect Handling of Exit Market Orders

During yesterday’s post, I mentioned that we had problems with the execution of an exit stop on the Currenex Trading System (CTS) we had been testing. Today, we found out why the problem occurred.

The CTS platform was supposed to send simple market orders to exit trades after the stop price was reached (limit orders are used for entry orders). For some strange reason, the programmer had designed the platform to send Market + IOC (Immediate or Cancel) orders when the stop was triggered. An IOC order is supposed to execute as much of the specified size as possible at the price when the order was sent and cancel the remaining portion of the order. On Currenex, market orders can’t be cancelled, but IOC orders are cancelled instantly if the price when the order was sent is worse than the market price when the order arrives. This can be problematic in a fast market, causing orders to be cancelled as the price keeps moving away fast.

This problem is what got us out of the market a price that was over 20 pips worse than it should have been. The platform kept trying to execute the exit trade, but the price kept changing. Consequently, the order was cancelled by Currenex several times causing us to get a worse price than we normally would have. I immediately instructed the programmer to change the exit orders from Market + IOC to simply Market. We might try a few scalping trades with this puppy again next week.

No; this is not a science fiction drama about a robotic day trader! I just like to use tragic titles to release my frustrations from time to time!

First of all, our Currenex Trading System project might have to be scrapped. It is taking too long for the orders to travel to the Currenex server. In today’s trading session, by the time the stop price to exit a short trade was reached and the sell signal was sent, the exit price wound up being about 20 pips worse than it should have been.

To avoid issues like these going forward, we are seriously looking at Strategy Runner. It works with a Radianz connection instead of through the traditional internet where data might be lost and delayed. This should decrease our trade execution times – a big plus!

More Trade Rejections at FXLQ and Weird Executions on MT4

Today we basically couldn’t get in any trades when the currency market was really moving. The same typical one-minute-plus trade rejections were the norm. The execution of the only trade today was also really, really weird.

First, here’s the section of the trading log that corresponds to this trade:

An order was sent to buy 25.00 EURUSD at 1.3142 at 17:00:13 UK time (the yellow arrow on this chart – the horizontal yellow line at 1.3141 corresponds to the bid price at that time). The order took 1 minute and 12 seconds to get filled!!! (see the log above). After the order was sent, the price of the Euro started ticking up to the high (1.3148) of the 1-minute bar at 17:00 (see the chart); there was no fill or rejected order throughout this move (like there should have been). The price then started to retrace, dropping slowly back to 1.3142 (still no fill). The price then dropped to 1.3138 and the order was filled at 1.3142! – 1 minute and 12 seconds later!

The price then started going up. It went to 1.3146 but stalled. The price ticked down two pips to 1.3144 and the sell order was sent. The price was static at 1.3144; no movement – yet no fill. The price started climbing rapidly to 1.3147 (the high of the 17:03 bar labeled on the chart). When at 1.3147, the fill took place at 1.3144; 8 seconds after the order was submitted!

Weird, isn’t it? When the Buy order was sent, it wasn’t filled as the price went up. It was instead held in “limbo” and only filled when the market price came back down and went lower than the original price. The fill occurred at a worse price (higher) than the current market price. When the Sell order was given, which would have closed out the position at a profit, the order was stalled for 8 seconds; then, when the price went higher, a fill occurred at a worse price (lower) than the current market price.

Maybe the trading platform is possessed!

We continue waiting for the new MT4 system to be ready.

A Bloomberg article shows that London, the world’s biggest center for currency trading, increased its lead over New York as  in the six months through October 2006.  Trading ran at $1.06 trillion a day in London during October, up 6 percent from April.  Meanwhile New York shrank 7.5 percent to $534 billion in the same period, based on Bank of England and Federal Reserve surveys.  “London has always been the centre of foreign-exchange,” said Ian Stannard, a currency strategist in London at BNP Paribas SA. “It’s continuing to grow and extend that lead.”

A growing share of the city’s volume is from currencies other than the euro and dollar as eastern Europe economies expand and investors take advantage of Japan’s low interest rates to sell yen and seek higher yields elsewhere.