Our Forex day trading system might have a new home soon. Today is the second day that we have been testing the Strategy Runner day trading system with Currenex. The executions have been pretty fast so far, even though the Forex market hasn’t provided us with the quick trading opportunities we like.

Tommorrow’s PPI (Producer Price Index) numbers and Friday’s CPI (Consumer Price Index) and Consumer Sentiment reports will probably create ample market volatility to put our managed day trading system on Strategy Runner through some more vigorous testing. I’ll keep you posted on the outcome.

We continue to monitor the live performance of four additional traders. These individuals are running their Forex trading systems on MT4. Two use some automation and two are fully automated. Nigel is helping us look for other traders as well.

Today I started testing an MT4 day trading system with institutional (non fixed-spread) pricing which shows promise. By next week I should also be testing a Beta version of another MetaTrader system with Currenex pricing. Either one of these might also be viable alternatives for the Forex robot day trading system.

This day trading business is definitely an exciting one! Maybe we should release an action/adventure motion picture in the near future! Hollywood, here we come!

It’s a hat-trick. We have experienced three back-to-back days of unacceptable delayed executions on MT4, resulting in losses. The good news is that FXLQ credited all three of these losses on Friday (3/2/2007). I already discussed Tuesday’s and Wednesday’s loss in my 2/28 post (“Will New MT4 System Solve our Trading Problems?“). I will discuss Thursday’s loss (the third one) today – plus some other exciting things. See the trading log below and my comments throughout.

This is the beginning of the log:

The day starts with an attempt to buy 25 GBPUSD at 1.9626 at 09:44:59 UK time (see below), which got rejected exactly 1 minute and 30 seconds later when the price was lower; i.e., when the trade would have been profitable. Click here to see the chart.

An order was then placed to buy 25 GBPUSD at 1.9633 at 14:37:32 UK time (see below). This order got filled 1 minute and 22 seconds later when the price was lower; that is, when the trade would NOT have been profitable. This is totally unacceptable and it seems as if someone, somewhere is just holding the trades in queue to see which way the price goes – and is then deciding whether to fill them or reject them (“off quotes”). It is impossible for a trade to have been filled at a price that occurred 1 minute and 22 seconds earlier, unless the price didn’t change throughout that time – which wasn’t the case here. It is obvious that this execution did not occur earlier because the programmed stop would have been triggered – and it wasn’t. The execution was just reported late.

Notice that the first line of the day trading log above shows: “07:38:47 Expert StepStopExpert_v1[1].1 GBPUSD,M5: loaded successfully.” This means that the Expert Advisor (fancy name for a computer program) that places stops on GBPUSD was already loaded. Despite this fact, if you look at the trade log and the corresponding screenshot, the row highlighted in blue shows that the stop was never activated (see “0.0000″ in the S/L column). This is obviously unnacceptable.

The final attempt to exit this trade (at 14:39:55) also resulted in a 17-second delay (from 14:39:55 to 14:40:12). See below.

I asked FXLQ to credit the above trade in question as well as the previous two. This they did on Friday (3/2). I also demanded an explanation for these “mysterious” execution delays that are putting client capital at risk. They couldn’t provide it and told me that they couldn’t guarantee that these problems would not occur in the future. Furthermore, I was informed that the new multi-bank system will not allow the use of Expert Advisors (EA’s); i.e., the programs that we currently use to place stops automatically. This might not sound like a big deal, but it is. If stops have to be placed manually (i.e., without the use of EA’s), it will slow down scalping significantly or make it impossible altogether. Having automatic stops is also the safest thing for the client.

To top it all off, I was told by FXLQ that they wanted to cancel my IB (Introducing Broker) agreement since they weren’t going to be able to provide me with an appropriate solution! This infuriated me even more. Why didn’t they tell me this before? Why now; especially since I have been demanding answers from them for almost a year now?

I then received a termination letter by mail from FXLQ. The forex robot needs to hit the road again! I can’t say that I’m ecstatic about this, but I’m glad in a way. This means that we are being noticed. We are making waves. If this program didn’t have such great potential, we wouldn’t have been experiencing so much resistance. Thank God that I had already been working on a few backup plans in parallel.

I will tell you about them by tomorrow. I don’t anticipate not being able to trade for more than two weeks, so I ask you to stay put until I make another announcement tomorrow.

As the above incident was taking place, a psalm came to mind (Psalm 141:4):

Let not my heart be drawn to what is evil,
to take part in wicked deeds
with men who are evildoers;
let me not eat of their delicacies.

I’ll continue pushing forward; seeking what is right and appropriate for all of us – despite resistance .

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.

We have begun testing a group of new day traders to be able to accept more assets.

Even though our current robot program is excellent and so is Nigel (the trader), forces beyond our control (which you should be familiar with by now) have prevented us from accepting new assets to keep pace with the demand for our program. While I’m confident that this will change soon, in the meantime we started assessing new manual and automated (algorithmic) day traders that have different trading styles. This might allow us to accept some more assets in the short term as we wait for liquidity conditions for our current program to increase and execution problems to diminish.

I think there’s a huge opportunity for growth in the automated day trading (a.k.a., algorithmic trading) front. I have seen some fascinating programs recently and will be working in the background to launch a fully automated managed account in the near future.

FXLQ said that they should be testing the new MT4 system live in a day or two. This was supposed to happen on Sunday (2/25), but it didn’t. IF FXLQ conducts the live tests this week, we might be able to run live trades with a test account soon. I won’t be holding my breath though!

Today, the forex market was pretty boring – void of any important news. Starting tomorrow and lasting through Friday, a series of important scheduled reports and speeches will probably increase market volatility. This should create a good environment for scalping. Let’s see what’s in store for us.

The forex market is moving. The EUR/USD is taking off; GBP/USD is following suit. A great day trading opportunity draws near; slowly creeping in sight of our crosshairs.

“Click!” – The trigger is squeezed. “Click, click, click!” No bang! No kill! No execution! – Instead, a freaking “off quotes” message as the prey escapes. Arrrgggghhh!

If you have been wondering why there is only one execution despite two back-to-back, active trading sessions, now you know. We’ve had two straight days where the British Pound has had a range (from High to Low) of over 100 pips and the Euro about 90 pips. Can you tell I’m frustrated?

Today’s trading log will give you an idea of the severity of this problem.

Three trades took about a minute and a half to get rejected; an eternity in the world of Forex day trading.

We are told that the new MT4 system will be ready possibly this week (maybe the 15th, as we were told last time), so we might be testing that as well. Hallelujah!

Currenex Scalping Platform Update

With the latest programming upgrade, the Currenex trading platform is performing a bit better – even though the prices become intermittent from time to time. We will continue to place trades through this platform tomorrow. We are also flirting again with Strategy Runner, which works with Currenex as well. We’ll keep you informed about the progress of our endless Forex day trading quest! Stay positive!

On Wednesday February 7th from 8:00 PM to 9:00 PM EST, Day Trading Tutor members will be able to join a free webinar hosted by the firm that provides one of my trading platforms of preference. The forex trading platform is based on a non-dealing desk or ECN model, which is the model that prevailed for stocks in the late 90′s and will dominate the currency trading world going forward. We have considered using this same trading platform for our day trading robot program, but are waiting for the broker to have the ability to control multiple accounts from one master account; an essential requirement for money managers and professional traders who trade for clients.

If you are interested in this event or another even like this going forward, please shoot me an email.

State Street has announced that it will be acquiring Currenex for around $ 564 million in cash to strengthen its position in electronic forex trading. Currenex connects more than 60 global banks to an electronic trading network. State Street’s current electronic foreign exchange trading platform, FX Connect, is offered to institutional clients.

The statement comments on the strong market growth with Forex trading worldwide now accounting for trading volumes of around $2.3 trillion per day.