Simple Forex System Trading

We lost 30 pips today.  The stop sell order at 147.81 was filled at 7:12 GMT, and it was stopped out about 1/2 an hour later.

We broke even today with our euro yen 30/30 breakout system.  I moved the stop loss too quickly and got stopped out right away.  Had I not moved the stop loss, it would have turned out to be a profitable trade.  The sell stop, 149.60, was filled at 7:11 GMT.  Within minutes, the price went south quickly and was in our favor.  It hit as low as 149.32 (offer) and was merely two pips shy away from the take profit target.  The price began to rebound from that point.  I decided to move the stop loss to the entry point of 149.60.  At 7:19 GMT, only 8 minutes after entering the trade, the order got stopped out – zero pip today.

Since I have been using Oanda as the primary trading account for years, I thought it would be a good idea to open an account with a different broker so that I don’t put all of the money in one basket.  First, I reviewed the financial data on CFTC so I could narrow down my selections.  Two brokers jumped out – Deutsche Bank, dbFX, and Gain Capital.  I trade Euro Yen primarily so its spread is important.  dbFX listed it as 4 pips.  That’s going to hurt the performance.  It’s about 2.3 pips on Oanda.  So I moved on to Gain Capital.  The site didn’t quite tell you what the normal spreads would be, but rather, it told you what the minimum spreads would look like, a.k.a. the spreads are “as low as”.

Anyway, I registered for a demo account and downloaded the software.  It was during the Asian trading session.  I found out that the spreads during that time were between 3 pips and 4 pips.  In addition, the spreads were constantly changing.  Since I already downloaded the software, I decided to give it a try even though an average of 3.5-pip spread would hurt the performance.  I set up the trades as usual and went to bed.

This morning, I checked the results.  It was a profitable trade, same as the one I entered on Oanda.  There are, however, two differences.  On Oanda, the trade was filled at 8:59 GMT and closed at 9:01 GMT.  On Gain Capital, the trade was filled at 8:59 GMT but was not closed until 9:10 GMT.  So, it was a result of the spreads and I could live with it.  But when I checked the account balance, I was in awe.  They charged $25 in commission for each trade for a total of $50 round trip.

I must have missed the fine print somewhere.  I didn’t remember seeing the extra fees they would charge.  After searching the site for a bit, I found it in their FAQs.  Although I won’t be trading one million units at a time, but two standard lots will cost $10 each trade.  That’s steep, isn’t it?

Our stop buy order, 152.41, brought us a 30-pip profit today.  All it took was only 2 minutes from entering the market to exiting.  Talking about a fast market, it was crazy.

Is your broker well positioned?  Take a look at the brokers’ financial standings on cftc.gov as of June 30, 2008.  This is a PDF format.  More reports are located here.