Moving On... And Back to New Hampshire

Yeah, I'm gettin' out of Dodge (Dallas, actually). It was interesting living here for six months, but it's definitely not my cup of tequila. Besides, we need to clear out before the real implosion begins. There's a large public park across the street from our house. In my mind's eye I see it covered with shacks and tents a year or two from now. Obamaville. Shades of Hooverville. I hope that vision doesn't come true, but I fear it will. Onwards...

For seven years now I've shared my knowledge of trading the Forex market with hundreds of students from all over the globe. I've invested thousand of hours in live support, answered thousands of e-mails and helped many to discover the power and potential of the Forex.

In February of 2009 I began sending out FREE Twitter trade alerts, each with a date and time-stamp, then tracked their performance on this blog. Seven months, 4,214 pips and 86.1% winning trades later, I stopped. I figured that was enough to make my point. And now I'm moving on.

Not that I'm actually going anywhere, mind you (like being incarcerated or assuming room temperature), it's just that I am now turning my interests in other directions. Those of you who...

1. Are paid Forex students, past or present, need to go to the course download page and snag all of the 60 or more recorded, one-hour long support modules. I've changed the URL to that page since it isn't pass code protected, so write me for the new one.

2. Recently signed up for 'Forex GPS', drop me a line and we'll discuss settling up.

3. Never got around to enrolling for Forex training, I have slashed the cost of my entire 'Convenience Currency Trading' course to just $195 USD for all eight hours of training, plus the 60+ hours of recorded (video) support. That's a 61% discount from the original $495.

There will be no more ongoing support provided, however I can assure you that every question you can think of asking has already been answered in all of that recorded support, which includes hundreds of examples of trade setups and analysis.

I'll leave this final offer open for another month, then the entire IOHE web site is coming down. If you want the course, there won't be a 'Buy Button' on a web page. You can just PayPal $195 to the Institute at admin@instituteofhigherearning.com and it's yours.

As for where I'm going next with the Forex, it's another of those major life transitions -- like going through puberty at 13, then becoming an anarcho-capitalist at 53 -- that I thought I'd share with you.

And May All Your Pips Be Positive

Gordon

Am I still a Forex trader...or just a glorified maintenance man?

When I first began trading Forex, I used all of the usual indicators. I learned to trade well with them, but eventually came to dislike spending that much time in front of the screen.

Sure, currency trading was a lot more convenient than alternative means of self-employment I had experienced in the past, like lugging around a 400-pound Hammond B-3 and two big Leslies in my musician days, but it still took hours of daily screen time to stalk trade setups, then ride them to the finish line.

I soon came to realize that I could make more money, more quickly, trading against the prevailing trend since the Forex retraces more reliably than it continues moving in the same direction (unlike government).

That led me to study divergence between oscillators and price action which then led me to the divergence trading method I taught over the past two years. It was convenient spotting juicy divergence reversal setups, then monitoring open positions at the end of each period -- a method I call trading on 'closed candles.'

This then led me to the realization that I could set a stop and limit, walk away and not look back, and still win better than 80% of my trades. This approach was even more convenient, since it took me less than an hour a day to look for trade setups and I didn't need to monitor open positions. Was there anything I do next to make trading even more convenient, besides getting someone else to do it for me?


.· ´¨¨)) -:¦:-¸.·´ .·´¨¨))
((¸¸.·´ ..·´ When you wish -:¦:- -:¦:-
-:¦:- ((¸¸.·´* upon a pip... -:¦:- -:¦:-


EPIPHANY!
The answer was to automate myself. Heck, why not? Today we've got 'Roomba' vacuuming our carpets while we sleep and rotary robot lawn mowers replacing teenagers. Why not automate the Forex?

I remember as a teenager reading Isaac Asimov's first books about robots and fell in love with the idea of automatons that could enhance our lives. I dreamt of the day when Dick Tracy's two-way wrist radio was a reality. Fifty years later, and we're there (those of you under 55, please keep the snickering to a dull roar).

It really is an amazing time to live in, with wireless Internet, satellite GPS and the ability to follow Britney Spears' every little thought on Twitter. I can remember when duct tape was an advanced solution.

But can a robot really trade the Forex for you? Experts in neuroscience and artificial intelligence tell us that we're still 30-40 years away from a computer as sophisticated as the human brain, one that would be aware of being alive and take all necessary measures to avoid being unplugged. Heh. How could a simple Forex 'trading robot' possibly replace the sophisticated pattern recognition we Forex traders rely on?

To answer these questions for myself, I began studying so-called 'expert advisors' (EA's for short) which are programs written to run on the Metrader 4 (MT4) trading platform, a free plug-in at most Forex brokerages.

EA's are commonly referred to as Forex 'robots' and come in many different flavors. Once MT4 is installed on your Forex trading account, you simply plug in the EA of your choice, adjust the settings according to the instructions provided, and let it rip. Most developers will allow you to run their EA in a demo account so you can play with it before having to pay for a license that will allow you to use it in a live account.

Hundreds of EA's have been developed, some by slick promoters who release them under names like 'Shark, 'Turbo' and 'Cyborg' only to flame out pretty quickly, usually due to over-leverage, combined with a tendency to treat Forex as a religion in which hope is employed as a strategy.

Read the testimonials at some of these EA sales sites and you'll see recent buyers expressing jubilation over getting 100% profit in a month. Can that really happen? Sure, even a blind squirrel bumps into a nut once in a while. But it's far more likely that you'll pull a Chernobyl and melt your account down.

Of course, you don't need an EA to do that. Many Forex traders can do that all by themselves. EAs just make the process faster, smoother and without all the messy emotion (shock, denial, bargaining with God, the usual stages of grief).

The fact is that a programmable EA can pretty much trade any way you could trade yourself, were you to sit there 24 hours a day, never eating, sleeping or performing (ahem) various other biological functions.

So what can a Forex robot do? Well, it can trade with the trend, it can trade against the trend, or it can do both. That's about it, unless you know of a parallel Forex universe in which price moves in three dimensions, not just two.

Of course, there are many ways to trade with the trend, most of which use moving averages of differing periodicity to determine when the trend has changed direction. There are many ways to trade against the trend, including divergence and Fibonacci retracements to decide when to shift into reverse. Personally, I think trading in both directions at the same time makes the most sense since the Forex is, after all, a bi-directional market.

After studying EA's for a couple of years, I and my associates in GOAL Forex (our managed investment account) have retained the services of a state-of-the art currency robot research firm that, in my opinion, takes expert advisors to the next level. As I wrote in a recent testimonial I sent to them, 'if off-the-shelf EA's are your father's Oldsmobile, this is your new Bugatti.'

Unlike most EA's which are hard-coded to trade a single way only, this EA is like a Swiss Army knife. If you want to trade with the trend, you pull out the scissors. If you want to trade against the trend, you use the corkscrew. If you want to do both, you throw in the nail file and the beer opener.

Using this EA has been a life-changing experience for me, and in more ways than you might imagine. Can I set it to trade the way I would personally trade if I were a robot that never slept? The answer is pretty much yes. Of course, I have to make some compromises since it can't 'see' everything a human mind trained in pattern recognition can do (it can't spot divergence, or bikinis), but for the most part I can get it to trade the way I was trading a few years ago, and that still got me a lot of pips.

The big difference is that it never misses a trading opportunity, never makes a mistake, never sleeps... you get the idea. Right now it's pulling in over 400 pips a day. Humble pie, anyone? I've already eaten my hat. I can go to bed, get up 6 hours later and find that I've got another 100 pips in the bag. Which leads me to the issue of obsolescence.

Am I still a Forex trader?
Or just a glorified maintenance man?
How can a carbon-based biped possibly compete with such silicon-based efficiency?
Am I as obsolete as a Detroit auto worker replaced by a Mad Max welding robot?
Have I been outsourced to the dustbin of protoplasmic redundancy?

Actually, no. And this is where the blend of 'man and machine' becomes interesting. It's true that these EA's are so inept they cannot even prepare a proper martini or pay the bills.

This EA is really just an extension of myself. I like to think of it as my personal assistant, something like Mr. French on the old TV sitcom, Family Affair.

Sure, it's dumber than a dinner mint when it comes to doing anything besides trading, but -boy- can it trade. It can mow the currency market down like a John Deere combine cruising abundant fields of Forex, blowing clouds of pips into the hopper as the operator naps in GPS cruise-controlled, air-conditioned comfort.

And that's precisely the problem. It could also head straight down the pasture, keep on going, never look back, mow right through your neighbor's yard, over his gladiolas, through his front door, and destroy everything and everyone in his house, leaving it all in shambles.

It reminds me of the giant robot in the sci-fi classic The Day The Earth Stood Still. Klatu could vaporize Army tanks, or gently restore the dead to life (at least temporarily). You just needed to know which command to issue, as you stared trembling and panic-stricken into that one-eyed death beam.

Which is precisely why this EA is not for newbies. Imagine holding the keys to a AAA nitro methane fueled dragster. Imagine that all you want to do is go grocery shopping. Maybe you should open the drag chute before you step on the gas?

If I didn't have years of Forex trading experience under my belt (and those who have met me know there's plenty of experience stored there!), I could easily turn this thing into a weapon of mass destruction.

Here are just some of the areas 'Klatu' must be instructed in, in order to consistently generate profits and not wreck the neighborhood.

* Trade with the trend?
* Or trade against the trend?
* Or both ways?
* Which currency pairs?
* Some with the trend?
* Vice versa with others?
* Which others?
* Should all pairs be closely correlated?
* Together or inversely?
* Or does it matter?
* What about the majors vs. the crosses?
* How often should a new trade be placed?
* Once a trade is open, how many pips should it go for?
* Should every trade be protected with a stop?
* Or should entire baskets of open positions be protected with a master stop that closes all trades at once, either with a pre-determined profit or when they all go too far the wrong way together?
* How many trades should be allowed to be open at the same time?
* Under what circumstances should new positions not be opened?
* What if the spread widens w-a-y too far because something BIG just blew up somewhere and sent the pip where no pip has gone before?
* And lots more...

Every one of these questions is left to the discretion of the trader to program in. Or not. So yes, I am still a Forex trader. I've simply automated my trading experience and taken convenience to the next level by generating returns that I, as a mere human being, would have to trade around-the-clock to achieve.

Some may call this heresy. After all, what's the point in learning (or teaching) how to trade if you can get a robot to do it for you? Answer: because you can't know what the robot is really capable of (including annihilation) until you can do it yourself.

So if you want the Forex course cheap (or know someone who does), get in touch with me. A month from now the IOHE web site comes down, probably around April 15th, just in time for everyone to assess their filing requirements under section 6012(a) of the Internal Revenue Code (hint: you really need to read it).

If you want to speak to GOAL about participating in the managed Forex investment program, contact Richard Van Cleave via GOAL's web site.

Meanwhile, I'll be busy with this screwdriver. Let's see, was I supposed to tighten this trading range or loosen it...?

And May All Your Pips Be Positive

Gordon

'Workin' In the Coal Mine'

Just a quick update on the performance of the GOAL Forex fund.

I started trading live for the GOAL Forex managed funds in December 2009 and moved up a nice and easy 7% in our first month. Then I basically stopped trading in the second month in order to wind my life and responsibilities down. As February began we had just gotten trained and set up with our new trading software... when one day later the GBP/USD pulled its first major (black) swan dive in a long time, down over 400 pips in one day. Who says the Forex doesn't have a great sense of humor? Good thing I keep plenty of smelling salts on hand at all times.

By (literally) staying at my screens all day and half the night for a few nights in a row, I managed to pull out of that inverted high-G roll with minimal damage. That actually made me pretty happy. If I could recover from that, I could recover from anything. But it had pulled us back down to just under where we had started, so I basically started all over again.

A few weeks later and I'm happy to say things are looking really good again. I'm still trading at very low leverage (over the past week the maximum draw down has been 1.4% which is minuscule) and currently averaging about .4% per day, or about 8% per month as I continue to gain experience with the software.

The alert among you might ask, heck, with draw downs that low, why don't you goose things a little, get ROI up to, say, 15% a month and you'd still keep draw downs under 3% which is still chicken feed.

Not so fast. Sounds great on paper, but capital preservation is my first and foremost objective. As it is, we're currently closing between 40-70 trades a day (you read that right), netting around 500 pips a day (not a typo), but position sizes are very small... just in case that swan comes around again.

I've discovered that flying this software is a little like flying a vintage F-104 Tomcat with twitchy afterburners. I just want to keep here in a nice, steady climb. No inverted snap rolls quite yet.

So altogether, I'm very pleased. Down the road another month or two GOAL may offer two different managed funds, each targeting different levels of performance (with matching risk and volatility). In order to attract investment money from main street clients still suffering post traumatic stress disorder from the stock market's 2008 high wire act, we may go for just 2%-3% a month in one fund (24%-36% a year which won't cause Grandma gastritis), and 10%-15% a month in a second fund for those who may need an air bag with their seat belt.

That way, the discriminating client can put a little in here, a little in there, and get some diversification with their performance.

I'll be posting frequently from now on, so I'll sign off here and go make sure Klatu's nuts are nice and tight. More on Klatu later. Back soon...