No more hedging orders NFA – Changing the forex strategy landscape

Everyone is talking about it! No more hedging on the same currency pair if you are using US-based brokers. The National Futures Association will be enforcing a Rule 2-43b that prevents a long and short being taken on the same currency pair at the same time with effect from 15 May 2009.

The reason given is that it is disadvantageous for a trader to be using such a strategy which incur costs (spread from long and spread from short) and these strategies are detrimental to trading. So for the sake of traders, brokers are not allowed to have hedging of the same currency pair.

So if you have a long order, and then issue a short order, your long will be closed, leaving your short order in place. You cannot have opposing trade orders in the same account for the same currency pairs.

If you must do it, open a different account, with one account doing long trades and another account doing short trades!

Implications for EAs are great. They have to be re-written. If the strategy has no changes, you need to split the strategy into two to be handled by two different accounts. How troublesome.

What about pending orders that are opposing? What if you have ensured that the orders are not triggered at the same time or ensuring that one is a market order and the other is always a pending opposing order. I posed that question to IBFX and their reply was “they don’t know the answer yet”.

Yes, it is going to be tricky if they don’t even allow opposing orders that consist of pending orders. A lot of other strategies has to be re-written. For example a Stop and Reverse strategy must really have the losing order “stopped” first before triggering a “reverse” order. And one must be careful to code in the spreads as well. A lot of precision and thinking now. No more sloppy strategy coding.

Automated Trading Championship - My 2008 Experiences

The reason why I can write so much on MetaQuotes' s Automated Trading Championship is because I was a participant in 2008. Everything was new for me, and the mad rush to understand the rules and then coding an expert advisor, discovering the intolerances of all sorts of errors, and finally dishing out a half-baked EA that got stuck in the early part of the competition.

I coded an EA based on a weekly strategy, and risked on the higher side for the lot volume so that the EA can get ahead. The currency pair traded was EURUSD. I have always wanted to do a multi-currency pairs EA but just could not find the time for it.

One week after the competition started, EURUSD threw up a more than 100 pips gap over the weeks, and my EA was "lost" simply because I did not handle the big gap.



But on the whole it traded very little but managed to get a profit of $1451, ranked at 95 out of 705. Nothing to be proud of especially over such a small gain. But then, it did give a nice feeling that I managed to be the few who could maintain the equity and gained some profit.







More importantly, it made at least 5 trades which was a competition requirement. But I guess it does not matter because the true performance of the EA has been marred by its inactivity for many weeks, and so it is not reflective of its capability or incapability.

Automated Trading Championship – Why Join?

What are the possible reasons for wanting to participate in ATC? The reasons are many, from the most trivial of just having some fun to potentially finding business opportunities. Let’s discuss some of this.

1. Self-selected MQL4 Olympian

Well, when you are a participant, you country is listed and so are your fellow countrymen. Within that you can have fun to see if you are doing better than them or better still in a small world like us, it looks like an Olympic game. Just think - you cab select yourself to represent your country.

2. Self-disciplined EA

Your EA needs to be efficient in using computing resources and error-free. Even if you have escaped the scrutiny before the competition, you may run into some errors which will disqualify you. Participating will help you build more efficient EAs and force you to discipline your EA and yourself and up the ante.

3. Making new MQL4 friends

Hey you can go around as a participant and drop messages on other participants and they on yours, so hopefully you get to know more like-minded MQL4 freaks.

4. Benchmark your EA

This is a good time with all participants on common ground to pit your EA against others and see how well it performs. It will tell you how good or bad your strategies are. Or maybe it is not the strategies but poor coding. Whatever it is, it will help you to see what kind of EA you have written.

5. Selling your EA.

If your EA show promising results, rest assured that there are many eyes from all over the world who will express interests to purchase your EA.

6. Business opportunities

Or you might get requests by intermediaries who will host your EA as a list of offerings to their customers and earn some bucks in return.

I am sure there are more. If you can think of any, drop me some comments!