Because there are many different forex brokers with different account types out there, you have to check the current account’s market info within your expert advisor to find out the minimum stop level distance you have. Some accounts are 3 pips, while others might be 15 pips.

The function you will use is called MarketInfo(). It requires two parameters, SYMBOL & TYPE. SYMBOL is the currency pair or security you want to access and TYPE is the request identifier to specify the account info you wish to return. Since we are looking for the minimum stop level, we will use the type, MODE_STOPLEVEL.

double MarketInfo (string symbol, int type)

EXAMPLE:

int MinStopDist = MarketInfo(”EURUSD”,MODE_STOPLEVEL);

Once you have this data, you want to make sure you do not try to place stop losses or take profits closer than this minimum distance from the market price. Additionally, you do not want to try to place pending orders closer than this distance from the current market price. If you are using an expert advisor that you do not have the source code for, you will want to look in the input value settings and see if there is a stop loss or minimum stop loss setting that you can change.

Another grade fade trade example comes from David Tepper of Appaloosa Management. He believed that in when prices were near their all time lows in March, 2008 that people were scared beyond reasonable measure and that prices were very tempting. He purchased large amounts of financials and amassed $2 billion in a very short time. Again this was more of a fundamental fade trade, but both men went against the general market consensus and were handsomely rewarded.

Mark Fisher commodities shark and author of the Logical Trader had a term for the market consensus. He called it, “the retail bus people.” He said if you put on a trade and nothing happens then anyone in the world has had time to get on that trade. If everyone is in the same trade, how can it make any money? Fisher claims that the bus people are the masses and the masses are always wrong. This would lead credibility to the fade and breakout trades. When both of these trades are taken they usually are going against conventional wisdom and human nature. Thus, having a much greater chance of profitability.

Currently Paulson has accumulated a large stake in gold. With gold just below its all time highs this would fit perfectly into the breakout strategy. Paulson is evidence of a trader using both strategies. If gold were to have a large retracement there would lead one to consider fading the move. However, at this point gold has never looked strong and although it is well over $1,000 the momentum is to the upside and that is the trade position to be in.

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The breakout system is based on the laws of Newton: Objects in motion will tend to remain in motion unless other outside forces stop them. Stocks, Currencies, Bonds, Options, and Futures are no different that objects of matter. If a stock has been bouncing between $23 a share and $25 a share for a weak and finally breaks above $25 on heavy volume this would be an example of a breakout. Now if I told you that the Stocks 52 week high was $25.43 and the stock just ran past $25.78 would you be inclined to buy or sell at this point? If you said sell then you may want to skip down to the next paragraph as the fade trading strategy may better suite you. For all those that would like to buy after a 52 week high you would be correct in your thinking because not only has the stock broken a shorter term timeframe of one week, but also a much longer term trend over the course of a year. A breakout trader loves to go long stocks breaking their all time highs. When you talk to old veteran floor traders they will tell you that stocks always go higher and lower than anyone ever expects. If a stock has broken out and has surpassed its 52 week high it has a lot of momentum behind it and it would make much more sense to go with the trend. Haven’t you heard, “the trend is your friend” from other experienced traders? There are many more indicators, patterns and even fundamental analysis that professionals use when making a breakout trade, but this gives a good premise for the strategy. Now for those that do not like buying at the top there is the exact opposite system available to you.

The Fade Trade – As one would guess the Fade Trade sells tops and buys bottoms opposite to what the breakout system would do. The idea is very simple and conforms well to human nature. In a minute you will see how this is not always a good thing in trading. If prices of a stock have gone up for 3 weeks in a row well past a previous 52wk high many traders are very reluctant to purchase the stock. They are upset that they missed the great run up and do not want to pay higher prices then other traders. They fear that as soon as they get in the party will end. In itself this is not terrible thinking. However, to be a successful fade trader it takes more than guessing that the rally is over. When taking a fade trade the trader will sell the stock after they believed it is well over priced to the high side. To be successful the trader must use filters. First they should never place the sell trade until they see price action to confirm it. For instance if a stock has risen from $50 to $75 a share and then dropped below $70 this is a sign the rally has ended and a sell would be warranted. A trader would not want to watch the stock trade up to $74, $75, $76 and then place a sell hoping at that instant the price will head down. This is wrong on so many levels. Firstly, this trader would be relying on the premise that they are all knowing and can predict the exact instant the trade will turn around. The statistics behind this are staggering. Nostradamus would not be able to make this kind of trade. Secondly, people don’t want to wait for it to come back down because they are afraid that they have already missed some of the profits and the trade will not go much further. This greed results some traders to, “try and catch a falling knife,” this refers to traders trying to fade a downward move by going long while the stock is still moving down. A fade trade can be very profitable if done intelligently, by waiting for the prior tend to cut out and be aggressive in opening the trade in the other direction.

So which strategy is right? To be honest it must be the system that works for you. Both systems have been used profitably by many traders. The important thing is making intelligent choices and forgetting greed. Potentially a trader could use both systems. For instance picture a stock that has traded between $35 and $37 for the week and its 52 week high is $43. If the price of the stock suddenly breaks though $37.60 on strong volume an intelligent trader should open up a long position. If the stock continues up to $43.50 what would you do? Since it has not retraced at all and has now broken its 52 week high you should add to your long position as this is another sign of strength. You made a good decision and the stock churns higher to $55, but then stalls out there for a few days and drops sharply to $49 the next day. This would be a great opportunity to fade the move. You went long with the momentum you increased your position as the momentum increased. Now that the charge is over and the stock has already been marked up considerably where it was just a week ago it is an intelligent time to sell it. You could place your stop at the previous high of $55 with $6 of downside risk, whereas the stock could move all the way back to its normal range of $35 and $37 which would net you a gain of over $11. This is a fade trade worth taking since the risk to reward is good and you are not trying to catch a falling knife.

Again it is more important that you trade with a system that suites you. There are plenty of systems out there to choose from, but these are two very common foundations for which systems are built. I would encourage you to select one of the systems that you are the most comfortable with and practice paper trading. As you become more experienced and see how the trades play out you will have a better sense of how the market works and this will help you develop trust in your system. One helpful hint is to trade longer timeframes. As you back your charts out from intraday to the 4 hour and daily charts you will have more success as your trades have more time to play out.

Are you into trading, but just don’t have time to sit in front of the computer all day? Are you trading well all day only to place one bad trade to ruin the whole week? Our Automated Trading Robots may be your solution. We have two Expert Advisors for the Metatrader Forex Platform. One is a breakout system and the other is a fade trading system. Run them both for maximum profits. See our backtest results spanning over 8 years without a year in the red. Ask about our managed accounts.

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Ordersend error 134 tends to happen a lot when people code expert advisors with a money management style that increases lot sizes such as Martingale. Eventually the lot size gets too big and you do not have enough margin to place the trade. This can also happen over time if your account balance gets too low or if you select too large of a lot size.

The error occurs when you try to place the trade, thus it is an “ordersend error”. To prevent this error you can check your account free margin before attempting to place a trade. To do this you will use the function, AccountFreeMarginCheck():

double AccountFreeMarginCheck(string symbol, int cmd, double volume)

Returns available margin that remains after the specified position has been opened at the current price on the current account. If the free margin is insufficient, an error 134 (ERR_NOT_ENOUGH_MONEY) will be generated.

Parameters:
symbol – Symbol for trading operation.
cmd – Operation type. It can be either OP_BUY or OP_SELL.
volume – Number of lots.

an example would be:

if(AccountFreeMarginCheck(Symbol(),OP_BUY,Lots)<=0){

// there is not enough margin in the account, so do not trade

return();
}

Another function you can use to find the remaining margin is:

double AccountFreeMargin( )

This returns free margin value of the current account.

The following example prints out the free margin for your account:

Print(”Free margin is = “,AccountFreeMargin());

There are many unconventional theories to the stock market. Everyone has heard of random walk. Statistically it has been proven that if you throw darts at stock tickers in the newspaper you are likely to do as well as the average mutual fund return. If random walk works, it might be fun to explore these other theories. Please note: thetrademachine.com does not endorse or use any of these theories in its expert advisors.

The Boston Snow Indicator – If Boston has a “White Christmas” meaning that they received significant snowfall the indicator would predict the stock market will rise over the course of the next year.

Presidential Election Years – The stock market generally rises during presidential election years. Now just because out of the last 21 election years the market has risen 18 times does not make this an obvious indicator. In 2008 when Obama took office the stock market fell 37%. This would have been a bad year to follow the theory, however had you checked for new moons and seen that it did not snow in Boston maybe you could have avoided getting crushed this year.

Trading should be simple. There are many indicators and theories out there to choose from. If you are feeling overwhelmed with it all check out some of the automatic trading programs from www.thetrademachine.com They have all been tested over an 8 year period with positive results. Best of all they do not require any time or decisions on your part. Just set the programs and let them work for you.

Consumer confidence came in at 66 today, its lowest level in three months. This comes at the same time JC Penny reported a large loss due to pension plans. JC Penny did report that their outlook will improve as their pension plans are now under control. JC Penny has a deal in the works where they can take on more top brands including Liz Claiborne at the end of a five year cycle. The brand power should propel profits down the road. Currently JC Penny claims same store sales are weak due to shoppers concern over their jobs and income.

The Swiss government is preparing to file a suite against Google over their street view map service. The Swiss who have always leaned towards privacy in their countries policy are upset over the relatively new imaging service Google provides. Google’s street view allows users to zoom into most major roads and get a close up view of what it would look like if one was standing right on the street. It is revolutionary and has been a great boon to real estate professionals in helping investigate listings without having to drive there in person. Many recreational users enjoy using it to plan vacations, view their friends places, and even investigate places in their own city. Google sends a truck around with a special 360 degree camera to snap the pictures and upload to the database. The implications are that there are other cars and people that appear in these pictures without knowledge and certainly without consent. The Swiss argue that any person or license plate should be blurred out of the picture before they are uploaded. Further, they insist homeowners should be notified a week before the images are going to be taken. Google claims they are not afraid of the suite and are prepared to defend themselves.

Jim Rodgers, famous for his success as a commodities investor, laughed when asked about his thoughts on the U.S. recovery in a recent interview this month. Rodgers point was that the U.S. has been in a decade of excess with mounting debt. The idea of combating the problem by creating more debt is asinine. He citied Scandinavia as an example of the same situation handled in a different way. Scandinavia had large levels of debt and a credit crisis in recent history. The government did not have the authority of the U.S. Fed to print money so they did the logical and really only thing that could be done. They allowed their citizens to file bankruptcy and have two to three years of hard times. This was a time of de-leveraging, while people learned to accept they lived in a lifestyle that should never have happened in the first place. One this de-leveraging was finished the economy was able to start up organically and this was followed with a great decade of growth and prosperity.

It is very possible that without the bailouts there could have been a run on banks and people could have lost everything in the process. For that the bailout has very significant and critical implications to the health of the U.S. Economy. However, once the banking sector was able to start lending again and the FDIC could secure the banks it was foolish to extend the bailout package further. The creation of programs such as cash for clunkers, the new home tax credit, and cash for clunkers creates only a near term solution at the cost of a long term debt. It would be far better to accept the inevitable that the grand decade of excess is over and prepare to consume less. The government has allowed ample time for this transition at a cost of longer term pain and suffering. The real effects of this debt may not truly be felt until 2012 or later, but there is no question the U.S. Dollar is going to lose its status as the reserve currency and the country as a whole is going to be in a precarious position.

As an investor or trader it is tough to be long U.S. stocks, gold, and treasuries. The government has propped up the stock market so far that it is trading at a 20% premium to its long term averages. It makes my head spin trying to figure out how investors could deem it worthy to pay a premium to own stocks in the most severe recessions since the depression. Bank savings rates and Treasuries are yielding less than 2% and gold is already trading at its all time highs. In times like this there is no choice, but to try different investment strategies. Check out the Fade Machine for an opportunity to profit in the current market turmoil. The Fade machine has been backtested for over 8 years and has consistently returned 50% per year with low risk.

Bug Fix:
Buy order take profits were being placed at the nearest 100 level instead of the nearest 50 & 100 level. For example, a buy at 1.4822 was taking profit at 1.4900 when it should have been taking profit at 1.4850. Version 1.1 fixes this problem.

For the latest release, please visit:
http://thetrademachine.com/blog/2009/10/29/cowabunga-expert-advisor/