high-frequency trading report
TRANSCRIPT
High-Frequency Trading Report opportunity to trade alongside large institutional
players and, what’s more, do so profitably
©2015 - 2016 BJF Trading Group inc.
RISKS ASSOCIATED WITH FOREX TRADING
Trading foreign currencies can be a challenging and potentially profitable opportunity for investors. However, before deciding to participate in the Forex market, you should carefully consider your investment objectives, level of experience, and risk appetite. Most importantly, do not invest money you cannot afford to lose.
There is considerable exposure to risk in any foreign exchange transaction. Any transaction involving currencies involves risks including, but not limited to, the potential for changing political and/or economic conditions that may substantially affect the price or liquidity of a currency. Investments in foreign exchange speculation may also be susceptible to sharp rises and falls as the relevant market values fluctuate. The leveraged nature of Forex trading means that any market movement will have an equally proportional effect on your deposited funds. This may work against you as well as for you. Not only may investors get back less than they invested, but in the case of higher risk strategies, investors may lose the entirety of their investment. It is for this reason that when speculating in such markets it is advisable to use only risk capital.
Risk Disclaimer for Forex Trading
Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. Past performance is not indicative of future results. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.
Benefits and Risks of Leverage
Leverage allows traders the ability to enter into a position worth many times the account value with a relatively small amount of money. This leverage can work with you as well as against you. Even though the Forex market offers traders the ability to use a high degree of leverage, trading with high leverage may increase the losses suffered. Please use caution when using leverage in trading or investing.
Hypothetical Results Disclaimer
THE RESULTS FOUND ON THIS WEBSITE ARE BASED ON SIMULATED OR HYPOTHETICAL PERFORMANCE RESULTS THAT HAVE CERTAIN INHERENT LIMITATIONS. UNLIKE THE RESULTS SHOWN IN AN ACTUAL PERFORMANCE RECORD, THESE RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, BECAUSE THESE TRADES HAVE NOT ACTUALLY BEEN EXECUTED, THESE RESULTS MAY HAVE UNDER-OR OVER-COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED OR HYPOTHETICAL TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THESE BEING SHOWN.
The information that may be presented is based on simulated trading using systems and education developed exclusively by MTI. Simulated results do not represent actual trading. Please note that simulated trading results may or may not have been back-tested for accuracy and that spreads/commissions are not taken into account when preparing hypothetical results.
No representation is being made that any account will or is likely to achieve profits or losses similar to those that may be shown. Past performance is not indicative of future results. Individual results vary and no representation is made that clients will or are likely to achieve profits or incur losses comparable to those that may be shown.
About me
Hello and welcome. My name is Boris Fesenko, and I would like to share with you my experience in high-frequency
trading.
First, I’d like to introduce myself. I graduated from university in Ukraine with a degree in robotics technology and with plans to work in that field. I went on to write a doctoral thesis on the subject but, by the time I finished it, I had realized that my future lay elsewhere. A career as a scholar or scientist did not seem particularly attractive, not least because such a career was synonymous with penury: in Ukraine at that time, there was little money to be had being either a scholar or a scientist.
Even though I had completed my thesis, filed a patent for a new kind of magnetic sensor, and published a number of
scholarly articles, including one that dealt with calculating elliptic integrals and was well received by my peers, for me
the writing was on the wall.
So, after my post-graduate studies, I got a job at a company that specialized in optical communication. I also continued
to further my education; this time, it was programming and software development. The work was enjoyable, and I
completed several courses administered by Ericson and Nortel, two companies that were heavyweights in their sector at
the time. I also had a chance to travel to the US, where I was one of those who had been invited by the US Department
of State under the auspices of a government program that offered Ukrainian professionals the opportunity to learn
about telecom companies in the US.
I was lucky enough to meet a number of interesting people, including Vint Cerf (the inventor of the TCP/IP protocol –
essentially, the inventor of the Internet), who was then Senior Vice President of Technology Strategy at MCI. The trip
made me realize that, with enough determination and financial independence, a single individual can create a million-
dollar business. I was also growing increasingly oppressed by the thought that I would never have enough time to attain
the kind of financial independence that I wanted for myself.
That was when I made a seminal, life-changing decision: I quit my job and applied for immigration to Canada.
Forex trading
Having read nearly every book about forex trading that I could get my hands on, I opened a trading account and started
to recruit software developers to help me with the creation and testing of trading algorithms. By that time I had already
become a proponent of automated trading, and I remain one to this day.
There are several reasons for this: automated trading allows traders to remove all emotions, which can adversely affect
trading results, from their activity; many automated trading systems can be tested based on historical data; and some
high-frequency automated systems can never be used manually.
In my opinion, high-frequency trading systems are the least risky and most profitable systems in existence. This claim is
buttressed by my experience of having spent more than ten years developing over 5,000 trading strategies that were
either based on our own trading ideas, for subsequent use in our own accounts or resale to clients, or on algorithms
provided by our clients.
Our High-frequency trading results
Below are several charts that show the performance of our trading and is verified by FXBlue.Com. The first chart is a
picture of the growth in balance since March 21, 2016, with a $10,000 Account:
As you can see, we turned $10,000 into $37,755.04 in about 70 days. It get’s even better as we continue to break these
results down using a fine toothcomb.
Look at this chart here for some impressive numbers:
You can check results here: http://www.fxblue.com/users/bjf
• ROI of +277.6 % during this period of time.
• wins 74.2% of it’s trades and has a profit factor of 7.13. It also only takes on average 2.8 trades per day and stays in
trades on average only 13.8 minutes. This means you aren’t holding trades for days on end thus decreasing your market
exposure risk.
• Particularly impressive is a peak to valley drawdown of just -1.1%.
This next chart shows the average win vs. the average loss for each currency pair/CFD that the Software trades. It’s
pretty impressive considering that the average win is in many cases two to three times larger than the average loss.
As you can see on average most markets are performing between $120 and $230 on the winning trades and only losing
on average between $60 and $110 on the losing trades. And with an impressive profit factor of 7.13, you can continue to
expect above average returns in the months and years ahead.
The other good news is that when you trade with our high-frequency software, market conditions and changes don’t
matter. In fact the more volatile the market is the better performs.
On the next page, take a look at the trades that BJF Forex Arbitrage Software captured during the last Non-Farm Payroll
day on May 6, 2016. There were 49 trades made with only 9 of them being small losses. Over 698.6 pips and $13,178.65
in profit were captured on this single day alone.
Notice also that the majority of trades didn’t happen until at least 4 minutes after the actual non-farm payroll
announcement at 8:30am EST. And as you can see, the results speak for themselves... which is exactly what you want in
an automated trading system.
Professional Arbitrage Software
These days it is possible to get access to a number of high-caliber arbitrage trading systems that are based on true latency arbitrage. These systems are nearly infallible. Some of the biggest banks and hedge funds operating on the forex market use high-frequency trading systems and sophisticated arbitrage software with remarkable results. There is no reason why you shouldn’t be able to do the same thing.
This kind of software offers retail investors or traders the opportunity to trade alongside large institutional players and, what’s more, do so profitably. How do you go about doing that? Where do you start? Before you wade in, it is important to take stock of the difference between automated trading systems and arbitrage software. First of all, you need to bear in mind the fact that most trading robots work more or less the same way. A robot analyzes the information provided by the market and compares that with the parameters that have been inputted into the robot. If the comparison suggests there is a trading opportunity, the robot makes a trade.
Underperforming – or, as I call them, static – robots usually come embedded with set entry and exit rules. This makes this kind of robot inflexible, which is a considerable flaw in a fluctuating market. If, for example, the robot is programmed to make a trade with a 10-pip stop loss and a 35-pip profit target when the price of a security reaches a certain level, the trade will probably be a losing one in a situation where important news comes out and there is a strong market reaction. Such a robot is simply not designed to deal with the kind of volatility that will accompany a strong market reaction. The problem is that the vast majority of trading robots on the market are like that. This is where arbitrage and high-frequency trading systems come in. The purpose of these systems is not to exploit market fluctuations, but to take advantage of various inefficiencies in the market. In a way, this is analogous to a time machine: the system can see the future, even if that future is only a few hundred milliseconds away. That distance can mean the difference between a profitable trade and an unprofitable one. Such arbitrage systems are indifferent to market conditions. They do not require the presence of a trading strategy, as they already know the direction of the market. Furthermore, these systems process information at an astonishing speed that is beyond the abilities of a human trader. They are able to monitor data channels and different brokers simultaneously, which would be physically impossible for a human being. While these systems can detect and take advantage of inefficiencies immediately, you will never even know that the inefficiencies were there in the first place – they will disappear before you are able to notice them. Using its parameters, an arbitrage system scans the market, identifies profitable situations, and makes corresponding trades to enter the market. The positions are subsequently closed, with a gain or perhaps a modest loss. The whole process takes seconds or, at most, minutes and is entirely devoid of all the sentiments and emotions that are so detrimental to a trader’s success. The advantages of using automated arbitrage software, then, are obvious: this type of software offers you the prospect of maximum profitability.
Hedge Fund Profits for Retail Investors Trading has come a very long way. Whereas the forex market was once the preserve of institutional traders, in recent years the playing field has been leveled. Any retail investor can now take advantage of the same tools and knowhow that have been previously available only to the big players. Technological progress has greatly empowered the mainstream investor, and there is no reason for you to forego the profits that are now within your reach and leave them to banks and hedge funds. The best way to take advantage of this new paradigm is to use automated trading, which is vastly superior to manual trading. It doesn’t matter whether you are an amateur trader just setting out to get your feet wet or a veteran trader, or whether you are looking to supplement your income or live entirely off trading income. The upshot is that an automated trading system should be incorporated into your trading strategy if you are to be successful in the perpetually changing market of today. It lets you trade in any trading conditions, regardless of the present economic background. I would like to finish this discussion by telling you about an automated trading system known as BJF Forex Arbitrage Software, a trading system that has surpassed all of my expectations. Personally, I have spent countless hours poring over charts and trading for my own account. I have also spent the last decade programming and testing trading systems, working with some of the best software developers and financial engineers in this field. I have seen many systems that were profitable and no fewer of those that weren’t. In short, I have gained enough experience to arrive at one important conclusion: developing a profitable trading strategy is expensive, time-consuming, and bewilderingly difficult.
Unless you have extensive financial resources and a programming background, it will make far more sense for you to buy existing, professionally developed tools than to try to make your own. BJF Forex Arbitrage Software suits this purpose perfectly.
The Big Secret of Arbitrage Trading: Introducing BJF Forex Arbitrage Software BJF Forex Arbitrage Software is short for “Forex Arbitrage Automation”. Unlike other forex robots, it is a complex piece of software that employs sophisticated arbitrary technology and allows users to trade currency pairs as well as contracts of difference (CFDs) based on such underlying instruments as DAX, spot gold, and spot silver. Its advanced risk management features and its ability to scour the market for arbitrage opportunities give the trader an edge over manual traders.
Combining automation with institutional-level price feeds, the software is used by brokers, hedge funds, and other serious traders; and you can use it too. In order to understand the workings of BJF Forex Arbitrage Software, it’s a good idea to understand what forex arbitrage is all about. There are different forms of arbitrage, the most popular being one-legged arbitrage. One-legged arbitrage (aka latency arbitrage) involves comparing quotes between different brokers and exploiting any differences between them (e.g., those caused by speed- and time-related variances). For example, if the trader sees that the price of a security as shown by one broker (whose quotes are more real-time than those of another) is trending upwards, a buy order with the slower broker is placed. It works the other way around: if the price shown by the faster broker is heading down, the trader will place a sell order with the slower broker. It looks pretty straightforward, but it is in fact difficult to achieve success without the use of advanced software such as BJF Forex Arbitrage Software. The main raison why arbitrage trading difficult is that brokers actively discourage the use of arbitrage systems: these systems cause them to lose money. A brief explanation of the way brokers operate is in order. Most brokers (particularly
the Meta Trader 4 ones) assign incoming orders either to the a-book or the b-book. If an order is assigned to the a-book, it is sent to a liquidity provider for execution. If it is assigned to the b-book, the broker keeps the order for in-house execution. Arbitrage traders tend to open accounts with small deposits, their orders are assigned to the b-book. Since execution is instant in the b-book, this makes the situation profitable for the trader; even a small deposit can quickly grow into a sizeable amount of money. As the broker is trading against the trader in this kind of situation, the trader’s gain is the broker’s loss. When the spectacular results are detected, the broker closes the account, putting an end to the trader’s arbitrage activity. The broker can also resort to other tactics designed to deter or hinder arbitrage trading, such as delaying the execution of the order. If the account gets assigned to the a-book, the order will be sent to a liquidity provider. Liquidity providers consider such trades as toxic and so disapprove of them as well. Consequently, traders who use arbitrage strategies often have to switch brokers, opening accounts under the names of friends and family to disguise themselves.
Viewing BJF Forex Arbitrage Software from the inside As I’ve already mentioned, when it comes to using an arbitrage trading system, the biggest problem will be your broker. Brokers do not want arbitrage traders to trade through them. However, there are ways to circumvent this issue. One is to trade through brokers who use an aggregator known as a “prime broker”. A prime broker connects the broker to a number of liquidity providers. That means that your buy order can be sent to one liquidity provider, while your corresponding sell order will be relayed to another. That makes it harder for the broker to identify your system as an arbitrage one. A second solution is to delay closing your position: instead of closing the position a few milliseconds or seconds after it was opened, which can give away your arbitrage activity, you can close your position after a time lag, which makes your system look more like a trend-following one. Yet another solution involves the use of Fill or Kill (FOK) orders, which instruct the broker to either execute the order immediately and in full (fill it), or not at all (kill it). Such an order makes sure you get the whole position at the price you want, instead of opening the order at a less desirable price. Using this type of order protects you against loss if your broker attempts to apply slippage. Regardless of whether you want to supplement your income or provide yourself with a very comfortable retirement, the use of an automated trading system is a very good way of helping you reach that goal.
WE recommend you to participate FREE Online Trading Courses. We provide not only information but also free
MT4 Indicators and Experts.
Schedule:
1st presentation: "An introduction to high-frequency trading" 2d presentation: "How to test a broker to gauge if high-frequency and arbitrage strategies are possible
with that broker" Free MT4 Tools: Spread Indicator, Execution Time EA and Indicator, Arbitrage situations Indicator
3d presentation: "Latency (1-leg) arbitrage" Article: "Trading the News" - How to trade on non-farm payroll Video: How to trade DE30 (dax) with Latency Arbitrage 4th presentation: "Hedge arbitrage". Free MT4 Indicator: arbitrage situations between 2 brokers Video: How to trade DE30 (dax) with Hedge Arbitrage 5th presentation: "High-frequency trading and trading the news"
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