Forex Trading Strategy and LFT Forex Parameters

Trading the Forex (foreign exchange currency trading) is a risky and challenging art and skill–perhaps even more so than US stock or ETF trading. In conjunction with an algorithmic trading program, acquiring training that increases one’s understanding of the currency market will provide significant advantage to new Forex traders.  Indeed, every penny you spend training and learning about these markets will become dollars earned in trading.  Maverick FX is an excellent firm to consider doing this training; they also provide qualifying traders with their own capital to trade on a leveraged account.  See maverickfx.com 

 1. Look at Relative Strength for 1 day and 1 week. See finviz.com/forex_performance.ashx?v=1

2. Chart out those strengths in one day and one week patterns. For example, see below for 1/29/2019

One Day Performance

AUD GBP EUR USD

JPY  CAD NZD CHF

One Week Performance

EUR JPY USD AUD

NZD CHF CAD GBP

3. Looking at the performance charts like the above, I will pick currencies that are rising both for the day and week (in the top rows):  AUD, EUR, or USD.  I would prioritize AUD crosses for going long over one day since it is stronger than the EUR or USD over one day.

4. When looking again for currencies to short, I will look for currencies declining for both day and week (in the bottom rows): NZD, CHF.

5. Now, matching up AUD/NZD would be the most likely combo to trade.  Long AUD:Short NZD. Note: I would generally avoid AUD.CHF because it is a less commonly tradely currency pair.

6. Finally, I would make sure all recent news reports from forexfactory.com are consistent with a rising AUD and falling NZD. 

Alternatively, one may also want to look at upcoming news reports and decide to buy or sell a currency pair based on a news event in forexfactory.com.  With two TWS accounts, one could easily hedge the news events at the same time with one account buying the currency pair and the other account selling the pair.  The LFT Forex algorithmic parameters, if entered correctly, will allow only the most successful trade to execute.

LFT Forex Buy or Sell Parameters

 1. For the LFT Forex programs, you will need to choose either one of the Forex Buy or Forex Sell programs. These LFT Forex programs will only allow either the option to buy or option to sell a particular currency pair or set of currency pairs.  (Note: The Forex Sell and Forex Buy programs are not able to run simultaneously on the same Interactive Brokers/TWS account.  You will need to run either two IB accounts if you want to sell and buy different currency pairs at the same time.

 2. After opening either the LFT Buy or Sell program, connecting to TWS, and starting Mongodb (see LFT Forex Setup), you will want to enter the following:

LFT Forex Buy

Symbol: USD/JPY  (Note: Currencies must be separated by “/”, instead a “.” for the program to work)

Limit price: 0.01 (For USD/JPY, this is 1 pip below the market price for a given criteria. For other currency pairs such as EUR/USD, 1 pip below market price will be 0.0001.  Also note: -0.01 for the USD/JPY is 1 pip above the market price). 

Take Profit: 0.55 (For USD/JPY, for example, this is 55 pips.  For EUR/USD, 55 pips would be .0055).  See blackboxtradingpros.com/atr for more information on how I use ATRs to calculate TP values.

Entry Order Fill Wait Time: 30,000,000 ms (8.33 hours). This is a pretty standard setting.

Exit Order Fill Wait Time: 90,000,000 ms (25 hours) I usually avoid holding Forex trades longer than 1 day. Also, the TWS program will often shut down around midnight EST daily so that may disconnect the LFT Forex Buy or Sell program.

Quantity: 10,000-200,000 (10k to 200K).  I avoid trading less than $10,000 for any currency pair.

EntryBuy SMA Value 30sec (0.02 to 10) I like the value 0.02 to 1 for most Buy trades.  Note: This is the slope of the SMA over 30 seconds.  For an aggressive entry into the trade, you will want to set the value closer to 0.02 or less.  For a conservative entry, set the value closer to 1 or more.  This is the most important value to watch and enter with caution.  I like to watch the slope (the calculated value) move when the currency pair begins to trend up or down.  You can sometimes see this value reach 8 to 10.  Most of the time, if the currency pair is not trending or moving sideways, the calculated SMA value will be close to 0.  (Final Note: The value you enter will be the “Actual Value” you see on the LFT Sell Program data log.  The “Calculated Value” is what is the current SMA value determined by the chart).

EntryBuy SMA Value 5Min (.0001 to 0.01) If the pair is highly volatile, you may want to set the value higher than 0.01. Note: This is the slope of the SMA over 5 minutes.  This is a key parameter to set as greater than 0 for most sell orders because a currency pair may bounce up and down in price just before a news event.  This parameter helps to make sure the trend is upwards over 5 minutes before executing a trade.

Exit SMA (EMA9) (-1 to -20) If the pair is volatile, you may want to set this to a bigger negative number.  Note: This is the slope of the SMA over 9 periods on 5 minute chart.

Trailing Amount: 0.30  (For USD/JPY, for example, this is 30 pips.  For EUR/USD, 30 pips would be .0030). See blackboxtradingpros.com/atr for more information on how I use ATRs to calculate TP values.

MAcrossoverentry: True (If set to “True,” this only allows trade to execute when the EMA9 has crossed over the SMA20.  If set to “False”, this allows trades to be executed when EMA9 is below or above SMA20.             

LFT Forex Sell

Symbol: USD/JPY  (Note: Currencies must be separated by “/”, instead a “.” for the program to work)

Limit price: 0.01 (For USD/JPY, this is 1 pip below the market price for a given criteria. For other currency pairs such as EUR/USD, 1 pip below market price will be 0.0001.  Also note: -0.01 for the USD/JPY is 1 pip above the market price).

Take Profit: 0.55 (For USD/JPY, for example, this is 55 pips.  For EUR/USD, 55 pips would be .0055).  See blackboxtradingpros.com/atr for more information on how I use ATRs to calculate TP values.

Entry Order Fill Wait Time: 30,000,000 ms (8.33 hours). This is a pretty standard setting.

Exit Order Fill Wait Time: 90,000,000 ms (25 hours) I usually avoid holding Forex trades longer than 1 day. 

Quantity: 10000-200000 (10k to 200K).  I avoid trading less than $10,000 for any currency pair.

EntrySell SMA Value 30sec (-0.02 to -10) I like the values- 0.02 to -1 for most Sell trades.  Note: This is the slope of the SMA over 30 seconds.  For an aggressive entry into the trade, you will want to set the value closer to -0.02 or more.  For a conservative entry, set the value closer to -1 or less.  This is the most important value to watch and enter with caution.  I like to watch the slope (the calculated value) move when the currency pair begins to trend up or down.  You can sometimes see this value reach -8 to -10.  Most of the time, if the currency pair is not trending or moving sideways, this calculated value will be close to 0. In most all cases, make sure to set as negative for the LFT Sell currency pairs.  Finally, the value you enter will be the “Actual Value” you see on the LFT Sell Program data log.  The “Calculated Value” is what is the current SMA value determined by the chart.

EntrySell SMA Value 5Min (-.0001 to -0.001) If the pair is highly volatile, you may want to set the value higher than 0.01. Note: This is the slope of the SMA over 5 minutes.  This is a key parameter to set as less than 0 for most sell orders because a currency pair may bounce up and down in price just before a news event.  This parameter helps to make sure the trend is downwards over 5 minutes before executing a trade.

Exit SMA (EMA9) (1 to 20) If the pair is volatile, you may want to set this to a bigger number.  Note: This is the slope of the SMA over 9 periods on 5 minute chart. Note: Make sure to set as negative.

Trailing Amount: 0.30  (For USD/JPY, for example, this is 30 pips.  For EUR/USD, 30 pips would be .0030). See blackboxtradingpros.com/atr for more information on how I use ATRs to calculate TP values.

Final Note: The Trailing Stop and Take Profit orders are based on numbers of pips away from the entry price.  You do not have to set these as negative in the LFT Forex Sell Program.  

MAcrossoverentry: False (If set to “False,” this only allows trade to execute when the EMA9 has crossed below the SMA20.  If set to “True”, this allows trades to be executed when EMA9 is below or above SMA20.