Introduction & Trading Guide

[foundhorizon]

Hello MoneyTec users,

I am currently in the process of gearing up a fee-based recommendation service, FoundHorizon, complete with an interactive website and daily signals sent out via a variety of mediums including email. As many of you may know from experience, setting up a new business is not an overnight process when you do things the right way. But being both eager to begin sharing my research and building a potential customer base, I would like to take advantage of the recommendation forum here on moneytec.com to provide readers with a full preview. So until my site is up, running and able to accept subscribers, I will be posting my FULL trading recommendations here every trading day, exactly as they will given to a paid subscriber in the future. What follows is a trading guide to teach you to exactly how to interpret and use the signals.

Trading Guide

Data Source
First of all, I think it is very important to establish a universal point of reference with regards to forex pricing data before any valid discussion of trading levels can begin. In my experience, far too many signal providers post trades and results based on unknown or mixed data sources, leaving customers to wonder why their trades don't seem to work out quite the same way. I choose not to play that game. It doesn't really matter what source you pick but it matters that you pick one and live by it. I have decided to use CMS (www.cms-forex.com) as the reference data source. I am not providing any endorsement of CMS but because I use them I will be able to verify any disputes over entries and exits easily. Plus, the CMS platform can be downloaded and run in demo mode by anyone wishing to follow my signals. The charts are also the only ones I've found that allow the user to view the chart as bid or ask separately, which is very useful. Therefore, all buy orders will be based on the CMS ask and all sell orders on the CMS bid. This removes all doubt from the signals. If you find any mistakes in my posted levels compared to CMS, you can let me know and they will be corrected. This is the kind of unambiguous service I would expect so I'm practicing it as well.

Pairs
I will be posting signals for the ten most liquid currency pairs:
EUR/USD
USD/JPY
GBP/USD
USD/CHF
EUR/CHF
EUR/GBP
EUR/JPY
AUD/USD
NZD/USD
USD/CAD
Not all of these pairs will have signals every day but at least one usually will. WARNING: Pairs giving signals on the same day are highly likely to be correlated and are therefore prone to the same market forces. Do not expect them to hedge each other. Divide risk evenly across multiple pairs. The more pairs in a day, the less risk per pair, as a rule of thumb. Or, in other words, don't risk 5 times as much on a five signal day as a one signal day.

Time
Another big problem for customers trying to follow a signal service is not knowing exactly when a signal will occur. The whole reason you choose to trade daily signals is so that you don't have to sit in front of a screen all day. FoundHorizon signals, however, will be posted before the same time each day. Because of email lags and the unknown number of pairs I may have to examine on any given day, I can't say that signals will be sent out or arrive at an exact time, but they will be posted before 18:00 ET (US & Canada) (22:00 GMT in the summer). But, so that no one has to take time out to constantly check these posts or their email before then, no signals will become active until 18:00 ET and the performance will reflect this rule. Therefore, any signal filled before that time will not count as a valid trade. Now you don't have to waste time checking for a new set of signals.

Signals
Signals for each pair will either be no signal at all (OFF) or a set of two signals, buy and sell, plus the stops and targets for each. For example:

EUR/USD
Buy 1.1516 Target 1.1554 (+38) Stop 1.1469 (-47) 50% 1.1535
Sell 1.1429 Target 1.1381 (+48) Stop 1.1471 (-42) 50% 1.1405

The entry levels will always be stop entries, both above and below the current market. The numbers after the target and stop levels are the pips gained or lost at these levels. Once an order is filled, the opposite order remains active and can be filled later if the first trade is stopped out and the market continues through the second entry. Any unfilled trade should be cancelled by 17:00 ET (21:00 GMT summer) while open trades should remain open until the target or stop is reached or until otherwise updated in a new signal. This can be easily accomplished with the CMS software if orders are entered as DAY orders and not GTC. This way, unfilled orders will be automatically removed at 17:00 ET.

Profit Protection
Managing open trades can involve as little as opening and closing the trades at the set times or it can involve some occasional profit protection. To account for these two styles, two results will be given for each trade: one for no profit protection and another involving a set of profit protection rules. These rules are:

1) When the ask (bid) reaches the target in a long (short) trade, move the stop to protect 50% of the profit potential ((target+entry)/2). When this calculation gives half pips, then set the stop of the whole pip that is farthest from the target, e.g. 1.14815 becomes 1.1481.
2) When the bid (ask) reaches the 50% level for a long (short) trade, move the stop to breakeven.

The 50% level will be listed at the end of each signal, as shown above. I will track rules 1 and 2 both separately, combined and neither so that you can see the results of different protection methods.

Conclusion
Hopefully, that should be enough information for you to follow these signals in a demo account without much help. That said, do not hesitate to post replies to any signal post and I will answer them in a timely fashion.

[russeller]

fondhorizons ..... how long have you been trading and what kind of returns on investments do you experience ? Will you tell your customers your trading methods or will it be a 'trust me' type of
arrangement ?

[foundhorizon]

russeller,

I've been trading for five years, which to some of you real troopers makes me still a newbie This experience has been wide-ranging from stocks, futures and options in addition to currencies. Over the past year I've turned all of my energy to currencies and closed out most of my interests in stocks and futures, primarily because of the advantages forex has over these markets in many areas we are all familiar with. My educational background is in computer science, statistics and computational finance but more than anything it came from putting real money, mine and other's, in the market. I currently enjoy annualized returns from X% trading with a moderate level of risk, trying to keep my drawdowns below 25%. Did I say X%? Yes, because, honestly, I could put anything here, right, and you couldn't prove otherwise? If I was unscrupulous, I could pick any three digit number. I will say that I live from it. I'd rather establish a legitimate, monitored track record through my signal service and let that be the guide. So for now, let's say that I have no track record and I'll be at the mercy of traders like yourself to build a reputation. That seems like the most honest way to begin earning your trust.

As far as sharing the system, there are two problems with that: one purely business and the other purely practical. First, my goal into sharing signals is to add capital to my own trading. I actually trade my own signals. The big question is probably "if they work, why do you need extra income from them?" and the answer is simple: no matter how good a system is, it still has drawdowns and you can't just trade at 100% exposure to squeeze it for all it's worth. I can only trade so much with the capital I have in order to stay within my risk parameters. But if I can get some extra value by selling these signals, that can help me to trade more. I can't recall where I read it, but a poll once determined that traders who sell their knowledge as well as trade their knowledge make nearly twice as much. Another way to accomplish this is to manage accounts for others but I've learned that that is not my favorite activity. The second, practical reason is that my system is not 100% mechanical and can't really be taught. It involves a personal feel that comes from my personal experiences. However, at any point that I decide to discontinue a signal service, should it be successful, I would derive great joy from passing on what I could in some sort of educational program.

sincerely,
foundhorizon

[russeller]

Have you determined how your service will work yet ? ... I like the posting on a web site approach ... but will you post certain entry/exit points ? ... and what time of day would the postings be available ? ... had access to data once that was not posted until 10:00 am est.... this was a little late to be useful .... also .. would the trade recommendations be useful for any time chart ? ... or just more useful for one hour ... or one day type trading ? ...

[foundhorizon]

My goal is to offer features that I've always found lacking in part or in whole in other signal services. I don't think this is bad necessarily because running a business a certain way is the particular problem of each individual and they have to make tradeoffs that help it work for them. There are a lot of great services out there but I wanted to make one that worked like I always wanted them to work. And one of those ways is having an exact time of day for signal postings, which you are concerned about. Signal traders are those who typically don't have the time to wait around and can't reasonably wait for a signal to arrive during some broad time window. Because my signals are not generated entirely by mechanical means, I can't put out new ones on a perfect schedule. But I can get them out earlier than a set time and then declare that time as the official start of the signal. So I have set that time as exactly 18:00 ET US (22:00 GMT summer/23:00 GMT winter). This is near the beginning of the daily bar for most forex charting software and is roughly the start of the Asian session. The signal will typically come out between 17:30-18:00 but will not become official until exactly 18:00 for the purposes of the performance history. Trades released but filled before then will be invalid until the next posting.

Also, the entry/target/stop points will always be exact, not ranges. Again, I want my service to cater to those who want fast, exact numbers. Other services are better suited to the more open approach that allows for interpretation and individual input.

As far as time frame is concerned, I could post signals for different time frames but, initially, the signals will be for 24-hour trades (though any time frame below daily can be used for better "resolution"). An unfilled order will be active until 17:00 ET the next day while filled orders remain open until exited normally. I am thinking about the possibility of both longer- and shorter-term trades but these will only come if the demand is high and time allows. Perhaps, one day, a chat room format might evolve. But for now, once-a-day signals seemed the best solution in terms of the risk involved, the time needed, and the level of action. These will go out initally here and soon on a website/email subscription basis.

In order to generate a history that can be easily validated, I will try to have exact rules to cover all situations. Hopefully, I've covered all of these already but if more arrise we can sort them out then.

Sincerely,
foundhorizon

[russeller]

looking forward to your posts .... thanks for the information

[gregh285]

horizon,
its looks as if you have considered all aspects, especially the profit protection rule where many of the signal providers are lacking.
i am happy to see you are covering the minors and crosses to provide more trading opportunities.
i will be watching with interest and wish you success in your new venture.

[Sophistik]

Originally posted by foundhorizon
I'd rather establish a legitimate, monitored track record through my signal service and let that be the guide. So for now, let's say that I have no track record and I'll be at the mercy of traders like yourself to build a reputation. That seems like the most honest way to begin earning your trust.

Thats the way I was trying to do mine but the way I trade is just too active. Right now i'm trying to figure out how I'm going to do my recos. heh. Untill then I can just log each one I guess, but they'd still be a little too fast to follow. So I'm lost on mine. lol.

I'm kinda curious to see some of these myself.

Good luck and happy trading!
Dave