Phoenix from the ashes of destruction comes the birth of distinction

Transcription

1 Phoenix from the ashes of destruction comes the birth of distinction users manual Phoenix trading software is a product of The Forex-Assistant What is Phoenix? In 2008 The Forex-Assistant released a new trading program for experienced traders that was based on the GoldenGrid strategy that never lost trades. In 2009, the NFA (National Futures Ass.) made new rules for US brokers that required the oldest trade to be closed before any newer trades were allowed to be closed, this is called FIFO (First In / First Out). In addition, traders could no longer hedge their trades with US brokers. Those two new and never heard of before restrictions forced traders off of US brokers and basically killed our new program. I was devastated that our country would do this to us. I began to toy with the idea of only having one range open at a time and began work on the collapsed grid concept that ultimately became Phoenix. It has been 4 years since the NFA took the wind out of our sales, but trying to find a way around the NFA restrictions led us to develop a totally new way of trading the forex market. Phoenix is the end result of our research into the collapsed grid. How does Phoenix trading software work? Phoenix is a collapsed grid system for trading the forex market. Under the original grid trading systems, traders would both buy and sell so that no matter which direction the price went, they would make a profit. The problem with that idea was that it left you with a string of open trades all in draw down. The GoldenGrid reduces the number of open trades to a manageable number and divided the grid in two, the top half we do sells only and the bottom half we only do buys. We still have a string of open trades but limited to a fixed number and calculated range sizes to cover the entire grid. Under FIFO we couldn't close the string in a 'last in first out' order as the system called for so we needed a way to close every trade after the price transverses the range regardless if it won or lost, no strings attached.

2 Of course that meant that our system would have losses and the way to compensate for those losses is the martingale recovery system. Just as we limited the number of ranges to a manageable number with the GoldenGrid, with a collapsed grid we limit the maximum number of iterations that we permitted the martingale to go through. The way a traditional martingale worked, you would open a trade for 0.01 lots, if the price went the wrong way you would close the first trade and open a second trade for twice the amount or 0.02 lots. If this trade was for profit then you would have a profit of one range because the other half of the second trade only compensated for the first loss. If the second trade was also a loss, a traditional martingale system would double the trade size again but when you finally win, it will only be for one range. To make it so that we have one win for every trade, (which is what we had with the GoldenGrid before the NFA) we need to modify the martingale sequence. Instead of doubling the last trade size, we double the last trade size and add the size of the first trade which we call the base. Instead of 1, 2, 4, 8, our modified martingale would trade 1, 3, 7, 15, Notice that adding the base to the trade every iteration has the same effect as having one additional trade under the traditional martingale sequence. Another benefit from only having one open trade at a time is that there is no reason to trade in the same direction as the last trade. In other words we can evaluate the trend on every iteration and trade in that direction. In other words, Phoenix really flies when the market is trending (direction unimportant) and volatile. The EUR/USD has been a good first choice because both of these currencies are of the fiat type (they are not backed by anything substantial) and can move around considerably. For my second choice I usually use the GBP/JPY as I tend to stay with the majors to get better spreads, but any currency pair that you have access to will work. I recommend that you check out the volatility chart at: As of this writing, the ZAR/JPY (ZAR - South African rand / JPY - Japanese Yen) is the most volatile but trading the ZAR costs a lot in the spread, so staying with the majors is generally a good idea. The majors are the Euro (EUR), Great British Pound (GBP, also called pound sterling and the cable), the Swiss Franc (CHF), U.S. dollar (USD), Canadian dollar (CAD), New Zealand dollar (NZD, you may also hear this one referred to as the kiwi), Australian dollar (AUS, aka Aussie), and the Japanese s yen (JPY). Of the majors, right now the USD and the JPY are the most volatile. My preferred range size is 25 pips. If the price is trending, no problem, we make lots of money. The weakness in the system is when the price is ranging. Ranging means that the price goes up and down only a little bit but not going more than 2 ranges (50 pips). Most of the time when this ranging happens, it won't matter as the price is just going up and down over the open position and doesn't hit the close position, but sometimes it hits just right to open and close trades. To make it a little harder to start a losing streak during ranging periods, we offset the change over from buy to sell by at least one range. But if this fails and the martingale recovery system begins to climb too high we want to pause and let the market move away from its current ranging dilemma. If we set

3 the pause setting to 4 or 5 then after the series has gone through those 4 or 5 iterations and the lot size is around.31 lots so long as your first trade was for.01 lots, then your program will pause trading and await your orders. It will stay paused until you reset the pause setting to zero or above the maximum iterations so long as the auto-release is set to zero which puts the pause release into manual mode. If you need to use the auto-release then enter in the settings box the number of ranges that you want the price to go through before releasing the pause and the pause will be released automatically when that condition has occurred. If the system loses the next trade after the pause is released then the system will pause the next trade until the price has moved enough for the auto-release to kick in again. This will continue to go on until we have a win or the maximum iterations has been reached. If the maximum iteration is hit then the Phoenix robot will remember the total losses and begin at the base start level, but will work twice as hard. Phoenix will take two trades at a time, one for the current profit so that we get paid for each trade that is taken and the other to recoup the losses. Of course it doesn't need to actually take two trades, just double the size of the original sequence. The robot will continue in recovery mode until the loss is recovered then it will shift back into regular trading mode. In the recovery mode we don't want to keep doubling the size because of the added margin cost. When starting with the minimum 0.01 lots, the trade size will be 0.02 lots in recovery mode. Through the 7th iteration the size multiplier would normally be 1, 3, 7, 15, 31, 63, 127. Each trade size is doubled during recovery so the sixth iteration would be 126 in recovery with a margin of $5 x 126 or $$630 using a margin level of 200:1. The 7th iteration of 254 would cost $1270 in margin. By doubling the range size from 25 to 50, we can keep the margin requirements at $630 saving $640 which is how much you need to trade 1.26 lots on a 50 pip range. I begin my range expansion on the 5th range in recovery mode but that is just a preference. Phoenix was written for use on MetaTrader 4. Note that some brokers are now offering MetaTrader 5 in addition to MT4, but this platform is not an upgrade to MT4 as it works quite differently and is also designed to be compliant with the United States NFA requirements which do not apply in any other country. Phoenix is designed to work with any MetaTrader brokerage offering the MT4 platform including in the USA. However, please take into account the additional margin requirements of brokers based in USA and Japan where the margin is typically limited to 50:1. (Note; new regulations proposed in the US may reduce the leverage even further to 10:1. If and when this happens, it will cost you $100 for every.01 lots that you trade. This is really an unworkable situation for traders in the US. However, there is something that can be done, check out For non-us citizens, the Phoenix trading system requires at least $3,500 to work properly for trading accounts starting at.01 lots using a maximum iteration setting of 7, $7,000 for a max of 8. For US brokers add $4,000 and $7800 respectively for max iterations of 7 and 8. One very important suggestion is this, please, don t rush things. Take time to read through this manual and understand the way the Phoenix trading system functions and practice on a demo before using real money. We are committed to your success with this product and others found on our website because we measure our success by how many others we help to be successful. For a quick refresher course on installing the MT4 and the robots, there is a tutorial at

4 ...Phoenix Settings Box... Lets go over the settings in the settings box, we begin with the range size. With traditional grids we need to be concerned with the number of ranges, this isn't the case with a collapsed grid - but we do need to consider the ranges size as it effects our profits. If the size is too small, the noise (normal agitation of the price) will cause the martingale to grow too quickly. Too large and we miss trades, we need a good balance. That balance may change from one currency pair to another, but for the EUR/USD a good starting point is around 25 pips. AllowTrading default is set to true which allows the program to trade, false stops all new trades. Range the distance in pips from trade open to trade close - default 25 pips. MaxIterations is the maximum number of times that you are willing to let the modified martingale increase the lot size before giving up and starting over. The higher the setting the harder it is to reach it but the more money that you need to keep in your balance. The required balance roughly doubles for each step up in iterations. It is pretty easy to hit 6 iterations so the lowest that I would go is a MaxIteration of 7, and 8 when the account is larger with tens of thousands of dollars. Default = 7. Expansion Instead of increasing the size of the trade, when the trade iteration has hit the expansion setting, the size of the range will begin to double while the size of the trade will stay the same. This saves us from having more of our money locked up in the margin requirements and leaves more for

5 actual trading. This is especially important for those trying to trade with any US or Japanese brokers. Pause If the market starts to cycle we don't want the martingale recovery to keep growing. It is better to pause the trading until the market conditions change. A zero in this box shuts the pause off. If your system goes into pause mode and you want to shut it off, change this setting to zero but don't forget to turn it back on again later. To turn the pause watch on, just set the number of iterations that you want to allow before pausing the program. 5 is the default setting. Autorelease - If the auto-release is set to zero then the pause is in the manual mode. In other words, once the pause is on it stays on until you change the Pause settings. But if you will be away for some time and want to just let the robot do the best that it can, then enter the number of ranges in the autorelease box that the price has to move before automatically shutting the pause off. 2 to 2.5 is a good estimate, but the default setting is 0.0 for manual control. Trend We want to take the trade in the direction of the trend. To determine the trend we look back in the direction that the price came from. The Trend setting is how many 'ranges' from the current price that we measure to in order to establish the trend. The Trend setting is in Ranges, not Pips. Again, 2 to 2.5 ranges is what I use and find that it does fairly well in choosing the right direction. Default is 2.0 BalanceFactor Phoenix will determine the base lot size based on the balance size. The BalanceFactor is divided into the balance and multiplied by.01 lots. A balance of $13,000 with a balance-factor of 3500 will open the base trade at.03 lots until the balance grows to $14,000 then it will shift to.04 lots. Default is set to 3500, which is about the right size for a 7 MaxIteration setting. Yellow AB boxes are message or reminder boxes, these do not require any action from the user. The one just after the BalanceFactor is to remind traders that setting the FixedLots setting to something other than zero disengages the BalanceFactor and the size of the base trade will never increase or decrease but will trade whatever size you set the FixedLots to. FixedLots set this to what ever size trade that you want Phoenix to trade at without growing. Use this setting when you want to take money out of your account periodically. Set this to zero to calculate the lot sizes using the BalanceFactor. Default is Zero (0). Autotrade default is set to True. This setting allows Phoenix to determine the direction of the trades automatically based on the local trend. If you want to force the next trade to be a buy or a sell then turn Autotrade off and whatever you have the Trade-Type set for, that will be the direction of the next trade. Yellow AB box reminder that (0) zero is for buy and (1) one is for sell. TradeType if you want to force a buy on the next trade, set the TradeType to zero and turn the AutoTrade to false. To force a sell trade set the TradeType to one and set AutoTrade to False. To let Phoenix decide which to use set the AutoTrade to true and it doesn't matter what TradeType is set to. For all of the settings, Phoenix will continue to trade according to the last setting until it is changed. Reset_Recovery If there is a loss due to the trading size hitting the MaxIteration, the system takes a loss and goes into recovery mode by taking twice the size of trade that it normally would. Half of the profits go to recovering the loss from the primary trading mode. The size of the deficit is reduced for

6 each profitable trade. If you want to set the recovery balance to a certain amount, put that amount in the reset box and close the settings box by hitting OK. Look over on the chart and watch until the Recoverybal resets to the amount that you want it, then reopen the settings box and reset the 'Reset field to 0.0 If you want to reset the Recovery-Balance to zero, set a negative number in the 'Reset' box and the system will reset to zero. Default setting is 0.0 Reset_Basket is also defaulted to '0.0' and keeps track of how much is lost, trade by trade, until a win wipes out the basket balance or it hits its MaxIteration point and resets to zero after transferring its balance to the Recovery-Balance. You can reset the amount in the basket by setting the desired amount in the Reset_Basket field. After closing the setting box by hitting OK, watch for the 'Basket' field to change on the chart then reopen the settings box and reset the 'Reset_Basket back to zero. To reset the 'Reset_Basket' to zero from a positive amount, just set this field to a negative number and it will set to zero automatically after the current trade closes. FixedIteration if for any reason you would like to force Phoenix to open the next trade at another iteration than which would occur normally, change the fixedinteration to that number and save. Remember to go back into the settings box and change this number back to zero or else every trade will be fixed at that iteration. This switch is more for advanced research, and should probably never be used. Yellow AB Reminder box - pointing to where to put your unlock codes. Z1, Z2, and Z3 - As long as you are running Phoenix on a demo account, these fields are set to 0.0 but to allow Phoenix to run on a live account you need to purchase an unlock code. This code is only good for one account and will not transfer to a new broker account, even if you close the old one. If you wish to change accounts, you will need to send proof of the old account being closed and the new account number that will take its place. If you wish to have a second account, note that it is only half price when you put your own membership number in the referral field during purchase. The decimal points are important, if zeros in the beginning of the Z numbers or the end of them do not show up after switching off that field, don't let it concern you, the system will adjust internally. The common tab on the settings box should look like this: Phoenix manaul 2013 The Forex-Assistant / Bob Llewellyn (all rights reserved) Revised: 17November2013

7 U.S. Government Required Disclaimer Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. 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. The purchase, sale or advice regarding a currency can only be performed by a licensed Broker/Dealer. Neither we nor any of our affiliates or associates involved in the production and maintenance of these products or this site, is a registered Broker/Dealer or Investment Advisor in any State or Federally-sanctioned jurisdiction. All purchasers of products referenced at this site are encouraged to consult with a licensed representative of their choice regarding any particular trade or trading strategy. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed on this website. The past performance of any trading system or methodology is not necessarily indicative of future results. Clearly understand this: Information contained in this product are not an invitation to trade any specific investments. Trading requires risking money in pursuit of future gain. That is your decision. Do not risk any money you cannot afford to lose. This document does not take into account your own individual financial and personal circumstances. It is intended for educational purposes only and NOT as individual investment advice. Do not act on this without advice from your investment professional, who will verify what is suitable for your particular needs & circumstances. Failure to seek detailed professional personally tailored advice prior to acting could lead to you acting contrary to your own best interests & could lead to losses of capital. *cftc rule 4.41 hypothetical or simulated performance results have certain limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not been executed, the results may have under-or-over compensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated 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 profit or losses similar to those shown. Additional important notice for US citizens: U.S. Government regulations restrict U.S. Citizens from fully utilizing the services of foreign brokers. It is ill-advised for U.S. Citizens to violate the laws of their country. However, there are legal ways to regain your freedom to trade effectively. To find out how, read on The most obvious one is to set up an off shore trust or IBC (International Business Corp.) There are several benefits to establishing an IBC/ trust. One such benefit is the ease in passing the trust and its assets on to your heirs without probate. Another reason this is done all the time is to protect assets from frivolous law suits, it adds an extra layer of safety because if someone sued you for the asset in that trust or own by a corporation, he would have to do so in the country of residency for that trust/ibc. Additionally, an attorney may not be so quick to take a case against you if you personally have very little assets, because most of your assets are in an off shore trust or belong to a business. A trust can also have its own bank account, foreign trusts wouldn t come under the same limitations for its investing as it is not a U.S. Citizen and U.S. law would be inapplicable. Your retirement program is a natural part of a normal trust. In Belize owner information is protected by law. Drawbacks are one, it cost around $1,700 to start one. The yearly fees are close to $800, but the first year is included in the setup cost. There is another option, at this time we can t recommend it. There are still a number of unregulated brokers that will take your money, sometimes literally. We are told that since the broker is from some other area, they are not bound by U.S. law. We are told that the U.S. law is worded to limit brokers and there is no law prohibiting U.S. citizens from opening an off shore broker account, (if they can find a broker willing to take them). But are these unregulated brokers are breaking U.S. law by accepting U.S. clients? Could this jeopardize your account? Now it may not come to that, but traders are risk managers and I don t see the rewards out weighing the risks here when there are alternatives. It may seem hard being singled out and treated like the property of the government but these are hard times and yet, you do have friends. Our concern here is not as much for what is true at the present, but what may become true in the near future. If you are a US citizen you may consider checking out the Passive Investment Generator which works well with US brokers however, the NFA has forced changes to the trading rules twice in so many years, there is no reason to believe that they won t do it again. This should not be taken as legal advice, only as a suggestion from friends.