Our Forex account is open with Oanda

Trade-Robots is going Forex – and it likely will even be the first market we trade our new trading agent with real money. We have finally decided to go with Oanda, which has a nice HTTP based API. Free and easy to implement. But that is not all – lets us have a look at our decision in some detail.

Why Forex?

In some article some time back we made the point that Forex is an even better market for smaller accounts than Futures – simply because the contract sizes in futures are fixed. Forex accounts can scale too much lower risk, making proper risk management feasible for smaller accounts. When in Futures your risk management says you should trade 1.4 contracts you can trade 1 or 2 – in Forex you can trade 1.2, one normal and 2 mini (or: 12 mini). Originally we looked at Forex purely as something we may add to our strategies when we start offering them to some sort of investors – mostly retail investors.

In the meantime we started working on our new trading infrastructure. A significant upgrade from the way we handle execution of strategies for the moment. The new TradeAgent will be a much more powerful runtime for our strategies. It also will be – brand new. One thing you learn early in larger projects is: never trust new software. Not until it has proven to work correct at least for some time. That puts us into some sort of – interesting position.

We originally planned to do some paper trading on our broker side (who offers a decent simulation environment on his side) to test the new agent risk management. But that will be limited. Oanda has a low cost (talk: zero) HTTP API – not that we are particular fans of a HTTP interface which always is significantly slower than a FIX or proprietary interface. But most other brokers charge quite a lot to access any decent API.

With Oanda we can test – with an extremely low risk

Thee combination of a free API together with another Oanda speciality – the fact that we can open position in any arbitrary size, down to buying and selling single USD or EUR – means that we can use the Oanda account and start trading not for profit, but as part of our software testing. Putting 20 USD into a separate subaccount and trading a single USD – and see whether everything works as it should. This is a significant advantage. Testing of trading infrastructure is of vital importance to avoid the idiotic errors that for example are part of the daily life of anyone using NinjaTrader. Once NinjaTrader was so nice to close a position we had – by issuing 122 close orders. We never found out where this error originated (so it may have been our strategy at fault, but NinjaTrader has no proper logging), but the fact that it was done without even a thought on the risk parameters available – shows quality. Or – a total lack of quality. We want – and we must – be a lot better.

We have a lot of plans for our TradeAgent – particularly in the area of managing portfolios of strategies, and higher risk management functions. All those need to be tested. Oanda does allow us to do so with a seriously limited risk.

Oanda – is also one of the big Forex brokers

So once the testing phase is over, we will likely maintain an account with them. That said, there are good reasons to go to other providers then, at least in addition. DukasCopy offers a perpetual automated trading competition that we can use for some marketing – assuming we are good enough to get decent positioning. Something we hope to achieve.

But for now, for our initial steps into the new TradeAgent and for putting up the first Forex based portfolios to trade them with significant, real size (once the agent has proven to work for a month or two), Oanda is good. Not as in good enough – they are award winning and one of the big forex brokers.

An open account – does not mean trading, sadly

This will take some more weeks. A situation update will come soon. For now – let just be said that we miss 4 things to start trading with Oanda:

  • We need a working Agent. It still is not feature complete for even basic trading – that will happen in January.
  • We need to be able to trade Forex and CFG – that is part of the last item and will happen in the same timeframe.

  • We need the Oanda connectivity up. That also will happen in January.

  • We need to fund the account. That also will happen in January. The last item is one of bad timing – we opened the Oanda account in the middle of our holiday shutdown preparation and given that we cannot trade for other re3asons, funding was not processed – lowest item on the stack for our finance department. And given that this post is written in a plane to my winter holidays in Turkey (which is a great location for anyone in Europe to go to), funding will only happen once I return. Which will be in the 2nd week of February. Until then – no funding.

So, what happens to futures?

Obviously – in hold until we can prove we do not loose significant money to mistakes in our trading agent. This is a complex piece of software. One that will take significant validation. We likely will have it trade futures starting March or April 2015.

Until then – we keep developing new strategies and testing them on various markets. Futures are exciting at the moment – what happens in Crude Oil can only be quantified as insane. We have a working infrastructure for futures – one that is good for us, not good for exposing it to third parties. And the next step – will just take some time.

Happy Holidays, Seasonal Greetings – or for all who care: Merry Christmas.