First Social Forecast Trading System 8

StatisticsCiao a Tutti,

today I’m introducing a novel trading system that will be forward tested here at starting from next Sunday (15th of January 2012). The system is based on the same concept of the PotenzaFX DLS Trader and will be an opportunity to have some fun together and to test if/how the overall opinion of many people can be used as an effective way to beat the market 😉 The system is only going to work with your help (it only requires 1 minute of your time each week), and you’ll be rewarded for the time spent with a chance to win 200 dollars worth of our products each month. We hope this giveaway will encourage you to take part week after week in this initiative which we find pretty interesting and pretty cool at the same time 😉

I’ll briefly recap the basic functioning of our DLS Trader in order to explain how our “Social Forecast Trading System” is going to work from next Sunday. The system will trade (at least for now) only the EURUSD currency pair, so I’ll make only examples related to this pair. Let’s say we apply the PotenzaFX Powerlines to a 4H EURUSD chart and at each new candle we compare the Powerlines’ values of EUR and USD. At the time of writing this post, the last closed 4H candle had EUR=-3.33 and USD=-43.87. Hence the EURUSD Powerlines’ Spread was +40.54 = -3.33 – (-43.87). That means that EUR is currently stronger than USD (the spread is positive). This information is used by the DLS Trader to open a Long position on EURUSD which is proportional to +40.54. Let’s assume we are working on a 10K USD account and we want to trade max 1 standard lot per time. In this case we should be Long 1 lot when Spread=+200 ans Short 1 lot when Spread = -200. Therefore the value +40.54 will be associated by the DLS Trader to the position “Long EURUSD 0.20 lots”, since +0.20 = +40.54 / 200.

The “Social Forecast Trading System” will work in the same way. Each week we’ll make a public free poll where you’ll be asked to share your opinion about the direction of EURUSD for the coming week. Let’s say 75% of people are bullish and 25% of people are bearish. In this case our “Social Forecast Spread” is +50%. The Spread can go from -100% (everyone is bearish) to +100% (everyone is bullish). In the first scenario (-100%) we want to be Short 1 lot on EURUSD during the coming week. In the second scenario (+100%) we want to be Long 1 lot on EURUSD. Therefore the poll result +50% means the system will be Long 0.50 lots on EURUSD during the coming week. When the next poll result is out, the system will adjust the position accordingly. Let’s say the second poll result is 40% bullish vs. 60% bearish. In this case the spread is -10%, therefore the trading system will close the previous Long position (close +0.50 lots) and will open a Short position with 1 minilot (open -0.10 lots).

Of course the results of this trading system will be publicly available on MyFxBook for everyone to see. Actually we will run two “Social Forecast” systems: the one described above and its “contrarian” system, i.e. a system that enters exactly the counterpart of each transaction entered by the first system. As an example, if the first system is Long 0.50 lots, the second system will be Short 0.50 lots.

Here are the rules for taking part in the Poll and help us implement the “Social Forecast Trading System”:

  • the POLL is absolutely FREE and it is OPEN TO EVERYONE (PimpMyEA subscribers and casual visitors as well)
  • the poll is open 48 hours each week (when the Forex market is closed), from 22 GMT of Friday to 22 GMT of Sunday
  • each person is allowed to give his/her vote only once per week
  • the vote is considered valid only if a valid email address is provided along with it

And here are the rules related to the prizes you can win when you take part in the Poll:

  • at the end of each week all the people who predicted the right direction of EURUSD (bullish or bearish) will enter the “Forecaster of the Week” drawing
  • at the end of each period of 4 weeks all the people who predicted the right direction of EURUSD for four weeks in a row will enter the “Forecaster of the Month” drawing
  • at the end of each period of 4 weeks all the people who predicted the wrong direction of EURUSD for four weeks in a row will enter the “Contrarian Forecaster of the Month” drawing 😀
  • the weekly drawing has a $25 coupon
  • the two monthly drawings have a $50 coupon each
  • the coupons can only be used as discounts on purchases made directly in the PimpMyEA website (not affiliate sites)
  • each “Forecaster of the Month” will be asked to write a few sentences regarding his/her trading approach and this short interview will be published on the PimpMyEA website

I believe this will be an opportunity for everyone to learn the DLS approach to trading and have some fun at the same time. We may also start making some money if we realize the “Social Forecast Trading System” (or its contrarian) is indeed a good system 😀

As soon as the poll is open (later today) we’ll send a post with instructions on how to participate. Stay tuned 😉

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8 thoughts on “First Social Forecast Trading System

  • Arturo

    Why use such a small % from your user base to do this.

    I can think of 3 other ways to get similar data:

    1. MT4i has a similar feature based upon the shorts on longs of peoples accounts, they even have a nice mt4 indicator (my assumption is that the user base is a lot larger than that of pimpmyea).
    2. The guys at elliottwave use something called the Daily Sentiment Index to find out the longs and shorts. Normally when the market hits a 85-95% short or long the opposite move happens. The market is short squeezed.
    3. There are also indicators out there that track twitter tweets about a pair to get a sense of direction.

    • Andrea

      Thanks Arturo.
      We know 😀 But we want to do our “version” by using the DLS.
      What makes the real difference is HOW you use that kind of “forecast”. We think that using the DLS can give a nice plus to the whole idea.
      There are many “market sentiment” indicators. Some quite original like the ones you pointed using Twitter feeds. Personally I’ve used and use “Google Trends” as a market sentiment indicator also. Probably in the coming weeks I’ll write about that.
      I’m sure that by using the right way that kind of approach can do very good things. Let’s see 😉

    • Andrea

      Yes quite interesting :)
      We are working on developing an indicator showing in real time the “” community positions.
      I think it’ll be quite interesting to see in real time how we all are trading.