Thinking Stuff Update 05-Feb-06

The software I've been working on for the past... forever... is getting very close to something very good. That is to say, very soon I will be giving copies to my beta testers, and hopefully very soon after that it will be available commercially.

The beta testing spots are filled. Thanks to the guys who have volunteered their time. However, a couple of people have asked if they can pay to use a pre-release version. And I have absolutely no problem with that at all :-)

What I told them is that I will get it to my beta testers around Valentine's Day. Then give them a week or so with it. If there is nothing majorly wrong, I will make available the website which lists all of the currently known bugs.

If they read through the currently known bugs and can live with them, then they are free to use the software. After payment. Well, there is a "trial version" mode of the software which you can use for free.

I guess in this respect it is no different to purchasing the software after it's officially released - there will always be bugs in any software, and it's up to you to read through the known bugs and decide if you still want to purchase it.

So, if you also want to use the pre-release version, just send me an email.

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I sometimes get emails asking for details of my API, or if by using my software can they get around the $600 charge from Oanda.

Actually my software merely provides a user interface for the APIs offered by Gain Capital (and soon Oanda). This means that there is no API that I provide that you need to code stuff for. That's the point of my software - that there is no coding required on your part. Just selecting options from pull-down menus.

It also means that it is up to you to create your accounts with those companies, and obtain access to their API. It's like you are a developer wanting to use their API, only you are getting someone else to make the software for you.

That means you have to pay Oanda the $600 before you can use my software with them.

Gain Capital's API is free, and it's pretty good, but until they allow API trading in their mini accounts, they will always just be a stepping stone before moving on to Oanda. In my opinion.

They have stated publicly in their forum that if your system is right, and tested in their demo account, then there should be no problem in jumping straight in to full contract positions. But this is nonsense.

Trading, for me, is about minimising risk. First backtest the system. If it works, then let it run in the demo account (where no real money is used). If it works, then start if off small in a mini account. As confidence in the system and/or auto-trading software builds, gradually raise the stakes until *eventually* you are trading with full contracts.

To leave out the step involving the mini account is not minimising risk.

So, I think the steps would be: Backtest the system. When you find a good one, and that might take months, then auto-trade it in the Gain Capital demo account. When you are satisifed that your system and the auto-trading software works in real-time, and that might take months, then you purchase the $600 API from Oanda and switch to them. And then buy tiny amounts until you build more confidence, and gradually grow.

Of course, you can jump straight into Oanda (when it's coded), but the method above would delay the $600 payment until you know you have a decent system (and software) to trade.

Of course, by that time Gain may have changed their mind on their mini accounts. Who knows?

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To make up for my recent silence, I will soon release the details of an indicator which I came up with independently (but there is a high chance someone else already published something very similar), which I call the Average Pullback Histogram.