Tag Archives | Apiary Fund

An Early Exit Strategy

It’s February, and that means it’s about the time you’re wishing winter would finally end! We just got a fresh new heap of snow on our lawn, and walking outside I couldn’t resist one teensy tiny snowball at my sister. Big mistake. You should not start a snowball fight, one that you intended to win at least, without first either

  1. building a snow fort
  2. planning an escape strategy

-or-

    3. making sure the most direct path indoors is clear*

It’s snowball prep 101 to have an exit strategy, especially if you’re going to be outnumbered. Even Buddy the Elf, with his north pole experience and skill, only engaged in a snowball fight without adequate protection after being ambushed by a set of amateurs.**

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With that being said, you wouldn’t enter any situation without a good exit strategy (can you sense where I’m going here?). Coerced into lunch with your mom’s book club? Set your dentist appointment for a half hour later. Blind date later tonight? Your best friend is scheduled to call at 9:00. We may make light of these situations, but when you find yourself in them you’ll have wished you made a plan.

On a more serious note, the consequences of not having an exit strategy can be more severe when you’re trading. It always pays off to take the time to know your exit strategy; Benjamin Franklin knew his stuff when he said, “an ounce of prevention is worth a pound of cure.” Set up your exit strategy early, and then enjoy the snowball fight…or, er…trade 😉

Happy Trading!

*I feel like I have the responsibility to mention that this is the coward’s path, and is not recommended if you wish you escape, albeit with a few battle scars, with dignity.

**Honestly, why would you throw a snowball at somebody who is clearly skilled in all aspects of winter.

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Shifting Spreads and Such

Shifting spreads keeping you guessing?

Indian_Chameleon_(Chamaeleo_zeylanicus)_Photograph_By_Shantanu_Kuveskar

Just as a chameleon will change to match a variety of backgrounds, in the currency market spread will invariably change to match market events. Here at the Apiary Fund, the ECN style market structure shows constantly changing spreads throughout the day. Spreads are either set naturally (by pending orders in the market) or, if the market is not liquid, set by the liquidity provider.

Since spreads will widen or shrink often, it is common to see them fluctuate during the open or close of trading sessions. This makes sense because the open and close of each trading session are usually the most volatile. Spreads will also adjust for

-Uncertainty in the direction of prices

-News events

-Volatility shifts

-Changes in liquidity

Liquidity providers use spread to help manage risk by either encouraging or discouraging the trading of the liquidity provider’s currency inventory. For example, if a liquidity provider wants to move inventory, they might narrow the spread to encourage trading; similarly, if they want to retain inventory, they might increase the spread to discourage trading in that currency. The magnitude of the spread indicates the degree to which a liquidity provider wants to encourage or discourage trading. Obviously, during uncertain times of high volatility and news events, it’s common to see spreads widen–sometimes significantly!

While spreads will always vary, by knowing why they’re changing you’re showing that you understand what’s moving the market. If you can understand spread changes, you’re one step closer to really knowing how to trade. You will be acting instead of reacting. Now see if you can predict where the next shift will be!

Happy Trading!

Shawn Lucas

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Trading and Misquotes

While viewing a chart, you are actually looking at two different prices: a historical price and a current price.

When you first open a chart, Alveo doesn’t have a history of current prices so it must backfill the chart with data from our “Historic Data” server; this is called historical data.

Once a chart is open, Alveo starts receiving “Current Price” data from our “Quote Server.” Apiary Fund has multiple liquidity providers who send their current price quote to our Quote Server which collects and organizes the different quotes, finds the best price, and broadcasts it to your computer.

The challenge with current price data is that occasionally we get an incorrect quote from one of our liquidity providers – called a misquote.  Since Alveo doesn’t know whether a quote is correct or not, it will “print” that quote on the chart.

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As you can imagine, misquotes are problematic for many reasons.  First, misquotes are not a true reflection of price and any analysis using a misquote will be inaccurate.  Second, the misquote may trigger pending orders. If the price limit of the pending order is between the current quote and the misquote, then it will trigger the pending order and give you a fill that is outside the current price.

No data or quote providers guarantee perfect data.  However, Alveo takes extra steps to make sure it has an impeccable record of clean data.  We have sophisticated systems in place to catch misquotes sent to us by our liquidity partners.  These systems catch the vast majority of misquotes, but again, no data is perfect and occasionally a misquote will slip past our watchful eyes – about one in about 100,000 misquotes to be precise.

Most of these misquotes are so close to the current price that you’ll never notice, but occasionally a misquote may pop up that is more apparent. If you suspect there is a misquote on your chart, you can find out by refreshing your data.  This will cause Alveo to pull historical price data.  If the spike on your chart goes away, then you’ll know it was a misquote.  If the spike on your chart remains, then you’ll know it was a good quote.

Happy Trading!

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Apiary Fund Resolutions

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It’s the beginning of a new year, and this means overflowing rec center parking lots as gym memberships increase along with work hours, dieting, and library cards as everybody desperately tries to hold onto their New Year Resolutions. It’s also a nice high volatile time for the stock market (even though this year had sort of a rough start, thanks Janet). Did your New Year resolutions include anything about helping you improve your trading? If so, we want to hear them!

Here’s what some of us around the office are working on:

Shawn Lucas– Lose weight and grow out my beard!

Dakota Andrews– Pass beeline to funding

Jacob Johnson– Develop a consistent trading strategy I have confidence in, get married and treat my wife like a queen, be profitable every month, and earn enough money to build a shipping container in the woods

Vilas Yang– Trade better by improving trading set ups (working with others), once I get this down the rest is going to be good!

Brian Lloyd– Double my trading account and profitability, and help others achieve their goals

Ron Evans– Become better at long term trading

Allisa Daybell– Spend as much time with my family as possible, and get three consecutive months of profit

Paul Allen– Become funded with Apiary by June 1st

As you can see, there’s so many goals we’re working together here at the hive! I hoped you noticed that most of the goals about trading were pretty specific–that’s one of the first steps to effective goal setting. Please share with us what resolutions you’ll be working on this year, and if there’s anything we can do to help!

Happy Trading!

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What An Old Fisherman Taught Me About The Markets

One of the greatest investors of all time had to be Noah…  They say Noah was able to float his stock while the rest of the world was in liquidation.  Impressive, eh!  While he may have been a good investor, he couldn’t have been much of a fisherman.  Why?  He only had two worms.

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If you’ve spent much time with a rod and reel, you might be quick to recognize the many lessons the sport teaches us about money in the market

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Here’s a short story about what an old fisherman – not Noah — taught me about the markets!

Link to Short Story:

http://issuu.com/apiaryfund/docs/apiary-fund-old-fisherman

Enjoy, and Happy Trading!

-Shawn

 

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Warning: This Post May Cause…

Disneyland Prop 65 WarningCAUTION

We all know everything in California is known to cause cancer, right? How could you miss it when there are warning signs posted on your grocery bags, in your hotel room, a restaurant, and even as you enter the Disneyland Resort. If simply entering the state is known to ‘cause cancer and birth defects,’ then why do 38.8 million people live there?

And we all know trading forex is dangerous. The warning that a bunch of power hungry wall street suits are scrambling around just to steal your money. You might as well be gambling, right? Then why are millions of trading transactions taking place every day?

Trading Forex is about as dangerous as going to California for vacation. Sure,  California has the potential to be harmful…if you go around licking signposts, eating wrappers, and sunbathing without sunscreen. Trading Forex might not be as relaxing as a nice trip to California, but it’s not a dangerous slot machine either. As long as you follow some common trading sense rules, you’ll avoid the substantial losses that instill hefty doses of fear in each of us.

Take time to learn how to trade safely, and you don’t need to fear the market. The Apiary Fund teaches and funds traders in the currency market, so you’re covered as you start the learning curve that comes with a new skill. Learn more at apiaryfund.com

Happy Trading!

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Demo Accounts Hold You Responsible

“Genius is one percent inspiration and ninety-nine percent perspiration.” -Thomas Edison

Hello Traders,

Take a look at this equity curve from one of Apiary’s demo accounts:

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What do you see?

I see someone with a mental block. However, I also see that they kept trying. Go back and take a look at that quote I’m sure most of you just skimmed over. Perspiration (i.e. hard work) is the key to becoming “genius.” This definitely applies to trading. Apiary Fund’s demo accounts offer a chance to become a genius at trading.  It gives you real life trading scenarios and demands without any of the pressure of trading real money. This teaches you to think and develop strategy instead of relying on luck. Luck will run out eventually, and it will be necessary to develop a strategy.

If you haven’t guessed by now, this is one of my demo accounts. Personally, I like to use a consolidation breakout strategy, and when I use it right it produces a nice equity curve. Using this, or any strategy, requires discipline and hard work. A friend gave me 7 steps to consider before placing any trade.

  1. Proper preparation
  2. Hard Work
  3. Patience
  4. A detailed plan before every trade
  5. Discipline
  6. Communication
  7. Replaying important trades

While each of these steps may mean something different to each of you, everyone could benefit by considering them before entering a trade.  With each of my big losing trades, I missed applying at least one of these seven steps.  My rebounding wins happened because I chose to follow these steps. I’ve learned that I can’t control what happens with a trade after I’ve placed it, but I can control what I do before placing it. My 6 biggest losing trades in this account are responsible for over half of the total equity lost. That’s out of 50 losing trades! Whether I wasn’t patient enough to wait for the right setup, or I didn’t have an exit plan, some step was overlooked. That is something I CAN fix. There is nothing wrong with losing a trade, that’s just part of the game. What’s important is that I follow my trade plan and stick to it-no matter the temptation to jump into a trade without proper preparation. I can handle the other 44 losses. They wouldn’t amount to much because I followed an exit strategy in each of them.

I’ll end with one of my favorite quotes, and hopefully you can all apply it to your trading:

Let me tell you something you already know. The world ain’t all sunshine and rainbows. It’s a very mean and nasty place, and I don’t care how tough you are, it will beat you to your knees and keep you there permanently if you let it. You, me, or nobody is gonna hit as hard as life. But it ain’t about how hard you hit. It’s about how hard you can get hit and keep moving forward; how much you can take and keep moving forward. That’s how winning is done! Now, if you know what you’re worth, then go out and get what you’re worth. But you gotta be willing to take the hits, and not pointing fingers saying you ain’t where you wanna be because of him, or her, or anybody. Cowards do that and that ain’t you. You’re better than that!” -Rocky Balboa

Happy Trading!

Jacob Johnson

Trader Support

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20 Pips Equals Your Success

Ever dream of being that one investor? The one who predicts market events before anybody else knows they’re coming, and gets away with millions of dollars fitting nicely in your pocket? Well, it might be hard to stuff that much money your pockets… but I’m sure you would have no trouble finding a nice safe place to store your millions. Wouldn’t it feel great to make it on the list of legendary traders known for their cunning and incredible returns?

1929: Jesse Livermore shorted the stock market (predicting the crash) and made $100 million.

1987: Paul Tudor Jones shorted the stock market (predicting Black Monday), making an estimated $100 million.

The 1980s (after Black Monday): Andy Krieger shorted the Kiwi (predicting it was highly overvalued) and made $300 million.

1992: George Soros shorted the British pound, making $1 billion dollars (meanwhile Stanley Druckenmiller invested in the german mark and made an additional $1 billion for Soro’s Quantum fund)

2000: John Templeton made $80 million in a week shorting the Dot-Com bubble.

2003: Andrew Hall went long (like, 5 years long) on oil and made enough to land a $100 million dollar bonus.

2007: John Paulson and Kyle Bass both made $3-4 billion shorting subprime mortgages and mortgage-backed securities.

2009: David Tepper went long on banks (predicting they would recover from the financial crisis) and made $7 billion.

Of course, while some take opportunities in the market to make millions, you have to realize the enormous risk behind these trades. As investor Spidey-man would say, ‘With great returns comes risk of great losses.’ For example: Yasuo Hamanaka lost $2.5 billion shorting copper, Brian Hunter lost $6.5 billion in natural gas futures, and Jerome Kerviel lost an incredible $7.1 billion in European futures. Just this last May, China’s richest man lost $15 billion when his company shares plummeted. Ouch – somebody didn’t have their stops on!

The difference between us and them is as simple as a couple of zero’s. Say you make 20 pips with one lot, while somebody else makes 20 pips with 100 lots. You both made 20 pips, but the one with 100 lots made a lot more money. Honestly, it all depends on how much money you put into the trade. The more you practice hitting your 20 pips a day, the more comfortable you’ll become trading in the market. The more comfortable you become in the market, the more money you’ll invest in it. The more money you invest, the more money you’ll make (as long as you’re smart about it). Then, you’ll be hitting your daily 20 pips with 100 lots and making a lot more zeros.

Happy Trading!

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What About Benjamins?

Born in Boston on January 17, 1706 was the tenth son of a soap maker. He was known as Benjamin Franklin, and not only did he contribute to the shaping of science and history but his face graces every $100 bill that’s been printed since 1914. How does our dear friend Ben measure up to his treasured namesake, the $100?

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Benjamin (Franklin) Benjamin ($100)
-Born on January 17, 1706 in Boston, MA -The version we know (with Ben’s face) was born in 1914, when Reserve Banks were established in 12 locations through the U.S.
-Alias: “silence dogood” -Alias: “c-note”
-Spent time abroad as an ambassador in both England and Paris -About 2/3 are in circulation outside the U.S.
-Invented a type of oven, swimfins, and bifocals -It costs 12.5 cents to produce
-Apprenticed at, worked at, ran, and owned a print shop -Printed in Washington D.C. and Fort Worth, Texas
-In 2009, one of the only 1733 original printed copies known to exist of his ‘Poor Richard’ Almanac was sold to an anonymous bidder for $556,500 -When the new version of the bill came out in 2013, the bill with serial number ‘1’ is estimated to be worth somewhere between $10,000 to $20,000
-Lived for 84 years (died April 17, 1790) -Avg lifespan is 90 months (~7.5 year)

 

One more thing you might not have known about Benjamin Franklin. His scientific and financial savvy (along with his good advice) inspired Apiary Fund’s Benjamin Formula. A formula that can help you determine whether or not to take a trade as well as how risky your trade will be. Pretty neat, huh? So follow the example of Benjamin Franklin while you’re trying to make your benjamins today!

“Well done is better than well said.” -Benjamin Franklin

Happy Trading!

For more information on the Benjamin Formula (not the Benjamin Graham formula) click here.

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Bunnies and Money Management

It is essential to understand money management before you enter the market. In fact, learning the essentials is important before you try anything. I learned this lesson years ago while caring for my neighbors animals.

babybunnyLast summer, my neighbors went on their annual camping trip to Beaver, Utah. Every year they ask me to take care of their pets while they’re away. The number of pets they have is always growing, and that year consisted of 12 chickens, 2 fish, 1 cat, and 4 bunnies. I never have, and am doubtful that I ever will, own a pet, but I agreed to help them out. I received 3 pages of typed instruction, and training on how to place the labeled chicken food into the labeled chicken pen using the labeled chicken scoop (I may have accidently mixed up the cat and chicken food the year before). I even practiced feeding the chickens with their daughter two days in advance. They left feeling reassured that not even I could mess up their detailed instructions, and I watched them go feeling confident in my ability to keep their animals alive for five days (one year the cat jumped into the fish tank, resulting in a decrease in the fish population).

The next day: I fed the fish, I fed the cat (not the fish), I fed the chickens, gathered the chicken eggs, and opened the door to the bunny cage. Unfortunately, the bunny in there ran out as soon as the door was opened, and I spent the next hour chasing it around the backyard. Finally, with the bunny safely in my arms, I returned it to the cage with the other bunnies. I replaced the food and water, and left feeling like a champ.

The next five days passed uneventfully, and I was delighted with my success. My neighbors returned, and immediately checked to see if their dear pets were still alive. I happily informed them that they were all alive and well. Their daughter, inspecting the bunnies, turned around and said, “Mom? Why is the boy bunny in with the girl bunnies?” One month later, they had 34 baby bunnies.

Truthfully, I’m uncomfortable with animals. They sound easy to take care of, and I had the instructions and means to take care of them, but I had no experience or any idea on how to actually handle them. Now, relate this to money management. I know it can feel like a stretch comparing caring for animals to your money (though I wish my money could reproduce as fast as those rabbits), but the similarity isn’t between animals and money. It’s between knowing how to handle and care for them.

Proper care and handling of money in the markets is key to successful trading.  In the same way improper handling of the neighbors farm resulted in unintended consequences, improper handling of money can have unintended effects – loss of capital, longer hold periods, lost opportunities.  However, with some basic knowledge, a good set of instructions, close attention to details and discipline you’ll discover that you can manage your results with much greater control…  And who knows, maybe your monies can grow like bunnies.

Happy Trading!

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