Rimantas Petrauskas

My Friend Bob is an Awful Trader. But He’s a Gold Mine! (Part 1)

This is a story that was shared by one of my customers. They enjoyed my product and decided to share their personal experience as they tried and experimented with my software.

I have this friend let’s call him Bob, although that’s not his real name. Bob’s an awful trader. Don’t get me wrong, he’s a great friend and I like him a lot. But honestly he can’t trade his way out of a paper bag.

It’s not really his fault either. Bob’s a beginner trader. He’s been trading for less than 6 months and it shows. He’s making all the beginner mistakes.

Bob likes to buy cheap. He calls it a bargain whenever he sees a currency pair that has been trending down for a long time. He likes to buy whenever price makes a new bottom expecting price to turn. He sells when prices ”get too high”.

All of that wouldn’t be so bad if he didn’t make another set of beginner mistakes. Picking tops and bottoms is hard to do but with a proper money management technique it can be done profitably.

Bob cuts his winners and lets his losses run

Because you’re bound to have a low win rate when you try to trade against the trend, you got to have a way to make up for that. One of those ways is to let those winners run. If you expect price to turn and make a new trend make sure you’re still in the move when price does turn and ”makes a run for it”.

You need to cut your losses short too. If you see price get below the swing point you just bought and it makes a new low, you can’t hope and pray that it will stop. You have to get out and get out as soon as possible.

Needless to say, as many beginner traders Bob cuts his winners short and lets his losses run. I’ve seen him enter a buy trade 5 times in a row and get out with a 40 50 or even a 80 pip loss when a 20 or 30 pips loss would’ve been enough to let him know the market isn’t really making a turn this time. Then in the sixth trade he would get a winner and you know what he did? Yep you guessed it, he got out with a 25 pips profit at the very first sign of price pausing.

In short, Bob’s not that new to trading, he’s not just randomly pushing buttons. He’s not at the stage where he’s not trading blind; there is a method to his madness. The problem is that he’s using the wrong method. But Bob’s a gold mine!

Bob is a Gold Mine!

Yep you read that part right, Bob’s a gold mine. I love to ask my friend for trading advice and he’s always willing to share it. So if he’s such an awful trader then how is he a gold mine?

I like to trade trends

I like to trade the trends. I like buying high and selling higher. Trend trading is not a foolproof strategy and it gets killed during market ranges. I’ve gone through some bad drawdowns with this strategy but I know that over the long run I’ll come out ahead.

Whenever I get my signal to enter a trade long or short I like to call Bob and ask him what he thinks. Its always comforting (for me at least, sorry ”Bob”) to hear that he’s on the other side of my trades. If I’m long, the trader in me jumps for joy whenever I hear that he’s short. The friend in me feels sorry for Bob but it’s not like I haven’t tried to help. He just doesn’t like ”to sell bargains” as he puts it.

In my trade journal I would mark down a small plus sign whenever Bob was on the other side of my trades

For a long time I just did this as an exercise. In my trade journal I would mark down a small plus sign whenever Bob was on the other side of my trades. I added 2 plus signs if I heard him use the words ”bargain” or ”too pricey” ” too high” or any variation of that sort. I added a minus if we were both in the same trade. Soon it was becoming clear that Bob’s on to something or better put, he’s on the opposite side of that something.

The trades I took that had a plus sign next to them tended to work better on average. They went further and had smaller drawdown against my position. This effect was even more pronounced in the trades that had 2 pluses next to them.

The trades with the minuses next to them didn’t work as well. In fact after a while I noticed that whenever I had a trading period where we would start to take the same trades losses would mount on my end. It meant that we were trading ranges and I my trending system would get killed in that kind of a market environment.

I wanted to find a way to make money out of this

I wanted to find a way to make money out of this. But there was a problem.

By this time Bob and me weren’t as good friends as we used to be in the past. He didn’t appreciate my calls and me trying to get him to change the way he trades. I like money but I liked my friend more, so I tried to give some trading advice. Just general guidance like don’t fight the trend or ”cut your loss now see price is making a new low”. But as you can guess, it didn’t do much good, it never does. Most people need to make their own mistakes and learn from them. When just talking didn’t help, I showed him my trading journal.

I show Bob my trading journal

Big mistake! At first he didn’t want to believe that those pluses and minuses were really his trades, so I showed him some of his recent trades. This triggered his memory but then he got mad. Looking at his losing trading record in plain sight was probably too hard for him. He said to me:

”You bet against your own friend? I replied ‘’No I haven’t I just marked your trades’’.

”But you put pluses and minuses next to my trades!’’: he said angrily.

”I wanted to see if it worked and besides you should be happy, you just have to reverse whatever you’re doing and you’ll be making money in no time!” : I replied.

He didn’t say anything and just left the room. We didn’t talk much after that. Needless to say he stopped sharing his trades with me. So not only did I lose a friend I lost a great money making opportunity. Or so I thought.

There is hope!

About 2 weeks later I noticed that I had an old installation of Metatrader 4 on my desktop. It was by a broker that I don’t use so I opened to see what it is before uninstalling it. I start the Metatrader platform and it logged me in automatically into a trading account.

I could tell it was my ex-friend’s trading account right away. We were in a trending period and most of the trades on the account were opposite of mine and were losing massive amounts of money.

I still had his Metatrader 4 investor password!

What was going on here? Then it hit me!

I still had his Metatrader 4 investor password! Those of you that are new to Forex trading and to the Metatrader platform may be wondering what is an investor password?

An investor password is simply a read only password for a Metatrader account. It is usually used by clients and investors to watch the performance of a perspective money manager in real time without interfering with his trades. It’s a password that gives a read-only access to a trading account. I remembered that we exchanged our investor passwords long time ago, he got mine and I got his.

I had the Metatrader platform setup to remember the login data so when I clicked the old MT4 installation it logged me into his account automatically

“Just look at all that drawdown!’’: I exclaimed as I looked at his open trades. But while his trading statement showed losses, I saw profits. Big profits!

I make my decision

I then made my decision. I would add 1 extra lot whenever his trades ran opposite of mine. I planned to use his trades as an indication to increase my trading size. This worked well for a while the trends lasted, it made me some nice extra profits on top of my winning trades.

But I encountered a big problem. Because I had to watch his trades constantly I would wake up every hour at night. I had my alarms set. But lot of times even waking up on an hourly basis was not enough. I would miss many trades.

My job suffered as I was sleepy and tired all the time. Then the trends ended and we entered a ranging period.

I needed a way to automate the process so I can finally get some sleep

By this point I was making some money while adding to my trades when I saw Bob take trades in the opposite direction. While the market was trending waking up at night seemed to be worth it for the extra coin I was getting. But soon a raging period came by and I saw really quickly that this was no easy way to riches.

On average when I added all the trending and ranging periods it really wasn’t worth it for me from a strictly monetary basis.

It wasn’t worth it to stay up every night anymore. I was losing both money and sleep. I needed a solution, I needed a way to get his trades in my account but reverse them somehow, all done automatically so I could finally get some proper sleep time.

I knew that I had to either automate this process somehow or give up and stop following his trades. I knew that there were ways to replicate trades from a Metatrader trading account so I looked around the web for tools to help me with this. But none of the tools I found were useful. I tried all these different trade copier tools but they all just copied his losing trades straight into my account. I needed a way to reverse the process somehow and have his losing trades turn into winning trades when they hit my account.

I needed a way to reverse his trades

I started asking on Forex forums for different solutions. None of the trade copier tools I tried could reverse the trades in my ex friend’s account. Finally I concluded that this couldn’t be done so I gave up and stopped following my friend’s account. It just wasn’t worth it for me.

Two weeks later I get an email alert to an old thread I had made

Two weeks later I got an email alerting me that a post has been made to a forum thread I was subscribed to. It was a thread I made asking for a solution to my trade copying problem. The post only had a link, no explanation no nothing. The link was

http://www.ea-coder.com/forex-software/local-trade-copier/

My first thought was this is obviously someone pitching his trade copier on a Forex forum. I’ve tried so many trade copiers that I almost didn’t bother checking the link. But as luck would have it, I had some free time to kill so I checked out the site.

Finally found what I was looking for!

I visit the site out of curiosity. I’m looking at the features of this trade copier and I’m slightly impressed. It has some 30-40 different features, many of which seemed like they could actually be useful. Then In the middle of the page with the features of the product I read this in bold letters:

Reverse Trades technology will help you turn your loosing trading system or EA into a winner

I finally found what I was looking for. I click the link and it leads me to this page that explains the feature in detail. Is this really what I was looking for? I wonder in slight disbelief.

I mean I know this feature is not some earth breaking coding work but I still had some reservations because it was so hard to find. I read this in the features page also:

Trades can be copied from any Metatrader 4 account including investor password accounts

So this would work on my friend’s investor password account! I could use his account with the password he gave me and reverse his trades to my account? I decide to take the plunge and make the order.

It Works! Finally!

After some playing around with the software I managed to get it working. If you’re interested you can read more about this in my second article where I’ll talk about my first time experience with the Local Trade Copier. It copied the trades from my ex-friends’ account and reversed them to my account as it should.

Finally! His losses will turn into my winners! Muahahaha

I make an evil laugh as I finish setting up the software. Naively I think ‘’Later I could share some of the profits I make with my friend if he promises to change his trading ways’’.

But he’s trading so many lots!

But I had another problem. Although our accounts were roughly the same size, I didn’t want to take the same size trades as my friend. He risked too much per trade. I needed to replicate the trades but risk lot less on my account.

The Trade Copier allowed me to scale down the size of his trades

One of the features in the Local Trade Copier was an option to change the size of my friend’s trades so that they would be replicated with a lower size once they reached my trading account. This option solved the last of my problems.

I finally had everything setup as I wanted. My ex-friend’s trades were replicated and reversed in my account with 5 times smaller size. And it took less than 2 seconds to replicate a trade!

It looked amazing! I could finally get some sleep!

It looked amazing. I could finally get some sleep and I also got more time to do more productive work then babysit my friend’s account waiting for trades. I felt relived.

In part 2 of my story you’ll read about my experience with the Local Trade Copier. You’ll read about how I set up the software, the issues that came up and the final of my story about my friend ‘’Bob’’. Did we rekindle our friendship? Is he still trading? And most important of the all did I make any money with this experiment? Muahaha.