CHF.VolaBreakout

Today, I started trading CHF.VolaBreakout at Collective2. It trades long and short Swiss Frank (CHF) using US dollars.

The technical goodies for selecting CHF.VolaBreakout were consistency of return, length of track record (9 months), Sharp above 2, APD above 0.3 (although I am still not sure if I trust APD, I like the concept in principle), and last but not least last 90 days of return and annualized return. And a huge bonus is a low $49 subscription fee. This allows me to try with smaller allocation of $7k.

In addition, I am not overly concerned about huge spike one way or another in CHF to USD exchange rate. Having written "I am not concerned" I feel like I am jinxing myself. So actually I am concerned about it.

Which brings me to the last reason why I like it. It has very small "duty factor". Average trade duration is only few hours and it generates about 10 trades per month (at least according to system vendor). In other words, most of the time it is in cash and only short time it is exposed to market risk. So probability of major negative event happening is reduced by the "duty factor".

So why do it? In one word - diversification. I want to reduce correlation between different strategies and FOREX is one way of doing it.

This is my first foray into FOREX trading and I am proceeding cautiously. Actually, I am quite nervous about round the clock trading and I am very worried about IB + Tradebullet set-up being reliable enough and a lot of mindless daily maintenance that goes into it. In fact, I am going to see if I can replace it with server based solution.

My second concern is that lately dollar was going only one way - down. So you could say there is almost a perfect correlation between CHF.VolaBreakout and CHF to USD exchange rate. Because the return was generated both through short and long sales I do not really think that correlation is there, but if the exchange rates become more volatile or starts trending in the opposite direction will CHF.VolaBreakout strategy continue to work? Suspense is killing me...

My original choice for FOREX TeamAlphapid was abandoned, replaced with Team Aphid Daily. Very Disappointing.