ALGORITHMIC TRADING

My Journey With Algorithmic Trading & Making Over £100,000

Reading Time: 19 minutes

 

Hey guys,

It’s day 26,

And today I’d like to talk about one of my main passive income strategies as part of my daily blog series:

The Results My Friends And I Have Been Seeing

I’ll begin with introducing a great friend of mine Francesco (via video)

I had the opportunity to interview him about his journey to 32%+ annual returns over one year with Forex.

Check this video out to learn more:

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Table of Contents

Here’s the time and date right now.

Back up at my usual 430am start this morning. 

I wake up automatically at around 415am now – and Jenny my cat seems to know that she’s about to get fed.

Francesco Garosci Pearl Lemon Invest Testimonial

This is actually outside our flat on the landing. But aptly demonstrates the fact she can career around the flat at 415am scratching at our door and bounding about with energy until I get out of bed

I was happy yesterday, despite the madness that’s happening in the world right now (Covid-19) to get this message from my broker:

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That was at 1821.

And that is what inspired me to actually write this post – because it’s been a long time coming given I’ve been trading millions on the Forex markets for close to two years now.

(I say ‘I’ but it’s not really me – I’ll explain as we move forward)

So this morning I checked my four accounts and low and behold:

catmessage

Client Call

A bloody good day if you check the ‘closed trade P/L’ line on the statements – and so I wanted to walk through my entire with algorithmic trading journey and how it all came about.

Getting Started

First of all I’d like to note that I’m not a professional or even an amateur trader.

I have no interest in trading nor do I intend to.

(For some of you this might be very different and I believe this post might explain why you should potentially reconsider).

Back in April 2018 my agency was just getting off the ground, I was making decent returns and beginning more and more to think about the future, and the future with my partner Strawberry.

I wanted stability so I’d set up a pension, invested into stocks, into EIS schemes, property….

And I found the whole thing pretty boring and not entrepreneurial at all.

I wanted something that was like my agency – I bootstrapped the whole thing and it would spit out revenue which would be spent on staff, service and then some take-home

So my advisor Sam at the time knew about this – that I wanted something that was a little more ‘liquid’ that I could put money into that would generate cash flow but not prevent me from accessing the money.

The challenge I had with all of the other investments I was making was that they were all ‘for the future’ – for a return 5-25 years out.

I wanted something that could generate a return for me now.

This is where I learned about the world of Forex – back in April of 2018.

 

Oil Forex Temp

And here is my initial email trail with Oliver close to two years ago now.

Little did I know we’d end up as great friends and share many dinners and drinks together:

Chat

At this time, however – I’d signed up with financial investment introducer Sam in the months leading up to this introduction – and his firm specialised in running due diligence upon companies as a means of making introductions to investments that I might find interesting.

And so I went to meet Oli and his partner Rob in their offices in Farringdon (London) to learn more.

I’d already put perhaps around £45,000 into bonds and stocks – and I was looking at what else I could put cash into.

In actual fact, I believe I had £30,000 that was sitting on my account in funds that I had earmarked for the 2nd half of a purchase of an off-plan PBSA that would be sitting there for several months.

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The original email

Having the money sitting in my account doing nothing just didn’t seem sensible.

I was busy growing my marketing agency, Pearl Lemon, and that was my core focus; to win more SEO clients and to grow my brand in the SEO space.

Any profit I generated from this I would put into other investment vehicles or otherwise as part of my portfolio diversification plan.

As has proven now (at the time of writing) – with the events of Covid-19; it really pays to have other sources of income outside of my marketing agency.- 

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This is an example of the return I had just a few days ago

Whist on the agency front I have clients dropping like flies – lately Forex has done extremely well and hopefully will continue to do so.

I don’t see why it wouldn’t have given me solid performance over the last two years.

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As someone who’d heard different things about Forex before; I was a little skeptical about getting involved with Oli and his company.

I’d heard of there being scams, of it being unsafe and that your money could disappear at any one time and more.

There was several weeks of back and forth with Oli on email:

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And here are some of the questions that were being asked/answered on email:

Due Diligence

Initially, they ranged from the broker the trading company would use – and how the algorithm worked in practice:

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The infographic he gave me some high-level information about the Forex markets:

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As well as some USPs that related to this trading company.

This was followed up by further explanations of Forex trading and how it worked in particular with this software company:

watch

Even after all of this I pushed and pried and asked further question still up until the point Oliver suggested that perhaps we were and unsuitable fit:

watch

By this stage, Oliver had explained that they were a software technology company and never touched the money but rather simply installed the algorithm upon the client’s trading account (with my permission).

When I looked up the company I found no evidence of negative reviews or otherwise and saw that they had a UK based entity and that the IP was held in Hong Kong.

This all made sense as they were trying to be tax-efficient and I already had a couple of marketing agency clients in Hong Kong anyway.

What was also nice to see was that the broker was based in London and was FCA regulated.

There was even a moment where I had Oliver send me his passport.

I was pretty paranoid back then 😛 lol.

And so –

That was the turning point in what now has become almost a two-year relationship.

I started off tentatively with £10,000 funded on the account and just watched and waited to see how it would go over the coming months, from April 2018 onwards.

I figured in a worst-worst case scenario I could lose the money that I had invested and that would be the end of this relationship.

I could afford to lose the £10,000 ultimately given the upside was so great and the reality was I’d tired of putting money into other investments as it felt like they were disappearing into a black hole

Right. 

It was time to find out about the practical next steps –

How It Works

So as I was shown the way that this was set up was a follows:

  1. Oli provided the algorithmic trading software
  2. I would set up an account with the broker who was FCA regulated and based here in the City of London
  3. They would go through all of the KYC anti-money laundering checks
  4. Once the money was deposited, the broker would send me logins for my MetaTrader (a mobile app) 4 account where my money would be traded on the markets
  5. I actually have an EUR and GBP account setup via Metrobank and Transferwise (which is how my Italian, Philipino, Indian, Canadian and American friends have setup)
  6. I had direct access via the broker to withdraw my money at any time (we’ll come to this later)
  7. Together we would discuss my trading style (conservative, speculative or otherwise) and Oliver would walk me through some of the initial parameters for their algorithm 
  8. Oliver would (with my permission) install a conservative trading algorithm on the account to begin executing trades
  9. I, at any time, if I chose to could pause the algorithm and execute manual trades (or do both at the same time) – I’ve never done this
  10. Daily the algorithm would open and close trades to start earning profits
  11. This could all happen within a few day period
  12. I could watch everything happen live via the mobile app

It seemed straightforward enough and within a few days, it was all live.

At the time, my focus was upon the agency and everything that came with it so I left Oliver to work on developing my income.

If this did play out – the strategy I had in mind was to withdraw 50% of my profits on a daily basis and to put this money into other investment vehicles – such as property.

And so the journey continued over several months.

Relatively soon in I changed my trading leverage to bring home bigger returns.

I initially had started on a conservative algorithm at a 30:1 leverage meaning I was effectively betting at odds that were 30:1.

Now – that might seem very low – but this was algorithmic trading.

The advantage this presented versus me trying to manually learn was:

  1. I never wanted to manually learn
  2. Humans are fallible so could make mistakes, have hangovers have off days
  3. Over 60% of the market was trading algorithmically anyway

So 30:1 based upon what they’d seen historically was low.

Oli asked if I wanted to ‘trade as the professionals do’

And so we went up to 200:1 leverage and I saw my returns skyrocket. 

I have to say:

This investment has single-handedly changed my life.

Long Term

Let me walk you through how:

I began making money from the outset pretty much, and six months into this adventure, the property deal I was holding my money for had gone south and I had around £50,000 invested with forex.

I was averaging around 3% a month soon enough which meant based on my balance I was returning around £1,500 a month.

I’d soon discover that the returns were even better than I thought.

Trading on the forex markets in the UK is considered spread betting, which technically qualifies as gambling.

As you can see from this Google search, this is how to understand the two.

This offered a powerful incentive for someone like myself who was trying to grow my bank balance because:

Algorithmic Trading

I had to double-check this with my accountant to be sure.

But it turned out indeed this really was the case, and that any of the £1,500 I’d earn based upon a £50,000 balance was totally tax-free.

It was a pretty amazing feeling to have income generated in this way.

Let me underline a couple of things with this in mind:

Other Income

There are several ways I currently generate an income.

  • There are two flats I currently have that have tenants
  • I’m in the process of acquiring a third and a fourth (potentially a fifth)
  • I have one monetized YouTube channel
  • Pension (held in a fund management account)
  • ISA (as above)

These are the other ways in which I generate a passive income at the moment and for this reason, it’s definitely easy for me to draw parallels between them all.

Property involves a ton of setup and maintenance once you get a tenant in. The whole journey of getting a property is fairly involved from an estate agent, property sourcers, mortgage brokers, lawyers and more.

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Then things in flats just seem to break half the time, which means there is further involvement from the estate agents.

And of course – there’s taxable income which involves accountants further still.

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As you can see here (and this is just email, it’s not phone calls) to purchase a property and get it rented has involved over 60 emails:

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I will continue to invest in property but it isn’t half a pain in the arse :p

The monetized YouTube channel is also a long-term investment that’s probably cost me around £5,000 so far in income

I’ll talk about monetizing a YouTube channel in a separate post perhaps, but it involves a YouTube SEO manager, a video producer and a research assistant – and everyone needs paying.

Right now I spend around £8 per video in total.

I could continue. But the point here is that my Forex investment is far and away the simplest return that I make.

____________

So that’s all for today – and the time is:

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I’ll continue with this tomorrow where I’ll be:

Discussing My Losses

Considering The Risks

My Record Month

Introducing my friends to the opportunity

The things Forex has given me

The passive income opportunity

My Official Partnership

In case you’re wondering why the random stop haha it’s because I keep a daily blog about my different adventures – which you can read right now – and I post my watch at the end of each day. 

This blog will span over a couple of days in this instance so I’ll be back with you tomorrow 🙂

______________

Hey guys,

Welcome back to day 27.

Here’s the time:

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And let’s continue

How The Algorithm Works

So I don’t think a post on this investment opportunity would be right without pointing out that from the start I was told this was a speculative investment.

For 24 hours a day; 5-days a week my money would be out being traded on the market; there was always the chance I could lose my income.

This was always the risk that came with Forex, and it continues to be a risk.

The way this works is as follows –

The algorithm had been programmed based upon current + historical market conditions. What I enjoyed about this journey so far was that I had a genuinely committed account manager who really cared about the investment I had.

So rather than this being a ‘we’ll turn the algo on and forget about it’ type scenario; the team were constantly keeping us up to date with what was happening in the markets and how our algorithm was performing in the instance we wanted to change anything

Furthermore, there were different algorithms for different investment appetites. One was more conservative, and others more speculative.

I wanted this to be straightforward whilst I focused on other aspects of my business.

so chose to stick with speculative when market conditions were good and conservative when times were choppy.

It’s worked well so far!

Alongside this – I’m quite a demanding client and what was brilliant to see was that Oli’s team was constantly developing new algorithms or adjusting current ones as market conditions changed.

All for the benefit of people like me to ensure we did well.

My First Loss

The first year there were two key moments in twelve months (the first being more key) where I got my scares and learned more about how this process worked – how I should behave and respond and how to treat this.

I don’t think it would be right to present this information without speaking of the losses I have personally made so anyone who is interested in an introduction understands the risks that come with it.

Around four months into my adventure, I suffered my first major ‘draw-down’.

A draw-down is when effectively a position on the market is opened and then unexpectedly the market goes against you.

So then you’d have a ‘floating balance’:

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Here’s an example of a floating balance right now (i.e current at this time of writing)

So the number you see above is effectively in a position in the market that’s a ‘negative’ one.

As effective as the algo’s were; there would sometimes be unforeseen economic events (Covid-19 being a great example of this) or otherwise that the algo couldn’t instantly cater for.

And so – in August of 2018 I got hit by my first significant draw-down.

The first time this happened I sh*t myself – assuming that all my money was about to be lost.

Oliver had to work hard to reassure me – he’d seen this happen dozens of times – and the important thing was that there was tons of equity (i.e positive balance) on the account which meant three important things were in play:

  1. We could hedge (i.e effectively bet) against the position meaning that if we were banking on the Euro needing to strengthen in value for this to increase (but it was still going down) – they’d open up bets that would involve the Euro going down – so again, either way, we’d win
  2. The equity that was available on the account meant that in parallel we could continue making trades and actually bank daily profits even whilst there was a floating balance
  3. Their team Oliver and all were with me to make sure the money was being looked after. His income was (and is) fixed to mine – which meant it was in his interest to see it come back to glory

So in this period whilst I was scared witless – I did a couple of things.

I panicked and worried about ‘losing my money’.

didn’t withdraw my remaining income and ‘take the loss’

I did exactly what my team told me to do in terms of how to treat this.

A few months followed and I went (at that time) from a 50% draw-down (44k of 86k I had invested at that time) to unlocking actual big profits along the way!

(i.e £7-15,000+)

I’d stuck to the path that had been laid out for me – and within three months I was back to black (i.e all positive equity) with 0 draw-down.

It was an amazing experience for me, in hindsight.

I got to understand the rhythm of the market; I got to test my mettle as an investor, and rather than opening manual trades (as some other clients did sometimes) or pulling the money out (and suffering the losses – as some other clients did sometimes)  I remained patient and that in the end was my saving grace.

We made all the money back (although we had actually never lost it in the first place – it was just in a losing position but not lost)

By the way, draw-downs happened every day in some respects – but the algorithm then open positions against this draw-down to effectively hedge the position (part of the reason it’s considered spread betting – because you take positions across the overall spread – so as long as there are swings in currency value – you win).

I.e you bet on both the euro going up in value as well as the euro going down – so as long as the market swings – you make money.

At this stage – the way I would monitor the markets was via the metatrader 4 app:

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We’ll talk through this screen in a second

And so, several months later, I actually took my first loss of around £30,000.

That sucked.

Oli was in pieces about the whole thing. At the time I was in Kew Gardens with my partner Strawberry and her two nieces that were visiting us on holiday from Italy.

It was a difficult thing to take at that moment.

It’d been a strange move on the market and consequently many of Oli’s clients had suffered.

This was around twelve months into being with my broker and over that period I’d invested more money into both Forex (100k+) alongside opening my Pension, ISA and beginning to get more deeply involved in property.

At that point, because of the storm I’d weathered historically we simply ran the numbers and Oli was still able to demonstrate that I was around £50,000+ up.

There is nowhere else I knew of I could put money into an investment vehicle and generate £50,000 without doing anything whatsoever (and god I was trying).

So it made sense to continue.

Oli promised me we would make the money back, and low and behold – month on month we’d make £8,400, £7,900, £10,300 and so on.

Bring it back he did.

Considering The Risks

So this is where it’s worthwhile pointing out that Forex is definitely not for everyone. For those who are already investing, and are looking at diversification – which is where I was on my journey – OR you want a liquid investment that you can access instantly – it’s brilliant.

There are risks that definitely come with Forex because you can lose potentially all of your income.

But if you are looking for cash-flow generating investments that are liquid and can make the returns you make from a property in a year in ONE DAY potentially.

This is perfect for you – as follows:

My Record Month

This relationship has been huge for me in terms of my own personal growth and this is how I now manage my investments.

Pearl Lemon is able to generate cash flow as well as profit on a monthly basis.

I take a proportion of that profit and put it into Forex.

And so – when I had my record month – netting a return of around £13,400 – I began to realise I could pull some of the profits from Forex also into other vehicles.

I’ve currently exchanged and completed on two properties – and the total balance of £90,000 across both of them that comprised the mortgage, lawyer, mortgage broker and other fees such as stamp duty.

All came from my forex investment.

Fundamentally I’m a small business owner (who’s trying to become a big business owner haha) and Forex has become an integral part of my investment strategy.

For example – one of the properties I bought is a 3-minute walk from my parents’ home – and so they take care of the property.

My dad took care of all of the costs to renovate which in total cost around £3,500.

This was yesterday:

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With the money I made yesterday (granted it was a record day) – I’d be able to pay for the renovation fees 2x.

This is just one in a series of things Forex has been able to give me in terms of income streams.

Right now we’re in the midst of the Coronavirus worldwide crisis – and if your work/business is anything like mine – you’re losing clients in spades.

So far we have lost six clients (could be seven by the end of the day), and it’s a really tough time.

I’ve had to let go of two people so far and it may mean I need to let go of a third 🙁

In the midst of all of this of course – I’ve also in the last week made over £15,000.

This could well be (and should well be) a new record month for us of maybe over £25,000.

We will see.

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Ok guys, my time allotted has finished for today 😛

Introducing my friends to the opportunity

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Back at it again chaps.

So as you can now imagine. 

I was keen on telling some of my friends about this opportunity because naturally when you’ve found an opportunity you want to share it with people that you care about.

So I spoke of my returns and ultimately over the past 2 years, my friends (and family) have placed over £300,000 into the same opportunity.

75% of my friends have made money, 1 has lost, 1 pulled out. All of the others remain and continue to ramp up their investment.

It’s important I share this with you because Forex is a speculative investment so you always run the risk of losing your capital.

With this in mind, I have 4 different accounts setup with my broker not all running the same algorithm – so to this extent, it hedges my downside.

It’s proven to be an incredibly effective strategy over the last 23 months.

It’s been brilliant to see it assist my friends with their own personal goals to the extent that they have begun referring others as well

The passive income opportunity

I didn’t really appreciate it at the time, but the benefit to recommending others was that I’d also retain a share of the returns as that’s how the model works.

You have:

  1. The broker (i.e the bank)
  2. The software company (with the algos)
  3. The developers who work continuously on the algos
  4. The Hong Kong entity (who own the IP)
  5. Deepak Shukla
  6. Deepak Shukla’s friend

And this is who the money will be split between with the friend (e.g Sam) in this scenario taking the lion’s share whilst everyone else shares a proportion of the money.

I did later clarify how much of the split everyone got and here’s how it works:

The end investor i.e Deepak Shukla gets the lion’s share of the profit.

Oliver as my client relationship manager and account director gets a commission based upon the overall volume traded.

Then there are the developers based in Russia who need to be paid alongside the Hong Kong entity that holds the IP. 

This is not to mention the broker fees based upon providing the Virtual Private Server with extremely low latency (i.e time between a trade being places or rather mouse being clicked and trade being executed) that allows the end investor (Deepak Shukla) to access the actual Forex Markets

Phew. 

I think that’s everyone.

And I can tell you – there is enough money for everyone – 

And the beauty of this investment was that my passive income would continue for a year whilst my friends were involved.

So actually Oliver had opened up two forms of income for me.

There was the money I was directly making from trading, and then there was the income I was making from the profits my friends made alongside anyone else who I’d recommend.

I would recommend anyone for free anyway to be honest – I’ve been writing this over a several day period and want to show you my returns just from yesterday:

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And so the idea that I can introduce people I care about alongside people that I know through business to this opportunity changes everything for me.

It means we can ultimately all bring home a return together.

My Official Partnership

With all of this being in place, it’s meant that I’ve now become an official partner with Oliver and his team.

Which is brilliant because now I’m producing content like this to speak more openly with people that know me about my journey over the last few years.

I live in Fulham, South-West Central London with my partner Strawberry and we live based on the income that I bring home and it’s been brilliant how this has helped give us so much more security.

The returns I’ve generated have given me the opportunity to start investing into property which you can read about here alongside making sure Strawberry’s university fees are paid for and more.

It really has helped offer me more financial security – because if you’re an agency owner like myself – you are often at the mercy of your client’s whims and wishes and concerns of your clients.

If you speak to any agency owner it’s stressful and an absolute battle to fight through.

But this means that where the agency has its ebbs and flows – you have something to fall back upon such as this.

Final Thoughts

This has been a brilliant investment for me in short.

And the model I follow is sensible in my view.

I generate cash from my agency, put it into Forex, generate enough income to make a more ‘steady/long-term/stable investment’ such as pensions, property or otherwise – and then I pull the money from Forex into that.

This is the model that I follow so that I keep growing my capital in Forex and also make other investments;

This month I’ve already made £15,000+ so at the end of the month depending upon the final return – I’ll withdraw half and put it immediately into another investment pot.

It may well contribute towards a property I end up purchasing or go into my pension as that’s also tax-free up to £40,000.

So.

This investment has changed my life and if you’re interested in applying for this investment  just fill in this form here to see if you qualify for an introduction.

I’m very wary of introducing people who aren’t financially stable or a good fit for this.

But if you are then this could very well be the best investment you’ll ever make

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And that’s a wrap :p

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