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As someone using multiple brokers, I can confirm Dukascopy has tighter spreads and commissions. I'm not cheer-leading just honest opinion from a high-frequency trader – where tight spreads matter. Consider screenshots from other two brokers I use versus Dukascopy.

Spreads 2nd Nov 2015

Volume Commissions 2nd Nov 2015

The spread difference isn't impressive, but note the difference in commissions between Dukascopy and my other broker. Such pricing is the reason I may consider moving my accounts over to Dukascopy if JForex4 meets all the hype.

This article is about lowering overall charges not comparing brokers so let’s get into it.

Set Reasonable Global Stop Loss on Your Account

This won’t lower your charges per se, set a conservative stop loss on your live account. This applies to total drop in equity not per trade.

In the image, I'm not willing to lose more than 20% of a 20,000 account so, stop loss is 18,000.
It’s up to you to choose partial hedge or total close on margin mode. I prefer partial as it gives me time to intervene.

Understand Volume Based Commissions and Trade Relative to Your Equity

Trading relative to your account means risking an amount that won't wipe the account in case of a loss or cost huge commissions.

In the following 2 images I backtest the same strategy, using different amounts but same data and deposit

See the difference in commissions? Over-leveraging a smaller account, means higher commissions. Risking 20% yielded amazing returns but consider if it lost, the account would be minus the loss and commission. I have seen a strategy end in profits but with an equity drop from commissions.

You pay commissions even on losses. So the bank always wins.

Up Your Trading Activity to Get Premium Rollover

Here's Dukascopy overnight policy

Premium Rollover 0.1m USD Account

Regular Rollover 0.1m USD Account

You pay fewer swap fees on a "busy" account. Of 3 levels, the premium has lowest rates.
I handle this by having 2 to 3 scalpers running all the time but trading the lowest allowable amount (0.001). These don’t have to be losing strategies, but they are not the only ones trading.

Here's my trading activity at 99% for premium rates.

The more you trade the more you pay spreads. They offset this by lowering your rollovers.

Trade Only When Spreads Are Favorable

While scalping is allowed, trade when the spreads are low. In most of my scalpers, I trade when spreads are below 1pip. Tighter spreads also indicate more liquidity and a higher probability of meeting profit target.

The spread is the difference between the tick Ask and Bid price.

spreadNow = ((LastTick.getAsk()-LastTick.getBid())/defaultInstrument.getPipValue());

In VisualJF, I created this function in a previous article.

Do Not Close Profitable Positions, Merge

I came across merge order in the Wiki and had an “epiphany”

By merging, there is no actual transaction. Since commissions and spreads are calculated after close, merging profitable positions would avoid the two. I tested with a strategy that opens an opposing position of the same amount and instrument after the profit target is met then merges.

Creating a Counter Order in JForex

It's straightforward, here are the steps.
  1. Get a list of open orders
  2. Determine if the counter order is buy/sell. It has to be the opposite of active order.
  3. Check if target profit is met then open counter order.
  4. Confirm if the second order is filled then merge.

For VJF users, there is no merge function yet. Create a counter order then modify your code to add the merge function discussed below.

Creating a Counter Order in Visual JForex

This is simple using 4 “If” blocks, 1 “Assign” block and a “Position Viewer” block as in the image below.

The “stop strategy” block is a safety feature if more than 2 orders are opened.

Merging 2 Counter Orders for 0 Commissions and Spread

With two orders (long/short) of the same pair and amount, merging will result in the closing of the two with no direction akin to sell1,buy1=0.

Things to note when merging are:
  • Positions to be merged must be in the filled state
  • No stop loss or take profit should exist on the positions
  • They have to be of the same instrument
The code for merge is as follows
  1. Confirm there are two orders of the same instrument
  2. Cancel any take profit or stop loss orders
  3. Place the orders in a list to be merged, then merge
  4. Confirm if the merge was successful

You should check that the returned message after the merge is not “filled” as it means a new position was opened after merging. In our case, this would signal an error since we opened the same amount in different directions.
If this happens, I have added a function to add a 20pip stop loss to the opened position.

Testing the Merging Function

Cut Down On Your “Texting”

Dukascopy offers 20 free SMS alerts per month. Extras cost EUR 0.07/SMS.
The image below shows the number of email alerts I got in October. As much as 200 SMS, these would have been EUR 14 in charges. Use the free email service for non-critical alerts.

Last Word on the Strategy

This strategy will not make you rich and over-leveraging it will wipe your account, I can guarantee that. Use the lowest amounts possible, preferably 0.001 to keep your account busy and get premium rollover rates. The image below shows 1 year backtest risking 1% of the account.

For those patient enough in the contests, you can also use it as part of other trading activities to reach the required turnover for withdrawals. As I am using it for the strategy contest, to be fair to me, I ask that you do not use it for the same contest.
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