How to setup install an expert advisor in MT4

Many people who are new to automated forex trading are puzzled by installation issues regarding the expert advisors for the metatrader platform. This easy to follow graphical guide will show you the simple steps necessary to setup an expert advisor for the metatrader 4 platform.

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1. Download your expert advisor file and indicators (if the ea needs any custom ones). These are either ex4 or mq4 format files, depending on if they are a source or a binary (precompiled file). There is no difference between these two classes as far as installation and usage goes.
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2. Copy your expert advisor files and indicator files to the corresponding directories. As it is shown in the following picture. Keep in mind that this directories are located under your metatrader installation path and that metatrader should not be running at this point.
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3. You should now open up metatrader. Open up a chart with the timefrime and currency pair in which you want to run the advisor. Now simply drag and drop the expert advisor from the navigator window as shown in the next picture.
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4. Now you need to check the live trading dialogue and change any settings you would like to modify on the expert advisor, as it shown. Also remember to click on the expert advisor button on the upper section of the program to allow trading.
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5. Now you should check that the expert is running. A happy face should show up in the top right corner of the chart you chose. If you see an x or a happy face it means you neglected to perform the last step (or didnt perform it correctly).
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Happy trading !

Diposting oleh Unknown 01.33 0 komentar

To Look or Not to Look Setting and Forgetting in Automated Trading

We all fear that moment when we open up our trading terminals to find out that some portion of our profits or even worse, our initial investment capital, has been wiped out. Looking into a trading account continuously is one of the hardest things to do when getting involved in automated trading and certainly the emotions and reactions that take place when we do so lead to many of the devastating consequences that make profitable automated trading a very hard thing to achieve for most new and inexperienced traders. For many people new to automatic trading execution the answer to this problem - in which looking into losing trades makes them lose control - is a simple "Id rather not look". On todays post I am going to discuss this issue a little bit and why you cannot expect to be successful just by "setting and forgetting" and "avoiding to look" when using algorithmic trading systems.

There is something very hard about looking into a losing account or an account with trades in open draw down that makes us want to forget about them or do something to make this stop. Definitely when people start to actively deal with their accounts they generally take very bad decisions that end up costing them far more capital. Inexperienced traders usually change systems upon draw downs, interfere with the trading of automated systems and get desperate and frustrated when things spend a lot of time going against them. However, given the knowledge that long term profitable systems are hard to trade because of this, many new traders simply decide to "forget" about the accounts and system to avoid intervening and dealing with the psychological aspects of trading.

This decision is absolutely logical and it is the easiest and most obvious answer to the above mentioned premise. If youre telling me that long term profitable systems are hard to trade because they have long and deep periods of draw down then Ill just trade the system and forget about it so that I do not interfere nor suffer from these draw down periods and their existence. Although this may sound good at first, this is a very dangerous road that often leads to as many losses as the first one.

In order to understand why this is the case we first need to see how people who are indeed successful with mechanical trading systems achieve this. Definitely it is not by not looking at the systems but my gathering knowledge, strength and confidence by doing the exact opposite. The difference between an experienced and an inexperienced trader is evident when you look at the ways in which they react to the exact same situation. While within a draw down an inexperienced trader would suffer from despair and fear (only avoidable by not looking at the account) the experienced trader can look into the account and see a temporary cycle which is just a pair of his or her regular business goals. If the account then goes onto a cycle which signals that it has become too risky to be traded the experienced trader will quickly realize this and eliminate the system from his or her portfolio while the other trader will trade the system to oblivion since he or she isnt even paying attention.

What I am trying to say here is therefore pretty simple : it is not about setting and forgetting and avoiding to look into your systems and accounts, it is about looking into them and understanding what they are doing and if what they are doing is part of what they are supposed to do. Certainly at first trading long term profitable systems will require a lot of self control and discipline from new traders but in the end this ability to look at the accounts, understand, expect and evaluate in a cold-headed manner is what distinguishes the few that do make it in this business from the big crowd of traders who fail at this endeavor.

My advice here is therefore quite straight, if you want to succeed at automated trading you should keep a close eye on all your live accounts and on their performance. When you feel emotions because of their profits/losses, turn them into understanding, learn all the ins and outs of your systems logic, its profit and draw down characteristics, what it is supposed to do and how it does it, only in this way will you be able to achieve success in this very hard business called automated forex trading.

If you would like to learn more about my experience with algorithmic trading strategies and how you too can receive a true education in automated trading please consider joining Asirikuy.com, a website filled with educational videos, trading systems, development and a sound, honest and transparent approach to trading systems. I hope you enjoyed this article ! :o)

Diposting oleh Unknown 22.46 0 komentar

Mathematical Expectancy A Basic Powerful Concept in System Design and Development

Through my last few posts I have mentioned the concept of mathematical expectancy , a very important and useful concept which many people seem to be unfamiliar with. The objective of todays post is to talk a little bit about the concept of mathematical expectancy and its usefulness, pointing out why it is such a fundamental and useful tool in the development of long term profitable trading systems and a key step in the evaluation of any given entry logic. I will start the post with the definition and purpose of mathematical expectancy and I will then continue with some examples and concepts which will show you why the analysis of mathematical expectancy is extremely important and a necessary step in the design of any given trading system.

Many of you may have wondered how successful traders come out with a good entry logic for their trading systems, being manual or automated. How can these people know the chances of success of a given entry logic and use it within their system development ? Many people who are new to automated or manual trading usually have an over-focusing - with little analysis - on the entry logic completely neglecting the development of the money management part. Not only does this pave the way towards the development of unprofitable systems but it doesnt help that the way in which the entries are developped is non-systematical and statistically not rigurous. usually youll find that people develop a given entry logic based on visual observations of a VERY limited number of market situations and then modify the entries in forward/live testing as they fail under current conditions. This speaks about the lack of knowledge of this novice developers and the way in which they view market and long term profitability.

A simple question then arises. Is there a way to systematically evaluate different entries to know which entry is better, which time frame is better and what exit strategies may be more suitable ? The answer comes in the form of mathematical expectancy analysis- an absolutely simple- yet absolutely powerful technique which allows you to evaluate the POTENTIAL (different from the profitability which comes into play when money management is implemented !!) of a given entry logic. So what is exactly mathematical expectancy and how does it play a role in system development ?

The mathematical expectancy analysis is simply a technique which allows you to know the extent to which the market is bound to move in a certain direction after a given entry is taken. The analysis is fairly simple, you mark every entry for a given logic on a chart and then you mark a set given number of bars into the future. So for example, if you want to evaluate the mathematical expectancy of a moving average cross on a 10 bar period you simply mark each entry and then you mark the tenth bar after the entry. After doing this you determine the high/low of this ten period after the entry. This gives you the maximum the market moved in favor of your entry and against your entry during this period. When you do this over a very large sample size you can determine the average movement in favor and against you and you will be able to tell if the mathematical expectancy of your system is positive or negative. This marks the potential of your entry.

This analysis is very versatile and very important. By changing the number of periods in the analysis you can see if your strategy is better at capturing short or long movements and what timeframe fits your strategy best. For example, some systems may have negative mathematical expectancy on a small number of periods while the mathematical expectancy may be positive under larger periods meaning that the system is better fit at capturing long term movements than short term movements. This analysis also allows you to design appropiate exit techniques for a given entry logic since you know what the average movement against and in favor of your entry is you can calculate an adaptive SL or TP such that in average you will hit the TP and miss the SL.

It is of course terribly difficult to explain all the aspects of mathematical expectancy within a single post reason why I only meant to give a small introduction to the topic within this post so that people interested in system design may know that this technique exists and has a paramount importance in the development of a systems entry logic. Within my website - in Asirikuy- I have made several videos explaining both the theory and practical aspects of evaluating mathematical expectancy over a 10 years period, in additon I have also coded an EA to allow people to evaluate any given entry logic . If you arent interested in Asirikuy then at least you now know this tool exists and you can either make your own EA to evaluate this aspect or you can do your own research to find more information on the subject :o).

If you would like to learn more about what I have learned in automated trading and how you too can design and program systems to use in forex trading please consider buying my ebook on automated trading or joining Asirikuy to receive all ebook purchase benefits, weekly updates, check the live accounts I am running with several expert advisors and get in the road towards long term success in the forex market using automated trading systems. I hope you enjoyed the article !

Diposting oleh Unknown 18.30 0 komentar

Carrying Trades in Forex Trading For Interest

People have often think about systems which they can trade that will bring them the most long term profit with the least risk. Some of the most popular systems used to achieve this by large investors and banking institutions is the carry trade. What is this popular form of investment which is so common amongst these "big guys" ? The carry trade is simply when you buy a high yielding currency with a low yielding currency, getting an overnight interest on your position. Todays post will be dedicated to the discussion of the carry trade and why it is in fact a good yet NOT risk free fundamental-based strategy.

So how do you place a carry trade ? As I say, you need to buy a high yielding currency with the lowest possible low yielding currency (to get the highest possible interest). For example right now you could buy AUD with USD since the interest rate of the Australian central bank is 4.00% and the US central banks is 0.25%, effectively giving you a very favorable interest differential. Once you get into this position you will receive an overnight interest which is often called the "swap" which is 6 USD for each 100,000 USD. In the year you would get about 2190 USD which would mean a 2.2% interest rate.

But why isnt the carry trade risk free ? When you buy any forex pair, you effectively expose yourself to the variation of the instruments value. For example, if you bought AUD/USD at 0.8 and then after a year it is at 0.6, then the fact is that you lost 25% in addition to the 2.2% you made on interest so the actual exposure you have to the variation in the currencys value is what will make or break your profits. There is also the opposite possibility that the AUD/USD goes up to 1.0 effectively making you 25% profit.

People often try to reduce their risk in carry trades by hedging different currencies, but what they are effectively doing is changing their risk from one instrument to another. For example, hypothecally, if AUD/USD and USD/EUR were carry trades, then buying both would just mean you are exposing yourself to AUD/EUR. In fact, the forex market is made in such a way that reaching a combination of pairs which give positive swap and a final exposure to X/X (AUD/AUD on our previous example) simply does NOT exist. This is due to the fact that such a combination would be a sort of arbitrage since it would give you almost no risk.

In fact, it may be reasonable to get into different positive carry trades to diversify risk somewhat but this does not mean that your trading is risk-free. In fact, when the carry trade unwinds, due to changes in central bank interest rates (like in 2008), people will lose on ALL their carry trades, no matter the different amount of pairs they actually have. If you want to trade for interest, you need to realize that what you are doing is playing a fundamental game which will change players as the economy changes. The carry trade is NOT a set and forget strategy, you need to stay on top of the interest rates and close your positions as the gap between interest rates becomes lower.

You also need to take into account your exposure to changes in the currency pairs. Always trade such that you will not buy more lots than what you have in your account. With 1:100 leverage this means that you need to reduce the trading size by a factor of 100. For example, if you have a 1000 USD account, instead of trading 1 lot which equals 100,000 USD, trade 0.01 lots which equals 1000 USD. This way you will be absolutely covered and you will only get wiped out if the currency pair you get reaches 0. However you can increase your risk a little bit more to 0.02 meaning that you would only get wiped out by a 50% variation of the currency, something which is also very unlikely.

The best moment to start investing in a carry trade is as soon as the swap becomes positive. When this happens people start to put money into the carry trade and you are in for a long term ride, however always consider the above risk statements and have your account ready for draw downs which WILL happen when you take a carry trade. Also remember to exit positions when there are signs of economic turmoil, which may happen every 6-10 years. It is of the utmost importance to always have in mind that the carry trade is a fundamental strategy and as such it demands constant vigilance over economic conditions and interest rate differentials.

If however you are not interest in the carry trade but you would like to know more about my automated trading systems and how you too can learn to program your own long term profitable trading systems please consider buying my ebook on automated trading or joining Asirikuy to receive all ebook purchase benefits, weekly updates, check the live accounts I am running with several expert advisors and get in the road towards long term success in the forex market using automated trading systems. I hope you enjoyed the article !

Diposting oleh Unknown 10.16 0 komentar

Does Hedging on the same currency pair Really Exist A Look at Position Holding in Forex Trading

One of the things I consider the funniest about forex traders is that they seem to have a strong opposition against the removal of "hedging" from their trading capacity. However few of them do realize that the traditional hedging we have seen where you buy and sell a given currency pair at the same time is merely and illusion and that in reality it doesnt exist or -for that matter- make any real sense. On todays post I want to talk about the concept of hedging, why it simply doesnt exist in reality and why any strategy that uses this concept can be implemented without its use. After reading this post you will understand better that hedging a currency pair by having open long and short positions at the same time is not possible in the real market and you ll see how you can actually understand what you are doing when you have this on your account and how it can be implemented within your strategy to have the exact same results without ever having more than one position opened per currency pair.

What is hedging after all ? In general it refers to the taking of opposite positions with a certain degree of correlation that offers some protection against side movements in the market. So for example going short EUR/USD and short USD/CHF is bound to guarantee some protection against variations in either currency pair since they are heavily and negatively correlated. However since the correlation is not 1 the actual effectiveness of this hedge depends on market conditions and - when correlation is temporarily lost - such hedges become extremely dangerous.

However, when people in the MT4 community refer to "hedging" they generally talk about having a long and short position opened at the same time on a currency pair. For example they open up a long on the EUR/USD at X price and then a short afterwards to cover up their loses or to "fix" some of the profit level they have achieved. Many traders who are not familiar with how the market works consider hedging absolutely vital for their success and the removal of this feature seems to be extremely unacceptable.

When we look close having a short and a long trade opened on the same pair is merely an illusion. What you are doing is buying and selling the same contract so if you were actually carrying out currency exchanges (of physical currency) you would have done the same exchange twice and ended up with what you started with (your ending net positioning is 0). It doesnt actually make sense if you think about it and the way it has been implemented in MT4 is practical in some ways but very misleading in others.

As a matter of fact, any hedging strategy can be implemented EXACTLY in the same way without ever having two positions opened in the market. For example if you bought USD/JPY at 85.54 then you want to enter a short position at 84.54 then exit the short and the long at 86.54 the same effect would be realized if you closed the long at 85.54 because closing the long is indeed what you would be doing in reality if you entered a short. The later point where you exit both the long and short is irrelevant since your net positioning from the open of the short is 0.

Case 1 ( Buy 85.54, Sell 84.54, Close both 86.54)

Long Result = 86.54-85.54 = 100 pip profit
Short Result = 84.54-86.54 = 200 pip loss

Net Result = 100 pip loss

Case 2 (Buy 85.54, Close 84.54)

Long Result = 85.54-84.54 = 100 pip loss

Net Result = 100 pip loss

So in summary it is now evident that the current "short and long hedging ability" in metatrader 4 is simply an illusion and that any strategy can be implemented which currently relies on this feature simply by taking into account the net positioning of the account. When shorts are entered they close longs and when longs are entered they close shorts. In the end this leads to the exact same effect as we would have had if we had simply opened all the short and long positions simultaneously since what matters is merely our net positioning in the market. This is the approach that really makes sense and falls in line with what would happen in a physicial currency exchange.

To sum it up, if you currently have a portfolio trading on the same instrument or if you are trading a system that opens longs and shorts on the same currency pair, dont worry about hedging as you can always implement your strategy using a net positioning approach, something we will all have to do once we move entirely towarsd metatrader 5.

If you would like to learn more about my journey in automated trading and how you too can code likely long term profitable systems using reliable trading tactics please consider buying my ebook on automated trading or joining Asirikuy to receive all ebook purchase benefits, weekly updates, check the live accounts I am running with several expert advisors and get in the road towards long term success in the forex market using automated trading systems. I hope you enjoyed the article !

Diposting oleh Unknown 16.45 0 komentar