Trading S R a Guide to my Trading Methodology

I have received some requests from people who have been interested in learning more about my manual support and resistance trading system inquiring about the specifics of the system and how it may be traded successfuly. It seems that there is a lot of confusion regarding how I choose my entries and how the system is globally traded. The objective of todays post is to draw some light into the steps I take when trading this S&R method so that other people can start trading this same way successfuly. The method uses incredibly sound trading tactics based solely on price action and I believe this is one of the simplest and most effective ways in which anyone can trade the forex markets.

To begin with, I am going to tell you the steps that I take when I go into trading my S&R trading methodology. By following these steps youll be able to get a lot more into my thought process and realize why I take the trades that are executed on the demo account (which I comment and signal on twitter). You will see that the steps require a great deal of discretion and that practice is the most important thing to trade my S&R method in a successful manner. One thing which I believe is great about this system is that as one gets experience with it, market behavior starts to show in a much clearer fashion. So what are the steps I take when using this method (my day trading S&R tactic) ?

1. Take an instrument you want to trade

2. Open up a one hour chart and other charts if you want to

3. Based on this information answer the question : Where is the trend going ? It is very important for you to be able to answer this question clearly. The system depends greatly on your ability to know where the market is globally heading. That is, you should be able to follow the trend. If the picture is not clear to you, then do NOT trade. As a wise trader once said "It is always better to lose opportunities than capital". Also do not overanalyze the situation, look at the chart. During the last 20 hours has price gone up ? or down ? If you can clearly say where the trend is likely headed then go to 4.

4. Now that you know where price is going you should locate support and resistance levels. The trick here is that you are going to wait for price to reach a resistance after a new low (in downtrends) or a support after a new high (in uptrends) and when price tests that level you are going to get into the trade in the direction of the trend. You should set your SL at a break of the resistance/support level you entered and the TP at the low or high price reached (which is a support or resistance level).

5. Before placing the trade make sure that you only place it if you can achieve a risk to reward ratio of at least 1:2, most preferably 1:3 and make sure that you trade a lot size such that you risk only 2% of your trading capital. Using the TradingBuddy EA mentioned on a post a few days ago should greatly help you with the accurate money management of trades.

As you see, the system is based on some very simple principles. You have to follow the trend, you have to enter on favorable spots (buy low, sell high) and you should have adequate money management with a very favorable risk to reward ratio. This tactic makes sure that it will be extremely hard for you to blow an account. You need to lose 50 consecutive trades to wipe an account and each trade you win buys you at least 3 loses. Trading this method will make you better at judging price action and will make market action much clearer to your eyes. In a few months you will be great at judging overall price direction and you will feel comfortable trading without any indicators.

However you should understand that this is no holy grail. Often you will not read market direction appropiately or price will reach your SL before continuing in the direction of the trend. This is normal. This method intends to allow you to have a fair share of loses, that is, you can lose 60% of the time and still come out with a profit. The key is to follow the method and learn from your mistakes. A trading journal in which each trade is recorded is VITAL to the success of anyone who wants to become a good manual trader.

If you would like to learn more about money management and the use of automated trading systems to trade the forex market successfully please consider buying my ebook on automated trading or subscribing to my weekly newsletter to receive updates and check the live and demo accounts I am running with several expert advisors. I hope you enjoyed the article !

Diposting oleh Unknown 10.17 0 komentar

Forex Expert Advisors and Market Volatility Gods Gift

On an earlier post I had described the use of the ATR indicator as a means to control the stop loss and take profit values of forex expert advisors. I became very aware of this fact yesterday when I started to back test and optimize the Gods Gift expert advisor using its regular stop loss, take profit and trailing stop features.

I realized that the expert advisor made profits consistently using fixed stop loss and take profit values but starts to fail to do so at mid-late 2008. In forward testing this was confirmed as the expert made a good amount of profit from the beginning of 2008 up until the tests ended in mid October. After that, a live account was started to test the ea, account which has experienced more draw down than this same expert last year.

As you can see on the GBP/USD weekly charts displaying the ATR indicator, (shown below) volatility has increased expotentially during the past 6 months. This seems to be a consequence of market uncertainty and a general increase in volume across the forex market. Indeed, the market has been almost doubling its trading volume every year.
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Now, expert advisors that use a set of fixed stop loss and take profit are bound to fail because they cannot adjust to these ever changing market conditions. As a matter of fact, market conditions can just be expressed as a measure of volatility since human psychology remains the same, the only thing that changes is volume (of course, on the long run, human psychology should change as we should be able to learn from our previous mistakes, etc).

What I discovered, in the case of Gods Gift, is that there is a defined set of parameters that work well from 2004 to 2008 and a completely different set of parameters that works very well from mid 2008 to present. The main difference is that SL and TP values have to be widened enormously to take into account changing market volatility. This led me to program an ATR based stop and take profit on the Gods Gift expert advisor, this of course, allowed me to find a set of conditions that worked perfectly from 2004 to present.

If you would like to learn more about the exact results obtained with Gods Gift both in demo and life accounts as well as getting the new Gods Gift with ATR adjustable SL and TP please consider buying my ebook on automated trading or subscribing to my weekly newsletter to receive updates and check the live and demo accounts I am running with several expert advisors. I hope you enjoyed the article !

Diposting oleh Unknown 00.32 0 komentar

The Metatrader 5 Series When Huge Backtesting Differences Appear

If you look at my last few weeks of posts I have been very excited about the new qualities of the Metatrader 5 trading platform and the benefits it brings to system development regarding faster execution, faster optimization and added flexibility. Using my prototype implementation of Watukushay FE I analyzed trading over several different instruments and I finally came up with the "starting point" of intra-currency trading for this well-known freely available trading machine. This week I decided to do a small experiment and compare my results of Watukushay FE for the AUD/USD on Metatrader 5 with those found out with Metatrader 4 and the results found were extremely surprising. On todays post I want to talk about my findings, the possible causes of the issues found and what I will be doing to investigate the nature of this problem and what solutions can be implemented to deal with it.

During the first post comparing Metatrader 4 with 5 and the backtesting results of Watukushay FE we already saw a small yet noticeable difference between the testing results obtained on both trading platforms. I talked about the possibility of these errors being feed-related and the fact that the Metatrader 5 history feed might be more reliable since it has been "remastered and fixed" for this new platform. However the difference was small and therefore there was no substantial issue besides an anecdotical note pointing out this curious fact.

However when I decided to run the initial AUD/USD tests on Metatrader 4 to compare the results I obtained with Metatrader 5 the difference changed from "noticeable" to "abismal". The pictures below show you the results for MT5 and MT4 using the exact same settings on the AUD/USD currency pair backtest from 2000 to 2010. The overall equity curve is very different and the results do point out that something is substantially very changed between the historical feeds of MT4 and MT5. I first thought that the difference would be due to the presence of Sunday candles but this turned out to be false since the MT5 feed doesnt have any of them, so regarding this aspect it is the same as MT4. I then thought about the possibility that the whole difference is caused by important changes in data prior to 2006 (before metatrader 4 was launched) and the fact is that data differences are NOT limited to pre 2006 periods, the whole historical feed is different between both trading stations and meaningful differences are present. If you analyze the results youll notice that almost all candles have different - if only very slightly - high/low/open/close values pointing out that RSI and ATR values will be very different. The change in one minute interpolation mechanisms is also not likely a factor here as Watukushay FE strictly controls bar opening on both its MQL4 and MQL5 implementations.
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What causes such a dramatic change in profitability ? To get to the bottom of this problem I decided to strip down the logic to its simplest form and eliminate the closing logic of the EA, leaving only the entry rules. This shows us that there is still some difference between backtesting results (shown below). This means that differences in results are caused by differences in the RSI and ATR indicator calculations which are dependent on each backtests particular historical feed. Stripping down the logic does reveal that most dependency is located before 2002 with results beyond this date being in better agreement. However there is still some dependency which is caused by differences in data between both historical sets beyond this period.
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Since we simply cannot know for sure which of the two historical data selections is better - and they are probably both valid within normal broker differences (with the 2000-2002 data being very different probably due to differences between feeds in this period) - it becomes a wise decision to run backtests on both and trust the less profitable results to calculate profit and draw down targets. In some cases like the EUR/USD backtests this proves to be trivial but on others like the one I showed you today doing this mixed analysis proves to be extremely important. I will email the people at metaquotes to get some information about the different nature of the feeds and I will let you know once I have more information about their origin. However up until now all backtests of Watukushay FE seem to be more profitable on MT5 (meaning that our MT4 simulations are in fact the worst case scenario). Investigating other issues which may be related with the closing mechanism of orders in MT5 is also something I am currenlty doing since I have seen that the differences when the closing logic is enabled seem to have other strong causes besides simple feed dependency (more on this on a later post !).

If you would like to learn more about automated trading, the evaluation of expert advisors and the programming of your own strategies 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 16.31 0 komentar

Forex Expert Advisors Forex Spectrum an Unbiased Review

A new expert advisor which claims to be something "never seen before" in the forex automated trading industry has just been released. This trading system, which was brought to my attention by an Asirikuy member, will be the subject of todays post. The trading system is named Forex Spectrum and the author claims that it is able to give more than 600% profit with "virtually no risk". On todays review I will analyze these claims against the evidence provided on the website and Ill give my opinion about whether or not the forex spectrum trading system is or is not worth buying and testing. My review will show you if the claims shown on the website can be taken as valid and if the "undisputable evidence" shown is in fact evidence of the claims made. Will the forex spectrum expert advisor pass the test ? Youll see within the next few paragraphs.

I have to say that I believe that it is always unethical to call anything forex related risk-free, making claims such as "with virtually no risk" makes people believe that they can achieve those profit levels without any market exposure something which is definitely misleading. People should take into account that forex always carries a high degree of risk, a fact that point out that there will always be some capital loses (sooner or later), which may or may not lead to profitable periods depending on the trading systems capabilities.

The claim made of a 600+% profit in a short time with almost no risk is one of the boldest I have ever seen (after the claim of 1000 USD to more than 3 million made by an EA a year ago) and not surprisingly there is absolutely no reliable evidence to backup this claim on the website. This expert advisor seller does not show 10 year backtest or live testing results which can stand behind what he is saying. What is the so called "indisuputable" evidence ? No more than a few trades shown on charts which could easily be made or hand picked from any trading strategy. These images say NOTHING about the likehood this trading system has of being long term profitable.

We also have some images of "statement shots" which could have been easily taken from any backtest and hand-picked to show a desired scenario. Why does the creator of forex spectrum NOT show 10 year backtesting and live testing results when they are SO easily available ? There is an EVIDENT hiding of easily obtainable evidence which would indeed backup the authors claims if they were coherent with reality, however the author does not show this evidence, obviously the simplest reason why the evidence is not shown is because it does NOT show any evidence of long term profitability.

I personally despise the hypocrisy of the sales pitch "this is not about money"- the author expresses- when it is evidently ONLY about money since the author seems to have no regard whatsoever for the future of peoples capital, selling them a system which has no evidence of profitability using bold claims and cheap marketing tactics. To sum it up, the overwhelming lack of evidence makes the forex spectrum expert advisor NOT worth buying or testing. The author would need to provide 10 year backtests coupled with a period of at least 3 months of live testing and a backtest of this same period to show back/live testing consistency, once this evidence is provided I will be glad to rewrite this review.

If you would like to learn more about my work in automated trading and how you too can start to develop and use automated trading systems with sound 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 07.16 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

Choosing Among Online Forex Trading Systems

Forex is not really new in the financial market. In fact, it is not only known by big players in the world, but also by small organizations and individuals lately. Now, forex is no longer ruled by the big players; people from all walks of life can actually do forex trading.

Before plunging in trading, you must know certain terms that are used in the market. One important term is the forex trading system. What it is all about, and what is its use.

The birth of the internet has changed the face of forex trading. Because of this very valuable tool, the FX market is easier to access, making it more convenient to small players. And all most importantly, all of this happens in real time, which is why online traders can actually make quick decisions regarding their trade.

Forex trading system is ergonomic and intuitive. All the necessary functions involved in forex trading can be done from your main screen. You can place a trade and leave an order. And not only that, you can also conduct margin analysis and position/order management.

There are many companies, located in different countries, which can provide you with a forex trading system. The very first thing that a system usually involves is investment of money. Some companies would require you to invest as low as five dollars while some can ask for as high as five hundred dollars for upfront payments. Forex systems greatly vary, and it depends largely on the company offering such service.

With the system, you can purchase companies, stocks, and make investments even in other places. You can enhance your wealth and personal preferences by investing in a forex trading system. By investing a certain amount of money, you can make even more money in the future. The forex trading system that many traders know about is built among leading companies, investors, and worldwide currencies.

The trading system can be offline or online. You are free to choose which system will work best for you. However, online trading systems are gaining more and more popularity because you have easy access to the money that you've invested. Offline trading systems usually involves a lot of paperwork; while with an online system, you can instantly invest, trade, move, and remove money faster.

All it takes is for you to learn about the investment, and how to trust the right brokers in case you may need to make additional decisions in the future. You must be involved with a company which you can communicate with any time during a business day. That particular company should be able to provide you with a telephone number, fax number, and email address. Steer clear from companies which do not disclose such information.

Without the right trading system, you can't trade effectively. Therefore you must choose a system which is suited for you as an individual. You must consider the trading style and the risk that it involves. A system which focuses more in risk and money management techniques is a good one. Look for a company who has been in business for many years and those with proven professional experience. It must also provide you with tools and strategies that will help you in developing your very own online trading system. If you select the right company, you can find one that is of best value for your money.

Choosing a good, and probably the best, forex trading system is one of the first things that you should learn in forex. There are three factors usually considered in choosing a forex trading system, namely: profitability, acceptability, and one that fits your daily routine.

Profitability is probably the most important consideration. People invest money to make profits, and a good system should provide that. It is shown in dollar amounts or pips/month.

Every system has a drawdown, and it is also expressed in pips. It is the biggest decrease in equity in the past. In comparing different systems, you should take a close look on its historical drawdown.

Also check for the systems profit and loss ration, as well as its win and loss ratio. The system should have consistency and you can effectively tell this by looking into their monthly or quarterly, and yearly results.

Once you've chosen a system, learn all about it, and you can expect to gain a lot from your investment.

Diposting oleh Unknown 13.45 0 komentar

Forex Expert Advisors Forex Warlord an Unbiased Review

Two or three days ago a customer suggested the Forex Warlord System for Review. Since more people may be interested in the review of this trading system I decided to publish a review about it today. As always, my review will look at the claims made by the author of the EA and the evidence the author has to back them up. After analyzing this evidence as well as any statements and information about the experts technique on its website I will tell you if the system fulfills my criteria for long term profitability and if it is or is not worth buying and testing.

This trading system is made by a guy that goes by the name of "Paul Liburd", I have never heard of him and I dont have the slightest idea if he is a successful trader or not. For all I know, this guy is just someone trying to sell an expert advisor. Is there any evidence of his success as a manual trader ? Does he show any statements of accounts he has traded profitably ? Then why does he say he is a successful manual trader ? It makes no say that if he is not going to show any statements. The fact that he is also the author of forex accumulator points to the fact that he is just a guy trying to sell his automated trading systems which may or may not work. God knows if he is an actual person or just a figment of someones imagination.

However we are not here to discuss if Mr. Liburd exists but we are here to discuss if the system he presents is or is not as profitable as he says. The claims he makes are actually all based on simulation. The few partial screenshots of winning trades he shows like the "38500 in 5 trades, nos loss" screenshot are just not believable unless we can get access to the statement. Any system can have 5 consecutive loses or profits, I dont care about those small aspects of trading. From the partial backtesting result shown we can see that the EA has a 10 to 1 risk to reward ratio. Talk about unsound trading tactics ! Of course, this EA is profitable in backtesting because, as many, it is probably made to take advantage of backtesting vulnerabilities that can be exploited. The result with this kind of EA is usually that in live testing profitability diminishes a lot and therefore the very unfavorable risk to reward ratio cashes on the market exposure and kills the system.

Are the backtests valid ? Well, there are NO live tests to confirm that they are, therefore we assume they are NOT because it is the most probable scenario. We always need to have back/live testing consistency in order to use backtesting as valid evidence of profitability. This guy is simply crazy if he thinks he can sell a system to knowledgeable traders with such scarce and incomplete proof. Why is the backtesting statement not available ? Why doesnt he show the dates ? Why are they no live tests if his system is so profitable ?

And what about the "manual performance graph" ? Please, I could make that in excel in ten minutes. Show us a REAL account with investor access we can believe and we will believe you got those results. Anyone can say anything and expect to be believed but it is just too bad that there are people out there willing to lie so bluntly. Of course, I will apologize for saying this and I will redo my review is evidenced is shown to backup every claim made on the website. I would like investor access to the statements of the manual system as well as 10 year backtests and live tests to confirm backtesting validity. Why do I feel I will never get this info ?

Because of all the things I have said before I consider this system NOT worth buying or testing until all the necessary evidence to believe the claims is available. Meanwhile, if you would like to learn more about automated trading system evaluation and the requirements for long term automated profitable trading please consider buying my ebook on automated trading or subscribing to my weekly newsletter to receive updates and check the live and demo accounts I am running with several expert advisors. I hope you enjoyed the article !

Diposting oleh Unknown 03.45 0 komentar