No Stoploss or Limit Orders for US brokers

I was a little bit shocked and surprised when a customer sent me an email earlier today regarding a new regulation that will be taking effect on July 31, 2009 that forbids the use of Stoploss and other limit orders on US forex broker accounts. After reading a lot more on the subject I realized that apparently only FXCM has issued a warning to their customers telling them that they will be unable to use these type of orders from July 31. What does the regulation exactly do and what can you do to protect yourself and your automated trading system ?

Well, as I said before the regulation prevents you from assigning any stoploss or takeprofit levels to your orders, that is, you cannot issue any pending orders with these values or place these values on existing trades. This means that in order to avoid risk, if you are manually trading, you are required to stay in front of the screen a longer amount of time. Expert advisors can also emulate the stoploss and take profit values simply by closing orders at predetermined price levels calculated by their logic but this is quiet risky and requires you to have an extremely reliable internet connection (that is, you need a very robust vps) because a failure to do so may leave your account opened to terrible loss levels and unmanaged risk.

What options do you have ? You can either migrate to a non-US broker and continue trading in the same fashion, you can simply use expert advisors to manage your stop loss and take profit levels (if you are manually trading) or you can modify your current expert advisors if you are auto trading so that they too can emulate and manage your orders according to the takeprofit and stoploss levels.

As retarted as this regulation may sound, it does provide a safer trading level for traders in that it absolutely prevents the ability of brokers to stop hunt trading positions and thus eliminates whatever influence brokers may be having in price, that is, it eliminates the artificial movements some brokers may be creating in order to make trades reach stop loss levels. This will probably make the market easier to trade on US brokers with the added pain of having to manage your risk in alternative fashions. Nonetheless, these brokers will lose a fairly good amount of their customers to off shore brokerages.

As far as my expert advisors go, I will modify the gods gift ATR to comply with the rule and use an internal mechanism to close orders according to stoploss and takeprofit values. Other expert advisor creators should do the same in order to maintain their systems at a good level. What do you think, will you adapt or migrate ?

If you would like to learn more about the gods gift ATR and other expert advisors 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 23.00 0 komentar

Targetting the JPY Crosses Why it is so Hard to Develop Long Term Profitable Systems for These Instruments

If you have been interested in system development and you have been following my achievements for a while you would have certainly noticed that I have never developed a system to target any JPY crosses. The reason why I havent done so is not because I havent tried but because the development of long term profitable systems for them has proved to be extremely hard. On todays post I want to share with you my experience with these instruments and why I have had a very hard time attempting to develop strategies that profit from these very volatile forex trading instruments. I will explain to you why price action based strategies simply do not seem to work for these pairs and what other alternative solutions I have put in practice to develop a long term profitable system that is able to diversify our trading with these JPY beasts.

The JPY crosses are a series of instruments in the forex market that pair the Japanese Yen with a non-USD currency. These instruments are most commonly EUR/JPY, GBP/JPY and CHF/JPY but other more exotic pairs like NZD/JPY and AUD/JPY are also available. These pairs have some very notable characteristics which set them apart from regular forex pairs like the EUR/USD and the GBP/USD. What makes them so special is the extremely large daily volatility and their overall lack of liquidity (when compared to major pairs). Developing a system for these babies is no easy ride and I will just show you why this is the case.

System development is based on the finding of exploitable market inefficiencies. Price behaves in a certain way that allows you to enter a trade with a high probability of success under very diverse market conditions. Lack of liquidity introduces a blur to this image and therefore it becomes very hard to find inefficiencies because price is "all over the place" so to speak. Lack of liquidity makes different price patterns appear on very different market situations signaling many different things taking your mathematical expectancy away from positive territory. So if you try to trade a given candlestick pattern you find that the pattern sometimes leads to where you want to go and sometimes it doesnt - like it always happens - but the lack of liquidity increases the number of times it leads to where you dont want to go significantly, to the point where you lose all the edge you would have gained from it.

For this very reason, the development of price based strategies on the JPY crosses is often not a good idea since you are very vulnerable to the "blur" introduced by the general lack of liquidity of these instruments. Systems that have success on very varied currency pairs - like Teyacanani - simply fail to profit on JPY crosses due to the fact that their signals simply dont lead anywhere. After analyzing 10 years of price data for the EUR/JPY I have found that price action is extremely hard to predict due to the fact that lack of liquidity makes it follow a very random walk in the short and perhaps medium term. This is the exact effect you would expect from lack of liquidity since crowd behavior becomes less representative and more individual human behavior - which is just random - starts to show through the charts.

What is the solution then ? Since price action based strategies seemed to fail to bring positive results on these currency pairs for me, I decided to change into indicator based strategies that allowed me to remove the "noise" from the market more effectively. The idea here is that JPY crosses do follow crowd behavior in the long term so introducing a strategy that averages data and gives me an idea of where things are going would most likely prove more effective. This is in fact the case and indicator based strategies do show positive mathematical expectancy values with less effort. However, the fact that the currency pairs lack liquidity makes the eventual profitability of these strategies much lower than what can be achieved on the regular USD paired instruments.

In the end it becomes obvious that lack of liquidity complicates any mechanical profitability to a large extent since market inefficiencies become far more scarce and difficult to capture. Lack of liquidity makes the effect of smaller parties larger and therefore the movements are just more random overall. Crowd behavior becomes less significant and therefore we lose a significant edge that we are able to use on major currency pairs. Many of you may think that this "randomness" constitutes an inefficiency on its own but the fact is that it does not since you arent able to predict when it will appear with a statistical advantage. If you assume that JPY crosses are random and attempt to profit from their volatility you will fail when they trend and vice versa. The problem is not the character of the instruments but the fact that lack of liquidity does not allow us to have a positive statistical edge on most strategies.

Does this mean that we wont have any mechanical JPY-cross trading strategy ? No, it just means that it will be much harder to develop and probably profit and risk targets wont be as good as for regular systems based on more liquid currency pairs. As a matter of fact I am currently developing some strategies to address these JPY crosses. Hopefully I will be able to tackle this beast and - in the end - we will have some likely long term profitable systems for our JPY trading friends :o)

If you would like to learn more about automated trading and how you too can learn to design and develop your own 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 21.45 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

Forex 101: An Educational Guide for Beginners

New in the Forex market? This market may sound really complicated and scary to tackle but it's not. Just like in any kinds of trade, you make money when you buy low and sell high. Forex trading is simply trading currencies in the Forex market.

Forex is the largest financial market in the world. It generates trillions of dollars of currency exchanges everyday and it operates 24 hours a day and seven days a week therefore, also making it the most liquid market in the world.

In the world of Forex, trading in this very liquid market is very unique compared to other financial market like stocks. Since the Forex market operates 24 hours a day worldwide, which starts at Sydney and ends in New York, trading is not centralized in one location. You can trade in Forex whenever you want regardless of the local time.

In the past, Forex trading was only offered to large financial institutions, like banks. And, it was also only offered to large companies, multi-national corporations and large currency dealers. This is because of the large and extremely strict financial requirements the Forex market imposed. This means that individual traders and small businesses are not able to participate in this liquid market.

However, in the late 90s, Forex was made available to individual traders and small businesses. This is due to the advances in the communications technology. High speed internet made it possible for people to enter the Forex market and have become one of the best make money at home businesses.

Forex trading is getting more and more popular each day. Besides, who wouldn't want to trade in the largest and the most liquid financial market in the world? Trading in Forex will certainly give you the opportunity to earn a lot of money. However, trading in this ever liquid market also has its risk. It is a fact that many people who traded in Forex lost a substantial amount of money and some of these people are seasoned traders.

This is why it is very important for you, as a beginner trader in the Forex market, to have the proper knowledge and education on how to trade in the Forex market. Firstly, there are hundreds or even thousands of available websites in the internet that offers Forex education. Some of these websites offer dummy Forex trading where you can practice trading in the Forex market using dummy money.

These programs will really take you closer to actually trading in Forex. Many experts say that you'll never really understand how Forex really works until you traded in the market. So, if you want to learn how to trade Forex, you may want to sign up for a dummy account that numerous Forex trading websites offer.

With a dummy account, you can trade Forex by not using real money at all. With this program you can practice your knowledge and skills in trading in the Forex market and not waste money.

To get started in trading in this market, all you need is a computer with a high speed internet connection, a funded Forex account, and a trading system. These three simple things are enough to get you started in Forex trading.

In order for you to minimize the risk of losing money, you need to have some basic knowledge in charting before you start trading. In most Forex trading systems, Forex charts are there to assist you with your trades. Forex charts are a visual representation of the exchange rates of currencies. This is where you will mostly base your decisions to buy and sell currencies. You have to learn how to read the different Forex charts in order for you to successfully trade in the Forex market.

Each Forex chart is different although they represent the same fluctuations. For example, in the daily Forex chart, you can evaluate market trends in the past 24 hours to help you make decisions on the next 24 hours of trading. In the hourly chart, you can use this chart to spot trends within the day. And, in the 15 minute chart, where it can help you recent currency fluctuations in a 15 minute interval to help you decide on which currency to buy and sell. Sometimes, there are 5 minute chart available to better help you get closer to the action.

These are the basics on how to trade in the Forex market. Always remember that aside from the promising earning potential that you can have in the Forex market, there are also underlying risks that you have to consider. It is therefore wise to trade in this market with a proper investment plan and strategy. If you are just starting out to trade in Forex, consider opening a dummy account to help you practice trading Forex without risking money.

Diposting oleh Unknown 21.45 1 komentar

Becoming Successful in Forex When There is NO Time Tips for the Family Guy with a Full Time Job Part No 2

On yesterdays post we talked about the disadvantages people have when they attempt to become full time forex traders or even simply successful traders when they have full time jobs and families that take up substantial amounts of their time. Near the end of the post I pointed out that patience and a long term look are bound to be absolutely important to the success of a person in this situation and I also said that exploiting strengths and reducing weaknesses was also an important part of this journey. On todays post I will elaborate on the more practical aspects of this advice and I will lay out a plan that you - as a person with a full time job and family - can follow to become successful in forex trading in the long term.

Many of you may be asking how I came up with such a plan if I dont have a full time job nor a few kids to make my life a lot more complicated. The truth is that even though this is not the case my advantage is that I know what has to be done to become a successful trader even if I did not do it from the above mentioned situation. This has allowed me to extrapolate what I learned to device a plan for people in such a situation. Of course, I would not bother to tell you this plan if I had not put it into practice before, something I have been doing for a while with a friend who has a wife, two kids and a full time job. For the past year this friend has been executing my plan to the letter and his results have been very good - a positive evolution towards a long term profitable trading outcome. Certainly he is not even close to quitting his day job but he made profit this year and did not wipe his account (a true achievement for having such a small amount of time !).

What was the plan he followed ? When he asked me to help him become a successful trader I told him about all the disadvantages I talked about in yesterdays post and I said to him that he had to approach trading in a very particular way to achieve success. Since I knew he had no clue about what he needed to do I laid out a plan for him so that he could go towards long term success in trading with under 5 hours of work each week. This is what I advised him to do :

Forget about short term trading, to trade one hour charts you need to stay at least 5-8 hours a day in front of your computer, to trade even smaller time frames you need even more time. If you attempt to trade short term charts when you get home tired at night you will definitely only get frustrated and lose.

Learning is the top priority, understanding what you are doing is the most important part of trading success. I told him to dedicate 2 hours each week to go through learning material and through its application. I encourage him to read classical book in currency trading and technical analysis and to actually PUT that knowledge in practice over visual backtests of at least 5 years of data. Often people read a lot but they fail to apply the concepts and knowledge they acquire.

Daily trading systems, perhaps one of the most important things I told him to do was to start trading daily systems and STICK with them. I encourage him to do evaluations of several different daily systems and to stick to those that had profitable long term results. He ended up trading a very simple MA cross based system on the EUR/USD. One pair, one decision each day, efficient, trend following trading.

Keep a journal. I told him that keeping a detailed journal of his trades was VITAL. Since the system traded once every few weeks it was actually quite easy to do this and visual backtesting analysis of his systems became CLEAR.

Learn to program. I said that evaluation is a significant part of success and that coding was an important thing to speed up evaluation. I insisted that he spent one "learning session" every month to learn how to code on mql4. The result was that after a few months he was able to start coding and backtesting his simple daily trading strategies.

Profits, for now, do not matter. When you start trading everything seems to be about the profits. I told him that profits are the reward for learning and that the first thing you wanted to do was learn and then profits would come. I advised him to just trade the systems he designed and evaluated without concerning himself with "last trade was a winner or a loser" or "I have lost all the trades".

So to sum it up, what you need to do is to approach trading in a way that exploits your strengths (your willingness to become a successful trader) and diminishes your weaknesses (lack of time). Putting a very strong emphasis on education and focusing on the evaluation and trading of daily strategies seems to be the best way for people who have "very busy lives" to start to become successful traders. Certainly it will take a few years to get there but the road is much easier, much clearer and much more rewarding than attempting to trade at a play field where you will most likely lose. By using systems that require little baby sitting and just a few quick minutes of analysis my friend was able to go from not trading at all to becoming at least a person in a clear path towards long term profitability in forex trading.

I hope that the above article has been helpful to all of you who are facing this situation of wanting to become successful trades with little time to do so :o) If you would like to learn more about automated trading systems and how they can be used to achieve profits in trading through understanding and sound design 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 13.15 0 komentar

Forex Trading Course: A Must for Forex Beginners

In the world's largest financial market where exchanges reach up to trillions of dollars each day, many people would really want to participate in this market. Aside from being the largest financial market in the world, Forex is also the most liquid market in the world where trades are done 24 hours a day.

A lot of traders have become very rich trading in the Forex market. And, many people who trade in the Forex market everyday have found a great way to replace their day jobs. Some even became millionaires almost overnight by just trading in this financial market.

Trading in the Forex market can be very attractive. However, you should also know that there have been people who suffered extreme financial losses in the Forex market. It is true that the Forex market offers a very good money-making opportunity to a lot of people, but it also has its risks.

It is a fact that people who didn't have the right knowledge and skills trading in the Forex market suffered huge financial losses and some even went into debt. So, before you enter the Forex market, it is essential that you should have the necessary knowledge and skills as a Forex trader in order to minimize the risk of losing money and maximize the potential of making money.

Many people who were successful in the Forex market have went through a Forex trading course to get the knowledge and skills needed to successfully trade in this very liquid and very large financial market.

In a Forex trading course, you will learn about when it is the right time to buy or sell, chart the movements, spot market trends and also know how to use the different trading platforms available in the Forex market.

You will also be familiarized with the terminologies used in the Forex market. Even the basic knowledge about trading in the Forex market can be a great help with your money-making venture in the world's largest market.

There are different Forex trading courses available, all you need to do is choose one that suits your needs as a trader. There are crash courses where all the basic things about Forex will be taught to you in a short period of time, full time online courses, where you will learn all about Forex through the internet and there are also full time real life classroom courses where you can learn the ropes about Forex in a real classroom with a live professor.

You can also become an apprentice. However, in order to learn a lot about Forex as an apprentice, you need to make sure that you have a seasoned Forex trader who can share a lot of things to you about the Forex market.

Here are some of the basic things you should look for in a Forex trading course in order for you to get the sufficient knowledge about Forex trading:

� Margins
� Leveraging
� Types of orders
� Major currencies

A good Forex trading course will also explain a lot about the fundamental and technical analysis of charts. As a trader, knowing how to analyze a chart is an essential skill that you should have. So, when you are looking for a Forex trading course, you should look for a course that offers fundamental and technical analysis instruction.

Stress plays a vital part in Forex traders. Knowing how to deal with stress is also a skill that you should develop. A good Forex trading course should teach you how to deal with stress and trade effectively and efficiently.

As much as possible, you should look for a Forex trading course that offer actual trading systems where students can trade real money on the Forex market or at least trade on dummy accounts in a simulated Forex market. This hands-on experience will greatly benefit you. Besides, the best way to learn about anything is by actually experiencing it. Live trading and simulations should be offered in a Forex trading course.

So, if you plan on getting involved in the Forex market, consider finding all these things in a Forex trading course. Developing the right knowledge and skills in trading in the world's largest and most liquid market in the world will definitely help you make it to the top and achieve your dreams as a Forex trader.

Diposting oleh Unknown 01.16 0 komentar

The Greatest Advantage of Automated Trading at Least for Me !

It is true that my posts regarding automated trading are generally focused towards the negative aspects of this way of trading and explaining why it is bound to be harder to achieve than simple manual profitable trading. However, there are a few advantages inherent to automated trading that have made it my operational way of choice and the generator of the majority of my current income level. Within the next few paragraphs I will be explaining to you one of the main reasons why I decided to use automated instead of manual trading systems to succeed in forex trading, especially why this is so beneficial for my trading style and personality. I will also tell you why this quality is also a double edged sword and why it does NOT mean that you can just "set and forget" trading systems.

Yes, we have all heard the many "benefits" inherent to automated trading. Most EA sellers just tell you that you can make money while you sleep, trade like a professional without knowing anything and simply enjoy the profits using the forex market like some sort of ATM machine. The truth is VERY far away from this and automated trading is simply not what they tell you it is. In reality automated trading is harder to achieve than manual profitable trading and it is as challenging and demanding from a psychological point of view.

What is the difference then ? What are the TRUE advantages of automated trading ? In reality automated trading has a lot of pitfalls but it also has some great advantages that made me decide to go with it instead of regular full time manual trading when starting to build my forex trading career.

Truth be told, the fact that you are able to watch the markets 24/7 and "not miss any trades" or do a "ton of analysis in a millisecond" were not the things that made me choose this way of trading over manual execution. Even though you may think that this is actually better the fact is that you can use manual trading systems that require only a few minutes every day to achieve the same profitability levels as a regular long term profitable automated trading system. I know traders who trade daily charts and dont spend much time "working" and achieve the same profit targets as me so the fact that you can just have an ever-watchful eye is not a true reason to choose automated over manual trading since being on a constant lookout for trading opportunities is not necessary nor does it warranty more success in trading.

The most important reason that drove me to use automated instead of manual trading systems was simply that - from a psychological point of view - I am better able to control my short term emotions when I do not have to take the actual trades of the systems I am using. I am very good at dealing with draw down periods since I always have a strong analysis and long term perspective but having to take trades from a strategy that has been losing for a given period of time manually is just psychologically hard for me to do. As a trader, I quickly noticed that draw down periods when trading manually made me change my strategy and this led to long term loses and deviations from my projected profit and draw down targets.

Automated trading is a blessing in the sense that it offers me the ability to have a long term plan and stick to its guidelines even if I am not actually personally executing each position the system goes into. Of course this does NOT mean that automated trading is emotionless and those of you who assume this to be the case will be making a BIG mistake. Automated trading attacks your psychology a LOT but from a different perspective. If you dont understand the system you are using you will not be successful because you will not know if you should or shouldnt stop using a given trading system when a draw down period happens, you will constantly wonder if it has stopped working and you will NOT be able to achieve long term profitability.

Even though automated trading is very demanding emotionally, it is demanding in a way which I am more comfortable with. I am very meticulous about the analysis and understanding of my trading systems and I have built what I think is a very good capacity to draw plans around automated trading systems and stick to them. Manual trading is demanding for me in a way that I cannot handle very well, reason why automated trading became the perfect answer for my question about success in forex trading.

So for me not having to personally suffer through each trade of my systems is great since I am better able to handle the great psychological pressure that is exerted by automated trading systems in other ways. However what you have to realize here is that whatever you choose -manual or automated trading -, it will be challenging and believing that automated trading will be a "breeze" simply because you dont have to watch and take every trade is going to be a FATAL mistake. In the end it comes down to having a well laid out plan, a GREAT understanding of your trading strategy and the will to execute your plan exactly as you have laid it out.

If you would like to learn more about the psychology of automated trading, the building of systems and how you can trade with confidence with a likely long term profitable system YOU build based on 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 07.31 0 komentar

New Forex Expert Advisor for Review PointBreak5

Last week I was very kindly approached by the PointBreak expert advisor creator who asked me if I could forward test his product on my virtual private server and write a review about it.

As I am always looking for a new profitable expert advisor I gladly agreed to test his PointBreak5 expert advisor. I am doing this with no monetary compensation at all, neither directly or from affiliate sales. This assures that my results will be totally unbiased.

At first glance, PointBreak seems to fulfill the requirements I would assign to a profitable expert advisor. Its goals also seem to be pretty doable with a long term profit target in sight. I have started to forward test this ea as of today, using the most conservative setting as outlined in the expert advisors demo documentation. I am using an Alpari 25,000 demo account with 1:100 leverage.

This expert advisor will be commented based on its weekly results, as my free expert advisor portfolios. Let us wait then, the surprises this ea may have for us.

Diposting oleh Unknown 22.15 0 komentar

Defining Support Resistance Levels Mathematically A True Challenge for Automated Systems

I have always said that there is a lot of importance and potential in the trading of support and resistance levels in trading in general, and particuarly in forex trading. However it is true that the creation of long term profitable systems for automated trading based on the definition of S&R (support and resistance) levels has been difficult up until now due to the inherent problems of defining these levels mathematically. On todays post I want to talk about some of the approaches used to define these levels and the short commings each one of them has. On tomorrows post I will talk about what I think is the solution to the problem, a concept which may lead to the development of an automated system based on S&R levels which is able to gauge S&R level importance and trade the many techniques which can be derived from these levels in a profitable fashion.

So what is so difficult about the definition of support and resistance levels ? Theoretically a support or resistance level is an area (not a specific price value !) in which price finds a natural difficulty to continue to move in its previously acquired direction. So for example, if the EUR/USD is in an uptrend and there is a resistance level at the 1.3500 zone, price will get to this level and then it will bounce from it or consolidate around it until it either continues its previous trend or tests a lower support level.

Notice how many of the definitions of support and resistance are vague. What is a zone exactly ? how large must these zone be ? What parameters determine its size ? How could we know this level exists before price reaches it ?

The fact is that these questions have no straightforward answer. There is no rules for the size of the S&R zone, nor is there a way to accurately determine the levels before they happen. The previous attempts at coding automated trading system using S&R levels have tried to infere future S&R levels by taking information about previous levels in the past. The reality seems to be that a previously found support or resistance level will behave as either support or resistance in the future depending on from where it is attacked by price.

So the problem seems to be to find S&R levels in the past somehow and then use them in the future. If price faulters around a support or resistance level, then an intuitive way to define them is through the high/low criteria. A resistance is reached on the high of a candle followed by a candle of opposite direction and a support level is reached on the opposite situation. Another way to define these levels would be to use the fractal indicator. Since fractals determine patterns which signal reversals then the high or low of a fractal may indicate a resistance or support level.

The problems inherent to these very common approaches and other similar approaches is evident. All Support and Resistance levels are given and absolutely no importance is given to some over others. Another problem is that several fractals or high/lows may happen on similar levels but interpreted as different S&R levels when in reality they represent the same support or resistance zone. Since there is no discriminations between the S&R levels defined, these techniques of defining S&R almost always fail since they trigger trades on "not so important" price levels which make the strategies lack a positive mathematical expectancy.

So the steps to define S&R levels in a reliable fashion seem to be the following :

• Define all S&R levels
• Discriminate important from unimportant levels
• Define Zones of S&R
  

On tomorrows post I will talk about how I intend to tackle each one of these problems and how I believe this will lead to the definition of reliable automated trading techniques based on S&R trading. If you would like to learn more about what I have done with automated trading and how you too can learn how to design and trade autoamted trading systems profitably 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 20.16 0 komentar

The Road To Financial Freedom Part No 2 Is this Right for You

It is not uncommon for people to persue the dream of "financial freedom" thinking only about the fact that they are tired of a 9 to 5 job and want to have an easy way to earn a living in which work is hardly ever present. On todays post of the road to financial freedom series I will try to give you a good insight into what I think the goals and mindset of a person who wants financial freedom should be and which people should not seek financial freedom because they are either doing it for the wrong reasons or with the wrong perspective in mind.

In what I have seen, there are mainly two types of people looking for financial freedom (trading wise at least). The first are people who are willing to do whatever it takes, work as long as they can, do whatever effort they have to in order to arrive to the dream of profitable trading -manual or automated- and then there are those who simply just dont want to do anything and think of trading as a way in which an income can be achieved without lifting a finger.

Things evolve differently for those two kinds of people. The first kind often struggles a lot in the beginning and have to work about 10 times what they thought they would have to, many with obssesive personalities end up with broken families, health problems, etc, due to the sometimes long hours and inevitable amount of hard work that must go in either manual or automated trading. The fact that they also put a financial burden on their families and take money to trade - almost certainly losing all of it at first- makes things harder for the people around them, specially spouses who sometimes fail to understand the goal to be achieved (mainly because the non-trading partner is usually more rational at this point).

The second kind works almost as hard as the first but in a different area. Their work is not centered on actually learning what they are doing but it is centered in the finding of the "system" that will make them rich without signficant effort. These people often give trading a try for a while and after 1 or 2 years they give up because of the fact that everything they have tried has eventually failed them (or has not achieved the income level they wanted), eventually they find out that their is no "free lunch" and that trading is not the bottomless "gold mine" they read on the sales newspages. These people either quit, or become part of the first group.

Now, there is also a problem associated with the intented amount of money people want to make in trading. Often I hear people talking about a 5-10% consistent monthly profit in forex being a "rational" thing to expect (these people NEVER know someone who has actually been making that kind of money consistently -for a few years-, it is just a dream created by the sales pages). Oh boy, 5% every month would turn 50 USD into one trillion dollars in less than 60 years. The profitable traders I know are often happy with a 1-3% average profit per month, which is very good for most purposes. Take into account that in financial markets, doing better than the S&P 500 is considered to be "beating the market" in the sense that you outperform buy and hold strategies. That is something that very few people in the world are able to do.

Novice trader minds are often "contaminated" with the unrational notion that the forex market is able to give very high profits, thinking that 10-20% per month or more is a rational expectation. The worst thing is that people get into their minds that it is something they can achieve if they work hard. The people who are hard working but believe they can achieve a profit level which is simply unprecedented are the ones who get the worst out of it. They lose and lose money and they struggle and struggle trying to achieve something which is simply not within realistic expectations (taking into account what most profitable traders I know do achieve ). They often get beat up, chewed and spit by the market and in the end they are beaten and defeated. These people usually quit at this point when they realize that they will not get to that million dollars from that 1000 USD account.

My objective with this post is to speak to all of you and tell you that you should give this a very HARD and long look and think about if trading is really what you want to do. Trading is a very intense, time consuming, work intensive way of life. Starting to trade with realistic expectations for success requires good capitalization (at least 2 to 5 times your expected yearly salary if you expect to live from this) and a commitment to work through all the emotions and frustration that will arise from attempting it. Trading is also not your 9 to 5 job so you may have long periods of loses with no paycheck at your door and there will be no one there to pat you in the back and tell you that everything will be ok. As I said on the last post, it is entirely up to you. Your possibilities are limited by your efforts.

For most people out there, forex is not a good opportunity for "financial freedom". Most people are simply undercapitalized, unfamiliar with the whole concept of trading and unaware of how their emotions respond to the trading world. Most people are also unable to deal with the stress of having no paycheck in the mailbox, no "fixed" income and no guarantee of future profits. The extremely large amount of hype and useless things out there dont make it easier for them either. The fact that 90% of new traders fail speaks for itself. If you think forex is not the way to go, then it does not mean you cannot achieve financial freedom, you can always look at a brick and mortar business or an online business which aligns better with your knowledge and personality.

However, if you are truly interested in trading after all that I have said, then you will enjoy the rest of the road to financial freedom series in which I will explain to you the steps I took and all the things I have done (and what I would have liked to do) in order to achieve financial freedom with forex trading. My first step was simple. I wrote in a piece of paper : "I am going to be a profitable forex trader". If you are also interested in my work and would like to know about how profitable trading can be achieved with realistic profit and drawdown expectations on the forex market 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 19.45 0 komentar