Forex Trading Systems The ultimate forex edge an Unbiased Review

As you know, I regularly review automated trading systems for the forex market but I have recently been asked by a website reader to review the ultimate forex edge trading system. Of course, as my website is called "reviewing everything forex" I am also interested in the review of regular trading systems and signal services so I decided to give this a go and review the ultimate forex edge trading system.

The forex ultimate edge website seemed to be just another cheesy marketing website that attempts to bond with the websites visitor by appealing to his likely current situation. The author first describes how he was broke and desperate (as many are likely to be when entering the website) and then he says that he saw the light and started to profit from forex trading. The story of course, has just no back to it, the trader does not mention the actual name of the company that allegedly gave him the chance to trade a 10 million dollar account or any information on any managed account or account he traded before or after this.

As a matter of fact, this is the most important thing. We have this guy telling us he can walk the walk and trade the forex market profitably but where is the proof ? Where are his account statements with all the profits he has been able to make with his trading system ? If anyone was going to learn a trading system from someone they would want him to show his trading statements right away. Why should you be different ? If he is claiming he can do something then he shouldnt have any hard time proving it if it is actually true. Now if it is, Ill be glad to take a look at the new evidence and redo this review to reflect that, but up until now, its just bunch of made up graphs and blablabla anyone can talk.

Being an account manager or selling a trading system is not supposed to be about being able to talk BS but it is supposed to be about being able to convince people through evidence and logic that your system is able to do something good with their money. Of course, up until now, this website is just a bunch of non sense which I would never consider worth buying.

If you would like to learn about automated trading systems and how there is the possibility to trade profitably with automated trading with real profit and draw down expectations 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 this article !

Diposting oleh Unknown 11.15 0 komentar

Expert Advisors The neighborhood full of loose dogs

When I think of the forex automated trading market right now and the way in which it has worked for the past couple of years one analogy always comes to mind. I tend to imagine this expert advisor market as a neighborhood full of loose mean dogs in which you are alone and trying to get across. I think that this perfectly portrays the confusion, misinformation, exploitation of ignorance, unethical behavior and other "properties" of this forex automated trading world.

Why is this market so uncontrolled ? Why is this happening ? For me it is pretty obvious, large sums of money are involved and whenever large sums of money are involved it doesnt take long for the predators of our race to go against their "prey", that is, retail traders who have just begun and are just desperate or wishing to earn financial independence. These people will go to great lengths to deprive everyone of their hard earned money. People will give their money willingly because they dont know any better and they trust the people that lie to them to be honest. The more and more I spend time roaming around this smelly market, the more I realize how people are tricked and how low and dishonest these marketing tactics the use are.

For me there is just one solution to this problem, which is summed up in a single word : regulation. The expert advisor market is in desperate need of some kind of regulation of what can and cannot be sold. People would argue against this since people are free to buy whatever they want and everyone is allowed to sell whatever they want. That is true, but to lie bluntly in order to sell something is an entirely different matter. This EA creators sell you an expert they say can "triple you account every month", "turn x into 100x" and they say this systems have been "battlefield tested", "proved", etc, without any actual conclusive evidence to backup their claims. I did not go to law school but I do consider that tellings lies to sell people things is immoral and should be punishable by law. Specially if it causes these people to lose their money because of their purchase.

My request is simple, have a necessary degree of proof for each claim established so that they are forced to show some realistic, convincing proof of anything they want to claim. It is not that hard, I am just asking for these people to show us the truth, plain and simple. Of course, this will only become true if people gain knowledge and start to demand this in a massive fashion, in no other way will the expert advisor sellers listen. Mainly because most of them cannot backup any of their claims (as you see within my reviews). Sadly, as with the informmercial market, this is likely never going to happen because most people that enter this market are ignorant about this situation and ignorance my friends, turns people into blind men driving.

If you would like to know more about what I have learned about this market, how you can evaluate experts and their proof, build, test and program your own systems and start trading the forex market profitably using automated trading systems 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 01.15 0 komentar

Cycle Analysis and The Stock Market

When we talk about cycle analysis we will definitely think of WD Gann, the legendary stock and commodity trader who had made tons of money from the financial markets. It was estimated that in his lifetime he made $50 million from stocks and commodities. Imagine how much is $50 million 80 years ago translated to todays money. What was his secret?

He had the ability to forecast the market by studying the historical prices. He said, "Everything works according to past cycles, and that history repeats itself in the lives of men, nations and the stock market." (more quotes from him)

In 1928 the year before the crash he successfully predicted the crash in 1929 and said that it would take years for the stock market to recover. You may read his detail prediction  here.

Today I want to talk about one of his famous theory on the cycle analysis, its known as the Decennial Cycle or the 10 year cycle. According to Gann, he compiled the past 100 years of price data and put them on a chart. He plotted the y-axis as the price while the x-axis as the year ending with 1,2,3,4,5,6,7,8,9,0. The actual chart was very blur as it was a very old chart, so I try my best to illustrate on the chart below:

From the above chart, we can see that the year that ends with 1,2,3 such as 1981, 1982, 1983, 1991, 1992, 1993 and 2001, 2002, 2003 have a similar price pattern, they start from low price levels. Year that ends with 7 or 8 usually experience crashes.

Below is an extract from Ganns teaching:

Each decade or 10-year cycle, which is 1/10th of 100 years, marks an important campaign. The digits from 1-9 are important. All you have learn is to count the digit on your fingers in order to ascertain what kind of a year the market is in.

No.1 in a new decade is a year in which a bear market ends and a bull market begins. Look up 1901, 1911, 1921, 1931...

No.2 or the second year is a year of a mirror bull market, or a year in which a rally in a bear market will start at some time. See 1902, 1912, 1922...

No.3 starts a bear year, but the rally from the second year may run to March or April before culmination, or a decline from the second year may run down and make bottom in February or March, like 1903, 1913, 1923...

No.4 or the fourth year, is a bear year, but ends the bear cycle and lays the foundation for a bull market. Compare 1904, 1914, 1924...

No. 5 or the fifth year is the year of Ascension, and a very strong year for a bull market. It can be a new bull market or a big correction in an existing uptrend. See 1905, 1915, 1925...

No. 6 or the sixth year is a bull year, in which a bull campaign which started in the 4th year ends in the fall of the year and a fast decline starts. See 1896, 1906, 1916, 1926...

No.7 or the seventh year is a bear number, and the seventh year is a bear year because 84 months or 84 degree is 7/8 of 90. See 1897, 1907, 1917, 1927...

No.8 or the eighth year is a bull year. Prices start advancing in the seventh year and reach the 90th month in the eight year. This is very strong and a big advance usually takes place. Review 1898, 1908, 1918, 1928...

No.9 the highest digit and the ninth year, is the strongest of all for bull markets. Final bull campaigns culminate in this year after after extreme advances and prices start to decline. Bear markets usually starts in September or November at the end of the ninth year and a sharp decline takes place. See 1899, 1909, 1919, 1929...

No.10 the tenth year, is a bear year. A rally often runs until March and April; then a severe decline runs to November and December, when a new cycle begins and another rally starts. See 1910, 1920, 1930...

This is just one of the cycle theories, there are also the Presidential cycle (4 year cycle), secular bull and secular bear, yearly cycle, monthly cycle and many more. From the study of past cycles, we see a very clear picture that history seems to repeat itself and by learning more technical analysis theories we can make better investment decision to help ourselves to grow our wealth.

Finally, Im going to end this article with a statistical table to show how accurate is this theory:

Happy investing,
Pauline Yong

Diposting oleh Unknown 05.17 0 komentar

The Doubleplay Forex Expert Advisor

When I began my quest to find an expert advisor that did well in a broad variety of market conditions I was very confused by the overwhelming amount of expert advisors available. After reading and searching for reviews all across the world wide web I found what appeared to be a good and well recommended expert advisor. Hence, I bought the Doubleplay expert advisor.

The Doubleplay expert advisor is what appears to be a very solid and conservative expert advisor. It fits my trading style, having a 50 pip adjustable stop loss and also a risk management module which makes sure that I never risk more than 5% of my account on each trade.

I have been very satisfied with this ea. It has traded as promised and has delivered some profit throughout the three months I have been using it for. I have obtained about 40% profit, which hits a quiet high profit/loss ratio. Support has also been absolutely wonderful, every doubt or support question I have had has been answered promptly by Hal, who is the eas creator.

As much as I like this expert advisor, bear in mind it is NOT a way to get rich quickly. If you ask me I would say that this expert advisor is a PROFITABLE expert advisor, but I would never expect more than 10% a month in ANY case. This was proved by this ea having almost doubled my account along the beginning of October and giving more than half back just a few weeks later.

I have complete faith in Hals commitment to the Doubleplay project, with no doubts in my mind that his main goal is to be successful as we are, not to deceive his customers in anyway. Doubleplay also has a money back guarantee if you have two consecutive months of losses using the ea.

This ea is one of the few I do personally RECOMMEND with no ties whatsoever, neither as an affiliate or as a personal friend of the eas creator. This ea would fit great as a conservative addition to our ea trading package.

This expert advisor can be found here.

Diposting oleh Unknown 09.46 0 komentar

Measuring System Vulnerability The Market Exposure Index

If you have been reading my blog for a while you may be familar with my use of the term "market exposure", as a matter of fact, most of you may be aware that this is a concept I use most the time to describe trading systems and gauge their possibility to be long term profitable. But, what is exactly market exposure and more precisely, how can it be measure ? Well, those of you who are subscribed to my newsletter may already have seen the video I posted on the FTP about market exposure and how this is vital for the description of a trading system. However, since this concept is pretty important and mentioned throughout my whole website I have decided to dedicate todays post to the analysis of the concept and the formal introduction of what I like to call "market exposure index".

The first thing we need to do if we want to talk about market exposure is to define it. What is market exposure ? There are actually several ways to explain the concept but the simplest one is to think about market exposure as the magnitude in which your system becomes vulnerable to loses as a consequence of the opening of a position. That is, whenever you open a position in the market you are getting "exposed" to losing your money as the market can take a move against you. The vulnerability of any system against taking loses is what I call "market exposure".

Now that we know what market exposure is we are left with a more challenging task. How do we measure market exposure ? How do we measure the vulnerability of a trading system against the market ? The first thing we need to do is think about the factors that affect market exposure, what affects the exposure of a system against the market ? The most important things that determine market exposure are the systems risk to reward ratio and the overall winning percentage of the EA. That is, the probability to win a trade. You must take into account that these two variables have to be deduced from extensive historical or live testing as short tests could bring unreliable results. Also take into account that the probability to win a trade, is never 1, that is, there is ALWAYS the possibility to lose a trade. Stubborn systems, like grid trading systems that assume the market will always "come back" to achieve a profitable result eventually lose as, even though the probability to lose can be low, it is still present and the fact that you are putting your whole account balance at stake makes the system to eventually wipe your account.

So how can we measure market exposure ? This is the reason why I came up with what I call, the market exposure index. This quantity, which is expressed by a simple mathematical formula can tell us if the market exposure of a system is capped. The formula is very simple

market exposure index = 100*(fraction of losing trades)/(average reward to risk ratio)

For example, the gods gift ATR, GBP/USD has a market exposure index near 60. Any market exposure index below 100 implies that the strategy is profitable and adequately capped. Any result above 100 indicates that the system is unprofitable, the higher the market exposure index, the higher the risk of a wipe out. For example, Martingale systems, whose risk to reward ratio increases exponentially with every losing trade have a market exposure which is generally equal to equity over the fraction of profitable trades. Grid trading systems have the same risk to reward ratio, something which lets us know from the start, through the market exposure index, that those are strategies with very important market exposures that WILL cause account wipe outs in the long term.

Hopefully, if you liked the idea, you can start using the market exposure index as a way to gauge the viability of trading strategies and the way in which they protect your equity from the market. Strategies with very low market exposures are the best since ideal strategies would have a very low risk to reward ratio with a very high winning probability. Most of the time, the best systems have a compromise between these two things.

If you would like to learn more about trading systems I have developed and how you to can evaluate and trade automated systems profitably 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 15.45 0 komentar

The Indicators Series The MACD the Markets Speedometer

Todays post will be a continuation of my indicator series of posts which try to explain the mathematical meaning of different indicators and how they can be used successfully to create sound automated trading strategies. The indicator series aims to make emphasis on the importance of understanding the nature of indicators to really know how they can be used successfully in trading. Success when using indicators does not come from just "blue line crosses red line" but from a true understanding of the underlying relationship between the data displayed and the price charts your looking at. This post will focus on the famous MACD indicator created in the 1970s by Gerald Appel.

So what is the MACD indicator ? The MACD, or "moving average convergence-divergence" indicator is nothing more than an expansion onto the idea of moving averages. The indicator has many componente but originally Gerald Appel designed it to have only two : a main line and a signal line. The main line is the difference between to exponential moving averages and the signal line is an exponential moving average of this difference. The histogram, introduced in the 1980s in mainly the difference between the MACD main line and the signal line. The following is a small summary of the tradigional setup (12,26,9).

MACD main line = 26 period EMA - 12 period EMA
MACD signal line = 9 period EMA of the MACD main line
MACD histogram = main line - signal line

But what does this tell us ? I usually look at the MACD as an expansion of the moving average concept. As I told you on the first post on the indicator series - which discussed moving averages - the difference between two moving averages could be interpreted as a sort of "derivative" of averaged price action : A velocity. This is why I usually think of the MACD as the markets speedometer. The MACD main line tells us about the velocity in which price is changing while the histogram tells us the difference between the main line and the signal line which is a measure of the changes in the main line or also a measure of the acceleration of price action (a sort of second derivative of price action). (on a small note, the MACD in mt4 does not display the signal line, only the main line and histogram, they might have considered the introduction of the signal line redundant as crosses between this line and the main line are signaled by the histogram crossing the zero line).
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Traditionally the MACD is traded in different ways with most of them corresponding to different changes in price action. For example, a cross of the main line through the zero line simply means that the difference between the 26 and 12 emas is zero, that is, the moving averages are crossing. If you trade these signals it would be nothing different than trading a traditional EMA cross. You can also trade crosses of the signal and main lines which would mean that there is a change in the "velocity" of price action. That is, price movement in that direction is "slowing down". That would be the same thing as trading the cross of the histogram through the zero line, since the histogram signals the difference between this two lines. Now the best possible signals of the MACD would come from changes in acceleration, which would go before changes in velocity and would be the most early signals of the MACD. However the tops/bottoms of the MACD histogram are impossible to predict since usually several tops/bottoms can form before any meaningful change in velocity (a cross of the histogram through the zero line). An attempt to do this lies in trading the MACD histogram "divergence" signals with price, such trading is incredibly discretionary and not subject to automation.

Truth be told, the MACD, based on moving averages, has some of the same inherent disadvantages of these indicators with the advantage that the "speedometer" feature of the MACD allows for better entries into the market. However developing an automated trading system using a MACD is not that easy. Usually the problem is that the MACD fails under even only mildly volatile markets due to the sharp changes in velocity that the indicator lags behind. The MACD velocity signals (crosses of the histogram through the zero line) would probably be the best and easiest to implement in coding but a lot of effort must be put in using adaptive money management techniques and exits on MACD signals from a MACD with faster settings which may be able to get the system out of losing trades quickly. Definitely exits will be the most important aspect of a MACD based system. A combination of the MACD signals is also not out of the question. Do you have any ideas for an automated trading strategy using the MACD indicator taking into account all the above ? Make sure you share them with us on the comments :o).

If you would like to learn more about my work with automated trading systems and how you too can learn to develop your own systems with long term profitable results 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 07.45 0 komentar

Watukushay No 5 The Aussie and the Kiwi More Encouraging Results

During this weekend I released the first official version of Watukushay No.5 coupled with all its 10 year backtesting data showing profitable results on 6 different currency pairs in Asirikuy. From my last post about this EA you might remember that Watukushay No.5 had been tested on the EUR/USD, GBP/USD, USD/JPY and USD/CHF, however at that time I hadnt completed my analysis on two other currency pairs that also show us great results with this strategy despite their overall lack of liquidity, the AUD/USD and the NZD/USD. On todays post I want to share with you some of the results of the EA on these currency pairs and how the EA is able to use a completely different trading technique to profit from the different trading mechanics of these two instruments.

As you may already know, Watukushay No.5 attempts to exploit breakout inefficiencies on the different currency pairs. On the 4 majors this is done by exploiting periods of low volatility when the currency pairs form significant ranges, entering breakouts when important moves develop within the following trading sessions. However, these trading tactics do not work well on the AUD/USD and NZD/USD, not only because they tend not to form areas of compact trading but due to the fact that this areas do not lead to successful or unsuccessful breakouts with any statistical significance. In the end if you try the same tactics as with the majors you will obtain slightly profitable results which are definitely not worth using in live trading.

Upon my analysis of these two instruments it became clear that I needed to think the problem from another perspective if I was going to find any profitable results for this EA on these two pairs. This meant going back to a meticulous analysis of the currency pairs and the way in which the medium and long term trends develop within them. After spending a few days working on this I finally realized that the key was to rely on breakouts of more volatile sessions but aiming at much higher take profit and stop loss targets. The idea was that this large breakouts do allow us to predict long term trend direction with a good statistical edge in the long term.

Backtesting results were indeed very encouraging showing me that my analysis had been right. When you exploit this different and larger breakouts on the AUD/USD and the NZD/USD, you obtain some very profitable results which are achieved as the EA is able to follow long term trends through the periodical entering of this large session breakouts. The effect resembles the accumulation technique used by the turtle trading system, allowing us to follow a trend and greatly profit from its long term direction. Below you can see a picture of how this trading works on the NZD/USD, notice how the EA got a lot of profit from a developing trend.
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The 10 year backtesting results also give us great results for both of these currency pairs. We arrive at results which have average compounded yearly profit to maximum draw down targets better than Watukushay FE and the same as Teyacanani on the EUR/USD in the case of the NZD/USD. Surprisingly, the best trading results for this EA have been found on the NZD/USD, showing us the robustness of this strategy as a portfolio solution. The EA shows us its robustness and its ability to exploit two completely different market inefficiencies based on the same trading mechanics but aiming for entirely different things.
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Later today 3 live accounts with real money will be added to Asirikuy to start the testing of the system on the USD/CHF, NZD/USD and a full portfolio setup. Hopefully within the next year we will be able to gather some very useful information about its trading system, its tactics and its ability to tackle changing market conditions. The ability of this EA to adapt to each particular market situation and its very large set of adaptive parameters will probably lead it to succeed in this quest against market changes.

If you would like to learn more about automated trading and how you too can develop your own likely long term profitable 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 23.01 0 komentar

The Moon And The Stock Market

Have you heard before that human tends to be emotional during the full moon? The reason why I want to talk about this is because statistically shown that mankind behaves irrationally during these periods and this will affect our decision making process in the financial markets.

A study suggests that a full moon really can bring out the beast in us, turning us into irritable animals.

While we may not actually transform into the bloodthirsty creatures of fables and movies such as An American Werewolf In London, research suggests we do display worrying symptoms.

A study conducted in Australia found that in 2009, 91 emergency patients with violent, acute disturbances were happening in one hospital north of Sydney.

According to the research, "some of these patients attacked the staff like animals, biting, spitting and scratching, and the patients had to be sedated and physically restrained to protect themselves."

Of course we can do another research on the crime rate and the full moon to confirm the above claims. But today I have done a small research on this topic and compare to our Malaysia KLCI and to see whether the moon does affect our stock market.

This research is about the distance of the moon to the earth and how this relationship affect our stock market. It is generally believed that people are more rational when the moon is furthest away from the earth, and the name for this type of moon is called "Apogee Moon". Another extreme case is when the moon is closest to the earth and we can see the moon big and round right infront of us, this type of moon is known as "Perigee Moon". It is this perigee moon that often cause people become emotional, anxious, and pessimistic.

So I did a research on the dates of the perigee moon and marked them on the KLCI chart. (The chart may be unclear but if you click the picture, it will be enlarged.)

Amazingly I discovered that the claim is about 86% accurate that the KLCI did experience local low during the investigating period.

On the other hand, theres a research done by FutureAnalyzer.com, they studied not only the perigee moon, but also the apogee moon (when the moon is furthest away from the earth). They discovered a high correlation between the "highs" and "lows" with the agogee and perigee moon. Most of the time, "highs" happen during apogee and "lows" happen during perigee! In other words, it means that "highs" happen when people are more rational while "lows" happen when people are emotional.

I hope this article is not trying to convince you that astrology is perfect, but just to highlight to you that these little researches help us to look at the stock market in different perspectives.

Happy investing,

Pauline Yong

Diposting oleh Unknown 13.45 0 komentar

Are we out of the woods yet

Many economists have started to criticise the trillion dollar fiscal stimulus programs by the Obama administration. Hasn’t the American learned from the Subprime crisis when it all started during the 2001-2002 recession, the Americans cut rates and boosted public spending. This brought a bubble in the housing sector which causes serious consequences to the rest of the world.

Now, with the current recession, the Americans is going to pump in trillion of dollars to boost its GDP. And the consequences? More debt and bigger bubble!

The Americans are not alone. Most of the governments around the world are increasing on their fiscal budgets and bailing out troubled banks to help steer their economies out of the wood so as to gain popular votes from the people. “China is back in bubble land,” warned the Financial Times. According to Bill Bonner, in the first six months of this year, Chinese banks lent more than $1 trillion, or about four times the rate of 2007. This loosening of monetary policy by the Chinese Central Bank is bound to add more trouble to the world in the future.

Why? Because no one would like to bite the bullet and let the economy suffers like the 1929 Great Depression. So let’s face the consequences when the next bubble blows up!

Diposting oleh Unknown 00.46 0 komentar

Forex Trading and Gambling One and the Same

I often find it curious that people tend to react very negatively when forex trading is compared to gambling. Every time I talk to a proffesional trader about this matter we end up discussing how only "new traders" gamble and proffesionals do not gamble but "trade". What is so different between forex trading and gambling ? Through the following few paragraphs I will tell you my views on the subject and why I believe that forex trading is a form of gambling. I will also tell you how they are different and what the difference between investing in forex and going to Vegas really is. At the end of this article I hope you will understand my points of view and why forex cannot be considered anything but a type of gambling.

So what is gambling anyway ? Gambling is simply the act of betting on the outcome of a given event without any true certainty about its result. Sounds familiar ? Forex trading is merely the betting of a certain amount of money on the outcome of price movement without any absolute knowledge of where price will head. Therefore, in accordance to the definition of gambling, forex trading and any other form of speculative investing is merely gambling. But if it is gambling by definition then why do proffesional traders find this comparison offensive ?

The problem arises because people often relate gambling with casinos and in casinos you are gambling on a game which has an outcome which will be statistically unfavorable to you in the long term. Casinos make money because they are NOT gambling, they know that the outcome of a large sample of events will always be in favor of the house. In practice, a player in a casino floor may feel like he or she is "gambling" (which is true for small samples which can effectively be totally random) but statistics do favor the casinos within a large number of events. What this means is that if someone plays in a casino for an infinite period of time, the casino will end up with all the money. The casino always wins since it has a statistical edge on all the games played.

Many traders are offended by the comparison because they believe that people are telling them that they trade like they would play in a casino, to inevitably lose money in the long run, which is why new traders are so often compared with casino floor players.

In reality, forex trading is gambling, but it is a "game" in which the odds are not set against you in a mandatory way. Forex trading resembles sports betting a lot more. In sports, a bet is made for a time with a lot of information which can be used to determine the winner with statistical significance. For example, if a horse has won the past 10 races, then it is bound to also win the next rase. Betting for this horse will give you a statistically higher chance of winning than betting against other horses. However, the outcome is never known so it might happen that your horse loses. However, within a large given number of events, you can be an overall winner if you know enough about the facts that affect the outcome of the events.

Forex trading is very similar, if you know enough about the facts which determine the outcome of price movements then you can statistically profit from the market even though you may lose in several events due to the true outcome of any event being unknown. The more educated gamblers make money while the less educated gamblers which have no capacity to determine the probabilities of certain price movements against others end up losing their money. Since every dollar is sold for every dollar bought, the best gamblers get in and out with money when the others get in and out to give their money.

So in the end the matter is pretty simple. If you trade like you would gamble in Vegas, without any edge, you will lose, however if you gamble with intelligence and with analysis over the outcome of events you will, in the end, become a profitable trader.

If you would like to learn more about the systems I use to trade in the forex market for a living and how you too can design and trade your own automated long term profitable 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 07.47 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

The Budget 2014

The recent announcement of the Budget 2014 was unexcited as predicted. Compared to the last Budget this budget is more realistic as we need to look into our deficit problem seriously as Fitch has already downgraded the Malaysian credit outook from "stable" to "negative" in July this year.

Currently, Federal Government debt at 54% of GDP while Household debt at 83% of GDP; Our budget deficit was 4.5% of GDP this year (for budget deficit > 5% is consider unhealthy). Hence a contractionary budget for next year is expected as people need to wake up from the over-indulgence of goodies during the pre-election period. There is a price to pay for all the big spending!

However, the GST is further delayed to 2015 which also mean that the budget in fact is not that contractionary and our credit rating of negative may remained for quite a while.

Moving forward, as far as KLCI is concerned there are winners and losers sectors for this budget. The winners are: telecommunication (increase of internet coverage in the rural areas), Oil and Gas, and Construction (West Coast Expressway, Doble-tracking rail project).

Biggest loser is the property sector especially the properties that rely on foreign buyers like the Iskandar region in Johor. As for the sin tax, the price hike in tobacco was implemented one month before the budget announcement day with a tobacco excise tax of 14%.  

The new RPGT of 30% for the first 3 years with no DIBS will definitely dampen the property market. However, I dont think there will be a major crash in the property market, but more like a mild correction kind of consolidation will take place as many of the projects will only be ready beyond 2015. 

For example, if you are holding 3 or more condos with price below RM1 million, youll most likely have the difficulty to look for local buyers as most Malaysian middle income earners cant afford to buy a property in the sub sales market. The difference between buying from the developers and from the sub-sales market is that, if you buy from the developers, very often you do not need to pay high down payment, low (or non) legal fees, DIBS (now no more), easy to obtain the loan approval from banks. But if you are buying in the secondary market you need to pay tens of thousands of ringgit for the legal fees, stamp duties, down payment and etc. Hence, this new ruling in fact is a nightmare for speculators with no holding power but a good news for genuine buyers because its everyones dream to own a house for old age retirement and for the next generation.

Now you may be thinking what is my advice for the general equity investor. My advice is keep investing in the equity market. Buy only when the KLCI has a minimum correction of 80 points - 120 points. Sell when you see your stocks rise by 20% - 30%.  Once youve sold your position do not buy immediately but to wait patiently for the next opportunity to strike. If you recall my previous articles, there were 2 strategies that I mentioned before: 

1. Buy at the cycle low that usually happens in the month of February, May, August and November.

2. Buy when the KLCI is in a correction mode. A correction happens when the KLCI violated the trendline and the 20 day MA. When the index is in the correction mode, individual counters usually reacted more.

For sell signals it is up to the individual investor, it could be a 3-to-1 reward to risk ratio, below 20 day MA, or any other technical indicators that you are familiar with.

For questions and enquiries you are most welcomed to emailed me at info@stocktips123.com

Diposting oleh Unknown 04.02 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

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

SPREAD BETTING Technical analysis on the Calendar Spread

             Investing in the Forex market and the stock markets, investors long, medium and short term make their investment decisions on the basis of two main factors. They suggest either fundamental analysis or technical analysis. Some traders use a combination of these two methods, which is obviously justified. The choice of investment method  depends on of many factors and it is a topic for an entirely separate post. Investing on calendar spreads traders turn their attention chiefly to factor that in many ways is not that important in the investment in those markets .
         
           Technical analysis on spreads is less important due to the relatively low volatility spread markets. In the Forex market or the stock market instruments during the day sometimes change their prices by 100 pips a day. Therefore, it is important to technical analysis to capture potential turning points. Market spreads are composed of two outright price difference on the same instrument but with different maturities. For this reason, the volatility of these markets is generally very limited and could be divided into two markets moving pips a day, three to eight pips and eight to thirty pips per day.
         
           With that information, you can see that technical analysis is not so relevant. Prices simply changing very slowly and very often made ​​once the analysis is valid for quite some time. It is worth to analyze chart and know what is the sentiment of the market.

          Despite many different variables that differ outright charts and the spread charts it should be emphasized that techniczal analysis works both on outrights and spreads.
 
     

       To illustrate to intercede two graphs showing the two markets with different volatility calculated. The first graph shows that technical analysis is not necessary. Chart moves sideways, no major changes to explain the technical analysis. The market is played  bid / offer and the order will be made in about three latter stages.

                                       

                                          Photo 1. Low market volatility

     The second figure shows a clear variation. Here, technical analysis is the most reasonable. And the trend is clearly correct. Speculation on such a volatile market requires technical analysis - despite the fact that it is spread, the graph showing the difference in prices.

                                          Photo 2. High market volatility

Diposting oleh Unknown 23.31 0 komentar

The Retail Trader and the Expert Advisors

It seems like yesterday when I first decided to use automated trading systems to become a profitable forex retail trader. My life was becoming seriously affected by me taking too much time to manage my forex market positions so this seemed like a great opportunity to enjoy a day job free life style without anytime taken from my schedule. Boy was I wrong !

There is no doubt in my mind that this are the thoughts going through the majority of the new people trying to start to make a living from the forex market using automated trading systems, mainly expert advisors. People, just like me, start in this world with the hope that they will find an easy way, without having to learn or intervene too much, to be profitable in forex trading. My friends, you couldnt be further away from reality.

Ill tell you what happened to me, in the hopes that some of you can cut a few steps. When I started with automated trading systems I decided to buy the "flavor of the month" so to speak, that is, the expert that had been making money for a month and everybody was hyped and talking about. To my surprise (yes, at that time I was surprised!) the expert advisor turned out to be completely different from what I was promised. After a few months, it brought my account to just a few dollars. And you guessed right ! I was angry !

Sure, that was a scam, but there should be another expert I could trust out there. It turned out to be, that most of the commercial experts out there, do not work. To my surprise, I ended up having to learn about triple of what I would have had to learn to be able to trade manually. On top of learning everything a manual trader needs to know, I had to get familiar with the mql4 language and start to really come in touch with what expert advisors really do and what can and cannot be achieved in the world of automated trading.

You really cannot cut corners in the world of forex trading, automated or not. There are hundreds of traders out there trying to catch that same dollar you are after so you really, really need a very sharp edge to get it. And trust me, a 100 USD trading robot does not give you that edge. The edge comes from knowing the systems, knowing their limitations, their strengths, knowing what draw downs to expect, really, really trusting your trading systems (something which is extremely hard to do with a system that you dont even understand and that comes inside a black box)

If you want to learn more about the free and commercial expert advisors I have used, reviewed and programmed 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 11.02 0 komentar

A Possible Ebook About Automated Trading in The Forex Market

The objective of this post is just to get your opinion about something I have been thinking about for the past two weeks. I have had the idea of writing an ebook about automated trading. This including my personal experience with several experts, my backtesting and forward testing results (with analysis of course), my views on free experts, commercial experts, setup explanations and profit/loss potential. The idea would be to guide someone completely new to automated forex trading towards the best free and commercial experts as well as explain the real profit or loss possibilities in forex automated trading. I would like to make it concise, about 20 pages, but very informative to novice traders who want to consider automated trading seriously. As always I would maintain my non-affiliate status with all commercial expert makers to remain unbiased throughout the whole process.

My questions for you are very simple. Would you be interested in paying for this ebook ? How much would you be willing to pay ? What would you like for it to contain ? What are your doubts and questions about automated trading ?

Last but not least, I would like to thank in advance anyone who comments and leaves his/her opinions about my proposal. Happy trading !

Diposting oleh Unknown 08.01 0 komentar

The Gods Gift ATR Challenge Testing by Third Parties

One of the great challenges of any automated trading system out there is to be robust, reliable and profitable. Since I want the gods gift ATR expert advisor to become the most well documented expert advisor out there I have decided to take several steps to make this automated trading systems characteristics very well documented, examined and tested. For me, an expert advisor that is truly long term profitable should fulfill a small set of characteristics that demonstrate its capacities :

• Trading Platform Independence
• Broker Independence
• Extensive Live Testing (1 year at least)
• Third Party Live testing

Since up until now all tests on this ea have been done by me (one year of forward testing of the main strategy plus 4 months of live testing on 4 different live accounts) I have decided to ask some of my newsletter subscribers to participate in what I have called "the gods gift ATR challenge". What I seek with this challenge is to have third parties test the expert advisor on live accounts under agreed conditions that guarantee that the ea testing is well done and comparable to my personal tests. The use of different brokers, different vps providers and money amounts should provide us with a wide amount of information about this experts profitability. The people participating on this challenge are aware that past performance does not guarantee future results and they do this testing under their own free will with no promise of profitability. They run the ea on personal live accounts to which I only have read-only passwords. However the people running the tests must fulfill some conditions :

• Expert advisor must be run 24/7 on a reliable vps provider
  
• Expert must be run alone on a live account with a minimum of 100 USD (10,000 contract) or 1000 USD (100,000 contract)
• A read-only investor password MUST be provided
• The ea must be run for at least 2 years, regardless of performance (people must agree to do this or their testing will not be taken into account)
• Settings, currency pairs and timeframe are to be provided by me and cannot in anyway be changed by the third party if results are to be comparable

If you are participating on the Gods Gift ATR challenge please make sure you fulfill the above requirements and then send me an email. Please include your read-only password as well as the contract size of the account you are running, broker, account size and one of this three risk levels : Conservative, Moderate or Agressive. I will then send you settings as well as metatrader publisher instructions so that your results can be updated live to my ftp so that we can all share the test results.

Up until now more than 5 people have expressed a strong interest in doing this testing so if everything goes as planned, in a year from now we will have extensive reliable testing about this expert advisor and we will learn a lot about how it trades, how robust it is against market conditions changing and how we can improve it.

If you would like to learn more about this and other expert advisors I have tested and reviewed 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 04.00 0 komentar

The Indicator Series The ADX beyond a trend range filter

I have to say that from all the indicators I have used in my career as a forex trader, the ADX (Average Directional Index) is the tool I dislike the most. The reason for this is probably because most traders have become accostumed to viewing the ADX as a range/trend condition filter when this is far from being an accurate use of this trading indicator. People who develop automated trading systems generally use the ADX to filter out trades (which I have learned is not a good approach) generating a global loss of statistical significance with a very small -if even present- improvement in profitability. On todays post I am going to talk to you about this indicator developed by Welles Wilder, I am going to go into its mathematical origin and into how it could be used successfuly for the creation of automated trading strategies. As always the most important thing is to understand what the indicator is telling you and how this information can be used to exploit tradable market inefficiencies.

First of all, the mathematical calculation of this indicator is not as straightforward as others since this tool has many different components. The Average Directional Index indicator is made up of three lines called DI+, DI- and DX. The lines are calculated according to the formula you see below (where the true range is mainly the highest value between the averages calculated, include the average of the close prices (current close - last close) of the N indicator period):

DI+ = Average of X periods [Current High - Previous High]/(Average of X periods of the True range)

DI- = Average of X periods [Current Low- Previous Low]/(Average of X periods of the True range)

DX = 100 * ((DI+)-(DI-)/(DI+)+(DI-))

So what is the indicator telling us ? Mainly the higher the values of DI+ or DI- the higher the difference between the current and past highs/lows becomes relative to the largest movement observed within the current and last candle X period average. However note that DI+ and DI- are not normalized and therefore we can only interpret them relative to each other. A higher value of DI+ over DI- indicates that in average higher highs where achieved while a value of DI- above DI+ indicates the opposite. The DX - which is normalized - compares the difference between DI- and DI+ and tells us what percentage this difference represents from the sum of both indexes. The value of DX will be higher as the difference between DI+ and DI- becomes larger effectively showing that during the past X periods the market has shown a prevalent movement in one direction.

The fact that the DX value seems to be related with prevalent market movement then does not imply that we can define trends/ranges clearly from the ADX. There are two reasons why this is mainly not a good use of the ADX indicator. First of all, the DX line is comparative meaning that if we have a quiet market period with low volatility but a steady up/down movement the indicator may interpret it as a trend. The second problem is related to the fact that you would have to select a "level" to use as a threshold between "ranging and trending" conditions, something which cannot be easily done. Usually if you attempt to enter trades in favor of "the trend" when the DX value is high you will find that the trend has already happened and you are just entering too late.

The ADX indicator however can be used to detect retracements given the fact that it can detect when a weakening from a previously strong trend has happened. For example, if the ADX reaches an extreme value (indicating strong market momentum) we could simply wait for a weaker DX value and enter the trade in the direction of the trend when the trend has apparently "ceased". Of course, we will enter upon a retracement, within a very good position to take advantage of future movements. Such a case is exemplified within the following chart.
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As you see, the ADX indicator can be used for this type of purpose successfuly, not taking into account any range/trend filtering characteristics which are generally attributed to this trading tool. We take advantage of the fact that the indicator signals "what has already happened" and we use it to enter trades in favorable positions to exploit a tradable market inefficiency. Of course, developing a mechanical trading strategy based on this concept would require the development of additional closing criteria and trade analysis (to see which DX levels are adequate) but such an approach is bound to be a good start to develop a long term profitable strategy based on the ADX indicator.

If you would like to learn more about automated trading systems and how you can use systems developed with market adaptability and sound trading in mind to achieve long term profitability 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 18.45 0 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