Lets take a look at what some experts say about the economic outlook:
A lot of economists, including the government, believe the worst is behind us economically. Do you agree? If not, what should we be on the lookout for in 2011?
Jim Rogers: It is better for those getting all the government largesse, but the overall situation is worse. More currency turmoil. State and local problems, plus pension problems.
Bill Bonner: None of the problems that caused the crises in Europe and America have been resolved. They have been delayed and expanded by more debt and more money printing and will lead to more and worse crises. Deleveraging takes time. 2011 will, most likely, be a transition year...not unlike 2010. But the risk is that one of these latent crises will become an active crisis.
John Williams: An intensifying economic downturn – what formally will be viewed as the second dip of a double-dip depression – already has started to unfold. The problem with the economy remains structural, where household income is not growing fast enough to beat inflation, and where debt expansion – encouraged for many years by the Fed as a way to get around the economic growth problems inherent from a lack of income growth – generally is not available, as a result of the systemic solvency crisis. Accordingly, individual consumers, who account for more than 70% GDP, do not have the ability, and increasingly lack the willingness, to fuel the needed growth in consumption on which the US economy is so dependent.
Steve Henningsen: The governments worldwide (I dont pay much attention to economists) want us to believe that the worst is behind us because the financial system is built upon the foundation of trust and confidence. Both of these were battered badly when it was shown that much of the worlds prosperity over the past few decades was simply a mirage that, once dispersed, left behind only debt with no means of future production. Now they want us to believe that they fixed the problem via more debt.
What I will be watching for this year is sovereign and US municipal debt corpses floating to the surface sometime in the months ahead.
Frank Trotter: Right now I have a somewhat dark but not dismal outlook. I think that over 2011, we will continue to experience a Jimmy Carter- style malaise that combines continuing high unemployment, tentative business investment, rising prices, low housing numbers when looked at on an absolute basis, and creeping interest rates.
As a very large mortgage servicer, we are not seeing significant improvements in payment patterns that would indicate the worst is fully behind us, and with mortgage rates moving upward, we see less ability for current mortgage holders to refinance and reduce payments.
Krassimir Petrov: No, the worst is yet to come. No structural changes have been made, no problems have been fixed. Printing money, a.k.a. Quantitative Easing, is a quick fix that has postponed the problem, yet also made it a lot worse. I would say that we are still in the early stages of the crisis and have another 4-8 years to go.
Price inflation is creeping up, but the enormous amount of money printing hasnt really hit the system yet. Does that happen in 2011, further down the road, or not at all?
Jim Rogers: It is happening. The US and CNBC lie about it. Most other countries do not lie and acknowledge it is worsening.
Bill Bonner: Most likely, substantial consumer price inflation will not show up in 2011. The explosion of money printing is being contained by the bomb squad of deleveraging. That will probably continue in 2011. But not forever.
John Williams: The problems of the money creation will become increasingly obvious in exchange-rate weakness of the US dollar. Related upside pricing pressure already is being seen on dollar- denominated commodities such as oil. There is high risk of consumer prices rising rapidly before year-end 2011, setting the stage for a hyperinflation. The outside date for the onset of a US hyperinflation is 2014.
Steve Henningsen: My guess is further down the road, as the deleveraging cycle continues with deflationary-housing winds in our face and the banks still hoarding money like my 9-year-old daughter stockpiles American Girl doll paraphernalia. I still expect inflation to continue in areas such as energy, bread, circuses, and whatever else provides sustenance to the Romans – I mean people.
Frank Trotter: Most research has shown that over time the increase in money supply is not a short-term economic stimulus, but rather has a moderate effect in the 18- to 36-month range. In addition, this theory contends that a growth in the monetary base – which is what has happened so far – only increases economic activity when accompanied by a decent multiplier; this is not occurring. The real risk is that with rising rates and continued soft economy, the Fed will feel obliged to continue to QE3, QE4, and so on, all of which may have a significant inflationary impact.
I am more concerned about general price inflation here in the US and the potential it has to reduce global growth.
Krassimir Petrov: This is a tough one. I would have thought that price inflation would have been raging by now, but this is obviously not the case. I have the feeling that 2011 will be a repeat of early 2008, with commodity prices (CRB) making new all-time highs. A falling dollar will trigger a rush into commodities as a hedge against inflation. I am really tempted to make a totally outrageous forecast that oil could make a run for $200 as QE3 unleashes another dollar scare, or maybe even a dollar crisis.
Sabtu, 21 Juni 2014
Now You Can Subscribe To Pauline Yong’s Trading Strategies Through ChartNexus XPertTrader Charting Software
In collaboration with ChartNexus, Pauline Yong has incorporated her unique trading strategies into ChartNexus XPertTrader charting software so that subscribers can apply the strategies to buy and sell blue chip stocks and other general stocks in Bursa Malaysia as well as other foreign stock markets.
Benefits of Subscribing the ChartNexus XPertTrader Charting Software
After subscribing ChartNexus, you can use Pauline Yong’s proven trading strategies – Sigma Wealth (SW) Blue Chip Buy Signal, SW Blue Chip Sell Signal to scan your watchlist, preferably the blue chip stocks list regularly for any buying or selling opportunities.
The SW Blue Chip Buy Signal is designed to scan for buying opportunities for blue chip stocks that are intended for medium term to long term hold, hence speculation is not encouraged here when applying this strategy. On the other hand, the SW Blue Chip Sell Signal is to scan for weaknesses in the market so that investors will not hold on to the losers in a severe downtrend.
However, if you have some knowledge in technical analysis and you want to construct your own rules, you may do so as long as you are the subscriber for ChartNexus XPertTrader™ as it is a unified trading system that combines a stock screener, a rule composer and a backtester for creating powerful rules to help you identify winning stocks.
For examples, you may build your own sophisticated trading system using the most popular technical indicators such as Moving Average, MACD, RSI, Stochastics, and more. You may also detect Japanese candlestick patterns such as doji, harami, hanging man, 3 soldiers and more. Hence, not only you can apply Pauline Yong’s Sigma Wealth strategies, you can also construct your own strategies too!
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Jumat, 20 Juni 2014
Ending Manual Testing My apologies o
Many of you may have followed my experimental attempt for the past few months to develop a support and resistance manual trading methodology for day trading. I usually trade support and resistance on some of my live accounts as a way to profit from long term movements in the forex market with positions usually lasting weeks or months. I decided to give a try at a short term version of this system during the past three months, time in which I have found many inconveniences with the manual day trading approach.
First of all, if you are thinking that this has anything to do with the +18% draw down the account was facing at the end of last week, you are certainly right. I have found that my short term support and resistance methodology is getting killed on the current rangy and highly volatile market conditions, however I am quiet certain that with time and the start of a trending market the method could easily recover from the draw down and get into profitable territory. There are actually some additional reasons why I decided to discontinue the trading of manual systems on the website.
The main reason is that trading a manual system on a short term basis and twitting continuously about opening positions was becoming cumbersome, I had to dedicate time to chart analysis and posting about this on a daily basis something which coupled with all my automated trading system development and usual analysis was taking a very big chunk of my time.
The second reason and a very important one, is that I believe that I am not mentally fit to try and trade a system in such a low time frame. I had figured this out about myself several years ago and this is the reason why I devoted myself to automated trading and long term system trading. I am simply not a very good day trader due to the fact that I do not like the "screen starring" part of trading, something which must happen for at least 3 or 4 hours each day to do this successfuly (I am a very social person and all this time with no contact with other humans is just a killer for me). This actually reminded me about my early days as a "trader" (many years ago) when I failed to sleep at night worrying about my SL and the short nature of the movements my positions were targetting for.
I also have to recognize that it is 10 times as hard to trade a system when something is expected from you. I started this experiment without any promise of profitability besides doing by best effort to implement what I believed could be a short term profitable day trading system but in the back of my mind I always wanted to give you profitable results. Even if only on a demo account, the pressure to have to get consistent positive results clouded my judgement and made me enter several positions which I sometimes wouldnt have entered if my results had not been public. It has to be said that greed and fear are expontentially increased when this happens, something which I suspected, but had never experienced :o). (expect a post on this soon !)
Will we see any more manual trading journals on my blog ? I think that it is safe to say that I have not plans to introduce new experiments about this in the near future. From now on I will devote all this time to the production of new likely long term profitable automated trading systems for asirikuy as well as the analysis and improvement of the currently traded systems.
Of course, to all of you who had been following this system and were expecting me to carry on with the testing, my sincere apologies. I hope you understand the reasons outlined above and continue to follow my ventures on automated trading which has been my main source of income for many months now. Hopefully someone out there will be able to trade my S&R methodology for day trading and succeed with it, certainly I believe that someone with the time and necessary dedication will do so.
If you would like to learn more about my development of automated trading systems and how you can have a high probability of achieving long term profitable results with sound automated trading 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 !
First of all, if you are thinking that this has anything to do with the +18% draw down the account was facing at the end of last week, you are certainly right. I have found that my short term support and resistance methodology is getting killed on the current rangy and highly volatile market conditions, however I am quiet certain that with time and the start of a trending market the method could easily recover from the draw down and get into profitable territory. There are actually some additional reasons why I decided to discontinue the trading of manual systems on the website.
The main reason is that trading a manual system on a short term basis and twitting continuously about opening positions was becoming cumbersome, I had to dedicate time to chart analysis and posting about this on a daily basis something which coupled with all my automated trading system development and usual analysis was taking a very big chunk of my time.
The second reason and a very important one, is that I believe that I am not mentally fit to try and trade a system in such a low time frame. I had figured this out about myself several years ago and this is the reason why I devoted myself to automated trading and long term system trading. I am simply not a very good day trader due to the fact that I do not like the "screen starring" part of trading, something which must happen for at least 3 or 4 hours each day to do this successfuly (I am a very social person and all this time with no contact with other humans is just a killer for me). This actually reminded me about my early days as a "trader" (many years ago) when I failed to sleep at night worrying about my SL and the short nature of the movements my positions were targetting for.
I also have to recognize that it is 10 times as hard to trade a system when something is expected from you. I started this experiment without any promise of profitability besides doing by best effort to implement what I believed could be a short term profitable day trading system but in the back of my mind I always wanted to give you profitable results. Even if only on a demo account, the pressure to have to get consistent positive results clouded my judgement and made me enter several positions which I sometimes wouldnt have entered if my results had not been public. It has to be said that greed and fear are expontentially increased when this happens, something which I suspected, but had never experienced :o). (expect a post on this soon !)
Will we see any more manual trading journals on my blog ? I think that it is safe to say that I have not plans to introduce new experiments about this in the near future. From now on I will devote all this time to the production of new likely long term profitable automated trading systems for asirikuy as well as the analysis and improvement of the currently traded systems.
Of course, to all of you who had been following this system and were expecting me to carry on with the testing, my sincere apologies. I hope you understand the reasons outlined above and continue to follow my ventures on automated trading which has been my main source of income for many months now. Hopefully someone out there will be able to trade my S&R methodology for day trading and succeed with it, certainly I believe that someone with the time and necessary dedication will do so.
If you would like to learn more about my development of automated trading systems and how you can have a high probability of achieving long term profitable results with sound automated trading 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 !
The Nature of My Reviews Nothing is Carved in Stone
Since last month I seem to be receiving a lot of criticism from some website visitors and traders because of my reviews on several different automated trading systems. Some people keep on posting comments on several different places of my website regarding the profitability and "wrongness" of my reviews on several of the automated trading systems I have been commenting on. These comments are usually filled with insults and profit claims that are not being backed up appropiately. Most of these comments seem to come either from the actual EA sellers who obviously dont benefit from my comments or from traders who feel my opinions are faulted and feel somehow "offended" by my freedom of speech.
For this reason I decided to write a post today in order to talk about the focus and expectations of my reviews and what people should take into account when they read my opinions about automated trading systems.
First of all, I take my time to analyze each one of the systems I review, as a matter of fact I always take more than an hour, sometimes even two or three, reviewing each one of the sites I take a look at. I always analyze all the evidence provided and gauge it against my knowledge in order to say whatever I say about the systems. Second, I am ONLY interested in systems that show enough evidence that there can be a good possibility that they will be profitable during the next decades. I am NOT interested in systems that give short term profitable results or that are based in unsound trading strategies such as grid systems and martingales. Please understand that I look for CAPITAL SAFETY, I always need a website to have long term backtests (from 2000) with live tests that SHOW consistency in order to even consider a system as being worth buying and testing.
However, I am a human, and as a human being I am prone to error. I may overlook evidence, fail to see new evidence or misinterpret trading records, etc. I am not free from fault. If you feel that I have not done a system justice and you believe that it has shown enough evidence to be considered long term profitable please place a comment on the review with the following conditions :
For this reason I decided to write a post today in order to talk about the focus and expectations of my reviews and what people should take into account when they read my opinions about automated trading systems.
First of all, I take my time to analyze each one of the systems I review, as a matter of fact I always take more than an hour, sometimes even two or three, reviewing each one of the sites I take a look at. I always analyze all the evidence provided and gauge it against my knowledge in order to say whatever I say about the systems. Second, I am ONLY interested in systems that show enough evidence that there can be a good possibility that they will be profitable during the next decades. I am NOT interested in systems that give short term profitable results or that are based in unsound trading strategies such as grid systems and martingales. Please understand that I look for CAPITAL SAFETY, I always need a website to have long term backtests (from 2000) with live tests that SHOW consistency in order to even consider a system as being worth buying and testing.
However, I am a human, and as a human being I am prone to error. I may overlook evidence, fail to see new evidence or misinterpret trading records, etc. I am not free from fault. If you feel that I have not done a system justice and you believe that it has shown enough evidence to be considered long term profitable please place a comment on the review with the following conditions :
- Do NOT insult me. I never insult anyone and I do NOT expect this from my website visitors, I am open to argument and whatever point you make should be made through argument. Not through insults. Insulting shows lack of education and culture, if your arguments are strong enough, they will speak for themselves.
- Place links to evidence. If you say you have the evidence but you dont show it, it is as good as you not having it. If you are going to counter any argument, please show the evidence to do so.
- If you are going to say a system is long term profitable please show links to 10 year backtests with at least a 3 month live tests that are CONSISTENT with the backtests. This is in order to ensure backtesting is RELIABLE and does NOT exploit one minute interpolation errors or such other problems.
- When posting results for scalpers (TP is less than 3 times the spread), please post only LIVE results as demo vs live results for scalpers can be dramatically different due to spread widening, requotes, etc.
- Please do NOT place comments about the profitability of grid, martingale, progressive money management, or other unsound systems. These systems are known to eventually wipe accounts out, this is based on statistic.
If you provide sound counter-arguments and evidence for them in any of my reviews, I will reconsider my review and even buy and test the system as part of my newsletter subscription. My reviews are NOT carved in stone and they are prone to change in the face of the appropriate evidence. I get NOTHING from saying anything positive or negative about any system, I just use my knowledge and criteria to gauge their long term profitability. Please understand that my criteria is pretty tough because my opinion may cause several people to actually use any systems I recommend, therefore I feel that I have the responsibility to only advocate for systems that have extremely sound and adequate trading principles.
If you would like to know more about the systems I have considered long term profitable or how I evaluate and program 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 !
If you would like to know more about the systems I have considered long term profitable or how I evaluate and program 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 !
The Road to Financial Freedom Series Part No 3 Organizing your Life Around Your Goal
Through the last two posts of the road to financial freedom series we have discussed the definition of financial freedom and the attitude necessary to finally attain this goal. Today I am going to focus on explaining what should be the first step on anyones journey towards financial freedom for anyone who wishes to succeed in forex trading without sacrificing other much more important aspects of their lives.
First of all, I will have to tell you that I am not the kind fo person who thinks money can do everything and I am therefore not willing to do any possible thing for money. I believe that there is a lot of value in having financial freedom but I consider that there are other things in my life which are far more valuable than the fact that I can live without having to work a 9 to 5 job. I have always had this very clear since the start of my journey in forex trading and I want to communicate to you what my first step in forex trading was : Organizing my life around my goals.
What does this mean exactly ? Well, when you start a journey in forex trading you have to think that you are not the only one starting the journey. Probably people around you (family, friends, etc) will be affected by your decision to seek proficiency in trading. The first thing you have to do when you make the decision that you will be trading and trying to do it profitably is to talk about this with the people around you. Bear in mind that by talking I dont mean telling. You need to truly explain what you will be doing and the time you plan to spend on trading and see how it affects your life and relationship with others around you.
Once you talk with the people around you you should build a schedule with them in order to guarantee that your new endevour will not affect your present relationships. For example, if you are married you should talk to your wife about what time you will be trading so that this time is exclusively devoted to this matter. Even if it is only half an hour or a whole hour a day your partner and closed ones should be aware of it so that they understand what you are doing and leave you your space to do it. This of course, also comes with the fact that you need to place boundaries in your life between trading and other activities. When you are playing with your kids or having dinner with your family dont think about trading, that is not what you are doing :o).
Another important issue, especially if you are married, is to discuss the financial issues openly and honestly with your partner. Dont make promises which you are much likely not going to be able to keep and dont go behind your partners back to use money to later "surprise them" with profits (more likely loses by the way !). Always be open about the very high risk of forex trading and the amount you will be investing. Talk about the potential in the future with your family but also make it clear that you may lose all that money in the beginning.
I have found often that failing to be open and communicative with the people in your environment about trading often leads to very bad situations like having to disclose your partner that you lost your lives saving (yes, this happened to someone !), or realizing that after years of training you are finally profitable but your wife and kids have left you because you were no longer a father and husband but merely a trader (this is also a true story !).
I was very communicative and open with my close family when I started my journey in trading and I have to say that I dont regret it a single bit. In fact, I believe that support from my close family was one of the positive factors that guided me towards success in trading. All the time I had people around me who knew what I was trying to do and who were understading when things turned sour. It is very important to understand that you are not alone in the world and that a big decision such as seeking financial freedom needs to go hand-in-hand with the support and affection of those around you.
If you would like to learn more about my achievements in trading, particularly automated trading and how you too can start to follow a path towards long term profitability using expert advisors 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 !
First of all, I will have to tell you that I am not the kind fo person who thinks money can do everything and I am therefore not willing to do any possible thing for money. I believe that there is a lot of value in having financial freedom but I consider that there are other things in my life which are far more valuable than the fact that I can live without having to work a 9 to 5 job. I have always had this very clear since the start of my journey in forex trading and I want to communicate to you what my first step in forex trading was : Organizing my life around my goals.
What does this mean exactly ? Well, when you start a journey in forex trading you have to think that you are not the only one starting the journey. Probably people around you (family, friends, etc) will be affected by your decision to seek proficiency in trading. The first thing you have to do when you make the decision that you will be trading and trying to do it profitably is to talk about this with the people around you. Bear in mind that by talking I dont mean telling. You need to truly explain what you will be doing and the time you plan to spend on trading and see how it affects your life and relationship with others around you.
Once you talk with the people around you you should build a schedule with them in order to guarantee that your new endevour will not affect your present relationships. For example, if you are married you should talk to your wife about what time you will be trading so that this time is exclusively devoted to this matter. Even if it is only half an hour or a whole hour a day your partner and closed ones should be aware of it so that they understand what you are doing and leave you your space to do it. This of course, also comes with the fact that you need to place boundaries in your life between trading and other activities. When you are playing with your kids or having dinner with your family dont think about trading, that is not what you are doing :o).
Another important issue, especially if you are married, is to discuss the financial issues openly and honestly with your partner. Dont make promises which you are much likely not going to be able to keep and dont go behind your partners back to use money to later "surprise them" with profits (more likely loses by the way !). Always be open about the very high risk of forex trading and the amount you will be investing. Talk about the potential in the future with your family but also make it clear that you may lose all that money in the beginning.
I have found often that failing to be open and communicative with the people in your environment about trading often leads to very bad situations like having to disclose your partner that you lost your lives saving (yes, this happened to someone !), or realizing that after years of training you are finally profitable but your wife and kids have left you because you were no longer a father and husband but merely a trader (this is also a true story !).
I was very communicative and open with my close family when I started my journey in trading and I have to say that I dont regret it a single bit. In fact, I believe that support from my close family was one of the positive factors that guided me towards success in trading. All the time I had people around me who knew what I was trying to do and who were understading when things turned sour. It is very important to understand that you are not alone in the world and that a big decision such as seeking financial freedom needs to go hand-in-hand with the support and affection of those around you.
If you would like to learn more about my achievements in trading, particularly automated trading and how you too can start to follow a path towards long term profitability using expert advisors 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 !
Kamis, 19 Juni 2014
Forex Expert Advisors BankingFX an Unbiased Review
Bankingfx is an expert advisor selling company which sells different expert advisors, mainly the Diamond and Ultra forex automated trading systems. At first sight, the website seems to be pretty simple without too much hype and with the testing information links readily available for anyone to see.
Their expert advisors are what you would usually expect from a commercial expert advisor these days. They trade the EUR/GBP and EUR/USD respectively and they aim for low profits and high winning percentages. Their backtesting results are of course excellent with very high profit ratios and amazing amounts of winning trades. Obvisouly, the risk to reward ratio of their experts is very high with almost 10 winning trades needed to overcome one single losing trade.
What I like about this company is that it is a perfect example of how this type of expert advisors completely fail to perform on the real market. The profit you see on the backtestng resports is absolutely based on the one minute interpolation erros of the metatrader strategy tester program. The proof of this ? Their own forward testing results ! When you look at the forward testing results for the ultra expert advisor you will find out that the ea does not perform as it does in backtesting, it had huge loses which it wasnt unable to recover from because of its high risk to reward ratio. The picture below was taken from their forward testing which was for some reason stopped in November 2009 (I bet you can guess why !).
What I like about this company is that it is a perfect example of how this type of expert advisors completely fail to perform on the real market. The profit you see on the backtestng resports is absolutely based on the one minute interpolation erros of the metatrader strategy tester program. The proof of this ? Their own forward testing results ! When you look at the forward testing results for the ultra expert advisor you will find out that the ea does not perform as it does in backtesting, it had huge loses which it wasnt unable to recover from because of its high risk to reward ratio. The picture below was taken from their forward testing which was for some reason stopped in November 2009 (I bet you can guess why !).
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Compare that to the backtesting chart shown below. The ea clearly changes a lot between forward and backtesting because the one minute interpolation errors have huge impacts when you have low take profit values and very high risk to reward ratios. It is also very worth noting that the forward testing for the Diamond expert advisor have been completely removed ! (pretty strange, right ?).
This expert advisors are definetely not worth buying but they are a very good example of how the profitability of an expert advisor can change in a very dramatic way between back testing and forward testing and how strategies with high risk to reward ratios are not profitable in the long run because their profitability is based on market randomness which changes amongst different market conditions. If you would like to learn more about other free and commercial expert advisors I have tested and reviewed as well as how to chose and evaluate 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 !
-Compare that to the backtesting chart shown below. The ea clearly changes a lot between forward and backtesting because the one minute interpolation errors have huge impacts when you have low take profit values and very high risk to reward ratios. It is also very worth noting that the forward testing for the Diamond expert advisor have been completely removed ! (pretty strange, right ?).
This expert advisors are definetely not worth buying but they are a very good example of how the profitability of an expert advisor can change in a very dramatic way between back testing and forward testing and how strategies with high risk to reward ratios are not profitable in the long run because their profitability is based on market randomness which changes amongst different market conditions. If you would like to learn more about other free and commercial expert advisors I have tested and reviewed as well as how to chose and evaluate 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 !
Rabu, 18 Juni 2014
Bookfest 2009 KLCC
Despite the H1N1, the event yesterday was a successful one. The audience was very responsive and we had a great time. Here are some pictures to share!
Introducing Watukushay No 5 Beta A Universal Daily Breakout System
If you have been following my blog for a while you might be aware of the Watukushay project, an initiative which gathers my efforts around the well-documented development of likely long term profitable systems. The last EA of this series was Teyacanani and today I am happy to introduce the next member of this family of what I think are well-crafted, sound trading systems with reliable simulations and very good possibilities of achieving long term profitability in forex trading. On todays post I am going to talk to you about Watukushay No.5, its first achievements and what makes the release of this EA different from the others as its development from now on will be done in conjunction with the Asirikuy community :o). I will first share with you the main aspects of the experts trading character as well as the first results on the EUR/USD and the great potential I think this EA holds.
To tell you the truth, it was not easy to come up with a release candidate for Watukushay No.5. I have been developing and evaluating systems none stop and - as a matter of fact - this has led to the finding of some very interesting trading techniques which have shown likely long term profitable results in 10 year backtests with acceptable trading characteristics. I have shared with you some of these developments such as the Bollinger Band strategy I wrote a blog post about a few weeks ago.
However I didnt feel any of these tactics were suitable for Watukushay No.5 since none of them had the multiple instrument potential I wanted for the next Asirikuy trading system. With the achievements of Teyacanani in mind, I decided that I wanted to create a system that could achieve good trading characteristics on several currency pairs and which had enough flexibility to exploit various types of inefficiencies with a simple change of settings. After a lot of searching and a lot of evaluation (and a fortunate email from an Asirikuy member who reminded me of some previous work) I have found a trading method that will be the core of Watukushay No.5.
This new Asirikuy EA is a daily breakout system that looks for trading opportunities everyday based on certain price ranges or "boxes" that may develop. The expert advisor looks at a specific period of time and sets pending orders if the characteristics of the ranging periods are adequate. As Kutichiy (Watukushay No.3), this EA uses an entirely adaptive technique which fits all the characteristics of the EA as multiples of the assigned range. It is interesting to see how many inefficiencies can be found through the trading of breakouts of consolidation periods and how these consolidation periods turn out many times to be non-conventional. The image below shows you a sample of a favorable trade of Watukushay No.5.
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I have worked a lot on this EA and I have already found several long term exploitable inefficiencies based on such breakouts. Trading on the EUR/USD, this EA is able to achieve results as good as those of Watukushay No.2, however the great thing about this EA is not its mere ability to profit from this currency pair but its more "universal" character. With the flexibility to change the breakout character, the characteristics of the box, the take profit, buffer and the actual trading or "fading" of the breakouts Watukushay No.5 is fit to trade a broad range of possible inefficiencies on several different instruments. Since this breakout system is very different and much more flexible than Kutichiy its potential for portfolio trading is MUCH higher.
Perhaps the largest difference between the release of Watukushay No.5 and the rest of the Watukushay expert advisors is that I released this EA at a somewhat early stage of development. My objective with this is to encourage the participation of the Asirikuy community so that new inefficiencies on other currency pairs can be found and a large scale analysis and coarse optimization of the trading system on many currency pairs can be done. Watukushay No.5 is not yet ready for live trading but it is still within what I would like to call an "Asirikuy community Beta" in which I hope members on the website can team to analyze the EA and use it to find trading tactics to trade a wide variety of currency pairs. (below a EUR/USD backtest from Jan 2000 to Jan 2010)
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-The great thing about the EA is that it can be fit to test extremely different tactics on many different currency pairs, it can be used to trade Asian session breakouts on the GBP/USD or it can be used to fade breakouts of the European session on the EUR/CHF, etc. The trading system has incredible flexibility and it has the possibility to take profit from a large variety of market situations that may show to constitute long term inefficiencies. Of course, I also expect we can add some additional closing mechanisms if our analysis within the next few months demonstrates that such additions would prove to be improvements to the experts logic.
Right now I have great expectations for this EA which has already shown its potential to achieve good profit and draw down targets on a few currency pairs. Will we be able to join as a community and evaluate and examine this trading system ? Will new and exciting ways of trading daily breakouts arise from the forum ? Right now the results of this trading system already point to its future outcome as a strong Asirikuy system and certainly I believe that the Asirikuy community forum approach will only make it better.
As for the name... We will be making a poll in the forum and we will name it when the first live account comes out :o)
If you would like to learn more about the Watukushay project and how it seeks to develop trading systems with sound trading techniques and realistic profit and risk targets 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 !
Selasa, 17 Juni 2014
Forex Expert Advisors Forex Enforcer an Unbiased Review
A few days ago I found a new expert advisor called forex enforcer. Since I had never reviewed this expert advisor I decided to write a post about it today. As with all other expert advisors I am going to evaluate the evidence provided by the author against the claims made by him/her in order to gauge the probability the expert has of being long term profitable according to my well established criteria for long term profitability. After that I will tell you if I think the expert is or is not worth buying according to both the soundness of its trading techniques and its credibility.
The Forex Enforcer trading system certainly does not look any better than the other hundreds of expert advisors out there sold commercially. The first thing you see when you enter the website is a very bold claim that states that the expert was able to turn 10,000 into 125,000 USD. Thing further from the truth. When will this EA sellers understand that it is not the same to make a certain amount of money in simulation than to make that same amount in real trading. It is totally invalid, and misleading to say an expert advisor "made" a certain amount of money when in reality in never did so. Of course, this is all part of the marketing tactic used to sell the EA.
This expert strikes me as the classical EA that uses backtesting faults to have large profitability in simulation. It only takes one good look to find out that there is really no evidence of the claims provided by the author. The backtesting statements are missing and even the full picture of the detailed statement does not show. This means that not only do we not know if the experts backtesting is of any use but we also dont even know the extent of the backtesting period. It is therefore totally wrong for the author to claim things as the ones he does on his website.
Another thing that bothers me is the use of trading examples as evidence of profitability. Trading examples are OK and a reliable way to convey to someone how a system works. However for trading examples to be of any use one has to show winning as well as losing trades. Charts showing trading examples can also easily be made up so we clearly need to see a live testing statement that shows us the result we are looking at so that we know its reliable.
This EA is sadly a part of the hundreds of experts out there that simply do not offer enough evidence to believe or support any of their claims. The EA makes claims it does not support through live testing and only backtests that are shown in a very limited way are present. Remember that back/live testing consistency is VITAL to believe ANY claim made by a commercial EA seller and we always need to have this information in order to assess profitability with certainty.
Because of all the above reasons, which can be summarized as a gross and intentional lack of evidence, this EA is NOT worth buying or testing. If the EA seller puts up backtesting from 1999 to 2009 and shows us live testing consistent results I will of course reconsider my review. If you are interested in viewing automated trading systems that are worth testing and really understand my criteria for long term profitability 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 !
The Forex Enforcer trading system certainly does not look any better than the other hundreds of expert advisors out there sold commercially. The first thing you see when you enter the website is a very bold claim that states that the expert was able to turn 10,000 into 125,000 USD. Thing further from the truth. When will this EA sellers understand that it is not the same to make a certain amount of money in simulation than to make that same amount in real trading. It is totally invalid, and misleading to say an expert advisor "made" a certain amount of money when in reality in never did so. Of course, this is all part of the marketing tactic used to sell the EA.
This expert strikes me as the classical EA that uses backtesting faults to have large profitability in simulation. It only takes one good look to find out that there is really no evidence of the claims provided by the author. The backtesting statements are missing and even the full picture of the detailed statement does not show. This means that not only do we not know if the experts backtesting is of any use but we also dont even know the extent of the backtesting period. It is therefore totally wrong for the author to claim things as the ones he does on his website.
Another thing that bothers me is the use of trading examples as evidence of profitability. Trading examples are OK and a reliable way to convey to someone how a system works. However for trading examples to be of any use one has to show winning as well as losing trades. Charts showing trading examples can also easily be made up so we clearly need to see a live testing statement that shows us the result we are looking at so that we know its reliable.
This EA is sadly a part of the hundreds of experts out there that simply do not offer enough evidence to believe or support any of their claims. The EA makes claims it does not support through live testing and only backtests that are shown in a very limited way are present. Remember that back/live testing consistency is VITAL to believe ANY claim made by a commercial EA seller and we always need to have this information in order to assess profitability with certainty.
Because of all the above reasons, which can be summarized as a gross and intentional lack of evidence, this EA is NOT worth buying or testing. If the EA seller puts up backtesting from 1999 to 2009 and shows us live testing consistent results I will of course reconsider my review. If you are interested in viewing automated trading systems that are worth testing and really understand my criteria for long term profitability 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 !
Gods Gift Expert Advisor One Good Month
I was very reluctant about writing a review on Gods Gift right now. The reason is that the results up until now could be misleading to some people and could make them believe this is the holy grail. I will then try to tell you the results as objectively as I can ( cause I do feel a little bit of excitement myself about this ea) . As you know, I always try to have my opinions as unbiased as possible although there is always some bias coming from my own expectations on the experts (Impossible to evade as a human, I think).
For starters, this ea has had an amazing month. Never in the large amount of forward testing I have seen had I seen such a clean record. Gods Gift has managed a perfect month. Absolutely no draw down, yet a hard stop and a trailing stop always in place. Eight wins in a row with an incredible capacity to pinpoint short term market direction.
I would say, I hate this ea because I have not seen it lose any money. When you are testing an ea you have to see it win and you have to see it lose. When you see this you know if your wins are much more than your loses or vise versa. Right now, I have absolutely no way to make this comparison. This, frankly, makes me a little nervous about the expert. I like experts than win and lose and consistently win more than they lose. An expert that always wins is impossible so I will just keep on watching until the losing streak comes.
According to back testing, this is something the expert does frequently. Has a large winning followed by a large losing streak. It is supposed to have a win to lose ratio of about 1:2 with 75% winners and 25% losers.
Needless to say, I am also impressed. It is incredible that an expert with a 70 pip stop loss and a 30 pip trailing stop can be this consistent. Not even one single losing trade. My emotions right now tempt me to try it on a real account. But time will tell, how much it wins or loses.
I will review this expert again in another month (due to it being a very slow trader), However, you can see the trading statement for the past month here. Remember that it took it almost two weeks to make the first trade !
For starters, this ea has had an amazing month. Never in the large amount of forward testing I have seen had I seen such a clean record. Gods Gift has managed a perfect month. Absolutely no draw down, yet a hard stop and a trailing stop always in place. Eight wins in a row with an incredible capacity to pinpoint short term market direction.
I would say, I hate this ea because I have not seen it lose any money. When you are testing an ea you have to see it win and you have to see it lose. When you see this you know if your wins are much more than your loses or vise versa. Right now, I have absolutely no way to make this comparison. This, frankly, makes me a little nervous about the expert. I like experts than win and lose and consistently win more than they lose. An expert that always wins is impossible so I will just keep on watching until the losing streak comes.
According to back testing, this is something the expert does frequently. Has a large winning followed by a large losing streak. It is supposed to have a win to lose ratio of about 1:2 with 75% winners and 25% losers.
Needless to say, I am also impressed. It is incredible that an expert with a 70 pip stop loss and a 30 pip trailing stop can be this consistent. Not even one single losing trade. My emotions right now tempt me to try it on a real account. But time will tell, how much it wins or loses.
I will review this expert again in another month (due to it being a very slow trader), However, you can see the trading statement for the past month here. Remember that it took it almost two weeks to make the first trade !
Senin, 16 Juni 2014
Rules For Trading In Stocks Part 2
Today Ill continue with 2 more rules.
Rule No.4: Buy and Sell on 3 Weeks Advance or Decline
Markets do not go up forever! There must be some profit taking involved along the way. In Ganns rule, he said "buy when the market is decline for 3 weeks in a bull trend". What this means is that when the market is up for about 2-3 months, therell be a correction, this correction usually takes in the form of 1-3 weeks decline, after which the bull trend resumes. So to apply this rule, we have to wait for the market to decline for 3 weeks, then start buying, but remember to put a stop loss should the decline extend further. If the market only decline for 1 week, no entry. Similarly, in a bear market, markets do not fall forever, after a few months of decline, there will be a pull back. In Ganns rule, sell after 3 weeks of bear rally.
Chart 1: KLCI 2010
The above chart 1 illustrate this perfectly well on our KLCI in the year of 2010. The 3 sell down in the month of Feb, May and Nov lasted about 3 weeks or 15 days (1 week = 5 trading days).
Next, Gann said, "after the market advance or decline 30 days or more, the next buy or sell point is 6 or 7 weeks. And after a market rallies or declines more than 45 to 49 days, the next time period to watch is 60 to 65 days."
To illustrate his statement, lets take a look at the chart below: Chart 2 KLCI 2011
In the first half of 2011, news on the euro debt crisis causing the market to react negatively. Between mid January to mid March, the sell down lasted about 7 weeks, which is 36 days in exact. In addition, in the second half of 2011, the US debt ceiling crisis resulted in stock market crashes around the world. KLCI reacted with a sell down for 60 days! After which the long term bull trend resumed.
Now, the question is how do we know whats the duration of the decline? We do not know, we just need to keep our stop loss at bay to protect ourselves.
Chart 3 KLCI 2012
Recently in November 2012, we had exactly 16 black candles, that was unusual as it was consecutively black candles with no white candle in the middle. However, 16 days is close to the 3 weeks of Ganns rule, so the rule still applied for this case.
Rule No.5: Market Moves in Sections
Market moves in sections or waves. Usually for a bull market, you will see 3 or 4 up waves before you can consider the top.
Similarly, in a bear market, never consider the market final bottom when you see the first decline wave because it will run 3 or possibly 4 sections before the bear campaign is over.
Chart 4 KLCI 2006 - present
From the chart above, we are currently on the 3rd wave. We do not know how long this wave will last, or there could be a 4th wave. Only time will tell. My advice for long term investors is to use the 200 day Moving Average as a reference, sell when your stock falls below this line, and get back in once it is above the line again.
Happy Trading,
Pauline Yong
Rule No.4: Buy and Sell on 3 Weeks Advance or Decline
Markets do not go up forever! There must be some profit taking involved along the way. In Ganns rule, he said "buy when the market is decline for 3 weeks in a bull trend". What this means is that when the market is up for about 2-3 months, therell be a correction, this correction usually takes in the form of 1-3 weeks decline, after which the bull trend resumes. So to apply this rule, we have to wait for the market to decline for 3 weeks, then start buying, but remember to put a stop loss should the decline extend further. If the market only decline for 1 week, no entry. Similarly, in a bear market, markets do not fall forever, after a few months of decline, there will be a pull back. In Ganns rule, sell after 3 weeks of bear rally.
Chart 1: KLCI 2010
The above chart 1 illustrate this perfectly well on our KLCI in the year of 2010. The 3 sell down in the month of Feb, May and Nov lasted about 3 weeks or 15 days (1 week = 5 trading days).
Next, Gann said, "after the market advance or decline 30 days or more, the next buy or sell point is 6 or 7 weeks. And after a market rallies or declines more than 45 to 49 days, the next time period to watch is 60 to 65 days."
To illustrate his statement, lets take a look at the chart below: Chart 2 KLCI 2011
In the first half of 2011, news on the euro debt crisis causing the market to react negatively. Between mid January to mid March, the sell down lasted about 7 weeks, which is 36 days in exact. In addition, in the second half of 2011, the US debt ceiling crisis resulted in stock market crashes around the world. KLCI reacted with a sell down for 60 days! After which the long term bull trend resumed.
Now, the question is how do we know whats the duration of the decline? We do not know, we just need to keep our stop loss at bay to protect ourselves.
Chart 3 KLCI 2012
Recently in November 2012, we had exactly 16 black candles, that was unusual as it was consecutively black candles with no white candle in the middle. However, 16 days is close to the 3 weeks of Ganns rule, so the rule still applied for this case.
Rule No.5: Market Moves in Sections
Market moves in sections or waves. Usually for a bull market, you will see 3 or 4 up waves before you can consider the top.
Similarly, in a bear market, never consider the market final bottom when you see the first decline wave because it will run 3 or possibly 4 sections before the bear campaign is over.
Chart 4 KLCI 2006 - present
From the chart above, we are currently on the 3rd wave. We do not know how long this wave will last, or there could be a 4th wave. Only time will tell. My advice for long term investors is to use the 200 day Moving Average as a reference, sell when your stock falls below this line, and get back in once it is above the line again.
Happy Trading,
Pauline Yong
Trading on the Edge of the Charts Why Visual Backtesting Does Not Work
It seems that the first thing that anyone does when they are starting to examine a potential trading system is to go down the charts and analyze the potential trades that would have happened from time to time. That is, people do what we call a "visual backtest" which is merely the optical evaluation of trading posibilities over a chart over a given (usually small) period of time. Visual backtesting brings many problems to the evaluation and creation of automated and manual trading system, often because profitability is over estimated by the person who does the backtesting who is already "biased" in a certain sense towards the profitability of the systems he or she develops.
What are the problems of visual backtesting ? Well, for one, most people seem to underestimate the problems related to how many indicators are portrayed, often traders will analyze systems with indicators that repaint (change past values due to future values) and because of that they get a greater profitability, there is also the fact that people tend to underestimate the exits when they already have access to how the whole picture developed. They say, I would get out here because "this" happened but "this" is usually a particular criteria applied to a single trade, a criteria that gets somehow twisted and adapted as the trader does the backtesting. Visual backtesters tend to hate taking loses and they usually modify the rules of the system "on the fly" to avoid the taking of loses. This of couse, means that in the end the trader has a system that may have worked very well for a small set of particular trades but will fail to work in the future or further away in the past.
What is the correct way to test a strategy then ? The best way to test a strategy is to simulate what real trading would have been like. The easiest way to do this is to use the metatrader 4 strategy tester as a "real life" market experience. You just need to edit any expert you have and place a // before the OrderSend function on any lines that start with it, this will make the expert unable to open trades. After this, just load the expert into any chart and do a visual backtest of the period you want to analyze. This will give you an "evolving" view of the market and you will see it how you would see the market in real life. With the advantage that you can "fast forward" and see where your trades would have ended. This allows you to apply any indicator/price criteria and see whether it would or it would have not generated you profit in the long term.
When I am teaching someone how to trade this is one of the first things I do, we will open up a strategy tester and we will "simulate" random entries on the visual backtesting and see where we would have goten out of trades (by simulate I mean that we will just draw lines on the screen and keep the record on an excel sheet since no actual trades can be entered while on a backtest). This teaches in a very practical way how to handle market exits and how the market is viewed "on the edge of the chart". Viewing the market before "the edge" is something that will never happen in real life so why would you ever practice trading a system on charts that have already been drawn ? If you think about it, it does not make any sense because the whole perspective changes dramatically. You will see that after doing this exercise you will get a very good perspective of how you interpret and react to the market. Generally I have several metatrader instances so that me and my students can analyze both short and long term trading perspectives.
If you would like to learn about automated trading systems and how they can be traded profitably in the forex market, specially how you too can trade or program a free, long term profitable expert advisor, 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 !
What are the problems of visual backtesting ? Well, for one, most people seem to underestimate the problems related to how many indicators are portrayed, often traders will analyze systems with indicators that repaint (change past values due to future values) and because of that they get a greater profitability, there is also the fact that people tend to underestimate the exits when they already have access to how the whole picture developed. They say, I would get out here because "this" happened but "this" is usually a particular criteria applied to a single trade, a criteria that gets somehow twisted and adapted as the trader does the backtesting. Visual backtesters tend to hate taking loses and they usually modify the rules of the system "on the fly" to avoid the taking of loses. This of couse, means that in the end the trader has a system that may have worked very well for a small set of particular trades but will fail to work in the future or further away in the past.
What is the correct way to test a strategy then ? The best way to test a strategy is to simulate what real trading would have been like. The easiest way to do this is to use the metatrader 4 strategy tester as a "real life" market experience. You just need to edit any expert you have and place a // before the OrderSend function on any lines that start with it, this will make the expert unable to open trades. After this, just load the expert into any chart and do a visual backtest of the period you want to analyze. This will give you an "evolving" view of the market and you will see it how you would see the market in real life. With the advantage that you can "fast forward" and see where your trades would have ended. This allows you to apply any indicator/price criteria and see whether it would or it would have not generated you profit in the long term.
When I am teaching someone how to trade this is one of the first things I do, we will open up a strategy tester and we will "simulate" random entries on the visual backtesting and see where we would have goten out of trades (by simulate I mean that we will just draw lines on the screen and keep the record on an excel sheet since no actual trades can be entered while on a backtest). This teaches in a very practical way how to handle market exits and how the market is viewed "on the edge of the chart". Viewing the market before "the edge" is something that will never happen in real life so why would you ever practice trading a system on charts that have already been drawn ? If you think about it, it does not make any sense because the whole perspective changes dramatically. You will see that after doing this exercise you will get a very good perspective of how you interpret and react to the market. Generally I have several metatrader instances so that me and my students can analyze both short and long term trading perspectives.
If you would like to learn about automated trading systems and how they can be traded profitably in the forex market, specially how you too can trade or program a free, long term profitable expert advisor, 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 !
Minggu, 15 Juni 2014
Metatrader 4 Backtesting Reliable or Not
As many of you may already know, the Metatrader 4 trading platform has a strategy tester whose objective is to evaluate a strategy based on historical data, rather than executing an expert advisor for an extended period of time. But the question for many remains, is it reliable ?
This question is of the highest importance as many decisions could be based on this feature of the program. Someone who believes in the backtester being accurate will have no problem in using it as a filter for his expert advisors and also using it as a measure of an unknown strategy.
First of all, we have to be very clear. There is only one way to test the accuracy of the strategy tester in Metratrader 4. First, we need to run an expert advisor in a demo account for a given period of time, second, we must backtest this exact same expert in that exact same period of time. The comparison between trades taken in both settings will let us know if the backtester is or is NOT accurate.
Many people say backtesting is not accurate because the expert was profitable for two months of backtesting, then wiped out the accound in real life. This is actually NOT an indication of a flawed tester (the expert could have behaved this way naturally because of changing market conditions). To be clearer, an expert being profitable in backtesting and not in forward testing is a necessary but not sufficient condition to declare the backtester unreliable. To be sure, you must perform the test suggested on the third paragraph.
To do this, you must first set the backtester so that you can get the best possible results. For this I have set my metatrader platform with alpari historical one minute data dating back to 2004. You also want to use the every tick mode and use every less time frame in your analysis. I have done small tests for different expert advisors and I have arrived to the following conclusions.
- Expert advisors that open and close trades in a 1-4 minutes timeframe CANNOT be accurately or even approximately tested with the Metatrader 4 backtester, this, because the tester uses fractal interpolation. It guesses what happens under the one minute candlesticks.
- Expert advisor behavior is not predicted in any case when a sudden move occurs in a one minute candlestick. When an expert trades a 100 pip move which occured in under a minute (like after some NFP releases). In many cases the results in reality and with the tester are fairly different.
- Experts that trade 1-3 times a day and have wide (50 or more) stops and take profit levels are usually predicted far more accurately than experts with tighter levels.
- Experts that trade on the closing price of bars sometimes exhibit abnormal profits because of "divination" of the strategy tester. It uses future knowledge by mistake.
- To deem an expert advisor profitable by backtesting, at least a 3 year analysis are necessary. This supplies a wide range of market conditions, which would at least justify a demo testing of the expert advisor.
So is backtesting useless ? This is actually NOT the case. Would I buy an expert advisor based on backtesting ? Absolutely NOT ! The reliability of the results is very dependable upon the nature of the expert advisor and only access to the source code and understanding of the trading method can guarantee a critical grasp of the testers results.
So personally I will continue to use metatraders backesting as long as I know that the expert does comply with the requirements necessary for reliable testing. I will, however, never buy any commercial experts based solely on backtesting as it is - quiet frankly - easily fooled by programming manipulation.
This question is of the highest importance as many decisions could be based on this feature of the program. Someone who believes in the backtester being accurate will have no problem in using it as a filter for his expert advisors and also using it as a measure of an unknown strategy.
First of all, we have to be very clear. There is only one way to test the accuracy of the strategy tester in Metratrader 4. First, we need to run an expert advisor in a demo account for a given period of time, second, we must backtest this exact same expert in that exact same period of time. The comparison between trades taken in both settings will let us know if the backtester is or is NOT accurate.
Many people say backtesting is not accurate because the expert was profitable for two months of backtesting, then wiped out the accound in real life. This is actually NOT an indication of a flawed tester (the expert could have behaved this way naturally because of changing market conditions). To be clearer, an expert being profitable in backtesting and not in forward testing is a necessary but not sufficient condition to declare the backtester unreliable. To be sure, you must perform the test suggested on the third paragraph.
To do this, you must first set the backtester so that you can get the best possible results. For this I have set my metatrader platform with alpari historical one minute data dating back to 2004. You also want to use the every tick mode and use every less time frame in your analysis. I have done small tests for different expert advisors and I have arrived to the following conclusions.
- Expert advisors that open and close trades in a 1-4 minutes timeframe CANNOT be accurately or even approximately tested with the Metatrader 4 backtester, this, because the tester uses fractal interpolation. It guesses what happens under the one minute candlesticks.
- Expert advisor behavior is not predicted in any case when a sudden move occurs in a one minute candlestick. When an expert trades a 100 pip move which occured in under a minute (like after some NFP releases). In many cases the results in reality and with the tester are fairly different.
- Experts that trade 1-3 times a day and have wide (50 or more) stops and take profit levels are usually predicted far more accurately than experts with tighter levels.
- Experts that trade on the closing price of bars sometimes exhibit abnormal profits because of "divination" of the strategy tester. It uses future knowledge by mistake.
- To deem an expert advisor profitable by backtesting, at least a 3 year analysis are necessary. This supplies a wide range of market conditions, which would at least justify a demo testing of the expert advisor.
So is backtesting useless ? This is actually NOT the case. Would I buy an expert advisor based on backtesting ? Absolutely NOT ! The reliability of the results is very dependable upon the nature of the expert advisor and only access to the source code and understanding of the trading method can guarantee a critical grasp of the testers results.
So personally I will continue to use metatraders backesting as long as I know that the expert does comply with the requirements necessary for reliable testing. I will, however, never buy any commercial experts based solely on backtesting as it is - quiet frankly - easily fooled by programming manipulation.
Doubleplay v 4 0 Live Testing
As you may know, I stopped doubleplays live trading as the expert advisor seemed to have a fundamental flawed related to the delay feature which prevents the opening of a position as soon as another one closes.
I was actually right. Hal, the creator of the expert, answered my email promptly telling me that other traders had also made the exact same complaint. As a result, Hal emailed me a fixed version of the expert advisor which is now in a live forward test using an interbankfx mini account I use for this purpose. The account has a hundred US dollars and will start trading tomorrow, Sunday, January the 20th as soon as the market opens.
First results and review will be published after two weeks of testing. Wish me luck !
I was actually right. Hal, the creator of the expert, answered my email promptly telling me that other traders had also made the exact same complaint. As a result, Hal emailed me a fixed version of the expert advisor which is now in a live forward test using an interbankfx mini account I use for this purpose. The account has a hundred US dollars and will start trading tomorrow, Sunday, January the 20th as soon as the market opens.
First results and review will be published after two weeks of testing. Wish me luck !
Expert Advisor Seller Responsability the H S R Criteria
For the past two years, I have been awed by the way in which forex expert advisor sellers take advantage of the ignorance of new forex traders. I have seen people selling expert advisors which are definitely a sure way to wipe out an account (and in many instances have done so), I have seen the hype, then the reality of the expert advisors.
In general, I believe that expert advisor sellers can be divided in two. The first group makes deficient expert advisors and sells them without the knowledge that they may be causing significant loses to people and the second group, which is almost criminal, that sells expert advisors to people with the knowledge that their product may cause account wipeouts. I know that the forex market is exceedingly risky and no expert advisor seller ever will be able to completely guarantee the success of his or her produts. But because of the amount of capital that is at stake here, I think that there should be a minimal standard for any ea that wants to be sold out to the public.
What I am proposing is a criteria for ea selling called the H.S.R, Honesty, Safety and Reliability. The criteria is a strict set of rules that needs to be followed in order for an expert advisor to have the best possible conditions for retail traders to experience. This in no way means that the ea will be profitable forever but it does mean that the ea creator thinks it will, to the best of his knowledge and that testing shows that the ea has been profitable in the past amongst several market conditions and that it has a good probability of being profitable in the future. The rules I propose for my criteria are :
1. The ea should be backtested with tick data (which is 99% modeling quality) at least from 2004, although longer backtesting should be preferred.
2. The ea should be live tested on a live account whose investor password is always available to the public and unchanged for a period of at least a year.
3. The above two items should be done with at least 3 different brokers in order to demonstrate that the expert advisor is broker independent.
4. The ea seller should explicitly indicate the maximum levels of draw down the account has experienced in the above tests as well as the average monthly return that could be expected.
If ea sellers around the world decided to follow my criteria, about 99% of the experts out there would be gone forever and forex retail traders could rest assured that the ea seller did all that was in his power to show that the ea is in fact profitable and that it can generate equity for its customers in the future. In the end, there is no obligation from any ea seller to follow any set of rules while trying to sell an ea. In reality a few good marketers can sell a totally unsound expert to the new retail traders or the people who dream about quick richness but it really is not about that. It is about being honest, not about ripping people off. With my criteria you would know that your ea seller is honest, safe and realiable. I challenge all commercial ea sellers out there to fulfill my criteria and become examples in the world of automated forex trading.
If you would like to learn more about free and commercial automated trading systems I have 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 !
In general, I believe that expert advisor sellers can be divided in two. The first group makes deficient expert advisors and sells them without the knowledge that they may be causing significant loses to people and the second group, which is almost criminal, that sells expert advisors to people with the knowledge that their product may cause account wipeouts. I know that the forex market is exceedingly risky and no expert advisor seller ever will be able to completely guarantee the success of his or her produts. But because of the amount of capital that is at stake here, I think that there should be a minimal standard for any ea that wants to be sold out to the public.
What I am proposing is a criteria for ea selling called the H.S.R, Honesty, Safety and Reliability. The criteria is a strict set of rules that needs to be followed in order for an expert advisor to have the best possible conditions for retail traders to experience. This in no way means that the ea will be profitable forever but it does mean that the ea creator thinks it will, to the best of his knowledge and that testing shows that the ea has been profitable in the past amongst several market conditions and that it has a good probability of being profitable in the future. The rules I propose for my criteria are :
1. The ea should be backtested with tick data (which is 99% modeling quality) at least from 2004, although longer backtesting should be preferred.
2. The ea should be live tested on a live account whose investor password is always available to the public and unchanged for a period of at least a year.
3. The above two items should be done with at least 3 different brokers in order to demonstrate that the expert advisor is broker independent.
4. The ea seller should explicitly indicate the maximum levels of draw down the account has experienced in the above tests as well as the average monthly return that could be expected.
If ea sellers around the world decided to follow my criteria, about 99% of the experts out there would be gone forever and forex retail traders could rest assured that the ea seller did all that was in his power to show that the ea is in fact profitable and that it can generate equity for its customers in the future. In the end, there is no obligation from any ea seller to follow any set of rules while trying to sell an ea. In reality a few good marketers can sell a totally unsound expert to the new retail traders or the people who dream about quick richness but it really is not about that. It is about being honest, not about ripping people off. With my criteria you would know that your ea seller is honest, safe and realiable. I challenge all commercial ea sellers out there to fulfill my criteria and become examples in the world of automated forex trading.
If you would like to learn more about free and commercial automated trading systems I have 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 !
Sabtu, 14 Juni 2014
Forex Killer Review an Unbiased Perspective and Strategy
Please do not consider this review as a recommendation to buy forex killer, I wrote it to help people who have already purchased the product and want to get something out of it but the software is barely of any more use than most of the freely available indicators out there. You can get the same or better results with simple indicator based systems !
I was looking at several forex trading systems the other day - mainly expert advisors - when I realized that my whole focus has always been on automated trading systems. I thought - maybe Im missing on some opportunities - so I decided to take a look at some of the most broadly known forex trading systems. I mean, the mass marketed, almost scam looking, forex systems. The ones with the testimonial filled selling pages where you are almost pushed to buy.
One almost instantly caught my attention due to the enormous amount of positive "reviews" available online. I say "reviews" because almost all of the web pages are absurdly biased. They have affiliate links all over the review, not meaning they are lying, but implying they have a concrete reason to do so, mainly getting a profit. For me, any review made on a product that includes an affiliate link is by definition not trustworthy, not necessarily dishonest.
So I decided to test it myself. It really wasnt that expensive so I guessed it wouldnt have hurt if I bought it. The forex system I bought is called Forex Killer.
The system promises heaven (sounds familiar?), telling you that you will earn thousands of dollars everyday. Quiet enough to quit your everyday job and dedicate yourself to forex trading. The website also states that the system is good for newbies (no experience required) and is easy and profitable by itself. The system basically tells you that it is the solution to all your financial problems. Well... I have a story to tell you.
At first glance, it really looked like a trading system for dummies. Big buttons, simple graphs, apparently simple interface and a simple instruction pdf. Well, I started to try and see the software through the eyes of a forex newbie trader, I was frankly lost. The instructions really dont tell you much. They dont tell you anything about actually trading, how to precisely interpret signals, make decisions, etc. This was a real turn off for me. You would have expected such an advertised piece of software to explain the whats, whys, whens and hows of the situation. What you get actually makes you feel like an abandoned child which ultimately would lead to you loosing your money.
After a while I started to figure the basics of the software. Save Metatrader data, import, calculate signals, execute signals. The problem actually has nothing to do with importing the data or calculating the signals. The missing part and the most crucial one, is forgetting to teach interpretation and discretion. What signals to ignore and which ones to execute. Im fairly literate and experienced in forex trading so I decided to apply some very basic rules and try to make the software work.
And I did just that. You can see the rules in the ebook I am selling for 75 USD - just KIDDING ! - I want to tell everyone this rules so that you can consider them yourselves and not actually loose the money you spent on this piece of software (keep in mind they are just a suggestion, no guarantees what so ever). The rules I am going to tell you have worked for me for the past week, actually making me 55 pips per day, average, still no losing days (only tested for two weeks though). I have managed to get about an 80% winning rate, all this on a live account (trading about 0.01 lots for safety !). I have spent about 10 minutes everyday on this.
It is a simple set of instructions anyone could follow (I hope even the newest of rookies) :
- Set a time of the day to start trades (does not matter what time, I have tested this, it still works). Do not trade on Fridays.
- Start up Metatrader (which you can download for free) and Forex Killer 2 (which I guess you bought).
- Open one hour charts for all the currency pairs available on Forex Killer (the ones on the drop down menu). Now save all the data from this charts in a given directory.
- Load one of them, for example EUR/USD, on Forex Killer 2
- Choose the appropriate currency and timeframe (1H) on the drop down menus.
- Press calculate and wait until it shows you the results
- This is the important part. You are going to see if the trading signals from short and long term periods match. If they do you, then you are going to look at the probabilities (below the charts) if they are above 70% (just has to be one of them), then you will return to metatrader and look at the daily chart for that currency pair. You will see where the daily chart trend is going (up, down, sideways), if your signal is in the direction of the daily trend, then we take the trade. For that we use the long term stop loss and take profit values. Also remember to set a 35 pip trailing stop for your order.
- If any of the above criteria is not met you do not take any trades and load another currency. If you take the trade then set up the trade and return to Forex Killer 2 and continue checking currencies.
- Setup as many trades as you find are completely compliant with the above rules.
- Let the trades be and check them the next day at the time you designated for this. Do not close any trades until they are closed by one of your preset stops or take profit limits.
- Repeat the above process and open orders again. You will hardly ever open more than 4 trades each day, with most of them closing during the first day, all of them on the second day almost all of the time. You will have 7 or 8 trades opened (that is the most Ive had).
The above has managed to work for me. The system seems to be quit profitable but it required a previously acquired knowledge of the forex market. No new trader could have figured that without considerable training, learning, etc.
Finally, the point you all came to this review for. I do not believe Forex Killer is a scam, neither is it what it advertises. It is definitely not what I expected in terms of the documentation that was provided with it, but I believe that with the above strategy the system has the potential to be very profitable. It is actually, profitable for the people that already have some or a lot of knowledge about forex trading. If you want to try my system do it on a demo account or on a live account with really small lot sizes, remember money management is the corner stone of success in the forex market.
I say it does deliver what it promises in a very shady way. It does not guide traders as they would have expected with a truly lacking, plain, simple instruction booklet that does not tell you anything really useful about how to use this system to trade. But the system is, as I have said, capable of generating consistent profitable signals (although signals would be very difficult to follow accurately with no trading experience).
My recommendation for you is to give it a try if you feel your knowledge on forex is not zero, you have little time for trading and you have realistic financial expectations from the forex market. That said, not thousands a day initially. It also seems to be a great system for busy people, as an example, taking me only a few minutes a day to use. So I hope this review was helpful for the people who bought fxkiller it and dont know how the heck it is used.
I wish you the best of luck in trading and thanks for reading this very long review. Please check my other reviews on automated trading systems (no affiliate links, I promise !) !
I was looking at several forex trading systems the other day - mainly expert advisors - when I realized that my whole focus has always been on automated trading systems. I thought - maybe Im missing on some opportunities - so I decided to take a look at some of the most broadly known forex trading systems. I mean, the mass marketed, almost scam looking, forex systems. The ones with the testimonial filled selling pages where you are almost pushed to buy.
One almost instantly caught my attention due to the enormous amount of positive "reviews" available online. I say "reviews" because almost all of the web pages are absurdly biased. They have affiliate links all over the review, not meaning they are lying, but implying they have a concrete reason to do so, mainly getting a profit. For me, any review made on a product that includes an affiliate link is by definition not trustworthy, not necessarily dishonest.
So I decided to test it myself. It really wasnt that expensive so I guessed it wouldnt have hurt if I bought it. The forex system I bought is called Forex Killer.
The system promises heaven (sounds familiar?), telling you that you will earn thousands of dollars everyday. Quiet enough to quit your everyday job and dedicate yourself to forex trading. The website also states that the system is good for newbies (no experience required) and is easy and profitable by itself. The system basically tells you that it is the solution to all your financial problems. Well... I have a story to tell you.
At first glance, it really looked like a trading system for dummies. Big buttons, simple graphs, apparently simple interface and a simple instruction pdf. Well, I started to try and see the software through the eyes of a forex newbie trader, I was frankly lost. The instructions really dont tell you much. They dont tell you anything about actually trading, how to precisely interpret signals, make decisions, etc. This was a real turn off for me. You would have expected such an advertised piece of software to explain the whats, whys, whens and hows of the situation. What you get actually makes you feel like an abandoned child which ultimately would lead to you loosing your money.
After a while I started to figure the basics of the software. Save Metatrader data, import, calculate signals, execute signals. The problem actually has nothing to do with importing the data or calculating the signals. The missing part and the most crucial one, is forgetting to teach interpretation and discretion. What signals to ignore and which ones to execute. Im fairly literate and experienced in forex trading so I decided to apply some very basic rules and try to make the software work.
And I did just that. You can see the rules in the ebook I am selling for 75 USD - just KIDDING ! - I want to tell everyone this rules so that you can consider them yourselves and not actually loose the money you spent on this piece of software (keep in mind they are just a suggestion, no guarantees what so ever). The rules I am going to tell you have worked for me for the past week, actually making me 55 pips per day, average, still no losing days (only tested for two weeks though). I have managed to get about an 80% winning rate, all this on a live account (trading about 0.01 lots for safety !). I have spent about 10 minutes everyday on this.
It is a simple set of instructions anyone could follow (I hope even the newest of rookies) :
- Set a time of the day to start trades (does not matter what time, I have tested this, it still works). Do not trade on Fridays.
- Start up Metatrader (which you can download for free) and Forex Killer 2 (which I guess you bought).
- Open one hour charts for all the currency pairs available on Forex Killer (the ones on the drop down menu). Now save all the data from this charts in a given directory.
- Load one of them, for example EUR/USD, on Forex Killer 2
- Choose the appropriate currency and timeframe (1H) on the drop down menus.
- Press calculate and wait until it shows you the results
- This is the important part. You are going to see if the trading signals from short and long term periods match. If they do you, then you are going to look at the probabilities (below the charts) if they are above 70% (just has to be one of them), then you will return to metatrader and look at the daily chart for that currency pair. You will see where the daily chart trend is going (up, down, sideways), if your signal is in the direction of the daily trend, then we take the trade. For that we use the long term stop loss and take profit values. Also remember to set a 35 pip trailing stop for your order.
- If any of the above criteria is not met you do not take any trades and load another currency. If you take the trade then set up the trade and return to Forex Killer 2 and continue checking currencies.
- Setup as many trades as you find are completely compliant with the above rules.
- Let the trades be and check them the next day at the time you designated for this. Do not close any trades until they are closed by one of your preset stops or take profit limits.
- Repeat the above process and open orders again. You will hardly ever open more than 4 trades each day, with most of them closing during the first day, all of them on the second day almost all of the time. You will have 7 or 8 trades opened (that is the most Ive had).
The above has managed to work for me. The system seems to be quit profitable but it required a previously acquired knowledge of the forex market. No new trader could have figured that without considerable training, learning, etc.
Finally, the point you all came to this review for. I do not believe Forex Killer is a scam, neither is it what it advertises. It is definitely not what I expected in terms of the documentation that was provided with it, but I believe that with the above strategy the system has the potential to be very profitable. It is actually, profitable for the people that already have some or a lot of knowledge about forex trading. If you want to try my system do it on a demo account or on a live account with really small lot sizes, remember money management is the corner stone of success in the forex market.
I say it does deliver what it promises in a very shady way. It does not guide traders as they would have expected with a truly lacking, plain, simple instruction booklet that does not tell you anything really useful about how to use this system to trade. But the system is, as I have said, capable of generating consistent profitable signals (although signals would be very difficult to follow accurately with no trading experience).
My recommendation for you is to give it a try if you feel your knowledge on forex is not zero, you have little time for trading and you have realistic financial expectations from the forex market. That said, not thousands a day initially. It also seems to be a great system for busy people, as an example, taking me only a few minutes a day to use. So I hope this review was helpful for the people who bought fxkiller it and dont know how the heck it is used.
I wish you the best of luck in trading and thanks for reading this very long review. Please check my other reviews on automated trading systems (no affiliate links, I promise !) !
Metatrader 5 Public Beta in the Horizon
After more than a year of development, the people at metaquotes have finally broken their silence to reveal that the metatrader 5 platform is now in a closed beta testing with some metaquotes forum members. The new metatrader 5 platform was introduced into its first testing phase in late September and, according to the developers, it will enter public beta testing soon. Of course, this beta testing will not include any live trading yet as we still dont know any brokers who will be pioneering the use of this novel platform.
As for the changes introduced, the metatrader 5 platform will include several improvements over its current version. There are many upgrades for manual traders who will be able to execute predetermined orders with the click of a button (like, open 5 longs with 20 take profit and 30 stop loss and the like) and this will all be done within a trading chart. Other smaller estetical improvements, like the ability to place any image on the trading chart are also going to be implemented. Without a doubt, the metatrader 5 platform will become a new powerful tool for all manual traders out there.
Regarding automated trading, the changes will be even more productive and drammatic. The current programming language, mql4, will be replaced with the new mql5 language which will have many advantages over the current version. For example, the mql5 language will be totally object oriented, a fact that will save us, programmers, a lot of work and time with dealing with these expert advisors. The language will also probably be easier to learn for beginners since , for example, the need to build loops to select orders (which makes the scripts inefficient) will no longer be necessary and orders will be easily selectable. Programming will therefore become much easier.
The only problem is that all current mql4 programmed expert advisors will not work with the new mql5 language, therefore, all programs will need to be ported to the new language if people want to keep using them with the new platform. However you should not panic, brokers will offer mt4 support for at least 2 years, until 2012, and through all that time, we will have time to port all our programs to the new language. In what concerns my expert advisors, I will certainly port all of them as soon as the mql5 language is out, just to start learning the language and testing all the new features.
If you want to know more specific details like the quality of the new strategy tester, the availability of tick charts, etc, sadly all these information has not been revealed yet and we will have to see the program working in the public beta to find out. However, the fact that history is now stored in tick format should hint that custom timeframes and volume charts (as well as more accurate testing) should be available.
If you would like to learn more about my current automated trading systems and how you can start trading profitably with a long term profitable system you understand 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 !
As for the changes introduced, the metatrader 5 platform will include several improvements over its current version. There are many upgrades for manual traders who will be able to execute predetermined orders with the click of a button (like, open 5 longs with 20 take profit and 30 stop loss and the like) and this will all be done within a trading chart. Other smaller estetical improvements, like the ability to place any image on the trading chart are also going to be implemented. Without a doubt, the metatrader 5 platform will become a new powerful tool for all manual traders out there.
Regarding automated trading, the changes will be even more productive and drammatic. The current programming language, mql4, will be replaced with the new mql5 language which will have many advantages over the current version. For example, the mql5 language will be totally object oriented, a fact that will save us, programmers, a lot of work and time with dealing with these expert advisors. The language will also probably be easier to learn for beginners since , for example, the need to build loops to select orders (which makes the scripts inefficient) will no longer be necessary and orders will be easily selectable. Programming will therefore become much easier.
The only problem is that all current mql4 programmed expert advisors will not work with the new mql5 language, therefore, all programs will need to be ported to the new language if people want to keep using them with the new platform. However you should not panic, brokers will offer mt4 support for at least 2 years, until 2012, and through all that time, we will have time to port all our programs to the new language. In what concerns my expert advisors, I will certainly port all of them as soon as the mql5 language is out, just to start learning the language and testing all the new features.
If you want to know more specific details like the quality of the new strategy tester, the availability of tick charts, etc, sadly all these information has not been revealed yet and we will have to see the program working in the public beta to find out. However, the fact that history is now stored in tick format should hint that custom timeframes and volume charts (as well as more accurate testing) should be available.
If you would like to learn more about my current automated trading systems and how you can start trading profitably with a long term profitable system you understand 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 !
Jumat, 13 Juni 2014
HOW TO PLAY FOREX
FOREX is a simple business of the exchange value of the currency of a country against another country where we only observe movements rise and fall of indigo and when the currency price fluctuations that we do bisnis.Nah to learn it is easy you simply sign up and have available a bonus 5 free dollars for your initial capital of Main Foreign direct.
HOW TO PLAY FOREX is the easiest way to get money, let alone have provided the initial capital in the form of cash bonus equal to 5 Dollar.Cara original Main Forex quickly and easily you will understand by reading this article and direct forex you can practice while learning Forex.
Have you found a free way of business, business fastest making money, and business without outside capital. Surely the answer has never existed.
Well from now on you will be shown how that is by way of a brief Main Forex How to make money nowadays is by way Main Forex.s Right once there is no other way than with this Forex Business.
Whoever the person is known origin Forex Trade Forex will surely continue to play, such as addiction, I am sure of it. Because Playing Forex is a simple personal work which only played online from the Internet only. Business capital not Forex you need to think about, you can even money 5 DOLLARS FREE after registering Forex that can directly create play forex capital.
And delicious that money directly into your account. Great right? ... Make people like you are the hunters must have a business forex business is best suited to play, definitely enjoy BUSINESS LEARN FOREX really no risk, rather than looking for quick wealth through corruption by a million taxable risk of confinement.
More enaknya more business with Main mode FX does not need to have a significant degree of seriousness its capital charge only. That delicious Playing Forex business.
Here we guide you:
HOW TO APPLY FOREX: Forex how to register the fastest and get a bonus of $ 5 in capital
HOW ONLINE FOREX BUSINESS; like what the heck it means business online forex whether I should try it
HOW TO DEPOSIT FOREX (plus capital), otherwise if I had wanted to raise capital 1jt.Saya capital, how to deposit it Valas.
HOW withdraw (take profits), when its a lot of luck, how do I withdraw or draw benefits.
LEARN TO PLAY FOREX; I do not have substantial capital now, if I could start learning to play the Forex now.
Do not worry we give BUSINESS TUTORIAL and HOW TO PLAY FOREX FOREX it deliberately for the people of Indonesia have Business Studies, at least once tried to engage in the business world Valas.Kami not charge for BUSINESS LEARN FOREX has even provided capital to Learn Forex.
Everything is described with a simple, complete and detailed, because the only sign you just get the original money from the manager of $ 5 (about 50.000, -) for initial capital in order to play Forex Forex directly into your livelihood.
This step SIGN IN FOREX:
1. Click Banner below:
2. Click on the Open Account
3. Fill in all the marked with an asterisk (*)
4.Username: select the name or call a unique and motivating Example: bossvalas77
5. Password on the contents of at least 8 characters, combine them with numbers. Example: bmwmerah2000
6. Frist Name: first name based on ID or drivers license.
7. Midle Initial: initials of middle name if you have any.
8. Last Name: your last name.
9. Street Address: fill in your address in accordance with ID (ID card or drivers license).
10. City: a city name as ID.
11. ZIP / Postal Code: Postal code
12. State: provinces now occupied
13. Country: Select Indonesia.
14. Phone: enter phone no home or HP are still active.
15. E-mail: fill in the email address is still active and is often used, because each confirmation and notification will be sent to the e-mail address is optional now.
16. After finishing her fill out the form, click "Continue". both form and content
17. In the second form, select Standard Forex Trader.
18. To "Recovery Question" and "Recovery Answer" please be filled in accordance with an easy to remember and enjoy, because this will be asked if forgot password MARKETIVA.misalnya: What is your pets name (what your pets name). You are the contents of rabbits, cats or cow.
19. Click "Next" to proceed to the sheet and endorsement agreements with Marketiva.
20. On this page, is a procedural from brokerage firms to investors. It is an obligation to notify any company that is in foreign currency trading so that investors do not feel disadvantaged. Then in the next stetment, from the Investor that the Investor has understood itself to all agreements that have been made with the Marketiva. in English: I have read, understood, and agree with the Service Agreement under the which it Marketiva Corporation Provides services and products. Also I have read and understood the Risk Disclosure Statement and I am willing and Able to assume you give risks.Silahkan Such checklists as a symbol that you have to agree with existing agreements.
21. Click "Finish" process is complete.
PLEASE CHECK YOUR E-MAIL
There are E-mail Support Marketiva please open and click on https /:: www.marketiva.com/index.ncre?page=identifikation fill orders.
22.kemudian after that will be in direct go to pieces "Get Streamster" to download the software from Marketiva.
FOR DOWNLOAD HERE PLEASE
23. Click "Streamster TM Instalation Package", then please install the computer.
The process has been completed and could be trading right now, do not forget to record all the data on specific books of business.
To refine Trading verify data immediately (scan KTP / SIM) scans you can request service ID card / driving license or a way to bring a USB Flash Dish and KTP / SIM Scan native to the place usually in the cafe, Wartel or place a photocopy, then save the scan in the USB in the form of a maximum size of 100Kb image (scanned back and forth). From the picture you upload to Marketiva, do as follows:
FOR VERIFICATION OF DATA HERE PLEASE
HOW TO VERIFICATION OF DATA self:
1. Scan ID card or drivers license front and back with each of a maximum size of 100KB only
2. Click the link marketiva
3. After clicking the link above will be asked username and password first. Enter your username and password that was created earlier, then click "Login"
4. Enter the ID card or drivers license scanned the front and rear on each column by clicking on the browse tsb.
5. When finished browsing click upload and wait 2 minutes to upload a successful outcome.
6. Close the program then reopen soon marketiva
7. Open Streamster program that was installed earlier and fill in your username & password.
Register Now Youve Done congratulations!
You can also get info from How To Play Valas Marketiva chatt room through a question and answer directly to the Support Marketiva although with the Indonesian language. Once logged on account Marketiva chat room go to international and Indonesia, I click the button at the top groups streamster window, select an existing list like a chat room, select international and Indonesian, click OK, then automatically enter the international room and Indonesia. To start trading, just click buy to buy and sell to sell while discussions with the support or ask questions and learn to play forex / FOREX Marketiva to support personnel from the Indonesian, international as well be in the room in the room of Indonesia. Support personnel are persons or guide with a nick that is the letter i (information) in front nicknya, they will be happy to directly help you understand the ways in Marketiva to advanced transaction like a chat. Ask politely with good language must be given the most valuable science.
How FOREX CAPITAL PLAY?
Please Play Forex with your own ability, indeed if you want a large capital gain should be larger. We are not forced because of money alone can play forex free. If it is serious please add capital to the deposit so the results are also larger and feels money. can learn how to deposit on the next page.
HOW TO PLAY FOREX is the easiest way to get money, let alone have provided the initial capital in the form of cash bonus equal to 5 Dollar.Cara original Main Forex quickly and easily you will understand by reading this article and direct forex you can practice while learning Forex.
Have you found a free way of business, business fastest making money, and business without outside capital. Surely the answer has never existed.
Well from now on you will be shown how that is by way of a brief Main Forex How to make money nowadays is by way Main Forex.s Right once there is no other way than with this Forex Business.
Whoever the person is known origin Forex Trade Forex will surely continue to play, such as addiction, I am sure of it. Because Playing Forex is a simple personal work which only played online from the Internet only. Business capital not Forex you need to think about, you can even money 5 DOLLARS FREE after registering Forex that can directly create play forex capital.
And delicious that money directly into your account. Great right? ... Make people like you are the hunters must have a business forex business is best suited to play, definitely enjoy BUSINESS LEARN FOREX really no risk, rather than looking for quick wealth through corruption by a million taxable risk of confinement.
More enaknya more business with Main mode FX does not need to have a significant degree of seriousness its capital charge only. That delicious Playing Forex business.
Here we guide you:
HOW TO APPLY FOREX: Forex how to register the fastest and get a bonus of $ 5 in capital
HOW ONLINE FOREX BUSINESS; like what the heck it means business online forex whether I should try it
HOW TO DEPOSIT FOREX (plus capital), otherwise if I had wanted to raise capital 1jt.Saya capital, how to deposit it Valas.
HOW withdraw (take profits), when its a lot of luck, how do I withdraw or draw benefits.
LEARN TO PLAY FOREX; I do not have substantial capital now, if I could start learning to play the Forex now.
Do not worry we give BUSINESS TUTORIAL and HOW TO PLAY FOREX FOREX it deliberately for the people of Indonesia have Business Studies, at least once tried to engage in the business world Valas.Kami not charge for BUSINESS LEARN FOREX has even provided capital to Learn Forex.
This step SIGN IN FOREX:
1. Click Banner below:
2. Click on the Open Account
3. Fill in all the marked with an asterisk (*)
4.Username: select the name or call a unique and motivating Example: bossvalas77
5. Password on the contents of at least 8 characters, combine them with numbers. Example: bmwmerah2000
6. Frist Name: first name based on ID or drivers license.
7. Midle Initial: initials of middle name if you have any.
8. Last Name: your last name.
9. Street Address: fill in your address in accordance with ID (ID card or drivers license).
10. City: a city name as ID.
11. ZIP / Postal Code: Postal code
12. State: provinces now occupied
13. Country: Select Indonesia.
14. Phone: enter phone no home or HP are still active.
15. E-mail: fill in the email address is still active and is often used, because each confirmation and notification will be sent to the e-mail address is optional now.
16. After finishing her fill out the form, click "Continue". both form and content
17. In the second form, select Standard Forex Trader.
18. To "Recovery Question" and "Recovery Answer" please be filled in accordance with an easy to remember and enjoy, because this will be asked if forgot password MARKETIVA.misalnya: What is your pets name (what your pets name). You are the contents of rabbits, cats or cow.
19. Click "Next" to proceed to the sheet and endorsement agreements with Marketiva.
20. On this page, is a procedural from brokerage firms to investors. It is an obligation to notify any company that is in foreign currency trading so that investors do not feel disadvantaged. Then in the next stetment, from the Investor that the Investor has understood itself to all agreements that have been made with the Marketiva. in English: I have read, understood, and agree with the Service Agreement under the which it Marketiva Corporation Provides services and products. Also I have read and understood the Risk Disclosure Statement and I am willing and Able to assume you give risks.Silahkan Such checklists as a symbol that you have to agree with existing agreements.
21. Click "Finish" process is complete.
PLEASE CHECK YOUR E-MAIL
There are E-mail Support Marketiva please open and click on https /:: www.marketiva.com/index.ncre?page=identifikation fill orders.
22.kemudian after that will be in direct go to pieces "Get Streamster" to download the software from Marketiva.
FOR DOWNLOAD HERE PLEASE
23. Click "Streamster TM Instalation Package", then please install the computer.
The process has been completed and could be trading right now, do not forget to record all the data on specific books of business.
To refine Trading verify data immediately (scan KTP / SIM) scans you can request service ID card / driving license or a way to bring a USB Flash Dish and KTP / SIM Scan native to the place usually in the cafe, Wartel or place a photocopy, then save the scan in the USB in the form of a maximum size of 100Kb image (scanned back and forth). From the picture you upload to Marketiva, do as follows:
FOR VERIFICATION OF DATA HERE PLEASE
HOW TO VERIFICATION OF DATA self:
1. Scan ID card or drivers license front and back with each of a maximum size of 100KB only
2. Click the link marketiva
3. After clicking the link above will be asked username and password first. Enter your username and password that was created earlier, then click "Login"
4. Enter the ID card or drivers license scanned the front and rear on each column by clicking on the browse tsb.
5. When finished browsing click upload and wait 2 minutes to upload a successful outcome.
6. Close the program then reopen soon marketiva
7. Open Streamster program that was installed earlier and fill in your username & password.
Register Now Youve Done congratulations!
You can also get info from How To Play Valas Marketiva chatt room through a question and answer directly to the Support Marketiva although with the Indonesian language. Once logged on account Marketiva chat room go to international and Indonesia, I click the button at the top groups streamster window, select an existing list like a chat room, select international and Indonesian, click OK, then automatically enter the international room and Indonesia. To start trading, just click buy to buy and sell to sell while discussions with the support or ask questions and learn to play forex / FOREX Marketiva to support personnel from the Indonesian, international as well be in the room in the room of Indonesia. Support personnel are persons or guide with a nick that is the letter i (information) in front nicknya, they will be happy to directly help you understand the ways in Marketiva to advanced transaction like a chat. Ask politely with good language must be given the most valuable science.
How FOREX CAPITAL PLAY?
Please Play Forex with your own ability, indeed if you want a large capital gain should be larger. We are not forced because of money alone can play forex free. If it is serious please add capital to the deposit so the results are also larger and feels money. can learn how to deposit on the next page.
Knowing Before Knowing The dangers in Hindsight
A few days ago, one of my new pupils in forex told me that he had been going through some automated trading system websites and that he payed close attention to the disclaimer shown at the end (shouldnt we all pay attention to that disclaimer). He wanted my opinion about hindsight and why it is important to consider it when trading either a manual or an automated trading system. Since this is an extremely important subject I wanted to dedicate todays post to the discussion of hindsight and how it can affect our trading negatively, specially when evaluating discretionary trading strategies. What is the problem of hindsight ?
To begin with, having hindsight is knowing something before it happens, that is, knowing the future. When we are evaluating our automated or manual trading strategies we have the benefit of hindsight. We all know the EUR/USD reached a high near 1.60 and during the next year dropped to near 1.29. We know that the pair then rallied towards 1.5, we all know this. What is wrong about this ? Well, it depends. I thought that I was barely affected by hindsight until I discovered that on an statistical study of a system I was doing on the EUR/USD I had been subconsciously supressing short positions before 2008 and long positions after mid 2008. I was in fact getting better results because I knew what was going to happen and I was subconsciously looking for profitable results. This is an inocent, bad consequence of hindsight, I was overestimating profitability.
Of course, there is a much more evil side to hindsight. Expert Advisor sellers looking to get very high profits in backtesting results can effectively manipulate their systems so that they "know the future" and trade in an exceedingly profitable fashion on historical data. Obviously if the system has any "hint" of the future it will most likely achieve very high profitable returns. This is the main reason why we cannot trust mere backtests from EA sellers, we always need live tests that show consistency with the backtests so that we know that the system behaves the same in real live trading conditions as it does in simulation.
Then it gets worse when systems are designed around hindsight. As an example, it has become popular to trade grid systems on the EUR/CHF or the AUD/NZD based on the hypothesis that this pairs are range bound. How do you know they are rangebound ? As a matter of fact, had you made the same hypothesis 5 years ago you would have gone through some very bad range extensions that would have wiped your account. Backtesting strategies that are based on a range that we know now but previously ignored obviously yields profit, since this range did happen. But could you have forseen that range somehow in 2000 ? 2005 ? You couldnt have. The same applies now, could you forsee the range that will be in place in 2020 ? NO ! Will there even be a range then ? As you can see, grid trading is a perfect example of a system designed around hindsight that assumes the future will be the past, nothing could be more wrong.
Hindsight is a very powerful force. When you evaluate or program either your automated or manual trading systems you should be very careful to leave hindsight aside. You should always consider that a healthy system must have no assumptions either about the past or the future, good long term profitable systems trade as market conditions change and have no assumptions about absolute ranges, past trend directions, etc. A good system trades the market as it plays out and assumes nothing about where it is going or where it has gone, it simply trades when the market shows a certain scenario it has been programmed to react to, then it takes advantage of it.
If you would like to learn more about hindsight free automated trading strategies designed to tackle varied market conditions through ATR based techniques and other adaptive tactics 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 !
To begin with, having hindsight is knowing something before it happens, that is, knowing the future. When we are evaluating our automated or manual trading strategies we have the benefit of hindsight. We all know the EUR/USD reached a high near 1.60 and during the next year dropped to near 1.29. We know that the pair then rallied towards 1.5, we all know this. What is wrong about this ? Well, it depends. I thought that I was barely affected by hindsight until I discovered that on an statistical study of a system I was doing on the EUR/USD I had been subconsciously supressing short positions before 2008 and long positions after mid 2008. I was in fact getting better results because I knew what was going to happen and I was subconsciously looking for profitable results. This is an inocent, bad consequence of hindsight, I was overestimating profitability.
Of course, there is a much more evil side to hindsight. Expert Advisor sellers looking to get very high profits in backtesting results can effectively manipulate their systems so that they "know the future" and trade in an exceedingly profitable fashion on historical data. Obviously if the system has any "hint" of the future it will most likely achieve very high profitable returns. This is the main reason why we cannot trust mere backtests from EA sellers, we always need live tests that show consistency with the backtests so that we know that the system behaves the same in real live trading conditions as it does in simulation.
Then it gets worse when systems are designed around hindsight. As an example, it has become popular to trade grid systems on the EUR/CHF or the AUD/NZD based on the hypothesis that this pairs are range bound. How do you know they are rangebound ? As a matter of fact, had you made the same hypothesis 5 years ago you would have gone through some very bad range extensions that would have wiped your account. Backtesting strategies that are based on a range that we know now but previously ignored obviously yields profit, since this range did happen. But could you have forseen that range somehow in 2000 ? 2005 ? You couldnt have. The same applies now, could you forsee the range that will be in place in 2020 ? NO ! Will there even be a range then ? As you can see, grid trading is a perfect example of a system designed around hindsight that assumes the future will be the past, nothing could be more wrong.
Hindsight is a very powerful force. When you evaluate or program either your automated or manual trading systems you should be very careful to leave hindsight aside. You should always consider that a healthy system must have no assumptions either about the past or the future, good long term profitable systems trade as market conditions change and have no assumptions about absolute ranges, past trend directions, etc. A good system trades the market as it plays out and assumes nothing about where it is going or where it has gone, it simply trades when the market shows a certain scenario it has been programmed to react to, then it takes advantage of it.
If you would like to learn more about hindsight free automated trading strategies designed to tackle varied market conditions through ATR based techniques and other adaptive tactics 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 !
Kamis, 12 Juni 2014
Forex Expert Advisors 4xgreed an Unbiased Review
Today I saw a comment on a blog that talked about a "great trading system that would come out in December". This new and exciting trading system is called 4xgreed and today will be subjected to my review. Even tough the system has not been released yet, the information provided by the authors is enough for me to analyze and decide whether or not this expert is worth testing or buying. By simply analyzing the trading results shown by the authors I can certainly gauge the likeness of this EA being long term profitable.
First of all, the expert advisors web page is fairly decent with no huge amount of hype or unnecessary marketing. In fact, absolutely no claims are done about the experts profitability, reason why I imagine the author(s) prefer the clients themselves to decide the profitability in virtue of the live/backtesting the people at 4xgreed show. There is no clear explanation of the nature of the experts trading but they do say that the expert is able to adjust to market volatility and market conditions via neural networks and genetic algorithms. To me, the mentioning of these factors is just to make people feel the system is "advanced" as there are no proven results in live testing that have shown that a strategy can in fact benefit in the long term from any of these two approaches. In fact, neural networks have been proven to overfit expert advisors to the past, preventing effective adapation to "actual" market conditions.
The most interesting part of this expert comes from the testing section. The people at 4xgreed have done a good job at presenting several brokers, account sizes and backtesting results. This is a sure way to show an expert is both broker consistent and profitable. However, by analyzing the trading statements, several things come to mind.
The first bad characteristic of this EA is the low value of the TP. With a TP in the order of 14 pips (EUR/USD), this expert advisor will sure have problems with one minute fractal interpolation in a very significant manner. Furthermore, the fact that the risk to reward ratio is 65:14 is also not very conforting. This disparity between the stop loss size and the take profit size makes the errors in backtesting favor winning trades more than losing trades because of their much smaller size. This is evidently seen in the ten year backtesting that shows the typical, unrealistic returns when fractal interpolation errors are predominant. An almost 5:1 risk to reward ratio is also not a very favorable characteristic since it means that the expert is relying on the randomness of short term movements to gain profits, rather than reliable trend following or similar types of trades.
Live testing at the moment is rather limited so there is no room for big conclusions regarding them. The only thing we could say is that, as it is inferred from the above discussion, there is disparity between live and backtesting which makes backtesting completely meaningless. I think that systems that cannot be evaluated in the past and therefore cannot be said to be long term profitable with good certainty, are NOT worth buying. Given the nature of the risk to reward and the backtesting results I would be inclined to think that this expert will have similar results as the shark EA. I am however, opened to change my mind after we have two years of live testing data that show that the expert can be profitable, obviously with lower profits than the backtesting shows. Before this, using this expert is as good as gambling as one does not have ANY reliable historical testing that shows if this EA has any "adaptability" at all.
As I have said, for now and at least the first one or two years, I will consider this expert advisor NOT worth buying. If you would like to learn more about my criteria for long term profitability and how you too can trade with long term profitable systems that protect your equity and have controlled risk levels 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 !
First of all, the expert advisors web page is fairly decent with no huge amount of hype or unnecessary marketing. In fact, absolutely no claims are done about the experts profitability, reason why I imagine the author(s) prefer the clients themselves to decide the profitability in virtue of the live/backtesting the people at 4xgreed show. There is no clear explanation of the nature of the experts trading but they do say that the expert is able to adjust to market volatility and market conditions via neural networks and genetic algorithms. To me, the mentioning of these factors is just to make people feel the system is "advanced" as there are no proven results in live testing that have shown that a strategy can in fact benefit in the long term from any of these two approaches. In fact, neural networks have been proven to overfit expert advisors to the past, preventing effective adapation to "actual" market conditions.
The most interesting part of this expert comes from the testing section. The people at 4xgreed have done a good job at presenting several brokers, account sizes and backtesting results. This is a sure way to show an expert is both broker consistent and profitable. However, by analyzing the trading statements, several things come to mind.
The first bad characteristic of this EA is the low value of the TP. With a TP in the order of 14 pips (EUR/USD), this expert advisor will sure have problems with one minute fractal interpolation in a very significant manner. Furthermore, the fact that the risk to reward ratio is 65:14 is also not very conforting. This disparity between the stop loss size and the take profit size makes the errors in backtesting favor winning trades more than losing trades because of their much smaller size. This is evidently seen in the ten year backtesting that shows the typical, unrealistic returns when fractal interpolation errors are predominant. An almost 5:1 risk to reward ratio is also not a very favorable characteristic since it means that the expert is relying on the randomness of short term movements to gain profits, rather than reliable trend following or similar types of trades.
Live testing at the moment is rather limited so there is no room for big conclusions regarding them. The only thing we could say is that, as it is inferred from the above discussion, there is disparity between live and backtesting which makes backtesting completely meaningless. I think that systems that cannot be evaluated in the past and therefore cannot be said to be long term profitable with good certainty, are NOT worth buying. Given the nature of the risk to reward and the backtesting results I would be inclined to think that this expert will have similar results as the shark EA. I am however, opened to change my mind after we have two years of live testing data that show that the expert can be profitable, obviously with lower profits than the backtesting shows. Before this, using this expert is as good as gambling as one does not have ANY reliable historical testing that shows if this EA has any "adaptability" at all.
As I have said, for now and at least the first one or two years, I will consider this expert advisor NOT worth buying. If you would like to learn more about my criteria for long term profitability and how you too can trade with long term profitable systems that protect your equity and have controlled risk levels 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 !
Lessons in Trading Psychology Removing Intuition
As I told you last time I talked about my little project to help two completely "new to forex" and young people learn how to trade forex, trading psychology and the ability to control ones emotions is vital in order to be successful in this business. However there is no greater enemy and no worse problem in forex trading than trading above ones own emotions and personality traits. The evident reason why it is not easy to see this when your starting to trade is mainly because there is, at the beginning, no "strong" evidence that suggests that your emotional trading is "wrong". As a matter of fact, many new traders start with very good results, doubling or tripling their accounts in little time. However these results are never permanent and with time the market cashes on the uncapped exposure that is "emotional trading". How can we remove this daemon from our trading ? How can we teach new traders to trade with rational analysis instead of red blood emotion ?
This is not easy task. During the years I have made and tried many emotional techniques but I havent found one that works all the time. Depending on the actual persons traits and their actual commitment to the technique it may be difficult or sometimes even impossible to do. However I have seen that the best approach to defeating yourself when trading is to learn, truly learn why your emotional decisions are not the decisions you should follow.
My approach is quiet simple, I will ask a new trader NOT to restrain itself from any type of trading decision he or she wants to make. You want to buy because the sun is shinning ? Buy. You want to sell because you have a "hunch" that the GBP/USD is going down ? Then sell. The only thing I ask from traders is that they keep both things separate. In one account you will trade emotionally and on another account you will trade rationally. When you take a rational trade you need to log into your journal the exact reasons why you entered the trade, how much you traded, when you entered, when you will exit, etc. All these criteria needs to be crystal clear. On you emotional account, you will do the exact same thing, only that "any" criteria will be valid since it is just an account to trade "whatever".
The very important aspect is that the emotional account will be a live account while the rational account will be a demo account. Then you will truly see all your emotional aspects into play when managing real money while you will have no incentive to be emotional on the other account because it just does not represent real capital. In the short term people may find that their emotional trading is much better than their rational trading. Of course, this success will be limited and it will eventually lead to the wiping of the live account while the demo account will be far from a wipe out, with some draw down in the worst case scenario. When I have done this I let people wipe the live account which is usually a 100 USD micro account which is a small price to pay for the extremely valuable lesson learned.
The only way to defeat your emotions is to realize through experience that your emotions and "hunches" do not allow you to be profitable in the long term and that emotional trading leads to an uncapped market exposure. The only way to truly know this is through experience, there is no shortcut, the experience can be a very meaningful and efficient experience as I mentioned above or it can be a painful experience involving thousands of dollars and even 10 to 20 years. It is really the decision of the trader and whether the trader is alone or learning with the help of an already profitable experienced companion.
My advice, have a plan and analyze things. If you make 100 trades and analyze non of them then it is like if you had made 0. Every time you make a trade go through its life and learn from it. The important thing is to learn from our mistakes, after all, in the words of Oscar Wilde, this is just the name we give to our experiences. If you are interested in algorithmic trading dont think that it will rid you of all emotion, on the contrary, automated trading is emotionally harder than manual trading and involves a different psychological approach. If you would like to learn more about this 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 !
This is not easy task. During the years I have made and tried many emotional techniques but I havent found one that works all the time. Depending on the actual persons traits and their actual commitment to the technique it may be difficult or sometimes even impossible to do. However I have seen that the best approach to defeating yourself when trading is to learn, truly learn why your emotional decisions are not the decisions you should follow.
My approach is quiet simple, I will ask a new trader NOT to restrain itself from any type of trading decision he or she wants to make. You want to buy because the sun is shinning ? Buy. You want to sell because you have a "hunch" that the GBP/USD is going down ? Then sell. The only thing I ask from traders is that they keep both things separate. In one account you will trade emotionally and on another account you will trade rationally. When you take a rational trade you need to log into your journal the exact reasons why you entered the trade, how much you traded, when you entered, when you will exit, etc. All these criteria needs to be crystal clear. On you emotional account, you will do the exact same thing, only that "any" criteria will be valid since it is just an account to trade "whatever".
The very important aspect is that the emotional account will be a live account while the rational account will be a demo account. Then you will truly see all your emotional aspects into play when managing real money while you will have no incentive to be emotional on the other account because it just does not represent real capital. In the short term people may find that their emotional trading is much better than their rational trading. Of course, this success will be limited and it will eventually lead to the wiping of the live account while the demo account will be far from a wipe out, with some draw down in the worst case scenario. When I have done this I let people wipe the live account which is usually a 100 USD micro account which is a small price to pay for the extremely valuable lesson learned.
The only way to defeat your emotions is to realize through experience that your emotions and "hunches" do not allow you to be profitable in the long term and that emotional trading leads to an uncapped market exposure. The only way to truly know this is through experience, there is no shortcut, the experience can be a very meaningful and efficient experience as I mentioned above or it can be a painful experience involving thousands of dollars and even 10 to 20 years. It is really the decision of the trader and whether the trader is alone or learning with the help of an already profitable experienced companion.
My advice, have a plan and analyze things. If you make 100 trades and analyze non of them then it is like if you had made 0. Every time you make a trade go through its life and learn from it. The important thing is to learn from our mistakes, after all, in the words of Oscar Wilde, this is just the name we give to our experiences. If you are interested in algorithmic trading dont think that it will rid you of all emotion, on the contrary, automated trading is emotionally harder than manual trading and involves a different psychological approach. If you would like to learn more about this 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 !
Rabu, 11 Juni 2014
The Risk to Reward and the Number of Loses
You may have seen on most of my automated trading system reviews and my system design blog posts that I usually put a lot of emphasis on the risk to reward ratio of trading strategies. The average risk to reward ratio which is simply a number comparing the average loss with the average profitable trade of a trading strategy gives us some very important information about a trading strategy. Perhaps some of the most important aspects of the risk to reward ratio are overlooked by most traders which usually leads to the comfortable use of systems with extremely unfavorable risk to reward ratios. Through this post I will try to explain the many problems of using a system with a very bad risk to reward ratio and why you should get away from this type of trading strategies.
But, what is a bad risk to reward ratio ? I usually define this as a ratio which is very tilted towards the risk side. Trading systems which risk much more in average than what they make per trade are said to have a bad risk to reward ratio. For example, a system which makes 10 USD per trade in average but loses 100 USD on every loss has a very bad risk to reward ratio of 10:1, that is, the average risk is ten times bigger than the average reward.
So what is the problem ? Many people think that a strategy can be successful, even if the risk to reward ratio is terribly bad, if there is simply a very high winning percentage. Of course, a strategy with a risk to reward ratio of 10:1 requires to win at least 95% of trades to be successful, any further loses will cause the strategy to cause overall loses. However it is true that mathematically a strategy could in theory be profitable if it has a bad risk to reward ratio and a very high winning percentage.
However, the problems start to come when we think about the estimation of the winning percentage. How can we reliable calculate the winning percentage of a trading strategy in a market which has no centralized exchange and which is bound to show different trading results on every broker ? Is there any reason to believe that the maximum number of consecutive loses in the past is the worst possible case ?
The fact is that the winning percentage cannot be accurately determined for any given trading system and the fact is that a difference of even +/- 15% may as well be possible not only due to broker differences but because of other aspects of the market like re-quotes and spread widening which are not shown within simulations or paper trading accounts. This is talking about the historically estimated winning percentage. However the future winning percentage may as well be within +/- 20% of the estimated historical value, given the fact that future market conditions are bound to show us a new worst-case scenario, something which usually involves a decrease in the winning percentage.
Now add to this the fact that most trading systems with unfavorable risk to reward ratios use very small take profits and you get an incredible augmentation of live vs simulation and paper trading results which may account for a great overestimation of the winning percentage.
When it comes to live trading, it is obvious that systems with favorable risk to reward ratios hold a much better chance at facing more unfavorable market conditions since an increase in the number of consecutive loses is bound to only cause a modest increase in the maximum draw down. On the contrary, systems with unfavorable risk to reward ratios, will show a very BIG difference in profitability with only a very small increase in their number of consecutive loses (or closely located loses for that matter).
This is the main reason why I do not develop or trade systems with risk to reward ratios higher than 2:1. It is evident to me that these systems have a smaller chance at surviving to future changes in market conditions and a bigger chance of having an overestimated profitability due to the inaccuracy of the determination of the winning percentage and the number of consecutive loses. through paper trading or simulations. The fact that these systems are INCREDIBLY vulnerable to even a small increase in the number of consecutive loses (which may easily be caused by a mere change of broker or the introduction of spread widening and re-quotes) makes the simulations of their performance very lacking at best.
If you would like to learn more about the systems I have developed and how you too can design and trade your own systems with favorable risk to reward ratios 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 !
But, what is a bad risk to reward ratio ? I usually define this as a ratio which is very tilted towards the risk side. Trading systems which risk much more in average than what they make per trade are said to have a bad risk to reward ratio. For example, a system which makes 10 USD per trade in average but loses 100 USD on every loss has a very bad risk to reward ratio of 10:1, that is, the average risk is ten times bigger than the average reward.
So what is the problem ? Many people think that a strategy can be successful, even if the risk to reward ratio is terribly bad, if there is simply a very high winning percentage. Of course, a strategy with a risk to reward ratio of 10:1 requires to win at least 95% of trades to be successful, any further loses will cause the strategy to cause overall loses. However it is true that mathematically a strategy could in theory be profitable if it has a bad risk to reward ratio and a very high winning percentage.
However, the problems start to come when we think about the estimation of the winning percentage. How can we reliable calculate the winning percentage of a trading strategy in a market which has no centralized exchange and which is bound to show different trading results on every broker ? Is there any reason to believe that the maximum number of consecutive loses in the past is the worst possible case ?
The fact is that the winning percentage cannot be accurately determined for any given trading system and the fact is that a difference of even +/- 15% may as well be possible not only due to broker differences but because of other aspects of the market like re-quotes and spread widening which are not shown within simulations or paper trading accounts. This is talking about the historically estimated winning percentage. However the future winning percentage may as well be within +/- 20% of the estimated historical value, given the fact that future market conditions are bound to show us a new worst-case scenario, something which usually involves a decrease in the winning percentage.
Now add to this the fact that most trading systems with unfavorable risk to reward ratios use very small take profits and you get an incredible augmentation of live vs simulation and paper trading results which may account for a great overestimation of the winning percentage.
When it comes to live trading, it is obvious that systems with favorable risk to reward ratios hold a much better chance at facing more unfavorable market conditions since an increase in the number of consecutive loses is bound to only cause a modest increase in the maximum draw down. On the contrary, systems with unfavorable risk to reward ratios, will show a very BIG difference in profitability with only a very small increase in their number of consecutive loses (or closely located loses for that matter).
This is the main reason why I do not develop or trade systems with risk to reward ratios higher than 2:1. It is evident to me that these systems have a smaller chance at surviving to future changes in market conditions and a bigger chance of having an overestimated profitability due to the inaccuracy of the determination of the winning percentage and the number of consecutive loses. through paper trading or simulations. The fact that these systems are INCREDIBLY vulnerable to even a small increase in the number of consecutive loses (which may easily be caused by a mere change of broker or the introduction of spread widening and re-quotes) makes the simulations of their performance very lacking at best.
If you would like to learn more about the systems I have developed and how you too can design and trade your own systems with favorable risk to reward ratios 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 !
Profiting in the Long Run How Compounding Builds Wealth in Forex taxes included !
If you read yesterdays post on the 10 reasons why I believe new traders fail to profit and live from automated trading systems then you may have noticed the very interesting discussion that was developed within the comments after that. The discussion centered mainly around the capital requirements to gather wealth in forex trading and my strongest argument to say that people can live from trading starting with small investments is the fact that compounding brings a large amount of wealth accumulation, even when you take into account all the taxes that have to be paid due to capital gains (which was also part of the discussion).
But how does compounding actually work ? Quiet simply, when you get a given average yearly profit on a given trading system, for example, a 10% average yearly profit, your equity starts to increase exponentially as the amount of money you are investing starts to increase. For example if you invested 100 USD and you get 10% on your first year, your new equity will be 110 USD, next year you also get 10% so your equity rises to 121 USD (since 10% is now 11 USD instead of 10 USD). As time goes by, 10% of your account is always a larger value, allowing you to accumulate massive amounts of capital from relatively small investments.
In forex trading the power of compounding can be used to reach a future in which a person lives from trading. However there are several aspects we must take into account to make the calculations as realistic as possible. First of all, lets assume that our system makes 20% each year in average, that equity compounds only once each year and that at least a new equity high is reached every year. Let us also assume that a given quantity of money is saved each month and all the accumulation is added once the system reaches a new equity high. If a person invests 2000 USD in such a system and the amount saved each month is 300 USD, this is the growth perspective that the person will get :
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-Now bear in mind that if no additions are made from monthly savings, the person will make a LOT less capital in 20 years.
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-In fact, profit is reduced from 620K USD to a mere 63K, effectively the power of regular additions of capital on yearly equity highs proves to be VERY important. Now, we also need to take into account taxes which range from 20-30% in most countries so let us assume the worst case scenario of a 30% tax on each years profits. This will reduce the yearly profit from 20% to 14%. The profit scenario we get is effectively cut to one half, reaching only 308K in 20 years. In this worst case scenario the person has reached a point were he or she gets a 61K yearly profit in 20 years.
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In fact, the initial capital is not as important as the monthly additions, if a person starts with only a 300 USD investment, the person will reach 287K in 20 years (tax included) making the profit targets mostly the same. The monthly savings are what counts in the ends since they amount to the majority of the invested capital. If a person saved 500 USD instead of 300 USD each month, this person would get 479K.
However the most important point is still the actual average yearly profit of the trading system which when increased to only 30% (21% after taxes) increases the profit of the above 500 USD investment example to 1 million USD in 20 years. In 10 years reaching already a yearly income of 23K, as shown on the table below.
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-I still feel however that all the above results are too unrealistic for my taste. Let us introduce the fact that profits in forex trading are not always constant, so lets introduce a standard deviation of the yearly profit of +/- 50% (note that the average yearly profit is still 21% in 20 years, the maximum draw down of the strategy below is around 50-60%) . As you see, profits become a lot more variable but an equity high of 1 million dollars is still reached and a new equity high will be reached if the system continues to function appropriately.
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-As you see, the power of compounding is great and anyone can live from forex automated trading after a certain amount of time simply if they use systems with limited levels of risk and save enough money to invest on equity highs. Living from any financial instrument demands time and simply turning those 500 USD into 1 million in 5 years wont happen. Long term success in trading demands continuous investment and a true commitment to financial freedom. It demands a lot of knowledge and a lot of confidence. Certainly this shows that people can trade to live from the market and not just "for fun" due to the under capitalized character of most forex traders. Proving that even though Reason 10 of yesterdays post is the hardest to overcome it can be vanquished with adequate saving and investing.
If you are interested in learning more about my trading systems and their risk and profit targets 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 !
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