The year 2013 has been an interesting one, especially with regards to trading the currency markets. I've made a lot of mistakes, and I have learnt how to act better. The most important lesson has been that if I must succeed in trading the markets, I have to take a very logical and rational approach. I guess this principle applies in all most every aspect of Human life. With this in mind, I will explain how best to “invest” in the Dukascopy strategy contest.
The Dukascopy strategy contest is one in which contestants create automated trading strategies, and let these strategies run on Demo accounts for a period of one month. At the end of the contest month, the accounts with the highest points are awarded prizes. And these points are awarded based on highest equity, amount of pips gained and other contest considerations. The prizes are given to the first ten contestants in the order seen below.
With $15,000 to be won monthly,there’s a frenzy to finish at the top of the table.
After taking part in the strategy contest for a few months, I realized something very profound; consistency is the key to effectively “investing” in the strategy contest. I call it an investment, because e…
All the traders know that money management is one of the keys (or even the primary key) to be a successful trader.
Neither the best trader in the world will dispense some rules or strategy of money management!
So all know the basic of money managemnt (if not, you should already know) like know the principles of Risk to Rewar etc...
Today i will share (if you want you can googlit and you will find many articles) one advanced "strategy", called Kelly Criterion.
2 - What is Kelly Criterion?
Kelly Criterion is an advanced strategy that will help to know how much you can risk on each new position based with similar traders in the past. 3 - Who invented?
Kelly Criterion was developed by John Larry Kelly Jr. (1923–1965), was a scientist who worked at Bell Labs.
Image 1 - John Larry Kelly Jr
4 - The Kelly Criterion
One thing you must understand when using the Kelly criterion is that this is a method used for diversification. Traders and investors have different preferences as to how they manage their equity. Some traders will use the Kelly criterion to base an individual trade or investment on, whilst others will use this method to allocate a percentage of th…
They say: Following the path of least resistance is what makes men and rivers crooked. Following the path of least resistance is what makes men and rivers crooked. Of course, there is another view, that a tree that is willing to bend can withstand a storm better than one that stands stiffly upright.So,is survival dependent on flexibility ? When applied to trading,where do we draw the line between standing up for what we believe and molding ourselves to the specific requirements of a situation? Not an easy task considering that trading throws up challenging dilemmas with annoying regularity. A tendency to just go with the flow is a common way of dealing with any given situation.
The Constitution In human existence, one of the main fundamentals is a code of ethics and honor to principles. Call it what you will, but the truth is, civilized society cannot survive without this code. And it is an unwritten code, quite like the governments constitution, which derives its value from adherence to it over a period of time. So the question is: Do you have a personal traders constitution? It thrives on the value we place on it. And when we cease to value it, quite simply, it ceases to exist.…
The highly anticipated FED tapering over last months is taking shape with economic data, markets will prepare for the same. The economic data which indicates economic health is analysed below. Strong numbers from various economic indicators would be deciding factor for FED’s Taper/ No Taper. The key, critical economic indicators for analysis of any country economic health are GDP growth rate Unemployment rate Inflation rate The supporting economic indicators to boost further confidence in country economy health are Current Trade Balance Retail Sales New home sale. FED’s purchase program of USD 85 million per month has to end in coming months, it is interesting to make a note how it will come to end, either reducing pace or at one go both the possibilities are possible. We will take a look at all the above key as well as supporting indicators to analyse the current situation of US economy. GDP Growth Rate
GDP growth rate is on rise since beginning of year 2013, it has rose from 0.1 to 3.6% indicating a strong recovery is on the way, next couple of months it should stabilize. Unemployment Rate Unemployment Rate is decreasing on steady basis since Jan 2013, strong jobs market is s…
is the level of change in sentiment in the decision . As participants come to the conclusion that it is profitable to sell usa dollar and buy usa dollar. If we are talking about pairs where is the us dollar . I think the level of balance is formed under the influence of fundamental and technical factors .
Fundamental factors : interest rates,GDP,inflation, unemployment,the rhetoric of the heads of Central banks and others. Technical factors : horizontal support and resistance levels .Closing month closing of the quarter.
To identify balance level requires a minimum of three weeks to six weeks.
The level of balance of the present and the past .I cite the example of the level of balance
I felt the need to cover this subject as well before the year end, because in my humble opinion it will be the dominant market driven theme of 2014, and if you're an investor or an active trader you want to make sure you understand the market implications of such a big event, because it will dictate the market tone for the next year. Even if you're only a technical analyst trader there is no way you haven't heard at least one time about "Taper", so have you ever asked yourself what does it mean and how it will affect your trading operations? The sole purpose of this article will be to answer precisely to that question.
The word tapering in financial terms is increasingly being used to refer to the anticipated reduction of the Federal Reserve's quantitative easing(QE), or bond buying program. The current Federal Reserve quantitative easing (QE3) accounts for purchases amounting to $85 billion in Treasuries and Mortgage Backed Securities (MBS) per month, with the main scope lower interest rates and therefore bolster growth.
What is Quantitative Easing?
Since the global financial crisis of 2007–2008 the FED has begin using new type of market policy like Quantitative Easing to try …
Good time of day traders. I will continue to show to you that known to all strategy Price Action can be sufficiently effective, if it is correct to know how to use its signals that the majority certainly does not make. Today I want to share with you still with one pattern Price Action - this is the inside bar. These are not less effective pattern, than pin-bar. It possesses large power, if we know as it to use. Let us have a talk further on this.
What such of inside bar?
And so iside bar - these are resersal candle pattern, which consists of two japanese candlestick , in which the second candlestick (the daughter) is located the completely in inside the range of the previous japanese candlestick (maternal). Pattern frequently appears at the apexes of bull motion and on the bottom of bear trend. These are the same pattern of pin-bar, which is only formed more long time in the essence.
Main thing to remember that :
Like any other pattern, iside bar must be founded upon support.
The higher timeframe, the stronger the signal. ( D1 , w1 , Mn)
In finance, a binary option is a type of option where the payoff is either some fixed amount of some asset or nothing at all. The two main types of binary options are the cash-or-nothing binary option and the asset-or-nothing binary option. The cash-or-nothing binary option pays some fixed amount of cash if the option expires in-the-money while the asset-or-nothing pays the value of the underlying security. Thus, the options are binary in nature because there are only two possible outcomes. They are also called all-or-nothing options,digital options (more common in forex/interest rate markets), and fixed return options (FROs) (on the American Stock Exchange). Binary options are usually European-style options.
From Wikipedia, the free encyclopedia
Binary Options or Digital Options,all-or-nothing options or Fixed Return Options(FROs), are a financial instrument, that have been available throughout worldwide markets for many years. Since 2008, that the US introduced binary options trading to the traders’ portfolio of financial tools, what did greatly increase its growth. In practice, Binary Options resemble Sports Betting, but in finance. If the trader use …
I am writing this article as trial and error over 5 years has caused me to lose most of my money.
I truly believe that trading can and is very lucrative how ever I think Hunches and perhaps addiction mentality makes most traders fall into the pit of gamblers anonymous.
The logical order to beat this market in my opinion is to have a step by step process. Too many simple obvious and logical things are overlooked.
1. GROUPING THE BIG THREE vs smaller CURRENCIES
By grouping your pairs before the day starts it easier to see the correlation of each pair against the other. It clearly acts as an excellent indicator as to what that countries currency's is going to do for the day. For example if you look at the Euro against all the smaller currencies IE Against AUD / CHF / JPY / CAD / and then the same for the other BIG 3 like EUR and GBP - You get too see whats going to happen on the day by checking the trend in the london session especially when theres news ahead for that day.
2. SPEED OF THE MARKET Now this is one thing I think makes a HUGE difference to trading success. The speed of the market is simply how many pips it can move in a day. take a little look closer and you get to s…
The definition of risk can be altered according to the way you perceive it. Hence, you can choose to define it in multiple ways. This same concept can be applied by individuals in order to comprehend the reason for classifying moving average-strategies as risk elements.
Volatility is synonymous with risk and incomparison with the market; moving average-strategies are considered to contain lower risk factor. But they are affected by another variation of risk which deals with calculating the time period the strategy stays underwater.
From this perspective, you can conclude that moving average-strategies are indeed full of risk. Even under the presence of favorable conditions, there have been instances of the best moving average strategies underperforming below the market expectations and that too for a long period of time which can stretch to several decades.
Step 1: European Session (London) as trading time
In the first step I will choose right time for trading. As the trading day progresses, the European session takes over the responsibility of keeping the currency market active as soon as the Asian trading hours come to a stop. The FX time zone is pretty condens…
Every trading method will have parameters for entries and exits. Some traders will decide to wait for confirmation and for others, the fact that price is at a specific level is all the confirmation they need. This article looks at a great reversal pattern to use for confirming short trades.
I like to trade from higher time frame levels,mainly from the daily chart but I will always wait for confirmation before considering an entry. Stops based solely on a daily level can be quite large and also price might not be ready to turn yet. Waiting for a reversal offers a safer approach to trading and helps to minimize losses and increase the reward to risk ratio on trades.
Considering the trend
To consider a short I want price to be at a level which I have objectively identified as supply on the daily chart. A level which I believe price will fall from based on a previous move from the same level.
When price hits a supply level the trend will usually be up. An up trend will often have higher highs along with higher lows and will sometimes have demand levels which would have formed during the up move. In an up trend you would expect demand levels to hold and supply levels to fail, …
In this article we will discuss how to profit by trading a false trend break. We will use a clever strategy to reach this goal. This is a complete strategy that includes entry, stop loss and take profit levels. Some charts, setups and trade examples, are also included. They will help us understand the False Trend Break Strategy better and reinforce different points we’ll discuss.
This is a very technical method. We simply look for an up-trend to appear on the daily chart. We draw its trend-line and wait patiently for it to break down. Then, we examine carefully the candle immediately after the break-down. We are looking for signs that the break is false. In such a case, we enter a long position (buy).
Although the method is simple to follow technically, it is quite hard psychologically. Taking a long position after price breaks down seems a suicidal, counter-momentum trade! Nonetheless, the strategy has its logic and can be quite effective and profitable. A back-test on EUR/USD is included to demonstrate this. I hope you will find this article helpful for your trading. :-) ________________________________________________________________________________
According to Wikipedia, a portfolio manager can be defined as “either a person who makes investment decisions using money other people have placed under his or her control or a person who manages a financial institution's asset and liability”. Most people sometimes mistake a portfolio manager for a fund manager. Both jobs are very much alike, but while a fund manager manages funds, a portfolio manager manages assets; which could be stocks, money, bonds and other valuables. As a Fund manager, you would be making trading decisions with other people’s money. The job of a Fund manager reminds me a lot about the Social trading contest. In the contest, a candidate is given a Demo account with 100,000USD, and is expected to subscribe to at least 10 signal providers for trades to be taken on the account. These trades are copied from the signal providers, and at the end of the contest month the candidates with the highest profits are given prizes.
A Fund manager works in a very similar manner, the major difference is that the funds are real. The Fund manager is also held responsible for his trading and investment decisions. He is accountable to his investors, and as such he…
In my previous article series “The Hunt for Liquidity” I argued why traditional technical analysis tools are useless and even more – doomed to fail because these are targeted by market movers in the liquidity hunt process. In this series I will explain some price action reading insights that will help to predetermine upcoming movements.
Market sentiment. Often technical sentiment and fundamental sentiment differs, as technical correction is exactly the case, when price moves against the fundamental sentiment. Market sentiment from technical stand point represents the formal trend and it is one of the main aspects to consider when reading price action (further in the article – PA). Make no mistake, sentiment of retail traders and their ongoing exposure produced by various retail brokers have little to do with the formal sentiment. Basically – when higher high (further in the article - HH) is made or long time consolidation is broken to the upper side – sentiment changes to bullish and vise versa. It’s important to understand sentiment (or the formal trend) correctly, because according to the ongoing sentiment – PA must be read differently and different patterns must be look for.
When you take a critical look at the chart daily, you willobserve that it looks like a massive field where daily financial activities take place. In this massive field called Chart you are not supposed to use the entire Chart as your trading Decisions Points else you will end up chasing shadows A good example is the Football field, the players are restricted to the pitchalone not the full Stadium.
Any play outside the mapped out area will be disallowed by the Referee.In trading it, you are not supposed to use the entire Chart as your trading Decision point. In the game of Football, there good eleven positions for the players and as such there is no one prayer that play in the entire position. The same thing is applicable to trading; there are so many trading strategies used by different traders. You as a trader is not expected to use all the strategies but to chose at least one that work for you. If you are not making good result with the chosen strategy, stop using it and try another one. In the game of Football, there is no one player that can play very well in all the positions. All the positions are good but the player master at least one that best suit his style of play. I…