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45/65
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Hi, friends I want to share a method how we can find a profitable indicator.
The History of the financial markets is very long. Over the past period, many genius in markets have developed many useful indicators to try and analyse what is transpiring in the market; and to predict what may happen next in market.
Nowadays trading is very much easy because internet has opened up a new era of advanced technology, so by sitting at home anyone can enter into trade. Moreover trading platforms have become quite robust, to maximize efficiency.
This has opened up the world of indicators in a revolutionary way, to a whole new breed of investor. Most indicators use parameters. These are variable inputs that govern the signals outputted by the indicator. We can back test to find optimal parameters for a given indicator.
But can back testing tell us correct upcoming future?
But back testing can help us estimate what is likely to happen, based on markets past behavior. But that have some lacunae.
Firstly, back testing provides a perfect look at the past, but only an imperfect estimate of the future. When we select an indicator, we choose it based on its past performance. This suggests it may be …
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FXRabbit avatar
FXRabbit 11 Apr.

Very well written article!

gargantua avatar
gargantua 21 Apr.

good article

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9/52
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Most new traders revel in leverage. They seek out brokers who provide high leverage, deposit a small amount of money and dream of the riches they will make. This is very delusional of course. But the subject of leverage seems to confuse a lot of professional traders and brokers alike.
Does Leverage Magnify Returns as Well as Losses?
It is often said that leverage can increase your potential returns and your potential losses. What is often missed if that this is not a linear relationship. While you can increase your returns with more leverage, it comes a point when this is counter-productive. In other words, past point X, for 1 unit of risk you don’t get a 1 unit of return anymore.
The Gremlins of Volatility
This asymmetric return works in three ways. First, increasing leverage always increases the volatility of your trading returns. These are our first gremlins, the gremlins of volatility. Take a look at our first picture below. This simple table showcases two hypothetical systems A in the first column and system B in the column below it.
System A makes 20 percent one year but loses 10 percent the next. System B on the other hand consistently makes 4.5 percent each year. Obvi…
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killer195175 avatar

good observations.

Beto avatar
Beto 3 Apr.

Very interesting information

ghfran avatar
ghfran 3 Apr.

nice one )

FXRabbit avatar
FXRabbit 5 Apr.

^_^ Gremlins

samymahrous avatar

great article

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6/39
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Hello members of the DFC!This is my first article after the return from holiday, and as I have not recovered from all the willingness to look at programming strategies, in this article I will not teach how to develop trading strategies, but I will present a study on the strategy that I am currently using in Strategy Contest.Given that the performance of my strategy used during July and August in Strategy Contest was very similar and very positive, I decided tomake a study of 2 variables that I would like to improve in my strategy. So, I gathered all the information about closed orders during August from the Strategy Position Report and decided to work it into our good old friend Excel. Therefore, taking into account that what I want is to improve the strategy for Strategy Contest, I decided to analyze the next points:The time that each order was open: in order to try to reduce the orders that are open more than 12 hours, a half day. As in the competition our strategy have to open at least twenty orders, are not convenient to have orders that remain open for a long time. Since I've seen strategies to stay out of the TOP-10 because they did not open the necessary orders, I think this…
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ilonalt avatar
ilonalt 13 Sep.

useful information! Good luck!

kittu7862000 avatar

well said LinnuxFX, all the very best

VTTG avatar
VTTG 20 Sep.

Very useful :) Good luck

adask avatar
adask 26 Sep.

Good article. But you really cannot filter too much. It would be like overtraining.

piter44 avatar
piter44 30 Sep.

Personally I do not have a time to explore Visual Jforex but I have seen few articles around which will help me when I'll find some time eventually and this one belongs to them :) Thanks :)

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15/39
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In this article, I’m going to share with you a little secret of mathematics and risk management. I formulated a simple law that expresses a win-win situation in risk management coming from risk/reward ratio analysis and the different mathematical outcomes and ideas that spiral off these simple and yet powerful notions. As we all know, good trading comes from the triple intersection between good trade location, good risk management and your ability to master yourself. This tripod cannot function properly if one of the elements is out of balance. So, in here I’m going to give you the key and some wise concepts about the second element: risk management. If you apply these principles, you’ll notice that your trading will become more solid and consistent over time. Also, you’ll have the ability to be wrong in your trading decisions most of the time and still come out with a little profit or at least breakeven. By having that in the back of your mind, you'll be able to eliminate some of the bad emotions about trading like risk aversion and the desperate need for absolute accuracy all the time. Before we worry about how much precise we can be with out strategy with need a insurance pla…
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alifari avatar
alifari 4 Sep.

Nice article +

Likerty avatar
Likerty 11 Sep.

I would concentrate on risk management in the charts rather than risk management on the capital. Its almost garanteed for a newcomer to loose its capital anyway. I would suggest to focus on price action trading - sort out the KEY levels which to bet against and manage the risk acording to support/resistance

ebiesczad avatar
ebiesczad 12 Sep.

I agree. You have to focus on price action to get good trade location. However, in this article I'm just talking about risk management and how it can give you peace of mind in relation to risk taking. I am talking about risk management in the charts and in the capital.. Bottom line, I just proved mathematically which risk/reward levels you should srtive for in order to have an statistical edge over time. Sure you'll need trade location, but that's a different animal. I'm just talking about capital protection over time and consistency.

Likerty avatar
Likerty 21 Sep.

Statistical edge is sure the necessary thing, but with bad entries/exits - it wont help anyway:) Piece of mind comes with understanding of what you doing (understanding what market movers are doing) - not just putting less of your equity on single trade. And on stressfull conditions one is surelly analysing PA more closely - so its not a bad thing - you dount need to avoid stress - it makes your iron harder:)))

Likerty avatar
Likerty 21 Sep.

I agree on your points here, but What I'm trying to say is that most of newcomers are way undercapitalised to be able to adopt text-book money/risk management and because of lack of understanding what PA is doing - they will lose anyway.. So, in the end - after loosing several deposits, if one still has any motivation left - the only way to make up in this business is to analyse hard the PA and try to make more than loose..

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28/40
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Hi Friends, While going through the results of the past few months trading contest, I found some interesting examples of contestants ending the month with more than 1000 plus pip points in the month, but still ending the month with one half or one third of the beginning equity. As we all know, making few hundred pips a month is in itself a big achievement. Still these contestants were not able to capitalize on their fantastic pip gains and ended losing more than half of their starting equity. A deep study of their trades showed an interesting pattern- high leverage and poor money management. Only if they had used little bit less leverage and had strict money management rules, they would have ended the month in the positive. Even though they might not have been in winning position at the end of the month, their ranking would have been significantly higher than what they had achieved. Below are two randomly selected examples of contestants who made around 1000 pip points in the month, but had vastly different equity balances at the end of the month. Example 1- Pip points gained- 1002 Start of the month equity-$100,000 End of the month equity- Around $60,000 Win/Loss ratio- 85% M…
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Randagio avatar
Randagio 14 Mar.

you're right, Sudink: everyone here should be willing to improve his methods and to learn not to loose money. But if the gamblers win so often, in this contest, maybe it's the contest rules that should be changed. Or maybe gambling is, for some reason, a part of the game that Dukas wants to maintain. Excellent analisys, though. :-)

Efegen avatar
Efegen 14 Mar.

Sudink I agree with you. However I am quiet pleased with the rules. I believe Dukascopy points also supports the less riskier contestants. Equity is just one of the pillars.

sudink avatar
sudink 14 Mar.

Thanks Randagio and Efegen for your comments. I think Dukascopy contest is one of the fairest competitions around where the winner is decided not only on end equity(as in other competitions), but also on pip points gained, win/loss ratio, maximum drawdown, etc. As far as gamblers winning the competition is concerned, data shows that gambling mentality will not take those traders far ahead in their real life trading and they would end up in the list of 95% of traders who blow up their accounts. Cheers!

Delossan avatar
Delossan 29 Mar.

Agree on this one..

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15/30
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Mathematics is an essential tool in many fields, and it should be used extensively in trading as well. By using mathematics you will reduce emotion and uncertainty, two of the biggest hurdles a trader faces. I wrote a comment in another member's article on how he could test his trading system, so I thought that it was probably beneficial for more traders if I wrote a simple and easy to understand article, on how to backtest a system/strategy and evaluate its perfomance, using a few mathematical formulas.At the end of the article there's a link to an Excel file which contains a calculator, so you can easily and quickly compute these formulas without having to do any maths. ________________________________► How to do manual backtesting If you have developed a new system, or have a new idea but don't know if it is profitable in the long run or not, and don't know how to program an automatic backtest to check its profitability, you can do a manual backtest instead, also called paper trading. This is similar to using a demo account, because there is no financial risk. However, when you use a demo account to test your systems, it can sometimes take a long time for a statistically v…
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mohamed1 avatar
mohamed1 29 Nov.

Good luck.

DumbAsArock avatar

You're first and second this month. Impressive. +1

doctortyby avatar

Congratulations for the top place my friend and good luck into the expert evaluations

SpecialFX avatar

Hey Doc, thanks! :) There is still the Dukascopy evaluation though, I can finish first, last, or something inbetween. Good luck to you as well!

p0002 avatar
p0002 9 Sep.

Hello, can someone upload the formular again :-)?

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18/53
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LOSING- the word that’s everyone hates the most, however if you refuse to
face it, it’ll come and get you inevitably. Despite the very best efforts to
formulate great trading systems, losing period will come at any time and during
that time, weak handed-players will be left empty-handed, it’s cruel but it’s
the way the game plays. Therefore, knowing various strategies can help you
handling the losing period. In my opinion, there’re 3 variables which you can
alter to suit you better during the drawdown period which’s: Trading System,
Risk and Trade Frequency.  
There’re safe ways and dangerous ways to handle losing period, in the
following articles I’ll try to list out situation and we’ll try to get the best
approach once such period inevitably comes.
 
1.   Increase Risk and Trade
Frequency:
From my personal experience as well as college’s experiences, the most
common way traders handling drawdown period is to increase both risk per trade
as well as the number of trades. For example you were risking 2.5% per trade
and were placing around 10 trades per month. Having to experience a long losing
streak made you want to gain back money fast. You decide to risk more to 5%
percent per t…
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petefader avatar
petefader 29 Mar.

@duongminhtuan: That's the attitude, stay cool, calm, believe in yourself, that's how you stay in the business.

petefader avatar
petefader 29 Mar.

@foreverloser: It takes time and experience to master it in this game. Everyone has such devil which's feer and greed and which I believe is the our direct opponent, once we beat them, we'll win the game. And it takes discipline, hard-work, time and reflection to be able to come out on top.

Neu_spir8 avatar
Neu_spir8 29 Mar.

My way of handling loosing periods is go 2 the Gym. "beat" the hell of urself by exercising and comeback nxt day fresh, nice article though....+1

foreverloser avatar

Thx for ur time comment, I really appreciate it. Almost gave up btw...

foreverloser avatar

Man, you deserve the 1st spot, not 3rd.

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49/94
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The Lure What comes to our minds when we think about forex? Money, enormous amount of money. We knows that forex is the largest financial market in the world with its $4 Trillion a day trade volume. Yes, that is why we plunge ourselves into the forex world, right? We want to make thousands, or even millions of dollar trading in this delicious foreign exchange market. Better still, forex brokers offer free trading line (leverage) up to 1:100 or even 1:500. Yes, we can trade 100 or 500 times the amount of our equity. This is the one! Perfect business, low setup cost with unlimited profit possibility.   Before We Start We do our homework. We read many good trading books. We study fundamental analysis, trying to grasp what that daunting economics data means. We study technical analysis, figuring out how to use and read many technical indicators and learn how to spot candle reversal and continuation patterns on charts. We open demo account, trading it for several weeks, and lose all the virtual money. We do not despair; we step back and analyze our trading mistakes. We refine our trading system and open another demo account. We trade it for s…
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LinnuxFX avatar
LinnuxFX 19 Sep.

Well done, nice article... good luck for the competition...

Livornese avatar
Livornese 19 Sep.

Like your article! Inspiring to be always at the top! One point from me!

quantum_fx avatar
quantum_fx 19 Sep.

I like your article! Keep writing!

alifari avatar
alifari 19 Sep.

Excellent Article +1

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