Making Automated Trading Systems 6 Tips for Successful System Design ~ forex trading korea

6:32 AM in 6, a, analysis, automated, design, for, Forex, making, performance, portfolio, revisiting, successful, system, systems, the, tips, trading, turtle

One of the questions I get asked the most is how I come up with and design all my mechanical trading strategies. Several people have wondered how I device my simple criteria for systems and how such simple logic can indeed be successful under todays ever-changing market conditions. However, what fellow traders often dont realize is that my system design is based on some very simple principles anyone could follow to achieve success in automated trading. On todays post I want to give you - fellow traders and system designers - some tips about system design so that you too can benefit from my experience around this area of successful strategy production.

Within the next few paragraphs you will find some very practical tips to help you with you design successful automated trading systems. I am absolutely sure that these tips will help you overcome some of the most prominent obstacles in automated trading, avoiding the mistakes that condemn most people who embark on this journey to failure and frustration. So how can you improve your system design and come up with better and more likely successful strategies the next time you design an expert advisor ? Keep reading to find out !

1. Understand what your system will attempt to do. Most people who attempt system creation often dont understand what their system will be doing. It is not a matter of saying "it will be making money" or "it will follow an MA cross", it is a matter of understanding what the system will attempt to capture and why it has a fundamental reason to work. Having an idea of how the market works and how your strategy exploits an inefficiency of the market is vital for success.

2. Everything must make sense. I cannot tell you how many times I have come up with people who want me to help them program systems that have a ton of indicators they dont even understand. In order to be successful, absolutely every single thing you add must have a reason and the reasons must not be shallow, like "because it filters ranging markets", they have to be clear and mathematically precise. Something like "this indicators helps me detect when price has moved in X direction because the indicators mathematical meaning shows Y about price..." is more like it.

3. Analyze and analyze deeply. Often traders will attempt to design a system based on a few weeks of forward or live testing or even on just a few months of "visual" backtesting. I can never stress enough that analyzing and testing systems on a statistically significant period is vital for success. I always analyze systems for at least 2-5 years of historical data before I even consider the coding of strategies. Not only does this analysis provide me with information about the system but it also helps me understand the underlying reasons why it does or doesnt work.

4. Do a mathematical expectancy analysis of the entry logic. When you are making a new trading system you always need to know if your expert has potential and what time frame and type of trade your system will be capturing. Doing a mathematical expectancy analysis is vital to get this information. This allows you to know for sure which time frame your system works best on and it gives you a good amount of information regarding the probable successful of your trading strategy.

5. Have simulation reliability in mind. When you are designing your trading system you need to do so with simulation reliability in mind. Being able to carry out reliable backtests is very important when evaluating trading strategies and taking into account this factor when you are programming your system is vital for success. If you program your system with simulation reliability as a main concern chances are that the results you will get will be much more reliable and consistent with live trading results.

6. Have adaptability in mind. Many traders decide to code their strategies with fixed exit target values (like fixed pip values of a TP and a SL) something which is bound to bring your systems to failure as different market conditions start to develop. Considering adaptability from the beginning and including adaptability within your mathematical expectancy analysis is important to guarantee the long term success and profitability of any trading system. If you look at systems that have been historically successful, most - if not all of them - use some for of adaptive exit.

I hope that the above tips help those of you interested in system design achieve better success in your quest towards the development of a useful trading strategy. Obviously there may be other aspects worth considering but this - in my experience - are the most important to know if you want to develop a successful trading strategy. Do you have any other useful tips or information you would like to leave ? Perhaps some personal experience ? Just leave a comment and well discuss it together :o)

If you would like to learn more about automated trading system development and how you too can create likely long term profitable systems please consider buying my ebook on automated trading or joining Asirikuy to receive all ebook purchase benefits, weekly updates, check the live accounts I am running with several expert advisors and get in the road towards long term success in the forex market using automated trading systems. I hope you enjoyed the article !

forex trading korea

Read more

Gold trading strategy release September 16 (updated) ~ forex trading basics

4:48 AM in 16, analysis, and, classic, elliott, Forex, gold, modern, release, september, strategy, trading, wave

Closing session days 16/9 energy commodities, world gold prices tend to go up while Brent prices fell slightly. Specifically, the December gold futures on the Comex rose 3.6 USD to  1235.1 USD/ oz with a volume of less than 25% compared with an average of 100 days, according to data compiled by Bloomberg.

The market is trading very careful with the economic data published ahead of the policy meeting the Federal Reserve (Fed). ICE dollar index - exchange rate of dollars monitor with 6 strong currency - almost flat, trading up and down in a narrow range from 84.035 to 84.519 points after hitting the highest level in 14 months of the date 9/9.

Back in technical analysis of gold prices. After days of consecutive decline, there were signs that prices tend to increase. However, only the price adjustments in the major trend remains discounts. So we can surfing day.

Gold trading strategy release September 16,2014 - short term:
Buy limit: 1234 - 1235.50
Stop loss: 1230.30
Take Profit: 1244.50

forex trading basics

Read more

Introducing Our New and Exclusive Profit and Draw Down Asirikuy Analysis Tool o ~ forex trading journal software

7:29 PM in analysis, and, asirikuy, common, down, draw, exclusive, five, Forex, in, introducing, mistakes, new, o, optimization, our, profit, system, tool

If you have read my posts during the past few months you will notice that I have become increasingly interested in the analysis of trading portfolios and the effect of trading several different systems together. After I was able to implement a solution that made the balance of Asirikuy experts independent it became possible to trade systems without their balance calculation becoming dependant on the other systems trades, something which in turn opened the door towards the merging of backtesting results to accurately evaluate joint performance of the different trading systems. Up until now all this analysis had been made through the use of SQL scripts and VBA macros which were implemented by several Asirikuy members. Thanks to their effort we were able to do accurate calculations on the draw down and profit characteristics of portfolios. However it became evident that these solutions to portfolio analysis were not very comfortable needing backtesting statement manual reorganization in excel followed by loading into an SQL server and then loading onto a separate excel spreadsheet to run VBA macros. For this reason we decided to start a project with an Asirikuy member (named Gábor) who offered some of his free time to do all the coding of this new draw down/profit analysis program. On todays post I have the pleasure to introduce this little Asirikuy-exclusive utility, our own profit and draw down analysis tool :o).

-
-
What is so great about this program, what does it do ? The program has many virtues that make it exceedingly good for backtesting statement analysis. The application allows us to load one or a series of backtesting statements joining them together automatically and calculating a series of very important characteristics which are not calculated on the metatrader backtester (not even the MT5 backtester). The program automatically calculates draw down periods, their length, their depth, yearly profits and monthly profits. Having all this information "a click away" is extremely important since it will allow us to do very fast Asirikuy portfolio analysis without having to through the cumbersome process needed to use SQL scripts for this purpose.
--
The image above shows you one of the main characteristics of this software, displaying the equity curve for the loaded backtests (in this case three) plus the addition of their results to show you the "portfolio equity curve". This instant snapshot of the equity curve is important since it allows you to see which systems were losers and which ones winners through the testing period you are evaluating. This in turn allows you to gauge the contributions to the maximum draw down and the overall risk level of the different systems, letting you know which system causes the most loses or profits.
-
-
The above picture shows you perhaps the most useful feature of the software, the ability to display draw down period lengths and depth of a given portfolio with great easyness. This allows you to know the average extent of draw down periods and how long you would have to be prepared to wait if you want to use a given trading strategy. It gives an overall realistic picture of a systems trading characteristics showing you why it is evidently hard to trade and what you should be looking forward to regarding eventual loses and losing periods. This draw down period analysis has become a very important part of system analysis within Asirikuy, letting us evaluate accurately worst-case scenarios and largest draw down period lengths.

Besides the features I have commented here, the software also has the ability to display monthly and yearly profits, important characteristics that are useful for determining the overall trading character of a given system. How profitable is the average month ? How many months are winners vs how many are losers ? What is the average yearly profit ? All these questions are answered by our new Asirikuy tool and its ability to dissect trading results into yearly and monthly statistics.

As time evolves we will be able to implement new features and correct bugs that may appear but currenlty this new profit and draw down analysis tool is a very nifty and welcome addition to Asirikuy. From later today, Asirikuy members will be able to download this piece of software from the Experts section of the website. If you would like to learn more about my journey in automated trading and how you too can start to design your own long term profitable systems based on sound trading tactics please consider buying my ebook on automated trading or joining Asirikuy to receive all ebook purchase benefits, weekly updates, check the live accounts I am running with several expert advisors and get in the road towards long term success in the forex market using automated trading systems. I hope you enjoyed the article !

forex trading journal software

Read more

Classic and modern Elliott wave analysis ~ forex trading simulator

5:47 AM in 10, analysis, and, classic, elliott, Forex, gold, modern, release, september, strategy, trading, wave

These guidelines can be used with classic and modern Elliott Wave analysis and also with the Elliott Oscillator in a bar chart of from 100 - 150 bars from Point Zero.


1. Point zero
CONDITIONS  : A coincidence of Pattern, Price and Time has come together to mark a major pivot that we have identified as the 5th of a 5th wave. The Elliott Wave pattern may not always be the one that we were expecting. When a fractal occurs it means that a wave has ended, ready or not. 

IMPLICATIONS : The suspected high or low tick at a major pivot point is the ideal entry point. This entry has the least capital risk because it is closest to the initial stop loss point - the pivot. The trade off is that there
will be a higher percentage of losses. The market does not always reverse where we want it to! The pivot point is Point Zero.

FIBONACCI : The most common Fibonacci relationships between Elliott waves of the same degree.

2. Wave 1
CONDITIONS : Will follow either a three wave A-B-C or a five wave impulse pattern. W.1 that follows an A-B-C is an impulse wave. W.1 that follows a five wave pattern is W.A of an A-B-C pattern. Modern Elliott Wave analysis allows for five wave triangle patterns in the W.1 position of lesser degree waves. That
means that W.4:1 can overlap W.1:1 without invalidating the pattern as an impulse wave. The internal structure is 3-3-3-3-3.  W.1 triangles are never allowed as lesser degree waves within a larger degree W.3.

IMPLICATIONS :  New W.1 of the same degree should overbalance the immediately prior corrective
pattern in price range but not necessarily in time.

FIBONACCI :
PRICE Use internal swings of lesser degree to project termination of W.1
TIME Impulse W.1 usually overbalances in time the prior counter trend swing. 

3. Wave 2
CONDITIONS : Zig-Zag (ABC) most common. Triangles least likely in W.2 position and most likely in W.4.

IMPLICATIONS :W.2 most likely to be more than 50% in time of W.1. Avoid premature entry. Patience required. Wait for C wave completion. The first counterswing is likely just the A leg of an ABC pattern. Must not penetrate Point Zero or suspected change in trend from Point Zero is probably wrong. 

FIBONACCI :
PRICE > 50% < 78.6% W.1
TIME > 50% W.1 minimum > 62% < 162% of W.1 most likely

4. Wave 3
CONDITIONS : Usually the longest and strongest trending wave of the sequence. W.3 cannot be the shortest wave of a five wave sequence. W.3 does not have to be longest wave but it can never be the shortest. This is one of the very few Rules of Elliott Wave analysis.  W.3 always synchronizes with an Oscillator extreme. The Oscillator extreme usually occurs before the price extreme.

IMPLICATIONS : W.3 confirmed when the price extreme of W.1 is exceeded. Price beyond the beginning of W.2.  If suspected W.3 completes five waves of lesser degree and is less than 100% of W.1 consider that the suspected W.3 is W.C of a corrective pattern and not an impulse wave. Once W.3 exceeds 100% of W.1 look for price to reach and probably exceed 162% of W.1 Look for termination conditions when W.3 exceeds 262% expansion of W.1 or 424% retracement of W.2.

FIBONACCI :
PRICE
W.3 162% - 262% of W.1 , W.3 162% - 262% of W.2 .
TIME
W.3 almost always longer in time than W.1 .  W.3 often equal in time to complete W.0 through W.2 sequence. 

5. Wave 4 
CONDITIONS : If W.2 was an ABC then W.4 will probably be complex and vica versa. This is the principle of alternation. Look for minimum of three fractals in lower time frame and minimum price relationship of 62% to W.2 W.4 should not penetrate W.1. A W.4 close into W.1 invalidates the W.5 setup.
This is a Rule.

IMPLICATIONS : Price extreme often occurs before the termination of the W.4 pattern. In complex waves Time factors should be the primary consideration.  If Wave 4 has exceed >50% of Wave 3, the possibility of a 5th wave failure is increased. The Oscillator will cross the zero line two times during W.4. First against the direction of W.3 and then in the direction of W.3 to signal that W.4 has fulfilled minimum requirements for completion.

FIBONACCI :
PRICE
< 50% of W.3.
W.4 38% W.3 common
W.4:W.3 < W.2:W1 on percentage basis
W.4 62% 100% 162% W.2
W.4 > 23.6% < 50% W.0 - W.3
TIME
W.4 most often related to W.3 or W.0 - W.3
Often longer in time than W.3 / W.0 - W.3
W.4 138% - 162% of Parallel Projection of ends of W.1 - W.3 measured from beginning of W.2 

6. Wave 5
CONDITIONS : Look for termination when W.5 has completed at least five fractals in lower time frame and is in a coincidence of Price and Time.  W.5 has made new price extreme and price and the Oscillator are diverged. 

IMPLICATIONS : When the extreme of Wave 3 is exceeded the maximum stop loss should be raised to Wave 4.  When four fractals are in place for Wave 5 trailing stops should be moved very close to the market. If Wave 4 has exceed >50% of Wave 3, the possibility of a 5th  wave failure is increased.

FIBONACCI :
PRICE
W.5 = 62% 100% 162% W.1
If W.3 extended W.5= 62% or 38% of W. 0-3
W.5=127%, 162%, 200%, 262% W.4 
TIME
W.5 > W.4 if W.4 is a simple ABC
W.5 < W.4 if W.4 is complex.
  
6. Wave A
CONDITIONS : Usually a five wave pattern but can be three. See W.1 description for the impulsive triangle pattern that can also occur as a W.A

IMPLICATIONS :Caution required after first three waves complete. May be only 3 of 5.  Assume the first five wave structure is the W.A of an A-B-C pattern. 

FIBONACCI : 
PRICE
Between 38% - 50% of prior W.5 
TIME
N/A  

7. Wave B
CONDITIONS : Usually a three wave pattern.
IMPLICATIONS : Wait for at least a 50% retracement of related W.A before entering a trade.
FIBONACCI :
PRICE
> 50% < 78.6% of W.A 
TIME
> 50% < 100% of W.A time.

8. Wave C

CONDITIONS : Classically W.C is a five wave pattern. 
IMPLICATIONS :If W.C. exceed 162% of W.A the labeling is probably wrong. The current pattern is probably impulsive.
FIBONACCI :
PRICE
W.C. usually 62% 100% 162% of W.A .  W.C 162% 200% 262% of W.B .  W.C. rarely > 262% W.B 
TIME
Use Time guidelines for complete A-B-C corrective pattern in W.2 or W.4.

Thanks everyone watched. Hope this article useful to people. Please LIKE and G+1 to spread article. Thank all !







forex trading simulator

Read more