Asirikuy Portfolios Increasing Profits Without Increasing Draw Downs ~ forex trading knowledge in hindi

8:09 AM in asirikuy, beginner, does, downs, draw, Forex, from, how, increasing, it, long, portfolios, profits, successful, take, to, trader, without

One of the objectives of Asirikuy is the development of portfolios to trade with high profitability and diminished risk levels. For the past year, the systems tested within Asirikuy and the previously available newsletter had never been traded together due to the fact that the effect of trading them within a single account had not been measured. For this reason it was very difficult to know if trading the experts together would have a positive effect in the overall risk level and the building of portfolios had been postponed until we had enough live trading evidence about Asirikuy systems. During the past few months - and thanks to the contributions of several Asirikuy members who provided several analysis tools - I have analyzed different combinations of Asirikuy trading systems and the way in which they affect each others trading during the long term. I would have to say that the results have been excellent to say the least. Within this post I want to share with you my analysis about an Asirikuy portfolio and how the combination of the different systems allows us to reach a great increase in profit with only slight increases in risk.

To begin my journey in portfolio building with Asirikuy systems I first tried simple combinations of all the systems to see what overall improvements I could achieve within their performance. I will show you today the effect of building a 3 system portfolio from Watukushay No.2, Teyacanani and Watukushay FE which are perhaps some of the most popular systems within Asirikuy. These systems all have a high like hood of long term profitability with 10 year profitable results and a good possibility of being live/back testing consistent. In fact, both Watukushay No.2 and FE have been trading for almost 6 months with consistent results with simulations. Since Teyacanani only has about one month of live trading, consistency cannot be evaluated yet but preliminary results look good.

What was the effect of combining these systems ? I have to say that I was impressed by the synergy I got when I joined these trading systems within a portfolio. By using their 10 year - Risk 1 - backtesting results and combining them using the tools developed by two Asirikuy members I was able to easily analyze the results from these three different systems combined. This is inline with what you would get by running the three within a single account since their internal balance mechanism ensures that they only take into account their own profits and loses when calculating their balance. Below you can see the equity curve for this 10 year combined analysis of their results in simulations.
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After ten years of trading the systems achieve - by working together - an equity gain of about 309% which is equivalent to a yearly compounded profit level of around 19% (see year by year analysis later on). Perhaps the most impressive aspect is not this but the fact that the maximum draw down level of this portfolio combination was very low, at only 5.15%. Not only is the draw down small but it is actually smaller than the draw down level of almost all the systems used. Watukushay No.2 has a maximum draw down of 5.2%, Teyacanani above 6% and Watukushay FE just above 3% showing that the systems are indeed able to reduce draw down to a lower level. Profitability was greatly increased - since the effect of profitability is additive- while draw downs were globally diminished. The overall consequence is the achievement of a yearly profit to maximum draw down ratio of 19:5.15 or 3.68, a wonderful number for any trading system.

An interesting effect also comes when you consider the length of the maximum draw down periods. The maximum draw down length is also greatly reduced when compared with individual systems. For example, Watukushay No.2 has a maximum draw down length of 259 days, while the combined portfolio has a value of 216 days, showing a diminishment in the duration of the maximum draw down length. This means that not only does this portfolio achieve lower worst-case equity loses but the overall length of these losing periods is reduced.
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It is also interesting to analyze the yearly and monthly performance of the portfolio to see how it compares with the Asirikuy systems by themselves, something which would show us the arrange of possibilities we could expect for our first year, month and subsequent years of trading this combined system portfolio. The results are shown on the images above and below.
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The images above confirm that the portfolio is a great improvement when compared with the three systems traded by themselves. Overall, we do not get any losing years for the past 10 years and - even though the draw down of the worst losing months does increase - it does so in a much smaller proportion than the most profitable months. The profitability over the years also increases very significantly showing us that the effect of profits is indeed additive while the effect of combined draw downs is "hedging" in the sense that when any of the systems enters a draw down period some of the others are bound to enter profitable periods. The draw down periods of the systems never overlapped perfectly during the last ten years and only a few months of combined draw down are ever seen. As you see above, the largest losing month does not give us even half the profit of the most profitable month and profitable months are overall much more abundant than losing months.

The significance and analysis of this findings is tremedous. The building of these portfolios will allow us to reach higher profit targets with diminished risk and to have worst-case scenarios (double the projected maximum draw down) that are below our profit targets. This could mean that this same porftolio traded with a Risk = 3 would have an average yearly profit near 57% with a maximum draw down near 15.6% and a worst case scenario of about 32%. The use of portfolio trading will become our most important trading tool within Asirikuy and within the next few months several portfolio live accounts both owned by myself and challenge accounts will hopefully be added to Asirikuy.

I am also building a wealth development plan based on combinations of Asirikuy systems (including all systems and different currency pairs) that will be our final test of all these likely long term profitable systems. A plan with regular additions and a 1000 USD initial investment to get to a 5 figure yearly income within 10 years with a worst case scenario below 50% is what I currently have in mind. As you see I am very excited about these developments as the combination of long term profitable systems is proving to be much more than the simple sum of its parts. I hope you are excited as well so feel free to leave any comments, questions or opinions you may have :o).

If you would like to learn more about Asirikuy systems and to begin your journey towards long term profitability in forex trading 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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The Indicator Series The Awesome Oscillator A Tool to Measure Momentum ~ forex trading for beginners

8:01 AM in a, arbitrage, awesome, does, forex, in, indicator, it, measure, momentum, oscillator, series, the, three, to, tool, triangular, way, work

On todays article we will be discussing a very interesting indicator which forms part of Bill Williams "chaos trading" theory in which several indicators are used to attempt to trade the markets profitably. This indicator- called the Awesome Oscillator - was developed as a means to get an idea about short term momentum on a given trading instrument. Within the next few paragraphs you will learn more about how this indicators values are calculated, what it really tells us about the market and how we can use this information for the building of likely long term profitable automated trading systems. As a part of the "indicator series" this article will attempt to give you an idea about the essence of the indicator and the real nature of the information it conveys.

So what is the Awesome Oscillator about ? What makes it so awesome ? This indicator - usually plotted as a histogram - uses a very simple calculation to measure what we would call "market momentum". The indicators value is obtained as the difference between a 34 and a 5 moving average calculated around the median price (which is the (high-low)/2 of each bar). Putting it simple, the values are obtained with this simple equation :

Awesome Oscillator = SMA(MEDIAN PRICE, 5)-SMA(MEDIAN PRICE, 34)

You might have also noted that the awesome oscillator contains red and green colors which depend on the increasing or decreasing nature of the values. If the last value is lower than the current values the current bar is green while the opposite case makes the bar red. To sum it up the awesome oscillator tells us if the 34 and 5 period average values of median price are coming closer or falling further apart. When the values are falling apart there is momentum (since short term price is - in average - moving away from the longer term average, when the values are closer then we have the opposite.
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It may now seem more evident how this indicator might be traded. We can build a system that trades the cross of the 0 line (which is equivalent to the simple moving average cross system of the 34 and 5 period MA values calculated on median price) or we can trade changes in direction (changes from red to green) to attempt to capture changes in momentum which may forecast an eventual cross of the moving averages. However the fact that the oscillator only gives us information about the momentum change taking into account a relatively small number of bars means that its success on lower time frames is bound to be very limited. When using this indicator on time frames lower than the daily you will see that it gives extremely confusing signals since the 34 and 5 median calculated moving averages cross a lot, something that makes the finding of an inefficiency quite hard.

Added to that is the fact that the awesome oscillator momentum "changes" (color changes from red to green) can happen during a single bar and therefore give a lot of fake signals. For this reason most people will advice to trade this indicator on three bar signals to gain a better perspective and eliminate signals that are simply spikes that might only "seem" like changes in momentum. By doing this we can gauge changes in momentum better and build a system that reacts quicker to changes in market direction. Exiting trades when the first opposite bar appears also seems to be a good exit strategy since usually this wont happen after the majority of the large move happens. Of course, the success of such an approach is bound to be minimal on lower time frames, again due to the inherent problems of the low period usage of the awesome oscillator on these charts.
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Above you can see a USD/CHF daily chart with some of the possible signals during the financial crisis which was a very trending period for this and other currency pairs. You can see here how the awesome oscillator would have captured moves with very good accuracy. Of course, the system is not going to be perfect and under conditions when the 34 and 5 MA comes close for large periods of time the system would suffer large amounts of losses (this is the systems market exposure so that it can get into this very good trades when they develop). The above mentioned signals also allow us to get back into trends after retracements, so they are definitely a necessary compliment since they help us fully exploit large runs without missing a large part (as if we only entered shorts above 0 and longs below 0).
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So as you see, the awesome oscillator is really not that awesome, it is simply a tool to measure momentum which compares the prices of two simple moving averages calculated on median price values. This information is bound to be useful for the development of a momentum based automated trading system, especially on large time frames - like the daily - where these signals are much more meaningful than on lower time frames when the low periods used by the oscillator will make the finding of inefficiencies extremely hard, if not actually impossible.

If you would like to learn more about automated trading and gain a true education in the development of likely long term profitable mechanical trading systems please consider joining Asirikuy.com, a website filled with educational videos, trading systems, development and a sound, honest and transparent approach automated trading in general . I hope you enjoyed this article ! :o)

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From Beginner to Successful Trader How Long Does it Take ~ forex trading know how

2:37 AM in beginner, diversification, does, Forex, from, higher, how, it, long, profits, risks, strategy, successful, take, to, trader

It is not a secret that most people who begin to search for and study forex trading have the goal of becoming indepedent and successful traders in the long term. However, reality is different in the sense that most people who start their journey in forex trading dont end up as successful traders but as frustrated and tired individuals who sacrificed an important amount of their savings trying to get a grip of forex trading. Is there a magic formula to success ? Is there a quicker or slower way to do things ? On todays article I want to write about this very important question that almost all new traders ask : How long does it take to get from being a new trader to a successful one.

It is not easy to be a successful forex trader (or a trader in general), it requires patience, concentration, time, energy, intelligence and most importantly, it requires a lot of dedication and perseverance. Most people fall for the promises of quick riches and "easy trading" from many online gurus which - truth be told - are most of the time marketers who have not become successful traders themselves. New traders start their journey with high expectations of large profits in small amounts of time something that inevitably ends up with frustration and sometimes even denial as traders find out that trading is not an easy task after acquiring some experience.
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But how long does it take for new traders to become successful ? Adding my personal experience to that of several experienced traders I know I can tell you : it depends. First of all, what do we consider success ? If success is having two consecutive years of trading in which any net profit is achieved, then - from what I know from others and experienced myself - it usually takes from 4 to 10 years of trading experience to achieve this goal. If enough capital is available, traders will usually also achieve living from trading within this time period.

What determines fast success or slow success ? Definitely I think that a good answer would be : your ability to learn. Traders who take longer to achieve profitability are more stubborn and less systematic when evaluating their trading performance than people who take shorter periods of time. Usually people who are methodical, have fixed periods of time for trading each day and analyze their trading - either done through manual or automated systems - in a very analytical way are those who can achieve success in the smaller time.

It is also true that this does not come without pain, effort and financial loss. Average profitable traders would have spent around 20K in wiped live accounts and their forex education before they can say "I made a net profit last year". A large majority of the successful traders I know have also wiped their first live account clean during their first year of live trading experience. Those who havent had close guidance and personal trading from an already successful trader showing how important it is to actually have advice from someone who is truly successful around this field.

I can tell you that - for me - this process took nearly 6 years. A time in which I wiped several live accounts - learned from my mistakes - and kept on going into my journey towards profitable forex trading. Now I can tell you that it was worth it but several thousands of times more diffcult than what peolpe wanted me to believe in the beginning. I had to discover my trading personality, understand the markets (something which is always in progress !) and learn to control my weakneses, which were evident after I started to analyze trades done by myself or my automated trading systems.

So in the end, what determines your success here - in forex trading - is not that different from what determines your success in life. You need to be consistent, analytical and willing to learn from your mistakes and the mistakes of others. If you would like to learn more about forex automated trading, the systems I use to trade and how you too can build your own likely long term profitable systems please consider buying my ebook on automated trading or joining Asirikuy to receive all ebook purchase benefits, weekly updates, check the live accounts I am running with several expert advisors and get in the road towards long term success in the forex market using automated trading systems. I hope you enjoyed the article !

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Judging by the Amount of Trades Does it Really Matter ~ forex trading income calculator

1:10 AM in advisors, amount, an, by, does, expert, forex, it, judging, kagi, matter, of, really, review, the, trades, unbiased

New traders seem to have a fascination for strategies that trade often. One of the points I have noticed sellers always emphasize when attempting to sell an expert advisor is its trading frequency. People will look for the system that trades the most because "the more you trade the more you make" seems to be the ruling philosophy out there. However few of these traders ever stop to think if trading frequency is really a good or a bad thing. It is important to consider other factors when you take into account trading frequency and this will eventually lead any careful trader to realize that higher trading frequency is generally a bad thing and very rarely a positive characteristic of a trading system. Within this post I will discuss the subject of trading frequency and what the trading frequency of a system tells and doesnt tell us. I will also talk about the consequences of both styles of trading and why an intermediate system - that averages about 1 trade per week - seems to be the best answer.

You may remember that "infrequently trading" robot you bought that didnt seem to go anywhere. It waited and waited and traded only once or twice every month without bringing you any substantial profits (just a draw down) within the first 6 months of trading. You are disappointed and you want a system that trades and brings profits to you lightning fast. For this reason you decide to change for a system that trades quickly and seems to be fulfilling your promises, getting you a 50% profit on your account on your first month. You think - I was right - trading frequency was definitely the answer because the more you trade a "profitable system" the more money you make.

I believe that this is the story that goes around time and time again and what causes the general perception that "higher trading frequency" is better because it achieves faster profitability. In reality it doesnt necessarily do this but it only ensures that there is a faster turn out of the systems character and increases the number of trades per draw down and profitable period. So with a system that trades very often (5-10 times per week) you may get a lot of profit very quickly when the market is favorable and then when the market exposure is cashed you will get a lot of loses.

To be clear here, the trading frequency of a system is only an aspect secondary to the systems profitable character. You can have a system trading twice a year achieving the same profitability as a system that trades 10 times a week with some differences that make the first choice better. The most important thing here is the accuracy of the measurement of profitability. Generally systems that trade very often trade lower time frames and lend themselves to further broker dependency and inaccurate simulations while infrequent systems trading higher time frames will give very accurate and broker independent simulations that will allow you to have MUCH better estimates of profitability.

It is also true that the "effort" a trading logic needs to do to come out with profit if it trades frequently is much higher because it needs to make up much more money in spreads. A system that trades an average of 10 times per year pays only 10 times the spread while a system that trades 200 times each year pays 20 times more.
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The fact is that the only advantage that frequent trading systems have over infrequent ones is the actual statistical significance of the simulations which is higher for a frequently trading system (if the simulations are indeed accurate). So a system that trades only once each year will have only 10 trades for the past ten years (which could not be interpreted as being long term profitable or unprofitable due to the small size of the sample) while a system that trades 100 times each year has more than 1000 trades which are more than enough to establish long term profitability - again - given accurate simulations.

However the advantages we get when we lean towards systems that trade infrequently is higher since we have an overall reduction in trading costs plus a gained accuracy in simulations which are vital to address the profit and risk targets of our different trading systems. For this reason the best compromise between both worlds seem to be systems that average 1-1.5 weeks every week with about 50-75 trades per year. These systems are generally traded on the one hour charts although use of higher time frames would also encourage less broker dependency and higher reliability. For example, the Ayotl trading system - my implementation of the turtle trading system - trades on the daily time frames with about 10-20 trades per year, giving very accurate simulations and a general lack of broker dependency. Systems like Watukushay No.2 trade much more frequently but this comes at the cost of higher broker dependency and spread costs due to the lower time frame used (one hour).

So as you see, more trading doesnt mean better since when this is taken to extremes simulation quality is drastically reduces - to the point of being pointless - and spread costs become a dramatic part of your trading systems profitability. If you would like to learn more about automated trading systems, their characteristics and development 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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Three Way Triangular Arbitrage in Forex Does it Work ~ forex trading for maximum profit pdf

5:13 AM in arbitrage, builder, does, forex, get, how, in, it, the, three, to, trader, triangular, umaki, way, work

One of the most interesting ideas in forex trading comes from what would seem to be a fundamental market inefficiency that would seem very easy to exploit by most market participants. Three way arbitrage is a trading technique that seeks to exploit inconsistencies in exchange rates arising from trading activity, inconsistencies that supposedly lead to tradable market inefficiencies. On todays article I will write a little bit about three way arbitrage, what it is, how it is traded and what the potential rewards may be. I will tell you why I think this cannot be done successfully by regular retail traders and why the rewards - if any - would be much lower than those of a regular long term profitable trading system.

When we have a large group of currencies and all their combinations are available as different currency pairs there is a basic consequence that leads to the trading of several pairs being equivalent to the trading of some crosses. For example if you are buying 1 lot EUR/JPY it would supposedly be equivalent to going long an equivalent on the EUR/USD and going long one equivalent on the USD/JPY. The idea is that your profits are dependent on the EUR/USD and the USD/JPY exchange rates such that the USD exposure is canceled and your net exposure comes from the indirect relationship of the EUR with the JPY. The below graph better explains this idea (using the EUR/USD, GBP/USD and EUR/GBP) (the graph was taken from here, where the concept is also further explained).
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The three way arbitrate inefficiency now arises when we consider a case in which the EUR/JPY exchange rate is NOT equivalent to the EUR/USD/USD/JPY case so there must be something going on in the market that is causing a temporary inconsistency. If this inconsistency becomes large enough one can enter trades on the cross and the other pairs in opposite directions so that the discrepancy is corrected. Let us consider the following example :

EUR/JPY = 107.86
EUR/USD = 1.2713
USD/JPY = 84.75

The exchange rate inferred from the above would be 1.2713*84.75 which would be 107.74 and the actual rate is 107.86. What we can do now is short the EUR/JPY and go long EUR/USD and USD/JPY until the correlation is reestablished. Sounds easy, right ? The fact is that there are many important problems that make the exploitation of this three way arbitrage almost impossible.

The first problem is the trading cost. This three way arbitrage is based on taking very small profits from the market and as such it becomes extremely vulnerable to spread variations. A bad spread means that you will lose most of the profitability or that you will need to search for very large arbitrage gaps which are rare and often fall in line with news events when trading spreads are much higher and trading becomes much harder.

The second and biggest problem is execution. Not only will it be extremely hard to get into these orders without any slippage (since your profitability depends on it) but getting out might be even harder as you will be trying to squeeze a very small amount of profit from the market. These arbitrage opportunities are also searched by funds with ultra fast computers and direct connections to banking feeds and therefore the liquidity related to them will dry up terribly fast.

The simple fact when trying to trade three way arbitrage is that for a retail trader it will be almost impossible to profit given the amount of trading cost, the rarity of very good opportunities and the speed in which these opportunities "dry up" as traders with access to much faster computing power take advantage of them. In the end trying to exploit one of these trading techniques is bound to be MUCH harder than trading a simple long term profitable system since their profitability will depend on too many factors which the regular retail trader cannot control. As a matter of fact, the exploitation of every arbitrage opportunity greater than trading costs is something that banks and hedge funds do constantly, a practice that aids to keep exchange rates equalized also making these opportunities for retail traders practically nonexistent.

As always there is no "free lunch" in forex trading and success comes from knowledge and understanding and not from the exploitation of some "magical" trading system that no one else takes advantage of.

If you would like to gain an education around automated trading and learn how you too can make up your own systems with sound profit and draw down targets please consider joining Asirikuy.com, a website filled with educational videos, trading systems, development and a sound, honest and transparent approach to trading systems. I hope you enjoyed this article ! :o)

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