Tag: forex

As the technical indicators are rigorous mathematical description as a formula, they are easily programmed and therefore form the basis of automatic Internet trading systems. Technical indicators are a very serious drawback – it is their persistence. The indicator shows the point of entry and exit points with some delay, when the market has already “gone” of these points at some distance. Trader is not able to affect the value of these distances and is forced to rely solely on the fact that, thanks to the use of indicators, after a certain number of Transaction total income will generally be greater than the final loss. The inertia of the technical indicators inevitably causes the so-called “subsidence of the deposit” (reduced deposit), ie situation when, after implement a number of transactions resulting loss exceeds the bottom line.

It is obvious that the trading using technical analysis has similarities with the game of roulette, if you bet on red or black. In the first case to make a choice of two financial transactions: buy or sell in the second case – the two colors. However, unlike roulette, where the probability of winning 50-50 and depends on the case, then the probability of the final profits in trading using technical indicators in general, higher than the probability of the final loss. 3. Empirical analysis of financial markets An empirical analysis based on the study and comparison values of financial markets by visual observation. The subject of study in this case is to map the movement of the market as a graph. Empirical trading is based on the ability to schedule “draw” certain kind of “graphic shapes, which characterize the behavior of the market and allow some degree of probability to predict its future behavior.

These figures almost defy mathematical description, it is virtually impossible to program, they can only identify visually. Therefore, in contrast to technical analysis, empirical analysis of financial markets provides a direct part trader in the process. Here comes to the forefront a concept of “quality figures.” What is “quality” figure, the smaller “flaws” it has, the more it approaches the “standard”, the more likely the anticipated market direction. Since the quality of the figure is almost impossible to describe mathematically, quality assessment figure depends entirely on the skill trader. The higher the qualification of the trader, the higher effectiveness of the empirical analysis and, consequently, higher profitability of trading. Thus, the trading using technical indicators – a “game” in financial markets since the indicators provide a quantitative analysis of markets, rather than qualitative, with the indicators should increase the likelihood of profitable transactions with respect to loss-making transactions. Trading with the use of graphic shapes – it’s “work” in the financial markets, ” because the graphical shapes give a qualitative rather than quantitative analysis of the markets. What is “quality” figure, the less they poyavlyayutya, respectively, the lower the number of transactions, but they are all profitable.

Most of the time traders spend looking for setups for the trading of inputs, using fundamental analysis, chart patterns, technical indicators, signals and other tools. Without doubt, the search for inputs is a very important element of success, because input is the foundation upon which the transaction. However, if you find a good entry is the most difficult task is to find a good solution is the most difficult part of the sales process with emotional point of view. Depending on when you close your position, you may find yourself in particular, both winners and losers. Usually carried out when the price reaches the level of stop-loss or reaches particular purpose. When you open any position we need to set a stop loss. Some traders use a mental stop, while others place a physical stop in the marketplace. Initially, the stop is placed at a certain level is the maximum risk that the trader can afford, if the market goes against him.

Later, if the deal is moving in this direction, the stop can be adjusted to record profits. Trailing Stops allow traders to stay on the market until such time as it is attended by a favorable trend. In the case of a reversal transaction is stopped. Usually the foot is placed near the support and resistance levels, which are visible on the graphs. Experienced traders can easily identify where a large number of stops. When the price touches the support or resistance level, and then there is a strong movement, a movement due to tripping stops.

Once the market rises up, I’m looking for a cup pattern consisting minimum number of 3 bands. I’ve been watching for 3 value at closing or lows. On the cup the first band will have the highest closing price (or low), the average band – a low cost of closing (or low), and the third page – the higher the closing price (or low) , – adds Stowell. “This structure shows the reverse trend. Once on the market a lively, and he then stopped, if the daily value at the close of all the lows will be lower plating structure, it will provoke a point of resale, “- says Stowell.

“Kepochnaya” structure, in fact, represents the opposite. “The market is obliged to pre-sell, and after these next reel on the market is up” – he explains. On their own trade as a whole, Stowell says: “When I start a position, I know the risks koy go on, but has no clear reward amounts. I just aim at it to pull a piece out of the middle oscillation. I do not bother with the top or bottom. Stowell acknowledges that the triumph of the trading is in addition Depending on the “rigid discipline, courage and perseverance.” “Enough, enough, it is important that the person has been persistence, and must also possess courage. You need to have strength of will to take action when the time come and talk about all the signals it “, – notes Stowell.

He also believes that any investor must calculate your level of comfort: “When you’re very much going to give ourselves the market, then you will not miss out on any other relevant things, and you will push the market now. ” As educator, he notes that all newcomers to investors’ need to go through the immediate boundaries. They learn about the disorder and fear associated with trading, will make mistakes. They are required to go through the process of learning. ” Stowell refers to investors: “Daily – a fresh day. He almost always be fresh. Need to constantly develop their skills. According to all the time to get involved.

Despite the fact that some portfolio managers believe in the high profitability of diversification, even with systems with a low percentage of winning trades, in fact, is a high probability of large DrawDowns on such systems, significantly reduce the profitability of this. On the other hand, if we trade system with a large percentage of profitable trades, we have much less need to diversify. And if our system is carefully designed so as to always "catch" the big trends and rarely cause damage, we obtain the best possible scenario. Of course, diversification is still useful for our strategy with a large percentage of profitable trades, but rather an additional expansion opportunities than neobhodimost.Sistemy with a high percentage profitable transactions require less initial capital to trade. If we need fewer resources to overcome DrawDowns and less funds for diversification, so we need less money to start trading on such system. Also, if a high percentage of winning trades, we can more confidently use the previously obtained profits to recover the funds after any big DrawDown.Sistemy with a high percentage of profitable trades easier configure and check for errors. Imagine a system with a low percentage of winning trades, in which the long series of losses is normal.

How many losses will have time to bring it until you realize that something working properly? I think a lot. Now imagine a system with a very large percentage of profitable trades. Any series of losses, which differs from the norm for this system to quickly draw your attention. Can hope that we can quickly check your system and correct any errors before they incur serious losses. In a system with a low percentage of winning trades, we have time to suffer huge losses while realize that something needs to be correct.

As you can see, we are convinced supporters of the systems with a high percentage of winning trades. We affirm that really is not difficult to create a system with a decent winning percentage, if you focus on the this option and you will be demanding to him. Very often, the creators of trading systems focus only on the total profit of the system. Usually, this results in a system with "perepodognannymi" outputs, taking a rare, but the unnaturally large profits, and very narrow feet, bringing frequent, but small losses. This approach gives a very low percentage of winning trades, and, ultimately, destroys the system. On the other hand, if we focus on achieving a high percentage of winning trades, we can achieve this without the great sacrifices and perepodgonok ", resulting in a system that actually" friendly "and reliable.