Search

Forex (Currency)

7 Rookie Forex Trading Mistakes

February 19th, 2014

Forex trading is one of the most challenging ventures a person could probably undertake in their life. Going to the gym and building muscle won’t help you, nor will going to university and getting a fancy degree. This job requires psychological features of strength, which most new traders do not have, and sadly may never
Read the full article…

Pros and Cons of FOREX Arbitrage

April 23rd, 2013

Using triangular or transitivity arbitrage strategies on the FOREX market has one very salient advantage: predetermined profits can be realized if the trades execute smoothly. Unfortunately, the disadvantages of this strategy are numerous: Higher transaction costs. The trader must pay the bid-ask spreads on three separate trades. Higher margin requirements. Roughly three times the margin
Read the full article…

What is Arbitrage in FOREX?

April 23rd, 2013

Arbitrage, especially triangulation methods, is a perfect candidate for computer analysis and execution; it requires both deep and lightning-fast calculation. In general, arbitrage is the purchase or sale of any financial instrument and simultaneous taking of an equal and opposite position in a related market for the purpose of taking advantage of small price differentials
Read the full article…

Grid and Pac Man Programs

April 23rd, 2013

Another interesting and less esoteric direction in FOREX automated trading are grid and Pac Man programs. Between the resurgence of artificial intelligence at one end and the continued frenzy of HF and UHF trading at the other end, a new trading paradigm is emerging. Grid systems trade both sides of a market, scaling in-and-out of
Read the full article…

The Trend Machine

April 23rd, 2013

There is, however, exciting and promising research using nonlinear methods and modeling techniques culled from the sciences of complexity and artificial life (A-life). The underlying hypothesis is this: While the basic input data of the markets—primarily prices—may be simple, the output can only be forecast with nonlinear methods derived from complexity theory. They do not
Read the full article…

Into the Future of FOREX

April 23rd, 2013

Although it has lost some luster in this century, application of artificial intelligence (AI) methods has been seen in the FOREX arena. The three primary approaches are: expert systems, neural networks, and genetic algorithms. I developed an expert system–neural network hybrid in the early 1980s, Jonathan’s Wave, and used it successfully in the futures markets
Read the full article…

High-Frequency and Ultra-High-Frequency Trading

April 23rd, 2013

I anticipated this in an article I wrote some years ago, “A Bust to the Markets” (Currency Codex, 1996): It will be most interesting to see how HFT and UHFT develop in the future. It should be said that at least in the short term, they do add liquidity to the market, which is, of
Read the full article…

Cloud Computing in FOREX Trading

April 23rd, 2013

Cloud computing is all the rage today. It is not as new as the marketing people would like us to believe, of course. Application service providers (ASPs) were cloud vendors 10 years ago. But cloud does sound more exciting and the available storage media and space and bandwidth has aided its expansion greatly. FOREX traders
Read the full article…

Automated Trading, Agents, and BOTS

April 23rd, 2013

An expert advisor may be manually traded—the trader waits for the signal and then executes the order manually, or, more commonly, automatically traded—the expert advisor executes the trade as it occurs. Computers do not get tired or hungry. They can make money for you 24 hours a day—if the program is good. At the top
Read the full article…

Do Expert Advisors Work in FOREX?

April 23rd, 2013

Expert advisors are combinations of indicators with a small rule set for determining specific buy and sell signals. They have become popular in the past two or three years. Some EAs can be quite complex and sophisticated. Others may be simpler: “Buy only when the 3-unit moving average is above the 10-unit moving average and
Read the full article…

Advantages of Computers in FOREX Technical Analysis

April 23rd, 2013

Technical analysis is the preferred trading method for many traders, big and small, institutional and individual. See Technical Analysis, for a summary of technical analysis ideas. Computers are an obvious aid to doing technical analysis studies, both for finding new methods and testing old ones. A computer can help in two areas. Complicated ideas and
Read the full article…

Research and Resources

April 23rd, 2013

Compile a list of your own of at least five prospective money managers who have some level of appeal to you. Perhaps it is their longevity that attracts, their trading method appeals to you, or their track record agrees with your risk-reward sweet spot. Then evaluate performance. Finally, of those who make your short list,
Read the full article…

Peter Panholzer-DynexCorp

April 23rd, 2013

Mr. Panholzer is featured here for several reasons: I have known him for over 30 years; he represents a FOREX manager with a balanced trading methodology who has performed well for many years maximizing returns while minimizing risks; his website is a good paradigm for the kind and depth of information a money manager should
Read the full article…

High Performing FOREX Managers

April 23rd, 2013

Note: Inclusion of any manager herein is not to be considered a recommendation. Here is a list of FOREX money managers who are getting good reviews at this time. Remember, in the currency markets, the music changes often and quickly. The tango dancers do not look so good when a slow ballad begins to play.
Read the full article…

FOREX Manager Costs and Fees

April 23rd, 2013

Two types of costs are associated with a managed FOREX account: those incurred in the process of the manager making trades on your behalf and those incurred by the manager. Transaction Costs Your manager will have selected a broker-dealer with whom to do business. Prima facie, if the manager is happy with them, so should
Read the full article…

How to Pick the Right FOREX Manager: The Due Diligence Process

April 23rd, 2013

Now that you have defined your own requirements and considered them vis-à-vis performance by analyzing the FOREX manager’s track record, it is time to do a due diligence review of the managers who remain on your list. Tip: Unregistered is not always a bad word. Some very reputable U.S. brokers decided to go unregistered after
Read the full article…

Two Methods of Performance Analysis

April 23rd, 2013

The conventional approach to performance analysis has become extremely complex, involving numerous mathematical and statistical methods and ratios. The most common is the Sharpe Ratio. The Sharpe Ratio This popular performance ratio was developed by Nobel laureate William F. Sharpe. The Sharpe Ratio is typically calculated by subtracting a risk-free investment rate, such as the
Read the full article…

How to Evaluate a FOREX Manager’s Performance

April 23rd, 2013

Listed here are the parameters used to dissect a FOREX money manager’s performance. How much analysis is possible is determined by how much of the program’s track record is made available to you. Reward and Risk Ultimately, a manager’s performance is about six factors: Reward—How much can he or she make for you? Risk—How much
Read the full article…

Different FOREX Trading Methods

April 22nd, 2013

I have mentioned trading methods en passant in the earlier section on types of managers. The primary breakdown: discretionary, computer-assisted, and automated trading methods. The latter dominates the managed FOREX landscape today. The variety and range of automated systems is huge and complex. Though it is possible to divide them into a few types, the
Read the full article…

Different Types of Managed FOREX Accounts

April 22nd, 2013

Most managed accounts are either individual or pools. A third variety, the PAMM account (percent asset management module) has become popular in the past two years. In an individual account, your money should reside at a registered broker, preferably an FCM (futures commission merchant) in the United States or a manager with a prime relationship.
Read the full article…