Is risk diversification even possible in the forex market? - page 3
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Nah... I'm an amateur... And I'm nowhere near your results. It's strange that with such success you're asking such questions here.
(But to be in profit (steadily) with high commission is really not easy...)
1. There are different risks. For example:
-Risks associated with being in the market. These are risks related to events occurring in the market and adversely affecting the result of your open positions. For example important news releases or force majeure situations, etc;
-Risks related to the execution of your trade orders. These are the risks you run if your orders are executed below your expectations;
- the risks associated with thechoice of the direction (Buy/Sell) of the position opening.
The first and third groups of risks are addressed through a market-neutral portfolio, i.e. when you open/close all instruments at once. The second group of risks is virtually unsolvable, in my view.
Have you got any information (links to extensive articles or books) about forex portfolio strategies?
(I cannot find anything reasonable in the Internet yet...)
I am interested first of all in the mechanism of neutral portfolio selection.
Once again, for those in armoured train - market-neutral portfolios have nothing to do with the former or the latter
(never used portfolio strategies before)
Explain why, if you can.
(I have never used portfolio strategies before)
I will be able to give you a clear, detailed, reasoned answer to questions like "why" and "how to" in relation to risk diversification and market-neutral portfolio, but ONE condition - you tell me your clear idea of how you have this information, can make a profit (and convince me of the correctness). The market-neutral portfolio (if you can create it) is an exchange position locking (that is possible in MT4 and not in MT5). So, you've got (hypothetically) the possibility to open a locked position in MT5, prove me with your fingers that you can profit from it. If you don't have such a way, then there's no reason to create a market-neutral portfolio.
But in Forex you may trade (on Forex) in several symbols simultaneously (on the same timeframe) in such a way that from the 1st movement of any (no matter what) instrument 5 of your positions on other instruments would not get caught?
Or is the correlation (direct or inverse or partial) between currencies in general in this market (and there is no independent pairs in this market)?
(because I often notice that when there is a spike in the market, it occurs synchronously in almost all pairs...)
All right. Let us assume that this variant is rejected.
But you can trade (in Forex) on several symbols simultaneously (on the same timeframe) in some way, so that from the 1st movement of any (no matter what) instrument does not "catch" about 5 of your positions in other instruments?
Or is the correlation (direct or inverse or partial) between currencies in general in this market (and there is no independent pairs in this market)?
(because I often notice that when there is a surge in the market it occurs synchronously in almost all pairs...)
Some kind of correlation is usually present. However, there are some instruments which have little or no correlation, but as a rule these instruments are exotic ones with unsuitable conditions for trading.
I'm afraid to touch upon a subject of endless discussions, even though it does not concern me, what is the goal of your case, to trade several instruments simultaneously? If several different instruments are traded using the same trading algorithm, it does not lead to diversification of risks.
You can, but it's not the instruments that diversify, it's the brokers that juggle, which is why inter-deal arbitrage gets punched in the arm :)
The other near forex options are inter-market, like forex + futures or forex + options.
The linkages between currencies in forex are weak, so those who have managed to make money on them - it was all half luck there.
The mechanism is simple - zeroing in on all the currencies in the portfolio. For example, buying EURUSD and USDJPY and selling EURJPY. As a result, all currencies in the portfolio (EUR, USD, JPY) in the resulting position are zero, since there is simultaneous buying and selling for each currency.
Genius! Bought EURJPY and sold EURJPY, spread-level loss - "nullified", ml......
True, this has nothing to do with market-neutral portfolios, but that's OK....
Before you comment, you should at least try to absorb what is written. WARNINGS, NOT WARNING Pairs!!!!
A scarecrow is a scarecrow!
))) I got it! For you, theEURUSD to USDJPY pairs ratiois not aEURJPYmajor!!!I see...
Start at the beginning - with arithmetic lessons. Concentrate on multiplying fractions.
And don't read books with clever words like "market-neutral portfolio" - it's not for you.