Is risk diversification even possible in the forex market? - page 5
You are missing trading opportunities:
- Free trading apps
- Over 8,000 signals for copying
- Economic news for exploring financial markets
Registration
Log in
You agree to website policy and terms of use
If you do not have an account, please register
Risk diversification is possible. And it is in forex. And forex itself is set up in such a way that diversified strategies can only be profitable in the long run.
Another thing is that I have never encountered a trading platform, which would allow competently testing such strategies without some crazy tricks. Still, it is possible.
For example, I mentioned in one of the threads that the dollar has been strengthening against all major currencies for at least 5 years (I haven't looked deeper) (the average dollar point value for all pairs is steadily declining). Smoothly, without jumps. Already this fact can be used for risk-free (relatively risk-free) trading.
If the dollar is strengthening (I don't yet understand how it can be calculated) then it turns out that other currencies are even more dependent on it now than they were 5 years ago?
And then how does one trade relatively risk-free? )
(If the quid goes down and you lose everything because of this momentum.)
P.S. Or am I missing something in your thought?
) When it comes to testing, you may use your hands to do it as well. )
(In my case at least.)
Describe the mechanism (idea) of the test, if you can...
What about the dollar index?
What does the dollar index have to do with it? The dollar index is just a currency, not a currency pair.
The SP500, on the other hand, is a set of all the stocks that are traded. And the main trick of market-neutral strats is to isolate the alpha, because you can get the beta just by buying the index.
...
Describe the mechanism (idea) of the test, if you can...
This fact alone can be used for risk-free (relatively risk-free) trading.
(Or maybe a link to a post where it is mentioned...)
Can you give me an example to illustrate at least 1?
(Or maybe a link to a post that talks about it...).
Calculate the point value in dollars for all major pairs. Add them together. Plot the change in value. Do not forget to synchronize the history, so that there would not be gaps in the history of any of the pairs taken for the calculation. If you think about what I have said, you will understand the pain I was talking about.
All this is not easy to do programmatically, not to mention the hand calculations and the actual trade.
Calculate the point value in dollars for all major pairs. Add them together. Plot the change in value. Do not forget to synchronize the history, so that there would not be gaps in the history of any of the pairs taken for the calculation. If you think about what I said earlier, you will understand what a pain in the neck I was talking about.
It is not easy to do all this programmatically, not to mention the hand calculations and the actual trading.
What will this graph of the dollar value change give him in terms of diversification?
How will it help to hold a dozen instruments simultaneously (+- safely)?
Let's assume for a second that someone calculates this.
What will this graph of dollar value change give him in terms of diversification?
How will it help to hold a dozen instruments simultaneously (+- safely)?
Simple as that. Buy a portfolio and wait for the value of the portfolio to exceed the costs (spread and commissions) of opening - then close.
Correction. it will just help if someone manages to calculate the whole thing. :) Because it's not enough to know that the point value of all pairs is falling on average, you need to consider the volatility of each of the pairs.
The mechanism is simple - zeroing in on all 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, as there is simultaneous buying and selling for each currency.
What will be the profit then?
(Is it arbitrage (I heard this case is punishable in brokerage companies) or what?)
Okay.
What will the income come from then?
(Is this arbitrage or what?)
Simple as that. Buy a portfolio and wait until the value of the portfolio exceeds the costs (spread and commissions) of opening - then close.
Look:
For example I decide to trade aggressively - 10% of risk (of deposit) for 1 transaction.
I take 5 instruments linked to the quid and it turns out that if the general quid chart does not move in my direction - then I lose 50% at once!
Isn't it so?
I'm going to take a portfolio (as I see) while looking at this general graph?
P.S. If I order not 50% (in 5 positions, but for example 2% on each tool in the portfolio), then there is no point in this manoeuvre, because I can trade with the same success on 1 instrument (any) at a time...
(having the same risks and the same potential profit)