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Date: April 13th, 2005 14:00 GMT
Expert: Doug Schaf, Managing Director, FX-Strategy
Automated Systems Trading and Backtesting
- Taking Systems Trading to the Next Level
- Signal Services, Platforms & Robots
- What You Need to Know
- Building versus Buying or 'Renting' your System
Who is Doug Schaff?
Doug heads FX-Strategy.com a forex trading firm that provides traders with currency charts, proprietary
trading indicators and trading systems, along with an in-depth training program.
Doug is an FX teacher, trader and analyst, with more than 20 years experience trading the foreign
exchange markets. He developed his trading skills under the guidance of experienced European-trained
traders at Bankers Trust in the 1970's, becoming a senior trader for the bank in its New York and Paris
offices. Later, as chief dealer at Merrill Lynch Bank, he established the bank's currency options trading
desk. For the last decade he has been an independent FX Trader, currency analyst and trainer.
Automated Forex Trading – the Opportunities and Challenges Taking Systems Trading to the Next Level
Thank you for joining me for this talk on automated forex systems trading.
There is a lot of interest today in the automatic execution of forex trading systems.
Why is this happening now?
One reason is that the technology has gotten to the point where it is possible. Some forex brokers are
giving developers the ability to program directly to their API (application programming interface) that
carries the full functionality of their trading platforms – the live price feed and use of a full range of
order types.
NOTE: This is not available everywhere. Automated trading solutions are catching up with demand.
There is currently no single solution available today that easily allows traders to do all of the following:
1) Build their own trading systems using the full range of orders (i.e. limit, stop, market,
contingent)
2) Backtest trading systems using broker generated tick data
3) Run trading systems as they are designed with automated quality control
4) Produce full reports that include monitoring order execution
5) Utilize money management resources that facilitate risk control
Having said that, as technology and programmers push the boundaries of what is possible, many
exciting and potentially quite profitable trading tools are being developed and offered today.
Are you a Candidate for Automated FX Systems Trading?
Forex is a true 24-hour market, ideal for automated systems trading. Consider the following situations
to determine whether you might be a candidate for automated trading. Have you ever turned on your computer and found that a great trade happened right before you got there?
Your indicators lined up just perfectly … but that was while you were sleeping or out to lunch.
Do you work (or play) during times when the market produces the best trades? Do you live in a time zone where the market is not that active during your waking hours?
Does your trading method work with several currencies and in several timeframes, such as on 30-minute, 1-hour and 4-hour charts … but you find it difficult to watch them all at the same time?
Do you occasionally get several signals at once but find that entering multiple trades at the same time is nearly impossible?… I hate to ask this next one as it brings up bad personal memories.
Have you been in the market, with your trading is going really well and suddenly your screen freezes up
on you? Your charts are down, the online link to your currency broker (and your sanity) is broken?
Have you ever taken your laptop to bed with you? (I am quite serious.) If you answered “Yes” to the last question then call me immediately!
If you answered “Yes” to any of the above questions then you are a candidate for automated trading.
Actually I do know someone who regularly took his laptop with him, even to bed. Yes, he is married
(still). But it’s probably because he is now running his systems automatically, from a server directly
connected to his forex broker rather than trading them manually. And his computer has been banned
from the bedroom, well, at least from the bed itself.
Forex IS a 24-hour market. And there are only so many hours that you can stay alert in front of your
computer. (Or that your significant other will put up with bringing the laptop to bed!)
You have your trading ideas and you want them implemented. You may not want to depend on anyone
else. So how can you accomplish that?