Something Interesting in Financial Video January 2016 - page 2

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Forum on trading, automated trading systems and testing trading strategies

Something Interesting in Financial Video December 2013

Sergey Golubev, 2013.12.21 19:39

Trading With The Multiple Moving Average

The Multiple Moving Average provides us with a method of visualising the dynamics of the market and the change from stability to instability and back again. It reveals additional information about the dynamics of the market that cannot be obtained from any individual moving average.

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we can use GMMA indicator for Multiple MA : GMMA indicator from MT5 CodeBase is here :




 

Forum on trading, automated trading systems and testing trading strategies

Something Interesting in Financial Video October 2013

Sergey Golubev, 2013.10.22 19:12

162. How to Use Multiple Moving Averages for Structure

This video is on how to use multiple moving averages to give structure to the market.



we can use GMMA indicator for Multiple MA : GMMA indicator from MT5 CodeBase is here :




 

An Overview of Canada’s Consumer Price Index (CPI)

The Consumer Price Index is the most widely used indicator of inflation. It’s also used to evaluate the performance of the economy and to help guide the formation of fiscal and monetary policies.


 

Forum on trading, automated trading systems and testing trading strategies

Something Interesting in Financial Video July 2013

Sergey Golubev, 2013.07.26 07:24

49. Trading The Martingale and Anti Martingale Strategies

In our last lesson we looked at how most traders pick a standard amount to trade per certain amount of equity in their account and how this probably isn't the best way to maximize profits and minimize losses of a potential strategy. In today's lesson we are going to look at the two categories that most position sizing strategies fall into which are known as martingale strategies and anti martingale strategies.

A position sizing strategy which incorporates the martingale technique is basically any strategy which increases the trade size as a trade moves against the trader or after a losing trade. On the flip side a position sizing strategy which incorporates the anti martingale technique is basically any strategy which increases the trade size as the trade moves in the traders favor or after a winning trade.

The most basic martingale strategy is one in which the trader trades a set position size at the beginning of his trading strategy and then double's the size of his trades after each unprofitable trade, returning back to the original position size only after a profitable trade. Using this strategy no matter how large the string of losing trades a trader faces, on the next winning trade they will make up all their losses plus a profit equal to the profit on their original trade size.

As an example lets say that a trader is using a strategy on the full size EUR/USD Forex contract that takes profits and losses both at the 200 point level (I like using the EUR/USD Forex contract because it has a fixed point value of $1 per contract for mini forex contracts and $10 per contract for full sized contracts but the example is the same for any instrument)

The trader starts with $100,000 in his account and decides that his starting position size will be 3 contracts (300,000) and that he will use the basic martingale strategy to place his trades. Using the below 10 trades here is how it would work.

As you can see from the example although the trader was down significantly going into the 10th trade, as the 10th trade was profitable he made up all the his losses plus a brought the account profitable by the equity high of the account plus original profit target of $6000.

At first glance the above method can seem very sound and people often point to their perception that the chances of having a winning trade increase after a string of loosing trades. Mathematically however the large majority of strategies work like flipping a coin, in that the chances of having a profitable trade on the next trade is completely independent of how many profitable or unprofitable trades one has leading up to that trade. As when flipping a coin no matter how many times you flip heads the chances of flipping tails on the next flip of the coin are still 50/50.

The second problem with this method is that it requires an unlimited amount of money to ensure success. Looking at our trade example again but replacing the last trade with another loosing trade instead of a winner, you can see that the trader is now in a position where, at the normal $1000 per contract margin level required, he does not have enough money in his account to put up the necessary margin which is required to initiate the next 48 contract position

So while the pure martingale strategy and variations of it can produce successful results for extended periods of time, as I hope the above shows, odds are that it will eventually end up in blowing ones account completely.

With this in mind the large majority of successful traders that I have seen follow anti martingale strategies which increase size when trades are profitable, never when unprofitable, and these are the methods which I will be covering starting in tomorrow's lesson.




 

The Advantages and Disadvantages of Swing Trading

"In today's lesson we are going to look at the advantages and disadvantages of the second most popular style of trading, swing trading. Swing trading is generally defined as a style of trading where positions are held for larger gains over multiple days and up to several weeks."

  • "Traders who promote this style of trading normally feel that it combines the best of both day trading and position trading. What this means is that these traders feel swing trading gives you a similar ability to amplify gains as day trading does, with the slow pace and lower transaction costs of position trading.
  • "A second advantage that many traders would site about swing trading, is that good swing traders plan their entries and exits in advance and since positions are held for longer than one day this method of trading does not have the same intensity that day trading does.

"While some traders prefer the intensity of day trading, traders who want a less stressful trading career often opt for swing trading as a result. I think most traders would agree that the biggest disadvantage to swing trading is the increased risk per trade. Because swing traders hold positions for longer periods of time, their average risk per trade is generally higher than day traders in order to give the position enough breathing room to work."

  • As swing traders hold positions overnight they are also exposed to the overnight risk which we learned about in our lesson on day trading.
  • Secondly, although swing trading does not require as much work as day trading, it still generally requires more work and resources than position trading, as good swing traders normally follow the markets very closely even when not entering or exiting a trade.


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