The Benefit of Hindsight in Trading System

Tuesday, January 13, 2009

Once you know something, such as the past history, pretending that you do not is very difficult. The ways a trader can delude him-/herself while back testing a trading system vary in degree of subtlety. A crude one is to develop a set of trading rules by observing the past history of the market, and apply the algorithm on paper to the same past history.

A more subtle one has to do with the choice of adjustable parameters. It is common to abstract the algorithm, and split it into the "artificial intelligence" (AI) core, capable of "learning", and adjustable parameters which may control the learning process, the application of its effects, or both. A developer would then prevent the AI from learning the future, and run a trading simulation program on historical data, having the AI algorithm fixed, for a range of parameter values and then pick the value that gives the best result. By not letting the AI learn the future, the developer reduces the level of self-delusion somewhat.

The best simulated performance would still incorporate "the benefit of hindsight" albeit in a refined way -- through the choice of the adjustable parameters. While the AI did not learn from the future directly, its way of learning would incorporate the benefit of hindsight, and the results might contain a survivorship bias of sorts. The result? In case of a poor AI, the result will be a trading strategy with a hidden "peso problem".

Below I demonstrate the quality of the Forex Automaton™ AI directly, by removing the selection step and thus the survivorship bias it brings in. I look simultaneously at the entire range of possible "ways of learning", refusing to reject those inside the range. Nor do I reject any of the possible money management styles, for the same reasons.

[Why ForexGen]

1. Lowest spreads in the market with 0-1 pips in 10 pairs, no commissions, no swaps and instant account Activation.
2. Scandinavian quality with Swiss precision, funds secured and local agents in 18+ countries.
3. ForexGen offers Forex trading in the major currency pairs and crosses.
4. Low capital start, with $250 as a minimum account size.
5. Liquidity and 24/5 availability are the characteristic factors of the Forex market compared with other financial markets.
6. ForexGen offers a free trial Forex [demo account] that allows you to test your skills and practice without risking real money.

We consider every client as a special case, a VIP and a partner. A client's profit is our success and a client's loss is a significant call of action for us. Customer care is the heart of our business, we know every client on personal bases as we provide 24/7 customer support.
We keep contact with our clients to ensure that we are on the right track. Leading our client relationship to success is our focus.
Let [ForexGen] prove to you that you have taken the right step by choosing our partnership.

The Best Way To Start a Successful Trading Career

This will be of great help when you are new to forex trading. By placing demo trades, you will learn a lot about how Forex transactions work. This is a very important step for you in order to be able to learn how to become a trader. A demo account allows one to become familiar with trading procedures, such as placing Market, Limit, Stop, Orders without any risk. Of course all dollar losses or gains using a demo account are imaginary but, as mentioned above, the trading experience you acquire is not.

Making big gains in a demo-account does not guarantee profits in live trading; however, those who are not successful trading on paper rarely are successful when money is on the line.
Once you sign up for a demo account, you will need to try one of the charting packages from the broker you will be using. Any demo software you choose will do because they all have the necessary indicator tools you need.

Once you have downloaded the software you can then set up your demo account and start drawing trend lines, marking support & resistance levels, monitoring moving averages, etc. Once you have a real trading system, you will already know how to place orders properly.

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As ForexGen believes that its success depends totally on its client's satisfaction and success, ForexGen is sharing its growth and new site release with wonderful promotion packages.

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Best Way To Automate Forex Trading

I have never traded a forex strategy live using any advanced automated methods. At the most, I’ve placed a limit order. Most, if not all of my experience has been with expert advisors in Metatrader.

I realize more than ever that if I could automate my strategies, this may take me to the next level of trading and keep me more involved in the market.

At this point, I need the motivation. The subject of automated trading has always interested me but my issue has always been with trusting a broker and the platform with a live account using an expert advisor. Therefore I’m calling on everyone who has experience with automated trading to share your experiences.

If you’ve used Metatrader, have you found success with any particular brokers? I know there are other automated trading software available that mostly allow trading via an FXCM API but are they any good? I know Oanda also has an API but it costs about $600/mo.

[ForexGen Demo Accounts Contest]

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[ForexGen] has the pleasure to announce the launching of the Demo Account contest on the first of every month.

Interested clients who wish to participate in this event shall send an e-mail request on demo.contest@forexgen.com including the following information:

- Full name:
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Also provide us with the following identification document:

" Certified copy of the information pages of account holder current valid passport or government issued photo ID"

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What Is The Best Way To Be Successful in Forex?

What are the best ways to become a successful forex trader? These results are taken from a Moneytec poll that had over 6,000 respondents and are ordered by most votes first. My comments follow each result.

1.Study by yourself and get experience - Over 45% of the respondents said this was the best way. I have to totally agree with this and is what I've been doing for the last year. One point I'd like to make is that you don't have to do it all by yourself. If you can find a trading partner who has the same drive and motivation as yourself, this could be even more beneficial.

2.Develop your own system - Over 25% voted for this but I think this goes hand in hand with #1. If you are studying by yourself and want to get more experience, developing your own system is an absolute must even if you never use it.

3.Learn from a mentor - 15% said this. I think I've stated my views on mentors clearly in previous posts. Mentors are what you make of them.

4.Open a managed account and monitor it for education - 5% voted for this. I personally have never tried this method. I did just hear last week that you can open a managed account with Raghee Horner called Autotrade FX. You open your own account at TradeDirectFX and it mirrors her every buy and sell order. Interesting concept but I think difficult to learn from. You see all the buy and sell orders but no rationale behind them.

5. Hire a portfolio manager - This was voted as the best way by 2.65% of respondents. I don't get it. I'd rather be self-sufficient and how do you know who to trust.

6.There is no way to become continually profitable in forex - 1.51% negative respondents to this one. The jury is still out on this for me personally. I hope I don't come to this conclusion.

7.Get signal alerts by subscription or live from a guru - 1.09% voted for this. I don't know if this helps or not. I don't like it though. Who do you trust with the never-ending list of scammers out there. If you want to listen to someone else though, there are plenty of sites where you can get free trade calls and technical analysis. In fact, there are just too many out there to choose from.

8.Get Analytical reports and Make your Judgement - Less than 1% chose this response. Sound very similar to #7. The analytical reports are basically going to tell you which way to trade so making judgment calls here is probably kept to a minimum. Not for me.

9.Buy Software or Strategy Description - Less than 1% chose this response probably because this too is very similar to #2, developing your own system. If you are going to trade forex with TA, you need software and you need a strategy.

[Partnership With ForexGen]

ForexGen offers three types of business partnerships:

*Introducing Broker
*White label
*Money Manager

ForexGen Introducing Brokers, White Label and Money Manager holders are recognized as a strategic business partners. The main focus of our service is to satisfy our partner's needs in order to deal with a qualified service and gain a huge income sharing plan.

[ForexGen] provide appropriate services satisfying the needs of all business partner's specified situation and requirements.

Forex Pips and Spreads - The Brokers Commission

The pip is the smallest measure of price move used in forex trading. For instance, if the currency pair EUR/USD is trading at 1.3000 and then changes to 1.3010, the pair is said to move by 10 pips. It is an acronym for Percentage in Point (pip).

In the wholesale market, currencies are quoted out to four decimal places, with the last placeholder called a point or a pip. A pip in most currencies is one/10,000th of an exchange rate or in USD/JPY, it is one/100th, likewise you can find for others.

Spread on the other hand is the difference between buy (long) or sell (short) for a currency pair. The bid/offer spread is the difference between the buying (bid) and selling (offer) price. The ask prices are the immediate execution prices for quick buyers or traders and bid prices are for quick sellers.

In Forex market you will find brokers who generally do not charge any commission from you. But they get their money by charging you a spread. As spread is the difference between the bid price and the ask price for any currency being traded, the broker will add this spread onto the price of the trade and keep it as their fee for trading.

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ForexGen.com is an online trading service provider supplying a unique and individualized service to Forex traders worldwide. We are dedicated to absolutely provide the best online trading services in the Forex market.

ForexGen provides a unique online trading experience based on our intelligent online Forex trading package, the ForexGen Trading Station, including the best online trading system.

20-30% a Month in Foreign Exchange FOREX Trading?

Wednesday, December 31, 2008

In a tide of new regulatory measures issued by the Commodity Futures Trading Commission (CFTC) most of the unscrupulous Forex firms have now disappeared or been forced to change their tune and marketing tactics ~ some have even gone underground. In the present climate of new regulations, is it time to take a new look at FX trading and the aspiring traders who are making Forex a profitably managed alternative investment?

Most US based hedge funds agree~ IT IS TIME! During an interview with a US based futures trader that worked for an overseas "fund", I learned some very interesting things... There are small private groups of investors that are formed outside the purview of the CFTC or other countries regulatory agencies that are currently making 20-30% per month, each and every month ~ and have been for the last 11 months. One of these groups initially began in Germany for small investors and was marketed under the new business slang of a High Yield Investment Program (HYIP) which has since been sold to a Grant Andrews and other "e-gold" enthusiasts (mostly tax protesters)...

But the Main trading group has gone on to become a legitimate trading company in the United States with the most experienced trader becoming the manager and director of operations. Accepting investments as low as $250 is undoubtedly an enticement to the retail investment sector and a maximum investment of $25,000,000 deservedly an enticement for accredited investors. As of this writing (November 10, 2003) the company has began operations as an Forex Pool conducting it's trading business ONLY with registered FCM's in the US.

I was personally honored to grace the hallowed halls of a VERY PRIVATE trading operation managed from the State of Missouri (of all places), witnessed an incredible spectacle of 6 traders making a bit over 8% on a Monday in a period of 4.5 hours or so and was delightedly impressed to say the least. They told me it was happening long before it actually did... What do they know that I don't? It turns out that the Director has over 18 years of trading experience in private (what WAS he doing there?) for his own knowledge, interest and experience. It turns out that he and a few colleagues found a way to express a trending market BEFORE the market actually began to trend... Now that is something to read about...

Although the knowledge wasn't overly remarkable in percentage terms on a monthly basis (these are professional traders making 5-50% per month ya' have to understand...) the utilized trading system is a combination of money management techniques and market volatility measures which, when combined in certain combinations... provide a steady flow of profit while limiting drawdowns (losses), limiting risk and increasing profitability... Can it be true?... 17% per month for 11 months now and I'm told it's increasing to 20-25% with an essential programming change that doesn't change the past trading except, if it had been done in the past, it would have returned the higher amounts... the software wasn't capable of doing so and now it is! Incredible... Do I believe it? I like the 17% per month... My stocks are killing me! It turns out that there are Three (3) groups of two (2) traders utilizing different trading styles - which together provide a stable rate of return according to ones own risk profile, whether it be conservative, moderate or aggressive... Even after the 25% incentive fees are deducted each week...

And there's more... They presently have two funds. (1) The High Yield Fund where you get what you get after the 25% fees and 5% (optional) sales load; and (2) The Stability Fund where you get 5% every month and a Reserve Fund that guarantees the 5% per month each month... even if actual trading is under the "norm"... Secondly, the Reserves are also used to guarantee 100% of the principal invested so there is little or no risk after 6 months or so... Well, that quite a choice in hedge fund investing.

They are also interviewing other traders, some claiming returns way out there in ga-ga land... But don't sweat it, the Director has his feet on the ground, his interest is long-term and stable minded. So, it turns out that 25% per month is possible - with just Forex trading... mix in a certain management style that limits risk by guaranteeing your principal and feeds a reserve fund for contingencies... and twalah! You've got yourself the very best in Alternative Trading Capital Management... Extra funds to actually live life with! And isn't that what this is all about?

[Partnership With ForexGen]

ForexGen offers three types of business partnerships:

*Introducing Broker
*White label
*Money Manager

ForexGen Introducing Brokers, White Label and Money Manager holders are recognized as a strategic business partners. The main focus of our service is to satisfy our partner's needs in order to deal with a qualified service and gain a huge income sharing plan.

[ForexGen] provide appropriate services satisfying the needs of all business partner's specified situation and requirements.

Choosing A Forex Broker

With currency trading becoming ever more popular, the number of brokers is growing at a rapid rate. What should one look at when deciding which broker to open an account with? These are the important points to consider.

Spread
Because currencies, unlike futures and stocks, are not traded through a central exchange, the spread can be different depending on the broker you use, so it's well worth checking a few out before you open an account. Most forex brokers publish live or delayed prices on their websites so you can compare spreads, but check if the spread is fixed or variable. A fixed spread means exactly that - it will always be the same no matter what time of day or night it is. Some brokers use a variable spread, which might appear to be nice and small when the market is quiet, but when things get busy they can widen the spread which means the market must move more in your favor before you start to make a profit. Fixed spreads are generally slightly wider than the variable spreads are when at their narrowest, but over the long term fixed can be safer.

Execution
Some brokers will show live prices on their trading platform, but will they honor them when it comes to pushing the Buy or Sell button? The best way to find out is to open a demo account and give them a test drive. This will also give you the opportunity to see what the speed of execution is like - when you want to buy, you want to buy now, not sit around waiting for ten minutes whilst your order is confirmed!

Trading Platform
Good trading software will show live prices that you can actually trade at, not just indicative quotes. It will offer Limit and Stop orders, and ideally will let you attach these to your entry order. One-Cancels-Other orders are another useful feature - they mean you can set up your trade and then leave the software to get on with it. And the most important feature of all - can you actually understand the platform? Having all the bells and whistles is of no use if you can't use them, so again, get a demo account and give it a go.

Support
Forex is a 24 hour market, so your broker should offer 24 hour support. You might not be trading at 3am, but that could be what time it is in your brokers head office on the other side of the planet, so make sure there will be somebody there to pick up the phone if things go wrong. You should also check if you can close positions over the phone - essential in case your PC or internet connection crash at a critical moment.

Backing
Finally, before opening an account do a little homework and find out about the company. Forex brokers are regulated, but that doesn't mean they all have equal backing. If the market collapses, you want to know that they've got the reserves to cope with it and will still be around when you decide to withdraw your cash. If a broker is elusive when it comes to questions about their parentage and financial backing, then steer clear.

In Conclusion
Choosing a forex broker isn't difficult, but don't rush the decision. Check out a few, and always get a demo account first to make sure you're happy with the way everything works before sending off your opening balance.

[ForexGen Money Manager]

An individual who is responsible for the entire financial portfolio of another individual or another entity. A money manager receives payment in exchange for choosing and monitoring appropriate investments for the client.

Benefits of being a Money Manager with [ForexGen]:

* Providing three different commission sources.
* Weekly commission plan.
* Easy & fast commission withdrawals.
* Fixed percentage of the profits.
* P = k * D “P=Profit, k=Variable Parameter, D=Deposits”

The money manager gets a fixed percentage of the profit previously agreed upon with the client for managing the client funds as a bonus feature.

The most competitive trading conditions:

* 2 pips spread on six currency pairs.
* Providing online trading services without maintenance margin, margin call and no automatic closing of positions below the initial margin on weekdays for accounts with initial equity of up to $1 million US. The margin level have to be recognized Fridays at 23:00 CET and before public holidays.
* Leverages up to 1:200 for accounts up to $1 million US.
* Liquidity and 24/5 availability are the characteristic factors of the Forex market compared with other financial markets.