AUTOMATED TRADING IN FOREX AND STOCK MARKET … · Understanding Forex Trading Robots Forex trading...

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AUTOMATED TRADING IN FOREX AND STOCK MARKET WWW.ALTREDO.COM

Transcript of AUTOMATED TRADING IN FOREX AND STOCK MARKET … · Understanding Forex Trading Robots Forex trading...

Page 1: AUTOMATED TRADING IN FOREX AND STOCK MARKET … · Understanding Forex Trading Robots Forex trading robots are automated software programs that generate trading signals. Most of these

AUTOMATED TRADING IN FOREXAND STOCK MARKET

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Page 2: AUTOMATED TRADING IN FOREX AND STOCK MARKET … · Understanding Forex Trading Robots Forex trading robots are automated software programs that generate trading signals. Most of these

Understanding Forex Trading Robots

Forex trading robots are automated software programs that generate trading signals. Most of these robots are built with MetaTrader, using the MQL scripting language, which lets traders generate trading signals or place orders and manage trades.

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Page 3: AUTOMATED TRADING IN FOREX AND STOCK MARKET … · Understanding Forex Trading Robots Forex trading robots are automated software programs that generate trading signals. Most of these

FOREX ROBOT FEATURES

➔ Risk ManagementLimiting trade lot size, hedging, trading only during certain hours or days, and recognizing when to take losses.

➔ Money ManagementMoney management is about protecting your open position and limiting your risk. It is actually about the position sizing you choose based on the percentage of risk you can afford to lose and current market structure and volatility.

➔ Trading StrategyA trading strategy includes a well-considered investing and trading plan that specifies investing objectives, risk tolerance, time horizon and tax implications.

➔ Backtesting

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Page 4: AUTOMATED TRADING IN FOREX AND STOCK MARKET … · Understanding Forex Trading Robots Forex trading robots are automated software programs that generate trading signals. Most of these

Forex Risk Management BasicsControlling Losses - using Stop-Loss and Trake-Profit, Trailing Stop..

Using Correct Lot Sizes

Tracking Overall Exposure - For example: if you go short on EUR/USD and long on USD/CHF, you are essentially exposed two times to the USD. And if the USD tumbles, you'll suffer a double dose of pain. But keeping your overall exposure limited can reduce your risk and increase your prospect for long-term success.

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Page 5: AUTOMATED TRADING IN FOREX AND STOCK MARKET … · Understanding Forex Trading Robots Forex trading robots are automated software programs that generate trading signals. Most of these

Calculate Your ExpectancyExpectancy is the formula you use to determine how reliable your system is. You should go back in time and

measure all your trades that were winners versus losers, then determine how profitable your winning trades were versus how much your losing trades lost.

E=[1+(L/W )]×P−1Where:

E=Expectancy

W=Average Winning Trade

L=Average Losing Trade

P=Percentage Win Ratio

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Page 6: AUTOMATED TRADING IN FOREX AND STOCK MARKET … · Understanding Forex Trading Robots Forex trading robots are automated software programs that generate trading signals. Most of these

Forex Trading Tips

Risk diversification - allows traders to mitigate the risk of huge losses in case the market suddenly moves downwards.

Market Diversification:

● Check correlation in multiple time frames● Avoid trading in the same direction on

strongly-correlated pairs● Alternatively, actively trade in the opposite direction

to strongly-correlated pairs● Avoid similar positions involving currencies from the

same regions● Diversify further by holding positions over different

time frames● Also, consider diversifying your strategy style

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Behavioral Diversification: Diversifying into differences in strategy logic, time frame, duration and trade frequency.The optimal option is to apply various strategies to distinct trading accounts and relocate investments to the most successful ones.

The trading strategies are assumed to have three types. As there are no clear limitations between the types, the system is treated as:

● conservative, if the maximum drawdown is not more than 20% (±3%) and margin level is not more than 10% reliable but low profitability, not more than 3-4% per month;

● aggressive, if the maximum drawdown is higher than 40%, margin level is more than 25% investor should be aware that his positions may be closed out, but if succeeds in trading, then the high risk will be compensated by a high profitability – more than 40% per month.

● moderate there are various transitional options:○ drawdown 25%-40%, margin level from 10% to 25% reasonable proportion of

risk/profitability;○ drawdown 40%-60%, margin level 10%-25% active conservator;○ drawdown 25%-40% and margin level is not more than 25% rational scalping.

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Diversification among multiple markets

Don't limit yourself in the choice of trade assets - use trade

tools of various financial markets. Contemporary technologies

enable even small investor to trade on various trading

platforms: currency exchange, stock exchange and

commodities markets. The main advantage of the asset’s

allocation among these markets are, as a rule, that the various

markets dependent weakly on the others, and therefore the

losses will be recovered by the profit from the other markets.

Risk diversification among brokers

In order to avoid the possibility of broker’s bankruptcy the

investor should not deal with affiliated companies. Investments

may be allocated proportionally between different brokers.

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How to trade Forex on news releases

● Economic data tends to be one of the most important catalysts for short-term movements in the forex market.

● U.S. economic releases tend to have the most pronounced impact on the forex market.

How Long Does the Effect Last?

1-4daysFocus on the most important news that could produce the greatest effect on the market.Don’t rush into a trade.

Which Currencies Should Be Your

Focus?These are the eight major currencies:

1. U.S. dollar (USD)

2. Euro (EUR)

3. British pound (GBP)

4. Japanese yen (JPY)

5. Swiss franc (CHF)

6. Canadian dollar (CAD)

7. Australian dollar (AUD)

8. New Zealand dollar (NZD)WWW.ALTREDO.COM

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Backtesting

Backtesting (sometimes written “back-testing”) is the process of testing a particular (automated or not) system under the events of the past. In other words, you test your system using the past as a proxy for the present.

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Forex StrategiesScalping - These are very short-lived trades, possibly held just for just a few minutes.

Day trading - These are trades that are exited before the end of the day, as the name suggests.

Swing trading - Positions held for several days, whereby traders are aiming to profit from short-term price patterns.

Positional trading - Long-term trend following, seeking to maximise profit from major shifts in prices.

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Good luck!Visit our web-site:

www.altredo.com

We develop trading robots and automated trading systems based on Artificial

Intelligence Algorithms and Advanced Mathematics for all kind markets and trading

platforms including stock market, forex, futures, options, etc. for professional traders

and investors.

Our full-time development and customer service staff are here to help you succeed.

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