One more try…

Ok, I thought I’m not going to touch forex for a while… cos I can’t find any system with good odds…. Anyway, today, for no particular reason… I opened MT4 again… I think I just wanted to check the USDSGD rates…. but I’ve decided to write any EA… this time, I use the most basic definition of trends to try and program a scalping system… higher highs, higher lows….

Brainstorming…

At the start of the day, look for a black white (90%) pair.

Sell at the low, buy at the top.

Grid size = length of black white pair.

Do a maximum of 5 levels.

Best Scenario.. only one direction executed (pure profits)

Ok scenario.. earn retracement

Worst scenario… loss length of candle

New ideas

I signed up for the Tradingology options trading course last week and has been spending my nights watching the videos… It’s great so far… exactly what I’m looking for… as in, it matches my trading style perfectly…. low risks, good odds and statistically sound…. the only complaint I have about the course is that it is too long winded…. It takes perseverence to complete some modules, especially those introductory modules that teach concepts I’m familiar with….  Nonetheless, I’m at Module 9 currently, and have already started paper trading with the concepts I learnt….  I’m pretty excited about some of the techniques I learnt in the Tradingology videos… but I’ll keep my cool and paper trade them first…. let’s see how it goes….

In addition to the videos, I’m also reading “The Options Course” by George A. Fontanills… Another long winded book, but I read fast, so that’s ok for me….

Anyway, as a by-product of the videos and books, a forex idea (exit strategy) suddenly struck me… I’ll modify my trend-following EA as soon as I finish the options course….

Exit after two consecutive lower lows (if previously in an up-trend)… To prevent giving up too much profits, after the first lower low, hedge the position. Exit the hedge position when price moves back above the first lower low…. (Update: Consider doing this at the close of the bar)

Hope that will not be too troublesome to programme….

For those who are interested in the tradingology course, you can check it out here: Tradingology Options Course….. Now, in case you’re wondering, ya, this is an affiliate link…. Contrary to some common mis-conceptions, buying through an affiliate link will not cost you more…. In fact, if you buy through this link that I’ve posted, you’ll actually get the course at $137…. instead of the usual $197… (just google “tradingology options course” to check the usual rates)… cool… a whoooppppping $60 savings….

but if you are like me, you’ll probably wonder what’s the catch… well, the catch is… you will have to pay $10 for the “30-Day Free Trial to Tradeologist Daily Market Review and Commentary”… that’s totally optional, and being an egoist as I am, I don’t believe in getting trading ‘tips’ from others… so I did not sign up…

anyway, that’s all for now…. let me end with a ‘quote’ from Tradingology… Trade with Confidence….

Another of those “I’ve not blogged for a long time” posts…

Well, I’m back again… 4 months since the previous post… Most bloggers are typical; they start a blog enthusiastically, and then eventually get tired of updating the blog… reminds me of a logarithmic graph… starts off with a steep gradient and after a while, the graph eventually “flattens out”… ok, never mind my nonsense, must be my erratic sleep cycle creating havoc… But I’m planning to revamp this blog soon…

Anyway, I’ve not bust my account nor have I withdrew from trading… quite the contrary, ever since I started selling options, I’m growing  my account at a steady, albeit, slow rate… Hit some losses last month due to the sharp reversal… so currently taking a break from real options trading… but I’m ready to get back very soon….

I’m constantly working on perfecting my trading skills… now busy with developing more EAs… have 2 in progress that’s doing pretty well…. need more testing… and then I’ll launch them on a forward test… if all goes well, I’ll probably post some indicators that I use on this blog soon… and if USD weakens a bit more, I’ll start trading forex with a real account….

ya, and if USD further weakens to my target level, I’ll sign up for this options trading course … I’m pretty addicted to the mathematical way of trading… so, trading options by the numbers is perfect for me… My philosophy is this: “If even Warren Buffett does not try to predict market direction, why should I?” Unless I can travel to the future and back, I believe the only way to trade the market is to trade only when u can be sure the odds are in your favor… I’m only interested in trading strategies where I know where my edge is… just like what I mentioned a few months back, I’ll trade like a professional gambler… and professional gamblers do not gamble… ;-p

Btw, I’ve just bought a HTC Dream, waiting for it to be delivered tomorrow… well, actually today… a few hours later… quite excited about this new gadget… fought a long mental battle before I finally bit the bullet and bought the phone… It’s not an expensive phone, but it is real fugly… I’m really worried about being stuck with an ugly phone and a two years contract… so eventually, I decided not to trade in my current phone… and spend a 100 bucks more to buy the Dream… I think all geeks would love to play with the HTC Dream… The phone seem to have an unexplanable attraction force on me (yeah, alrite, that officially makes me a geek…)… so much so that I finally bought it against all my logical sense… despite the fact that HTC magic is coming soon… despite it being an ugly phone… never mind that Android is too new and may not be stable… Or that the phone is too heavy, bulky…and totally uncooool… I JUST WANT THE PHONE….!!!! But anyway, not sure what I can do with the phone tomorrow, with my mobile broadband account not set up yet… dun wan to delve into details here… but pretty pissed off with my telcom company… what to do… just got to wait for them to get back to me…

I’m back…

Wow, I’ve not blogged for a long time… but that doesn’t mean I’ve given up trading…. on the contrary, I’m spending more time trading and less time surfing the net, blogging etc etc… In fact, I’ve also significantly reduced my tuition hours so that… well, I believe I reduced my work hours so that I can spend more time learning how to trade… but maybe I am just lazy… :-p

Anyway, I was pleasantly surprise to see that this blog still has readers… hmmm… must say a big thanks to those who stop by….

Here’s an update of what I’ve been doing since my disappearance from cyberspace… Like I mentioned in my previous post, I’m starting to sell options spreads… results have been ok so far…

I thought options selling would be almost ‘emotionless’ for me, as I can sell with a buffer and do not need to decide when to close my positions, which was and IS STILL my greatest weakness. I always used to close my positions out of fear, for instance when the stock moved merely $1 away from me, or when I had only a small profit.

Options selling is definitely a lot easier for me, because I am mathematically trained, and I love the statistical advantage I get by selling. However, occasionally, I still managed to let my fear grip me and ended up losing a portion of my profits….Nonetheless, because the odds are strongly in my favor, I can still easily make money even with some wrong trades….

I’m also doing lots of research in forex trading… After programming numerous EAs, I’ve become increasingly disappointed with indicators-based systems… these systems tend to be less robust… highly dependent on market conditions and the parameters used….

Recently I’m exploring grid trading… like options selling, it’s mathematically based and thus clicks with me…. I’ve become convinced that trading should not be about predicting market direction… rather, it is just a statistical and psychological game…. after all, even the sage of ohama does not attempt to predict market direction… of course, that is my personal perception of the market… others may or may not agree with it… There is no need to argue if I’m right or wrong… what matters is just that it works for me…

Hope I can work out a statistically sound way to trade forex soon… will definitely update my ‘findings’ when that happens….

Good luck to all….

Another Strategy

1) RSI exceeds 65 / 35

2) RSI crosses back into band

3) RSI reach 50 (and current value compared to value when RSI is out of range is in the right direction)

Stop Loss:

Extreme of the bar which first results in the RSI to exceed 65 / 35

OR

Fixed value (e.g. 100)

OR

RSI falls back out of the channel on the same side and position is currently losing money

What’s happening to WordPress?

Wow, what’s the problem with WordPress these 2 days… I’ve been having sooooooooooo much problems logging in…. anyway, another strategy to try…. simple and straight forward…. now that I’m more familiar and comfortable with MQL, this should be relatively easy to program….

1) Previous 30 bars below (200?) MA
2) MA Short Term < MA Long Term
3) Breaks above (200?) MA (on watchlist now)
4) Break back down within 10 bars

Which EA would you choose?

I’m currently comparing the following 4 EAs… 3 of them are written by myself… (well, actually the three EAs are very similar to each other in terms of strategy, differing more in terms of their parameters) while the 4th is a commercially available EA….

Here’s the backtest results of the 4 EAs (all based on an initial deposit of $3000), which would you choose?

EA 1
Profit = 65067.85
Absolute Drawdown = 1148.78
Maximum Drawdown = 24261.06 (26.38%)
Relative Drawdown = 3284.37 (63.95%)
% Profit Trades = 64.34%

EA 2
Profit = 66192.86
Absolute Drawdown = 2490.66
Maximum Drawdown = 26020.04 (27.51%)
Relative Drawdown = 7367.36 (93.53%)
% Profit Trades = 66.30%

EA 3
Profit = 616088.27*
Absolute Drawdown = 1863.44
Maximum Drawdown = 428440.76 (48.17%)
Relative Drawdown = 13798.68 (92.39%)
% Profit Trades = 66.21%

EA 4
Profit = 18313.39
Absolute Drawdown = 1853.44
Maximal Drawdown = 5294.85 (21.90%)
Relative Drawdown = 4945.47 (81.18%)
% Profit Trades = 54.10%

*  Note: This is not a typo. EA 3 profit is about 10 times the previous 2.

Now for the real thing…

Ok, I’m now ready to start a forex account…… 010908

Optimisation

I don’t know how to optimise my EA… I mean, I know how to use the optimisation feature on MT4, but I don’t know

1) How often should I optimise the EA?
2) How many months of historical data should I use for optimisation….?

I did an analysis of optimization, by using a fixed starting date (June 2004) and a variable ending date that ranges from Apr 2005 to Aug 2008 (I randomly selected a few ‘End Dates’ from that range). To my surprise, I find that more often than not, the parameters that I get from optimization are constant (Stop Loss = 140, Trailing Stop = 110). In cases where I got a different result, I used those parameters for next month’s testing and found that the results were not as good as without optimization.

So, what does this say?

1) SL = 140 and TS = 110 is the best parameter for my EA?
2) I’m doing something wrongly?

I mean, how to go about optimizing the EA to make it more suitable for market conditions. Given that EURUSD was in a downtrend in 2005 but in an uptrend after that, is it normal for my parameters to stay the same? Is this consistency normal?????