Forex Robot Mania

As suggested in my last post...As a side note, I'm planning to make opposing robots this weekend. They will trade long and short positions in different sub-accounts.I've put together yet another robot. It will trade the same currency both long and short in separate sub-accounts. I'll have to wait until Monday or Tuesday to activate it.A few points I feel are worth mentioning:I've been developing

Friday Market Analysis

I am following CNBC regularly (via their web site) these days. I see many of the pundits advocating panic and doom. I suspect they all want to be able to claim they were right when we finally do experience some type of pullback.However, these braying naysayers of doom really don't have much of import to say. All they really do is act as large forces on the emotions of market players. Everyone
Point-and-figure charts (P&F) is another way to represent the price charts that can be used in Forex trading. Conventional charts display the price as the linear function of time, which results in a demonstrative picture of how the market behaved during certain periods of time. But the problem is that the trader often doesn’t need to know how price depended on time, all he needs is to know what the prevailing force on the market is at the moment — bulls or bears, demand or supply. That’s where P&F charts come handy. They show the price changes graphically, independently on the time during which the changes have occurred.

For example, the simple point-and-figure chart could look like this:



The green X’s are the price increases (by some certain value) and the red O’s are the price decreases. A column of X’s represent an uptrend, while the column of O’s represents a downtrend. In each given column there can be only X’s or O’s. When one trend ends a new column starts. As you see, there is no time scale in this chart. Each column can last an indefinite period of time.

So, how are these point-and-figure charts drawn? To start drawing a point-and-figure chart you should first set two important parameter values of the chart — the box size and the reversal distance.

The box size is the height of each of the O’s and X’s in pips. For example, if you set a box size to 10 pips, each X will mean an upward movement by 10 pips, so a column of 6 X’s is an upward movement by 60 pips. The same would be correct for the O’s.

The reversal distance is the amount of boxes that should be passed by a price in a reverse direction for a trend to reverse (to start a new column). The most common reversal distance is 3. That means that on a rising trend (a column of X’s) a price has to go down by the amount of pips in three boxes for a new column (this time — of O’s) to start. For example, if you use a box size of 10 and a reversal distance of 3: the price goes up by 60 pips, you draw 6 X’s, then the prices goes down by 30 pips (that’s more than 3 × 10), you draw 3 O’s down starting a new column from the level below the last X. If the price would go down by less than 30 pips you wouldn’t have to draw anything new. Basically, after drawing an X or O you just wait for the price to continue going in the direction for a box size of pips or in a reverse direction for a reversal distance * box size of pips.

If we consider 10 pips box size and reversal distance of 3 for the image above then we can say that first the price goes up by 50 pips during the first uptrend, then it goes down by about 50 pips, then goes an uptrend for 70 pips, then go two equal bearish and bullish trends for 30 pips (exactly the reversal distance). Then a price declines by 50 pips, then goes up by 30 pips and finally falls by 40 pips. It ends at +10 pips (if you sum up all the values) and, as you see on the picture, the ceiling of the final O is 10 pips above the bottom of the first X. That’s exactly +10 pips. The «effective price» is located at the bottoms of the X’s and at the tops of the O’s.

Using the point-and-figure charts is simple. Almost all chart patterns and analysis techniques that work with the classic time-based charts work with the point-and-figure charts too. The trends are very easy to visualize in the P&F charts because the square dimensions of the boxes (X’s and O’s) form nice 45-degree angle trendlines. Look at the example:



Apart from the chart pattern analysis, P&F charts offer a sort of trading signals. When the trend direction changes, a new position can be opened in this new direction with a stop-loss equal to the reversal distance. But such trading technique requires some thorough optimization of the box size and the reversal distance for the given currency pair and the market conditions.

If you have any questions or comments regarding point-and-figure charting, feel free to reply in the commentaries to this post.

Thursday Robot Recap

Thursday was a very slow day.The market was down. The yen crosses took a dive. Everyone is getting antsy about stocks, news reports, and the month of September. OMG, the risk! My robot snoozed for much of the day and had little chance to earn anything useful.However, amidst all the whining I have to realize that being up about 4.5% for the week isn't so bad.Regardless, I did tweak things a

Wednesday Status

Wednesday was a slow day.The AUDJPY was very quiet, which left little opportunity for my robot to extract revenue. In fact, with the DOW drop at the end of the trading day today we may be looking at a bit of a downward correction over the next little while.My robot is not very active during downward movements. So, I'll get bored, worry about long term profitability, and otherwise be motivated

Monday Robot Review

If you are a new visitor I should let you know I'm reviewing my own proprietary forex robot -- I'm not providing a general review of robots.The GoodProfitability continues. Sunday evening the robot earned 0.2% and over the course of Monday it earned 2.0% return. It's not obvious, but when capital is added to the robot old smaller positions provide less return when closed profitably. This means

Weekend Robot Development II

While not fully tested, as the market isn't open for trading, I have also completed both the meta-robot concept and a notification system.The meta-robot will look at the trades made via the current profitable robot and impose rules that require trades to open at a better price. The required difference, in pips, will be divided in two and added to the meta-robot's take profit point. For example,

Weekend Robot Development

Now that the weekend is here it's time to put on the thinking cap and figure out how to increase earnings, reduce risk or both.As mentioned in a reply to a comment on the previous post I've reallocated funds, put in a reserve amount and added a manual release amount.The reserve amount holds back capital from the lot size calculation and the total margin available calculation. This capital is

Forex Robot Wars

As you can see by my last few posts I've had a couple of trading robots slugging it out for the last few days.I'm happy to announce that the latest robot has absolutely thrashed my initial robot. Here are the recent earnings for this week:Sun 0.19%Mon 3.23%Tue 3.16%Wed 3.26%Obviously, I'm going to retire the previous robot, which earned at an average pace of approximately 0.5% per day, and
Some people are asking me about the secret of daily trading. The answer is there is no secret. It is there for everyone to see but the question is, can you accept what you see.

Trading the daily chart requires patience, lots of it. That is what most of us lack. Patience. If you look at the longer timeframe charts, you will see that price will stop or hover around certain areas. That is your key point. Always start or stop trading around these key point.

The next indicator I use is CCI. CCI alone is a bit of a headache. So I smooth it out with MA. With the MA, I can see the direction of trade clearly. People say MA is a lagging indicator but I dont want to be early going to a party. I like to enter when the party already started.

The last advice is, there is no such thing as holly grail. You just cannot win all the time. The best that we can do is try to win as much as possible and lose a little as possible. In the long run, it would be profitable enough to stay trading. Otherwise you need to find another business to run.

Two Live Robots

Sunday evening I unleashed another trading robot. Here's how I set up my sub-accounts to do this in a reasonably safe manner.My initial or primary account is used to add or remove funds.Each robot trades in it's own sub-accountThis let's me track the returns for each robot in a trivial manner. It also means that each robot is 100% independent. If you do this be sure to name your sub-accounts

Oanda Robot Trading -- Cost Efficiently

If you are trading with Oanda, as I am, you are probably aware that you have to trade a fair amount before their monthly API fees are waived.However, there is an alternative. The first time I tried their platform, probably shortly after it was released, I didn't find it very inviting. However, about a month ago I tried again. Guess what? While I might not use the platform for discretionary
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