A quantitative approach to trading Forex and Forex Derivatives
I’m receiving an increasing number of requests to detail my approach to the Forex and Forex Derivatives trading challenge. This is my approach to the problem, it has worked for me, I do not however claim that it is the only way to trade.
For me it is all about statistics, all about proving beyond reasonable doubt that an edge exists through finding data that correlates to a particular market behaviour frequently enough to overcome the costs of trading a particular instrument and produce a positive edge that can be exploited to generate a profit.
After many years watching the charts and the news, and losing, I finally decided to approach the problem in a methodical and scientific manner.
Before risking a penny of my hard won cash I spend hours if not days and weeks analysing my potential setups using historical data, I use Excel for this, but there are many software tools available. I gave up trying to back test by eye because I found that firstly I could not test a large enough set of data and secondly that I, I suspect in common with everybody else, am susceptible to what is called in science, confirmation bias, this means that we tend to see what we want and expect to see, when calculating your potential edge, this is of course fatal, because you will be basing your calculations upon false information. I strongly recommend using a computer always for back testing, as computers do not suffer from emotional attachment to an idea.
My main approach is known as quantitative analysis, but I never restrict myself to any particular methodology I simply seek a positive correlation in a data set to a market move that can be exploited.
I am happy to answer questions in this thread, to guide, to mentor even. I will not however disclose the formulae that I use to generate my income, nobody, in my view, will give away or even sell their exact trading setups, because they would be unsure what will happen if those setups are exploited widely and whether in so doing they kill the potential. If you are offered a magic formula for success, in the form of software or training or mentorship or whatever, it is probably a lie, ask to see real auditable trading results, I have yet to find anyone who will provide them.
In the spirit of credibility I am willing to show details of my trading accounts and historical results, but I am of course nervous about showing financial information in a public forum. I could do it using Skype and sharing my screen, this way I feel I have more control over whom I share my information with.
This is an open forum, all are welcome to contribute, I will not however accept any form of abuse directed at myself or any other contributor to this thread, at my sole discretion, abusing parties will be “Ignored” and thus will not be able to contribute further.
I’m receiving an increasing number of requests to detail my approach to the Forex and Forex Derivatives trading challenge. This is my approach to the problem, it has worked for me, I do not however claim that it is the only way to trade.
For me it is all about statistics, all about proving beyond reasonable doubt that an edge exists through finding data that correlates to a particular market behaviour frequently enough to overcome the costs of trading a particular instrument and produce a positive edge that can be exploited to generate a profit.
After many years watching the charts and the news, and losing, I finally decided to approach the problem in a methodical and scientific manner.
Before risking a penny of my hard won cash I spend hours if not days and weeks analysing my potential setups using historical data, I use Excel for this, but there are many software tools available. I gave up trying to back test by eye because I found that firstly I could not test a large enough set of data and secondly that I, I suspect in common with everybody else, am susceptible to what is called in science, confirmation bias, this means that we tend to see what we want and expect to see, when calculating your potential edge, this is of course fatal, because you will be basing your calculations upon false information. I strongly recommend using a computer always for back testing, as computers do not suffer from emotional attachment to an idea.
My main approach is known as quantitative analysis, but I never restrict myself to any particular methodology I simply seek a positive correlation in a data set to a market move that can be exploited.
I am happy to answer questions in this thread, to guide, to mentor even. I will not however disclose the formulae that I use to generate my income, nobody, in my view, will give away or even sell their exact trading setups, because they would be unsure what will happen if those setups are exploited widely and whether in so doing they kill the potential. If you are offered a magic formula for success, in the form of software or training or mentorship or whatever, it is probably a lie, ask to see real auditable trading results, I have yet to find anyone who will provide them.
In the spirit of credibility I am willing to show details of my trading accounts and historical results, but I am of course nervous about showing financial information in a public forum. I could do it using Skype and sharing my screen, this way I feel I have more control over whom I share my information with.
This is an open forum, all are welcome to contribute, I will not however accept any form of abuse directed at myself or any other contributor to this thread, at my sole discretion, abusing parties will be “Ignored” and thus will not be able to contribute further.
I live entirely from the growth of my personal trading account
how many trades a year and what was commission , what was instrument
has asked me about what data can be used to form the basis of our testing, the answer is all and any, price data of course and news releases, I once even looked at weather reports! This is the essence of quantitative analysis, we are simply looking for a correlation between given data and market movement. Get creative!
