Financial Trading Without Programming
- #2
- Edited 6:43pm Jun 19, 2016 1:54am | Edited 6:43pm
Detecting upcoming market moves - the VOLAT indicator/chart
There are many trading styles - the institutional traders aim to trade when the market is expected to make a move, but how do we know the market is going to make a 80pips move ? Well the institutional traders subscribe to morning reports, various, some spend 100K a year on market reports. They meet up at 7AM CET to read the reports, and decide on which pairs to trade and in which direction the pairs will expect to move. But we do not have 100K to spend, so what do we do ?
We try to find new methods to detect an upcoming move - one way to do it, is to measure across the markets, since the markets are related, not correlated, but cointegrated. We can use the VOLATILITY indicator in VisualStation, which separate trend from pullbacks.
The VOLATILITY indicator has been turned into a chart it self, since it is a key input, with its technical indicators, which we can use as input to a STRAT indicator. Shown below as the candles on the Basket Chart ( colored lines are currency pairs, synchronized). Below is an example of a basket of currency pair. The VOLATILITY indicator is displayed as candle bars in the left char - right chart illustrates the potential profit in each move and retracement/pullback.
VOLATILITY (VOLAT) INDICATOR: When above 30, the market is in a move. Rising indicator = market is in a move, descending indicator = retracement/pullpack
The technical indicators, such as the MACD shown in pane A, can be used to make TA on the VOL indicator, use the VOLAT indicator as input to STRAT indicators, and thereby to automated trading.
There are many trading styles - the institutional traders aim to trade when the market is expected to make a move, but how do we know the market is going to make a 80pips move ? Well the institutional traders subscribe to morning reports, various, some spend 100K a year on market reports. They meet up at 7AM CET to read the reports, and decide on which pairs to trade and in which direction the pairs will expect to move. But we do not have 100K to spend, so what do we do ?
We try to find new methods to detect an upcoming move - one way to do it, is to measure across the markets, since the markets are related, not correlated, but cointegrated. We can use the VOLATILITY indicator in VisualStation, which separate trend from pullbacks.
The VOLATILITY indicator has been turned into a chart it self, since it is a key input, with its technical indicators, which we can use as input to a STRAT indicator. Shown below as the candles on the Basket Chart ( colored lines are currency pairs, synchronized). Below is an example of a basket of currency pair. The VOLATILITY indicator is displayed as candle bars in the left char - right chart illustrates the potential profit in each move and retracement/pullback.
VOLATILITY (VOLAT) INDICATOR: When above 30, the market is in a move. Rising indicator = market is in a move, descending indicator = retracement/pullpack
The technical indicators, such as the MACD shown in pane A, can be used to make TA on the VOL indicator, use the VOLAT indicator as input to STRAT indicators, and thereby to automated trading.
Financial Trading Without Programming
- #3
- Edited 5:12am Jun 19, 2016 2:08am | Edited 5:12am
The STRAT indicator:
After we have made a basket of currency pairs, with the custom index and the VOLATILITY indicator, its time to make som STRAT indicators, which we use in our trading.
The STRAT indicator is a digitized indicator, not calculated from the chart data, but consist of a set of criteria - it is a criteria-based technical indicator.
Where a criterion can be anything, even "is it Monday today ?", true or false.
The value of a STRAT indicator is calculated by dividing the count of true criteria with the total selected criteria:
STRAT 1 at time t = count of criteria which are true / Total count of criteria * 100 = x%
Since a STRAT indicator is a set of criteria, it can be regarded as a strategy, since any strategy consist of a set of criteria, each having the values true/false. Since this can be regarded as a strategy, the indicator is also a visual backest of a set of criteria, of a strategy.
One question pops up, always: If 10 of 8 indicators are with me, isnt it ok to place the trade ? A classic problem within strategies is, too many criteria makes a strategy useless, and too few too simple, since they all have to be true to trigger the trade. But by using STRAT indicators, we can use probabilities of strategies.
Extend the visual environment with custom Criteria Groups
After we have made a basket of currency pairs, with the custom index and the VOLATILITY indicator, its time to make som STRAT indicators, which we use in our trading.
The STRAT indicator is a digitized indicator, not calculated from the chart data, but consist of a set of criteria - it is a criteria-based technical indicator.
Where a criterion can be anything, even "is it Monday today ?", true or false.
The value of a STRAT indicator is calculated by dividing the count of true criteria with the total selected criteria:
STRAT 1 at time t = count of criteria which are true / Total count of criteria * 100 = x%
Since a STRAT indicator is a set of criteria, it can be regarded as a strategy, since any strategy consist of a set of criteria, each having the values true/false. Since this can be regarded as a strategy, the indicator is also a visual backest of a set of criteria, of a strategy.
One question pops up, always: If 10 of 8 indicators are with me, isnt it ok to place the trade ? A classic problem within strategies is, too many criteria makes a strategy useless, and too few too simple, since they all have to be true to trigger the trade. But by using STRAT indicators, we can use probabilities of strategies.
Extend the visual environment with custom Criteria Groups
Financial Trading Without Programming
- #4
- Edited 5:13am Jun 19, 2016 2:22am | Edited 5:13am
Develop automated trading strategies - portfolios of strategies
The last post in this intro, before we will start to post tips and tricks, is to use STRAT indicators as input to automated trading.
Any change to a STRAT indicator, or other setting, will result in an instant backtest in <500ms.
Multiple STRAT indicators can be used as input, STRAT indicators can be used to optimize a base strategy.
8 entry pages and 8 exit pages
The last post in this intro, before we will start to post tips and tricks, is to use STRAT indicators as input to automated trading.
Any change to a STRAT indicator, or other setting, will result in an instant backtest in <500ms.
Multiple STRAT indicators can be used as input, STRAT indicators can be used to optimize a base strategy.
8 entry pages and 8 exit pages
Financial Trading Without Programming
