Yesterday merely illustrated that the holiday season, at least as far as
the Foreign Exchange market is concerned, was still with us. Trading was thin
and subject to short-term volatility. The Euro, Yen, Gold and the US dollar are
all in trading ranges, with any movement there consistent with the idea,
cynical as it might be, that the market movers are attempting to bring it to a
place that will allow for maximum profitable trading in the direction of the
dominant trend when normal service resumes.
Only the Aussie dollar is showing some inclination to head south, which
is the direction that is mapped out for it by all the fundamentals and by the technical
indicators that have validity when substantial trading volumes are involved.
The opening of the Tokyo
market at midnight last night (GMT), was followed by a relatively short lived
but nevertheless significant sell-off in the AUDUSD pair.
“Get rich slow”
The trading strategy of OmiCronFX involves careful research into the
behaviour of the currency pairs we watch. For this, we use quantitative methods
that involve elements of chaos theory, the study of probability, and pattern
recognition. We are always on the lookout for the “Black Swan” event, or the
happening that comes out of the blue to blow away the most cherished
expectations of market participants. Fundamental and Technical Analysis is used
alongside our algorithmic tools for trade entry and management.
Risk mitigation and profit retention are of paramount importance to us,
and we spend a great deal of time studying the factors that are involved in
these subjects.
We also apply elements from such as the Kelly Criterion, which is a
formula for the optimisation of position sizes in trades to maximise
profitability over time. This was developed by John L. Kelly, who worked for
Bell Labs in the 1960s. It was put to good use by one Edward Thorpe, who
managed one of the very first hedge funds in existence. According to the book,
“Fortune’s Formula”, by William Poundstone, Thorpe coined the phrase “Get rich
slow”, to describe the methodology with which he became so successful as an
investor and trader. This alluded to the fact that his operation applied
exceptional care and a great deal of work in research in order to choose the
deals he would be involved in. He was also one of the very first to use computer
power to assist him in his endeavours.
Here at OmiCronFX, we like to think we are following in this noble tradition.
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