As
mentioned previously, the development of the software used by OmiCronFX in its
Forex trading has three distinct elements. These are:
1. Defining the trading strategy
2. Coding and debugging of the software,
and
3. Optimisation of the trading parameters
All
three are interlinked. The honing of each element is carried out by reference
at all times to the other two. Therefore development as a whole is an iterative
process, in the fullest sense: The strategy has been modified many times as a
result of discoveries made when both the software writing (coding and
debugging) and the optimisation of the parameters were taking place, and each
of the others is affected thereafter by adjustments made to the strategy and to
each other.
As
can be imagined with such a process, there are many blind alleys waiting to
entrap the developer. The most insidious of these are, perhaps, those that
pertain to the reduction of risk. Our focus has been at all times on the
minimisation of risk but, oftentimes, the magnitude of risk exposure is not
obvious and it is only when one is confronted with the adverse effects of
taking on too much that it becomes truly apparent.
Getting probability on the side of
the trader
It
has been a basic principle from the start that making profits in Forex trading
is a matter of getting probability on the side of the trader. This entails a
consistent, systematic and, ultimately, repetitive approach, but only after
much work has been done to ensure that losing trades are (1) as scarce as it is
possible to make them and (2) result in the smallest conceivable losses that
are consistent with allowing the trade to have its full potential to make
profit.
After
going through the process of developing a system such as Mandelbrot, one gains
an outlook that is quite philosophical. The concept of time takes on a more
refined meaning (entailing a real appreciation for the need to live in the
present, and only in the present, and to recognise and totally reject any tendency
to tolerate hindsight-related knowledge). It becomes very clear that the
proposition that anyone, anywhere, can, without inside information or other
unfair means, foretell what is to happen in the future, is an absolute
nonsense.
To
be continued - coming soon:
Defining the trading strategy
· The trade entry trigger
* Make
sure that entry only takes place when there is the highest probability that it
will be a profitable one. Spend many, many hours experimenting to find the conditions where this will be the case
* Give
the trade enough space to become successful but ensure that if this is
ultimately not to be the case, the loss will be the smallest that it is
possible for it to be
· Risk control
* Eliminate the danger of taking on too much risk
* Lock in profit as soon
as it is worthwhile to do so
* Control of Stop Loss
levels at the start of the trade and as it progresses
Coding and debugging the strategy
· Some programmable platforms are better than
others, but this is still a new industry outside of the major banks and hedge
funds
Optimising the parameters
· Historical research on the price
action of different currency pairs
· Simulated trading with historical
data, and real-time trading
- The place of Fundamental and
Technical Analysis
No comments:
Post a Comment