Monday, 22 April 2019

  Contact  

F Forex Course

Basic systems of trading

User Rating: 0 / 5

Star InactiveStar InactiveStar InactiveStar InactiveStar Inactive
 

Supposition 1: OPERATING OF FORM SIMPLE AND EFFECTIVE

A) System We will operate, always, using a system. A system is a screenplay where we have foreseen, previously, that we go to do in every moment of our operative one of agreement with the chosen strategy. All system, by simple that is, must give response, inexcusably, to 3 essential points:

● When entering (bought or sold).
● When to go out.
● When doing nothing.

All inputs and outputs must be made compulsorily with the same system. To evaluate any system, we will use simulation for a period of not less than three months. Each week we will calculate the ratio profit/loss (p/l) based on the number of operations performed. That is, if in the week we made 12 trades and have won 8 of them and lost in 4, our ratio will be 8 to 4 (8/4). Consequently, if we are testing different systems, we will choose the one that best suits the way we operate and better ratio "p/l" we offer.

B) TEMPORARY SPACE SEARCH

1) We must select a temporary space where we are comfortable operating, given that, the shorter the space, the faster we will make our decisions.

2) The temporary space for our operative classifies them as:

● Short-term (tertiary trend)
● Medium term (secondary trend)
● Long-term (primary trend)

3) If operate, for example, 5 m. (short term), we use charts 60 m. to see the medium-term trend and one days to identify the long term.

4) The temporary space that we will use to operate, requires us to use other temporary spaces to help us "see" the trend.

5) In paragraph 3 º), the long-term trend (1 day) ALWAYS will prevail in the medium term (60 m.) And short (5 m.).

6) Operating against the long-term trend is a significant risk increase.

7) We will operate only when the trend of the three temporary spaces going in the same direction.

8) All inputs perform them from the 1 minute chart, at any time, and during the 2 candles following the formation of the option chosen. Entries are made at market prices to ensure immediate enforcement, as the liquidity in the market virtually assures us that our orders are executed at the desired price.

C) TREND

● When the market HAVE a definite trend, we can use any of the following technical indicators (trend followers):
→ Moving averages
→ MACD
→ Bollinger bands

● When the market does NOT have a definite trend, we can use any of these oscillators (anticipated indicators):
→ RSI
→ Stochastic Oscillator
→ Momentum

D) STRATEGY We will expose a strategy with moving average, well known, we will use in markets with trend:

d.1. temporary space Use the following temporary spaces in our operative:
- For the short term: 5 minutes (tertiary trend).
- For the medium term: 60 minutes (secondary trend).
- For the long term: 1 day (primary trend).

d.2. Trend In the temporal space of five minutes will place 3 exponential moving average (EMA):
- A 4 periods of days (the fastest and closest to the price) red, other of 9 periods of days (intermediate) green and the last of 18 periods of days (the slowest and farthest from price) blue. Always bear in mind that the more "short" is the temporary space used, major number of false signs will produce the strategy to us

d.3. Purchases
- When entering: when the mean of 9 (green) crosses from the bottom up and is above the average of 18 (blue).
- When exit: when the mean of 4 (red) crosses from top to bottom and is below the average of 9 (green).
→ Modification of the strategy:
● Enter whenever the average of 4 periods (red) crosses the average of 9 periods (green) up (and is above the average of 9 periods).
● Exit whenever the average of 4 periods (red) crosses the average of 9 periods (green) down (and is below the average of 9 periods). Only we do purchases, sales are to close purchases NOT to get sold.
- The order of the averages of the purchases: 1st red (4 periods), 2nd Green (9 periods) and 3rd blue (18 periods).

d.4. Sales
- When entering: when the mean of 9 (green) crosses from top to bottom and is below the average of 18 (blue).
- When exit: when the mean of 4 (red) crosses from the bottom up and is above the average of 9 (green).
→ Modification of the strategy:
● Enter whenever the average of 4 periods (red) crosses the average of 9 periods (green) down (and is below the average of 9 periods).
● Exit whenever the average of 4 periods (red) crosses the average of 9 periods (green) up (and is above the average of 9 periods). We only make sales, purchases are to close sales NO to get bought.
- The order of averages sales: 1st Blue (18 periods), 2nd Green (9 periods) and 3rd red  (4 periods).

d.5. Do nothing - If there is NO trend.

E) MONETARY MANAGEMENT

● Minimum capital requirement: the result of the formula # 1.

● Maximum number of contracts: the result of the formula # 2.

● Maximum loss on equity (1): 2.5% per contract.

● Stop loss (2): 2.5 points per contract. → n° 1) Minimum capital required: Calculated in based to trading with 1 contract and a stop loss of 2.5 points per contract: 1 contract x 100 / 2.5 (1) = 100 / 2.5 = 40 40 x 2,5 (2) x 50 (3) = 5.000 dollars USA. (1) Maximum percentage of loss on capital. (2) Points stop loss by contract. (3) U.S. dollar value of 1 point of the mini S&P500. → # 2) Maximum number of contract: Calculated based on using the minimum capital requirements and a stop loss of 2.5 points per contract: 5.000 (1) x 2,5 (2)        = 1 contract. 100 x 2,5 (3) x 50 (4) (1) Capital in dollars U.S. (2) Percentage of maximum loss on capital. (3) Points stop loss by contract. (4) U.S. dollar value of 1 point of the mini S&P 500. Data - summary of the previous examples:

● Capital: 5,000 dollars U.S.

● Number of contracts: 1.

● Maximum loss on capital: 2.5% x 5.000 dollars = 125 dollars.

● Stop loss by contract: 2.5 points (2.5 x 50) = 125 dollars. Author: Traderpirata.com

Erick Gálvez
Author: Erick GálvezWebsite: http://www.asdforex..comEmail: This email address is being protected from spambots. You need JavaScript enabled to view it.
Administrator
ASDForex manager and professional trader since 2008. I am also Aleforex.com manager where you can view the services that I give
Latest articles Author

Popular News

Newsletter

Lorem ipsum dolor sit amet, consectetur adipisicing elit.

New Edge @newedge


Fans Page ASDForex

The sustained and successful trading is a mixture of perseverance, education and discipline. Forex ASD will find this

Email:

Info@asdforex.com

Skype:

Mercadoforex
Contact Form