Friday, June 30, 2006
The New Strategy
It has been a wild roller coaster ride. In the past two months, I've lost a bunch of money trading, gained them back for some profit only to lost them again. I'm now working back on my way up. Nonetheless, it has been a precious experience you can't get unless you go through it yourself. It's been fun learning all those financial terms and following the news which used to be so alien and boring prior to my involvement in forex trading.
I think I'm getting a better hang of the market. I'm still very, very wet behind the ears, but what can you expect from a two-months old novice?
I'm also getting my feet very wet with automated trading systems. You see, we can program the trading terminals to buy or sell depending on the behaviour of the charts. It's like a robot working 24/7.
There are many expert advisor (EA) scripts available on the internet, which you could use to trade. Some are good, and many are really bad. I've been testing several of them with the data from the past two years. One particular script I really like multiplied my equity 100 times in two years. In the simulation, I started with USD100 and ended up with more than USD10,000. Ain't that awesome?
Of course there were some lost trades, but the way the script was written, losses are minimize while winning entry would be allowed to maximize the profits. And unlike humans, computers are not emotional. Greed and fear, the greatest two obstacles from being a successful trader, are just not in their system.
Having said that, backtest results are nothing. We've got to forward test it in real time. I'm looking to install a broadband connection once I've settled down at a new place I'm moving to. With an old PC, I'm gonna let it automatically trade continuously with a demo account, and see how it would perform in a real situation. I expect the internet connections would fail me many times, and we'll have to manually reconnect the robot to the web, but for the time that it's on the web, we could see how the EA script would handle the forex market.
If automating trading does prove to be profitable, my next project would be to put a dedicated server in a data center and let it be the cash cow, while I concentrate on more fun things to do with life (not that manually trading is not fun, but one can only do it a couple of hours a day without getting a brain freeze). ;)
I think I'm getting a better hang of the market. I'm still very, very wet behind the ears, but what can you expect from a two-months old novice?
I'm also getting my feet very wet with automated trading systems. You see, we can program the trading terminals to buy or sell depending on the behaviour of the charts. It's like a robot working 24/7.
There are many expert advisor (EA) scripts available on the internet, which you could use to trade. Some are good, and many are really bad. I've been testing several of them with the data from the past two years. One particular script I really like multiplied my equity 100 times in two years. In the simulation, I started with USD100 and ended up with more than USD10,000. Ain't that awesome?
Of course there were some lost trades, but the way the script was written, losses are minimize while winning entry would be allowed to maximize the profits. And unlike humans, computers are not emotional. Greed and fear, the greatest two obstacles from being a successful trader, are just not in their system.
Having said that, backtest results are nothing. We've got to forward test it in real time. I'm looking to install a broadband connection once I've settled down at a new place I'm moving to. With an old PC, I'm gonna let it automatically trade continuously with a demo account, and see how it would perform in a real situation. I expect the internet connections would fail me many times, and we'll have to manually reconnect the robot to the web, but for the time that it's on the web, we could see how the EA script would handle the forex market.
If automating trading does prove to be profitable, my next project would be to put a dedicated server in a data center and let it be the cash cow, while I concentrate on more fun things to do with life (not that manually trading is not fun, but one can only do it a couple of hours a day without getting a brain freeze). ;)
