Thursday, February 26, 2009

Programming An EA

I'm finding it takes a lot more time to program an EA than I would expect. Alternately, perhaps I am dumb enough to think that I could just throw together some ideas and have a profit machine?

Anyway, after another night of testing I have some new software that is able to detect or indicate various conditions.

I'm hoping that doing enough visual testing will clue me in enough, personally, to the mechanics of price movement, correction and reversal and then allow me to find a way to codify that knowledge. It's pretty tough. However, I guess it's also sort of a holy grail quest. Invent your own money machine -- how often does that happen?

Anyway, some of the things I'm starting to look for are indications that represent shifts in market sentiment on various chart times. Is this curve smooth? Is the rate of change increasing or decreasing? Was that supported on the next higher time frame?

Wednesday, February 25, 2009

MT4 - Moving Average Crossover

Believe it or not I think I'm going to use a simple moving average crossover as a signal for my automated trading system.

Obviously, and testing verifies this, there are two issues to manage:

1) Getting whipsawed.
2) Entering the trend too late.

I believe that I can at least alleviate these issues somewhat. Technical indicators can provide clues about whether or not the market is currently trending -- such that if it isn't trending you can avoid opening positions. Additionally, I believe I can impose restrictions that will greatly reduce purchases near the end of a trend.

Even with these two problems I am able to see spectacular gains temporarily. Trends with few reversals and a slow conversion to the opposite direction yield very high profits... so I can see the potential that is available.

Tuesday, February 24, 2009

Ongoing MT4 Development

As I develop and test more expert advisers I see just how tricky it is to translate common sense into a series of hard and fast rules.

In short, my adviser does stupid things!

When I trade Forex on my own I'll combine a "feel" for the current situation along with some technical indicators. For example, in recent times, if something funny is going on, then the market I'm trading almost always takes an extended dive.

Basically, every time the world goes into a micro-panic things head south.

Anyway, when I program a set of rules I find it will do stupid things. It will not take into account these "feel" issues that let a person "read" the market. The same cold hard logic that has me enticed happens to be a double edged sword.

Anyway, as I mentioned before, I'm a programmer by trade so hopefully I'll figure something out.

Monday, February 23, 2009

MT4 Programming

I love the fact that I can program the MT4 system. However, wouldn't it be nice if there was documentation in English? Well, yes, there is some, but it obviously wasn't written by somebody who speaks it fluently.

Anyway, I spent much of the weekend fooling around with some custom expert advisers. One or two had promise, but obviously if it was easy to do then everyone would be doing it. It isn't. They aren't. I'm not, yet.

What I really need to be able to do is figure out how to determine that a position is not likely to become profitable again. Then, once that is known, it would be nice to look for an opportune time to trim that position. You see, picking a maximum loss generally means that the software will simply allow or force that level of loss.

I have some ideas and the tester is being put through it's paces...

Thursday, February 19, 2009

Automated Forex Trading Robot

I've signed up for a second account. This one is at a broker that uses a dealing desk and an MT4 based trading platform.


Because I write software for a living. Because I sometimes have a decided lack of discipline. Because my life is stressful and I don't need to be glued to my screen worrying about charts, margins and limits.

No, really, it's because I'd like to think that I can create a program, known as an expert advisor (EA), that will watch the markets for me 24x5 and eek out money with ruthless disregard to extraneous factors. No need to sleep. No need to eat. No ability to be distracted by anything at all.

A mindless devotion to price action, indicators, and limits. No if's, and's or but's allowed.

Perhaps I'll have the time and energy to put something together this weekend?

UPDATE: Also, an automated system won't select the wrong currency or the wrong trade size because it is in a hurry to get to the bathroom!

Tuesday, February 10, 2009

Infrequent Nibbles

I'm getting into this small position size infrequent trading style.

For example, with a pittance of my capital at risk I am earning nearly a 5% annual return. What am I trading? I'm holding the ever popular AUDJPY carry trade pair of course.

Even with the recent wildfires in Australia I really don't see them falling off the map completely. Come on, realistically, how low can their dollar sink? Now that it is at these very low levels any given change in pips is magnified in terms of percentage moved. This gets amplified as the AUD falls relative to the JPY.

So, I have my average position displayed on my chart. When possible I'll try to snap up a small position when the price is relatively low. When it is relatively high I'll do the opposite. By this, I mean that I'll sell a position that was opened above the average price and take a profit.

At the same time, I'll pump a small amount of additional capital into the account on a monthly basis to ensure that I never have a significant total percentage of account value at risk. Given the economic mess that we are in I see this as a long term play measured in years.

Tuesday, February 3, 2009

Not Enough Time To Trade

Well, my days have become very busy as of late. I go to work early, come home late, and need to get some sleep when I am not swamped with the normal day to day duties of life. I need time to cook and clean, pay the bills, service the car, look after my home, watch the superbowl, do laundry, and so on.

While I've been making money I certainly am not making enough money to hire someone to look after all my day to day tasks.

Okay, enough whining! What, you may be asking, am I going to do about this?

I'm going to focus my energies on my job. It's interesting, pays well, and I can't afford to ignore it in the current economic situation. This means that I am going to scale back the amount of time I can trade.

To put it concisely, I'm going to trade very small position sizes and look towards lowering the average price of my open positions. This means checking my account once in a while, taking profit when I'm ahead, and opening more positions when I am behind. As a hands-off trader I'm going to have to trade in small amounts and make sure I have the longevity to wait for days at at time for a swing to give me some profits.