Forex trading simulators

Posted on July 19th, 2008 by admin, under forex platforms.

Forex trading simulators

No savvy trader would trade a system with a real account and risk real money without first observing its behaviour on paper. A trading simulator is a software application or component that allows the user to simulate, using historical data, a trading account that is traded with a user-specified set of trading rules. The user’s trading rules are written into a small program that automates a rigorous “paper trading” process on a substantial amount of historical data. In this way, the trading simulator allows the trader to gain insight into how the system might perform when traded in a real account. Trading simulator makes it possible to efficiently back-test, or paper-trade, a system to determine whether the system works and, if so, how well.

Types of Forex trading simulators

There are two major forms of trading simulators. One form is the integrated, easy to use software application that provides some basic historical analysis and simulation along with data collection and charting. The other form is the specialized software component or class library that can be incorporated into user-written software to provide system testing and evaluation functionality. Software components and class libraries offer open architecture, advanced features, and high levels of performance, but require programming expertise and such additional elements as graphics, report generation, and data management to be useful. Integrated applications packages, although generally offering less powerful simulation and testing capabilities, are much more accessible to the novice.

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Forex charts: Algorithms of Japanese candlesticks

Posted on July 17th, 2008 by admin, under Forex Signals.

Forex charts: Algorithms of Japanese candlesticks.

Algorithm of calculation of a white candle.

The scenario may be white, and black top candle closes, and the candle will be closed by a black top if on Friday there will be an fundamental analysis information good for dollar, and the price will go downwards badly. In this case instead of a white candle we’ll get a black top, but the scenario of development of a week candle will still remain white.

Algorithm of calculation of a black candle.

If calculation has shown that the candle should be white, and in practice it has closed by a black top, algorithm of price movement still remained white.

Calculation of a candle is not stagnant. It requires constant refinement depending on what calculation of price movement was the initial one and whether the price on this algorithm goes in real time (see fig. below).

For example, the trader works on week schedules, and calculation gave the following settlement white candle. Work should be done then in the following order.

According to the algorithm of white candles on Monday the price should come to the check point 2. After that, by Friday it should reach the check point 3 and, finally, the week closes at a check point 4. But very often price on Monday comes not to the settlement point 2, but to the point 5, or on Tuesday to the point 8. After Monday (Tuesday) it is necessary to make correction of calculation (to wait the bottom point: 2, 6 or 9) from a point 5 (or after Tuesday from a point 8). If the check point 2 has not been reached, it is necessary to expect check points 6 or 9, and only after achievement of points 2, 6, 9, it is possible to start to work upwards. No matter when the price will reach the top check point, by the end of Thursday (a point 3) or in the middle of Friday (point 7). It is necessary to close here (after reaching the top point), and to try to work downwards (risk work).

Let’s assume that calculation resulted the following week candle white, with long shadows, then in calculating for daily candle for Monday heavy graph will provide bottom work for all indicators despite the fact that the overall calculation of the week gave a white candle. This applies to Friday also.

In calculating the first and/or last week of the month, it is necessary to keep in mind that this week must be calculated twice. First, in view of calculations of the last month, and, secondly, in view of calculations for new month.

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Brief Overview of Each of the Eleven Elliott Wave Patterns

Posted on July 16th, 2008 by admin, under FOREX strategy.

Brief Overview of Each of the Eleven Elliott Wave Patterns
Impulsive or Motive Waves - Moving with the Larger Trend

Impulsive or Motive waves are always moving with the larger trend,consist of five waves, and are labeled 1-2-3-4-5.

Impulse: (IM)

An Impulse is a five-wave pattern, labeled 1-2-3-4-5, moving in thedirection of the larger trend.

Diagonal – also known as a Diagonal Triangle: Leading (LD) and Ending (ED)

A Diagonal is a common 5-wave Motive pattern, labeled 1-2-3-4-5, that moves with the larger trend. Diagonals move within two contracting channel lines drawn from Waves 1 to 3, and from Waves 2 to 4.

There exist two types of Diagonals: Leading Diagonals (LD) and Ending Diagonals (ED). They have a different internal structure and are seen in different positions within the larger degree pattern.

Ending Diagonals are much more common than Leading Diagonals.

Ending Diagonal

Corrective Waves - Moving Against the Larger Trend

Corrective patterns are either 3 - or 5 - wave patterns, labeled with letters, and move against the larger trend.

Zigzag:

A Zigzag is a 3-wave structure labeled A-B-C, generally moving counter to the larger trend. It is one of the most common corrective Elliott patterns.

Zigzag

Double and Triple Zigzags (DZ and TZ):

Double and Triple Zigzags are similar to Zigzags and are typically two or three Zigzag patterns strung together with a joining wave called an “x” wave. They are corrective in nature.

Triple Zigzags are rare.

Zigzags, Double Zigzags and Triple Zigzags are also known as Zigzag family patterns, or “Sharp” patterns.

Double Zigzags are labeled w-x-y, while Triple Zigzags are labeled w-x-y-xx-z.

Only a Double Zigzag is illustrated below.

Double Zigzag

Flat (FL):

A Flat is a three-wave pattern, labeled A-B-C, that moves mostly sideways. It is corrective, counter-trend and is a very common Elliott pattern.

Flat

Double and Triple Sideways:

Double and Triple Sideways patterns (also known as Double 3’s and Triple 3’s) are similar to Flats, and are typically two or three corrective patterns strung together with a joining wave, called an “x” wave. They are all corrective in nature.

Triples are rare.

Doubles are labeled w-x-y, while Triples are labeled w-x-y-xx-z.

Only a Double Sideways is illustrated below.

Double Sideways

Triangle (CT and ET):

A Triangle is a common 5-wave corrective pattern, labeled A-B-CD-E, that moves counter-trend.

Triangles move within two channel lines drawn from Waves A to C, and from Waves B to D.

A Triangle is either Contracting (CT) or Expanding (ET) depending on whether the channel lines are converging or expanding.

Expanding Triangles are rare.

Contracting Triangle

Degree or Time Frame:

An Elliott pattern may span minutes, days, years or even centuries. To indicate the approximate time span of an Elliott pattern, it is labeled with one of ten possible “degrees”.

• Submicro – minutes to hours
• Micro - hours to days
• Subminuette - days to weeks
• Minuette - days to months
• Minute - weeks to months
• Minor - weeks to quarters
• Intermediate - months to quarters
• Primary - months to years
• Cycle - quarters to years
• Supercycle - years
• Grand Supercycle – decades or longer

Every Elliott Wave pattern is, in itself, the building block of a larger Elliott pattern, also known as the “next larger degree”.

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Forex indicators

Posted on July 15th, 2008 by admin, under forex indicators.

There is a plenty of Forex technical indicators which enable to give you opportunity to estimate condition of market and to make the most exact forecast of the further movement of the prices. All these Forex indicators can be divided into three groups:

1. Trend following indicators of trends or indicators are effective in the presence of a pronounced trend, but give dangerous signals when the market stands. These include indicators such as, for example, Moving Average, MACD (convergence / divergence of moving averages), ADX index etc. These indicators are moving when the trend has changed.
2. Oscillators or oscillators show a turning point, but give premature and unsafe signals when the market began its movement. This group includes Stohastic oscillator, Momentum, RSI (relative strength index), Wm% R (Williams % R), etc. Oscillators change frequently before prices.
3. Miscellaneous indicators or other indicators give an opportunity to evaluate the psychological condition and mood of the market. Among them are New High-New Low (index of new maxima and minima), Put-Call Ratio (the ratio of supply and demand), Bullish Consensus and others may be synchronous or faster indicators. Please note that this group of Forex indicators used mostly with the sale of futures and options.3.

In the given section we’ll give the most widespread and, in our opinion, convenient in application indicators - those technical Forex indicators on which it is necessary to pay special attention at creation of trading system. We shall not give formulas for calculation of indicators as we believe, that the main thing is to understanding of about what speaks the indicator and as correlates with by. The description of mathematical calculations can be looked in help system of a trading platform.

Also we wish to notice, that here we give the description of classical application of indicators which is not recommendations to opening positions. Before applying this or that Forex indicator we recommend to study its behaviour in relation to the price independently, try to change parameters and to pick up values that are optimal in your opinion.

Moving Average

This Forex indicator always follows changes of the market, but does not advance it. МА does not predict changes of the price but only eacts to it, i.e. signals about the beginning of the new tendency only after it has already appeared. A signal to purchase is closing the price above line МА, in that case when МА grows. A signal to sale is МА falling and closing of the price below this line.

Usage of moving averages is effectively during ascending or descending trends, but during a turn of a trend movings are late, and during lateral give many false signals.

MACD (a convergence/divergence of sliding averages).

The МА Forex indicator defines a trend by smoothing fluctuations of the prices. The method of a convergence-divergence consists not of one sliding, and from three exponentional МА. МАСD gives the trader three types of signals: crossing by faster line slower (from down to top - purchase, from top to down - sale); confirmation of a trend when gives new maxima and minima simultaneously with the prices; formation of divergences.

ADX - Average Directional Movement Index

The given Forex indicator consists of three lines: ADX line itself which shows presence and force of a trend, and also + /-DM lines which show direction of trend. If ADX it is small, the trend is weak, and it is not necessary to follow it. When ADX decreases, it means, that the tendency weakens, when ADX rises, it shows that new trend appears. In this case it is necessary to pay attention to + /-DM lines, for definition of a direction of movement.

Bollinger Bands

This Forex indicator is intended for research of price movement channels. When the price reaches to bottom Bollinger border, it is possible to consider purchase, when to top - sale. Often Bollinger lines coincide with lines of support and resistance accordingly. It is not necessary to accept decisions at strong breakdown by a strip. The analysis of Bollinger strips is well combined with the sliding average analysis. As a rule, on growing the market when the price spends more time near the top Bollinger line, its bottom level finds the support near average. At the bear trend the price fluctuates from bottom Bollinger line up to an average, being a kind of resistance line.

Momentum and Rate Of Change

These Forex indicators trace acceleration of a trend, growth or reduction in speed of its movement. The zero line (a 100 line for Rate Of Change) of oscillator represents area of low risk for opening long positions in the growing market and short - on falling.

RSI - Relative Strength Index

Measures relative strength of the market under the prices of closing. It is the warning or synchronous indicator, it never lates. Values of RSI fluctuates between 0 and 100. When RSI is above 70 or below 30 it shows that there is a condition of extra-bying and extra-selling accordingly. Signals arise when RSI had crossed alarm lines. If you work with short-term transactions, it is possible to reduce the period of calculation, as the more lower is period, the more sensitive is the Forex indicator.

Stochastic

As at stochastic calculation not only the prices of closing are considered, but also maximal, minimal prices, many traders and analysts prefer it instead of RSI. There are two variants stochastic - fast and slow. Fast is very sensitive to turns of the market, but gives many splashes. Slow - eliminates market noise better and gives less splashes, that is why it is very popular. The given Forex indicator gives three types of signals: crossing of lines of levels (20 and 80), a direction of lines and divergence. These signals work well in a corridor of prices, but works bad in a trend. On an ascending trend oscillator quickly enters into the area of extra-buy and gives a signal on sale, and prices continue to grow. At a descending trend - on the contrary. It is recommended to use stochastic on the weekly and monthly graph for forecasting the long-term tendency, and during short-term strategy use day time schedules.

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Relative Strength Index (RSI)

Posted on July 12th, 2008 by admin, under forex indicators.

Currently relative strength index (RSI) is one of the most popular technical Forex indicators, which is sold in virtually every software product on technical analysis. This is a technical momentum indicator that compares the magnitude of recent gains to recent losses in an attempt to determine overbought and oversold conditions of an asset. It is calculated using the following formula: RSI = 100 – (100 / 1 + RS), where RS is average of x days’ up closes divided by average of x days’ down closes.

This is an extremely useful and popular dynamic oscillator. When you have or want to buy the stock, which showed a breakthrough, make sure it goes ahead the market. The relative strength index will help you identify it by comparing its performance with a benchmark - S&P 500. When the action explodes and climbs to new maximums, it is necessary to the line RSI grew together with it, if not before it. However, if the relative strength line is not able to show the new maximum, when the share of turn off a foundation, breakthrough will be false.

SLP Trading Group

http://shop.profxtools.com

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Forex platforms

Posted on July 10th, 2008 by admin, under forex platforms.

Electronic trading Forex platform is a computer software designed for making commercial transactions in international financial market Forex by means of Internet in real time and carrying out the technical analysis.

User features in Forex trading system:

• to receive information on the course of the tenders in the form of the table of financial instruments and in the form of graphs
• to conduct the technical analysis
• to give orders about making transactions and installation of orders
• to maintain control and accounting of operations
• to communicate promptly with the dealer by means of an integrated chat
• to export data in the format of widespread computer programs (Excel, Metastock)

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