Best Forex System - Beware of Backtesting!
by Harold Hsu
What is backtesting?
Backtesting is essentially the testing of a trading system using historical market prices, to see how profitable that system can be. This testing is usually done with computer software that runs the trading system through a period of time in the past.
Why beware of backtesting?
Many new traders think that good backtesting results will guarantee similar results in the future. This is a big mistake because a system that has worked in the past may not necessarily work in the future. This is because the Forex market is always changing and evolving. The Forex market today can be very different from the Forex market last year. The past does not equal the future... if it did, we'd all be millionaires by now!
What about trading systems with good backtesting results?
Because everyone knows what has happened in the past, it's easy for anyone to create a trading system that can be very profitable during that time (in the past). But remember: we're not trading in the past; we're trading in expectation of the future. Trading systems with good backtesting results may very well fail miserably in the future.
But this fact has not stopped unscrupulous people from selling Forex trading systems based on "excellent" backtesting results. They use impressive hypothetical (i.e. backtested) results as a sales tool. Unfortunately, many traders purchase these trading systems only to have them fail miserably and causing them to lose thousands of dollars.
What can I do to protect myself?
When looking for a good trading system, ask the system developer whether the trading results are actual or hypothetical. Many people assume that hypothetical returns are actual returns, but that's just not the case.
Now that you know it's easy to create a trading system based on backtesting (i.e. hypothetical) results, you'll hopefully be more skeptical about trading systems with little or no actual trading results.
Summary
While backtesting can be a very useful way to test a trading system, it's definitely not an accurate measure of how the system will perform for you in the future. Be wary of scammers who use hypothetical returns to try and sell you something!
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Showing posts with label forex online trading. Show all posts
Showing posts with label forex online trading. Show all posts
Best Forex System - Beware of Backtesting!
Saturday, April 4, 2009 Best Forex System, Forex Killer Strategy, forex market, forex online trading, forex trading
The 3 Most Profitable FOREX Charts
Thursday, March 19, 2009 Currency Trading Course, FOReign EXchange, FOREX Charts, forex online trading, Forex Traders Guide
The 3 Most Profitable FOREX Charts
by Yusoff Allian
A basic understanding of technical analysis can propel the novice FOREX trader from a micro account to the big leagues in record time, and it really isn't that difficult to master once you comprehend the basics. At first glance all these charts and acronyms can seem daunting and can quickly scare the average novice trader away, but it's really not as complicated as it looks. Let's take a look at the three most popular FOREX charts out there right now.
The Line Chart.
This is the kind of chart that even non-traders are familiar with. It plots closing prices from one day to the next and connects the two points with a line, forming a jagged line with peaks and valleys from left to right. The general trend of a currency pair is very easy to identify as the price will either trend up, down, or remain relatively stagnant.
The Bar Chart.
The bar chart is a glorified line chart that not only shows the closing price, but also shows the opening price that day and also the high and low that the currency pair reached that day. Picture a vertical line, with the top point of the line representing the high price traded that day, and the bottom of the line indicating the low price traded that day. Each vertical line also has a horizontal line on the left side that indicates the opening price that day, and a horizontal line on the right side that represents the closing price that day. This FOREX chart is particularly useful as it's easy to identify the long term trend of a currency pair while also seeing what kind of daily variation it typically experiences.
You'll often see bar charts referred to as "OHLC" charts - Open, High, Low, and Close, for the reasons explained above.
The Candlestick Chart.
Candlestick charts are probably the most popular type of FOREX chart used by professional FOREX traders. It combines the best elements of the line chart and bar chart and adds its own unique twist. A candlestick has a vertical line, just like the bar chart, but instead of having horizontal lines on either side that represent the open and close prices it has a rectangular box in the middle of the vertical line. The inside of this box is typically white if the price closed higher than it opened, and black if the price closed lower than it opened, although you'll see various color schemes used from site to site.
Candlestick charts don't contain any extra information than a bar chart, but visually they're much easier to understand at a quick glance. You'll find that you'll be able to identify trends much quicker and recognize market reversals much easier than if you were using a bar chart.
As candlestick charts tend to be the most popular of the FOREX charts you'll find that there tends to be a lot more information available online about them, including information on candlestick patterns. These patterns have been tweaked many times over and are very handy in identifying emerging trends in a currency or stock, and it's highly recommended that you familiarize yourself with some of the more well known candlestick patterns if you want to realize some serious profits in FOREX trading.
by Yusoff Allian
A basic understanding of technical analysis can propel the novice FOREX trader from a micro account to the big leagues in record time, and it really isn't that difficult to master once you comprehend the basics. At first glance all these charts and acronyms can seem daunting and can quickly scare the average novice trader away, but it's really not as complicated as it looks. Let's take a look at the three most popular FOREX charts out there right now.
The Line Chart.
This is the kind of chart that even non-traders are familiar with. It plots closing prices from one day to the next and connects the two points with a line, forming a jagged line with peaks and valleys from left to right. The general trend of a currency pair is very easy to identify as the price will either trend up, down, or remain relatively stagnant.
The Bar Chart.
The bar chart is a glorified line chart that not only shows the closing price, but also shows the opening price that day and also the high and low that the currency pair reached that day. Picture a vertical line, with the top point of the line representing the high price traded that day, and the bottom of the line indicating the low price traded that day. Each vertical line also has a horizontal line on the left side that indicates the opening price that day, and a horizontal line on the right side that represents the closing price that day. This FOREX chart is particularly useful as it's easy to identify the long term trend of a currency pair while also seeing what kind of daily variation it typically experiences.
You'll often see bar charts referred to as "OHLC" charts - Open, High, Low, and Close, for the reasons explained above.
The Candlestick Chart.
Candlestick charts are probably the most popular type of FOREX chart used by professional FOREX traders. It combines the best elements of the line chart and bar chart and adds its own unique twist. A candlestick has a vertical line, just like the bar chart, but instead of having horizontal lines on either side that represent the open and close prices it has a rectangular box in the middle of the vertical line. The inside of this box is typically white if the price closed higher than it opened, and black if the price closed lower than it opened, although you'll see various color schemes used from site to site.
Candlestick charts don't contain any extra information than a bar chart, but visually they're much easier to understand at a quick glance. You'll find that you'll be able to identify trends much quicker and recognize market reversals much easier than if you were using a bar chart.
As candlestick charts tend to be the most popular of the FOREX charts you'll find that there tends to be a lot more information available online about them, including information on candlestick patterns. These patterns have been tweaked many times over and are very handy in identifying emerging trends in a currency or stock, and it's highly recommended that you familiarize yourself with some of the more well known candlestick patterns if you want to realize some serious profits in FOREX trading.
Forex Day Trading - The Most Important Fact You Need to Know
Sunday, March 8, 2009 eliminate stress, Forex Currency Trading Online, Forex Day Trading, forex online trading, Forex Signals
Forex Day Trading - The Most Important Fact You Need to Know
by kelly Price
If you are considering forex day trading, there is one fact you need to know above all others and its enclosed in this article.
The fact is that if you try it the odds are you will lose your money and lose it quickly.
Why?
Because all volatility within such a short space as a day is random and support and resistance levels are meaningless and you will may as well flip a coin. Of course if you think about it its obvious why:
You have millions of traders trading trillions of dollars each day and this mass of people and what they do cannot be measured in such a short time span as a day or less.
You will see a lot of day trading systems on the net and they all claim to make money - but there is a problem - none of them do, because none of them have been traded.
They all produce a track record in hindsight knowing the closing prices!
Well that's hard - if we all knew tomorrows price today we would all be rich but forex trading is not that simple. Whenever you see a day trading or forex scalping system with a track record look at the disclaimer and you will normally see the one below or a similar one:
"cftc rule 4.41 - hypothetical or simulated performance results have certain limitations. unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not been executed, the results may have under-or-over compensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profit or losses similar to those shown".
Of course if you put this disclaimer on you can say anything you like and many vendors do. They know the system wont make money (that's why they have the good sense to not trade it themselves) better to sell it and make a guaranteed income by appealing to naive and greedy investors.
Day trading is a good story but that's all it is and it doesn't work in practice. I quite like Harry Potter as a story but I don't think I can fly!
If you want to make money in forex trading understand one key point:
You need to use data that allows you to calculate the odds and that means swing trading or long term trend following - where the data can be used to help you time your trading signal and enjoy long term currency trading success.
If you want to day trade the odds are not on your side and you will lose and if you don't believe me try and find a day trading system with a track record audited of trades and profit and loss and you simply won't get one
by kelly Price
If you are considering forex day trading, there is one fact you need to know above all others and its enclosed in this article.
The fact is that if you try it the odds are you will lose your money and lose it quickly.
Why?
Because all volatility within such a short space as a day is random and support and resistance levels are meaningless and you will may as well flip a coin. Of course if you think about it its obvious why:
You have millions of traders trading trillions of dollars each day and this mass of people and what they do cannot be measured in such a short time span as a day or less.
You will see a lot of day trading systems on the net and they all claim to make money - but there is a problem - none of them do, because none of them have been traded.
They all produce a track record in hindsight knowing the closing prices!
Well that's hard - if we all knew tomorrows price today we would all be rich but forex trading is not that simple. Whenever you see a day trading or forex scalping system with a track record look at the disclaimer and you will normally see the one below or a similar one:
"cftc rule 4.41 - hypothetical or simulated performance results have certain limitations. unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not been executed, the results may have under-or-over compensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profit or losses similar to those shown".
Of course if you put this disclaimer on you can say anything you like and many vendors do. They know the system wont make money (that's why they have the good sense to not trade it themselves) better to sell it and make a guaranteed income by appealing to naive and greedy investors.
Day trading is a good story but that's all it is and it doesn't work in practice. I quite like Harry Potter as a story but I don't think I can fly!
If you want to make money in forex trading understand one key point:
You need to use data that allows you to calculate the odds and that means swing trading or long term trend following - where the data can be used to help you time your trading signal and enjoy long term currency trading success.
If you want to day trade the odds are not on your side and you will lose and if you don't believe me try and find a day trading system with a track record audited of trades and profit and loss and you simply won't get one
Business forex online trading
Wednesday, March 4, 2009 Business, Forex Currency Trading Online, forex market, forex online trading, Forex Trading Strategies
Business forex online trading
by Nick Schultz
Foreign exchange is where people from various countries trade in currency belonging to other countries. This is similar to stock trading but very different from it as well in the sense that there are no specific office or clearing houses where money is traded and rates are fixed. If a person has been working for a couple of years, he would have saved up enough for the future and might want to invest the rest. Among the top options for investment, of which forex trading is one, the business forex online trading is today has made life so much more effortless for all involved. Through the online medium, people can get in touch with traders in other parts of the world, in a country of their choice and place their orders. Today there are many who carry out Forex as a business and not just as an investment venue. They help other prospective investors make the right choice and help them in trading on forex. Not only do they provide assistance to new investors, but they themselves invest in the foreign exchange using a lot of analysis and data.
The business forex online trading is where the investor plans ahead of time, and decides on a strategy before making the investment. The forex industry is said to be the most volatile but the most liquid of the investment venues available to companies. While carrying out online trading, the investors also have the flexibility to speed up the process by sending across emails within minutes of receiving updates on the currency rates. Or they might be tracking the market trend and if they feel the timing is right, they can make the purchase right away. They even have Java based platforms through which investors can keep track of all their investments and get regular updates. The only thing required from the investor is that they need to create an account with the website before they start trading. And most of them maintain not one but two sites, one they use for trial and learning purposes, while the other is for regular trading.
It is normal for a person to incur losses during their initial investments but with practice they will master the art of following trends. And once they have set their feet firmly in the ground there is no turning back. The worldwide web offers plenty of options through which one can spend less time than before but double their earnings. All they need to do is follow the rules of business forex online trading to assess each of the currencies and play based on the reports generated periodically. This will not only yield them high returns but also help them reduce the risk factor with every investment made. And while dealing online, they can make buy or sell decisions all 24 hours of the day as someone somewhere is still up and trading in the foreign exchange. Even while they are sleeping, they might earn about 100 pips through the exchange because the other country might be awake doing business.
Nick Schultz is a Forex Trading expert who recently developed an eCourse that details a step by step process for success Forex investing. If you are interested in learning more about his "9 Steps to Better Forex Investing" eCourse and learning how to make greater profits from your Forex Trading, please go here right now! : http://www.forexinvestingcourse.com
by Nick Schultz
Foreign exchange is where people from various countries trade in currency belonging to other countries. This is similar to stock trading but very different from it as well in the sense that there are no specific office or clearing houses where money is traded and rates are fixed. If a person has been working for a couple of years, he would have saved up enough for the future and might want to invest the rest. Among the top options for investment, of which forex trading is one, the business forex online trading is today has made life so much more effortless for all involved. Through the online medium, people can get in touch with traders in other parts of the world, in a country of their choice and place their orders. Today there are many who carry out Forex as a business and not just as an investment venue. They help other prospective investors make the right choice and help them in trading on forex. Not only do they provide assistance to new investors, but they themselves invest in the foreign exchange using a lot of analysis and data.
The business forex online trading is where the investor plans ahead of time, and decides on a strategy before making the investment. The forex industry is said to be the most volatile but the most liquid of the investment venues available to companies. While carrying out online trading, the investors also have the flexibility to speed up the process by sending across emails within minutes of receiving updates on the currency rates. Or they might be tracking the market trend and if they feel the timing is right, they can make the purchase right away. They even have Java based platforms through which investors can keep track of all their investments and get regular updates. The only thing required from the investor is that they need to create an account with the website before they start trading. And most of them maintain not one but two sites, one they use for trial and learning purposes, while the other is for regular trading.
It is normal for a person to incur losses during their initial investments but with practice they will master the art of following trends. And once they have set their feet firmly in the ground there is no turning back. The worldwide web offers plenty of options through which one can spend less time than before but double their earnings. All they need to do is follow the rules of business forex online trading to assess each of the currencies and play based on the reports generated periodically. This will not only yield them high returns but also help them reduce the risk factor with every investment made. And while dealing online, they can make buy or sell decisions all 24 hours of the day as someone somewhere is still up and trading in the foreign exchange. Even while they are sleeping, they might earn about 100 pips through the exchange because the other country might be awake doing business.
Nick Schultz is a Forex Trading expert who recently developed an eCourse that details a step by step process for success Forex investing. If you are interested in learning more about his "9 Steps to Better Forex Investing" eCourse and learning how to make greater profits from your Forex Trading, please go here right now! : http://www.forexinvestingcourse.com
Commodity forex online trading
Monday, March 2, 2009 Commodity, forex online trading
Commodity forex online trading
by Nick Schultz
Whenever we go to a store to buy a product, there is always something in return the shop keeper expects from us. This is how it works in most businesses and this is the case of forex as well, where there is what is called the commodity online forex trading. Any product used for commercial purpose is called a commodity and there are markets where these are traded and profits are earned by smart investors. Currency is a commodity, and so are bonds, metals, livestock and even grains or oil. Since the sale of these fetch a huge profit , which adds to the income of the state or country, they are all fitted into this category. For a person to trade in these, it is not enough if he monitors the market trend, but he must also watch the business inflow and outflow of that country. This is because if more business is made on the metal industry, the price of those commodities is bound to increase with a spurt in demand and this in turn will be a wise option to invest on. The same way, if business prospects look good for energy industry, one must go with that and make the decision and pull out if there is a slump in this particular arena.
There are some investors who agree to do a future forex trade on a certain commodity when they know that a new deal is about to signed on that commodity with the country. At times one can make a profit simply by agreeing to trade at a future date and price irrespective of the market trends. So it is not wise to simply stay focused on the market trends in case of these products but it is necessary to just go with the flow. If a person makes a sale today, he is expected to deliver the goods or commodities after a week only, and in that time if the prices fall, he can buy them back at that price. This way he makes a profit as the sale price will be more than the purchase price. Such is the world of commodity forex online trading. Since there are numerous websites offering online shopping and sell their products online, interested people can use these facilities to leverage their time and money and make a break for them to more easily get into the market.
In commodity forex online trading, the investor is the king and he is the one who decides the price of the commodities. There are several brokerage firms too that have come up to help the investors make a deal on any of the available products. One can open accounts with them and begin trading on these items and make a lucky pot of gold provided they make a timely decision. Some wise investors will also insist on spot trading which means the purchase or sale needs to take place instantly and they get their money right away. This saves them from undue losses and gives them a good head start on the market, so it is very important for a person to stay alert.
Nick Schultz is a Forex Trading expert who recently developed an eCourse that details a step by step process for success Forex investing. If you are interested in learning more about his "9 Steps to Better Forex Investing" eCourse and learning how to make greater profits from your Forex Trading, please go here right now! : http://www.forexinvestingcourse.com
by Nick Schultz
Whenever we go to a store to buy a product, there is always something in return the shop keeper expects from us. This is how it works in most businesses and this is the case of forex as well, where there is what is called the commodity online forex trading. Any product used for commercial purpose is called a commodity and there are markets where these are traded and profits are earned by smart investors. Currency is a commodity, and so are bonds, metals, livestock and even grains or oil. Since the sale of these fetch a huge profit , which adds to the income of the state or country, they are all fitted into this category. For a person to trade in these, it is not enough if he monitors the market trend, but he must also watch the business inflow and outflow of that country. This is because if more business is made on the metal industry, the price of those commodities is bound to increase with a spurt in demand and this in turn will be a wise option to invest on. The same way, if business prospects look good for energy industry, one must go with that and make the decision and pull out if there is a slump in this particular arena.
There are some investors who agree to do a future forex trade on a certain commodity when they know that a new deal is about to signed on that commodity with the country. At times one can make a profit simply by agreeing to trade at a future date and price irrespective of the market trends. So it is not wise to simply stay focused on the market trends in case of these products but it is necessary to just go with the flow. If a person makes a sale today, he is expected to deliver the goods or commodities after a week only, and in that time if the prices fall, he can buy them back at that price. This way he makes a profit as the sale price will be more than the purchase price. Such is the world of commodity forex online trading. Since there are numerous websites offering online shopping and sell their products online, interested people can use these facilities to leverage their time and money and make a break for them to more easily get into the market.
In commodity forex online trading, the investor is the king and he is the one who decides the price of the commodities. There are several brokerage firms too that have come up to help the investors make a deal on any of the available products. One can open accounts with them and begin trading on these items and make a lucky pot of gold provided they make a timely decision. Some wise investors will also insist on spot trading which means the purchase or sale needs to take place instantly and they get their money right away. This saves them from undue losses and gives them a good head start on the market, so it is very important for a person to stay alert.
Nick Schultz is a Forex Trading expert who recently developed an eCourse that details a step by step process for success Forex investing. If you are interested in learning more about his "9 Steps to Better Forex Investing" eCourse and learning how to make greater profits from your Forex Trading, please go here right now! : http://www.forexinvestingcourse.com
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