Archive | September, 2013

Automated Trading

Most traders do a lot of market analysis for their trading. There are two analysis methods: Fundamental Analysis and Technical Analysis. In Fundamental Analysis, traders must read and understand charts, pairs characteristic, news events, etc. In Technical Analysis, traders’ decisions purely based on certain price level or indicators such as MACD, RSI, Bollinger Bands,etc.

If the trading strategy is based only on simple rules using indicator values, then that strategy can be programmed, and the trade can let the Expert Advisor does the automated trading. It will be nice if we can run an automated trading machine to make money from Currency Market. Expert Advisor (EA) is a script in a specific programming language (MetaEditor) that will place trades within MetaTrader4 automatically. This can be useful since not everybody can sit in front of monitor 24 hours a day. EA has advantages and disadvantages.

EA advantages are:

  1. Can run trades 24 hours

  2. Can not feel tired

  3. Trade without emotion

  4. EA can manage few currency pairs simultaneously. This can increase trading frequency.

  5. Fast trade executions. This advantage depends on internet connection.

EA disadvantages are:

  1. Not everybody familiar with programming language

  2. Manual intervention can lead to EA misfunction

  3. During volatile events, EA might not work properly (depends on how it was programmed)

  4. EA can not recognize market changing behavior

  5. If the EA has a bug then it could lead to a wrong trade and resulting in a loss of money.

Think carefully before you run an EA run on a live account. Make sure it is well tested and keep a careful eye on what it does. To prevent from losing too much money because the EA doesn’t work as expected, don’t keep too much money the real account.

Using EA in trading is very helpful and can get rid a lot of hassles. However, keep in mind that it is only a program and needs to be supervise. The best way to use EA is to run it as a ‘grey box’ not as a ‘black box’. ‘Grey Box’ means trade with an EA and do intervene if something does not go as planned. It is necessary for a trader to constantly watch the trades and how the EA reacts towards the taken trades. ‘Black Box’ means the EA does all the trade without trader’s intervene.

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Smart Bees During Fall

Fall is here and this is the last chance for bees to prepare their winter supplies. Flowers are rare, wind is getting stronger and temperature drops. It’s not a good condition to collect honey. As a smart species, during hard time like this; specially in cold, rain ,or windy, bees will stay in their hive. They don’t want to take high risk moves that give them very little benefit.
During the Fall, bees fix all cracks on the hive and reduce entrance size using propolis. It’s a smart action for little bugs. The egg laying of the queen bee tapers off or stops completely as the temperature drops. As the temperature getting colder, the bees will form tight cluster to keep the brood (eggs, larvae, pupae) warm. Bees are smart and hard working creature , but they emphasize smart above hard work. When the weather is too windy or cold, bees will stay in the hive. During winter, bees will form cluster to warm each other, the colder the weather the tighter the cluster.
Same like bees, traders should observe the market prior to trading execution. We need to recognize profitable trading hours, understand market volatility, plan trade strategy, know pair characteristics, etc. For example, when the market is quiet and in consolidation pattern, it’s not a good ‘weather’ to trade breakout strategy. It is wiser to stay out of market and make preparation for incoming volatility. Same like bee; bee’s job is to find flower and collect nectar, not grow the flowers. Trader’s job is to identify market trend and volatility, not to move the market.
Traders are supposed to work smart same as bees, not only work hard. Trading is supposed to be something to enjoy, not stress up.

don't Fall Beehind

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Forex Account Types

In general, there are 3 types of Forex accounts: Standard , Mini, and Micro (Nano) account. It classifies by the leverage provided thus will have an effect on minimum deposit

One lot Standard is worth $100,000. The margin requirement to trade one lot Standard is $1,000. In Standard account, one pip equals to $10. Hence, if in one given day a trader gains 20 pips, it means he makes $10 x 20 pips = $200. In contrary, if he losses 20 pips, it will cost him $200. The capital requirement for Standard Account starts from $5,000.
One lot Mini is worth $10,000. The margin requirement is $100. One pip in Mini is equivalent to $1. Capital requirement for Mini starts from $500. Mini account is usually the more preferable by a new trader or trader who wants to test new strategy, because the potential loss in Mini is one-tenth of Standard Account.
One lot Micro is worth $1,000. The margin requirement is $10. One pip in Micro is about 10c (ten cents). Generally, Micro is a good option new trader who is not familiar with trading, because its potential loss is only one-tenth of Mini account. Not all broker provide Micro (Nano) account. Capital requirement for Micro (Nano) account starts from $25.
Both, Micro and Mini account, are a good option for a new trader, as their potential loss is much smaller than Standard account. Trader must choose the suitable leverage to trade. Experience and sophisticated trader can go with Standard account, while for beginner it’s better go with Mini or Micro account.

In forex trading, capital is crucial, but knowledge is beyond capital. If the trader has skill and knowledge, trader can compound small capital into big one. But, if the trader only depend on large capital he / she has, the money is going to the market in no time. Remember Black Wednesday, 1992 when George Soros beat Bank of England. It is a solid  proof that knowledge is beyond capital.

 

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Healthy Trader

Every work field has their own health risk issues. Trading field is not exception. Working in front of monitor for hours to understand chart and news, analyze trend, set up strategies,etc; may expose a trader to substantial health risks.
Since traders mostly spend hours in front of monitor(s) and do not physically active; it is highly recommended for them to spend at least 30 minutes per day for exercise:

  • a minimum of 2-1/2 hours per week of moderate-intensity aerobic activity, for example, brisk walking for 30 minutes a day, five days a week, or
  • minimum of 1-1/4 hours per week of vigorous-intensity aerobic activity, or
  • combine both.

Then, give your eyes a break once an hour during your workday. Rest your eyes 10 minutes for every 50 minutes spent in front of monitor. If your eyes feel overly tired, lie down and place cooling cucumber slices over your eyelids. The monitor position should be located nor closer than 70 cm from the trader’s eye and lighting should not cause any glare on the monitor.
Last but not least, drink a lot of water or a cup of tea hourly to prevent dehydration. Good diet also have important roles. Vitamins A, C, E, and mineral like copper, zinc are essential to eyesight. Antioxidant can be obtained from dark leafy greens, eggs, yellow peepers, pumpkin, sweet potatoes, and carrots. Other food that give benefits such as spinach, broccoli, lemon / orange, nuts, avocado, garlic, onions, shallots, capers, blueberries, grapes, salmon, sardines, mackerel, cod, whole grains.

Source:
http://www.hsph.harvard.edu/nutritionsource/physical-activity-guidelines/

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Forex Trading

Forex trading equals business. Most people say trading is risky, but actually forex trading is similar to other business. Just like forex  trading, starting your own business also have high failure rates (http://www.statisticbrain.com/startup-failure-by-industry/). One of the advantages of Forex trading is I can trade from anywhere as long as there is internet connection, which is very easy to find nowadays. I can control my own time and life, while making money. I take trading very seriously to generate my cash flow.
Trading forex is risky by nature, therefore; it is very vital that one needs to get educated and gain plenty of trading experiences. I took series of education program and am still learning until now. I commit to life-long learning as I believe I need to keep updating and adjusting my trading knowledge and skills to catch up with the market. Then, I experiment trading strategies on my demo account, that I discovered from courses, my reading or other traders’ experiences, to find a strategy that fits my personality and trading psychology. Last but not least, daily trades documentation and evaluation would also be important, so I can learn from my mistakes and sharpen my strategy.
It is not an easy journey. It takes huge effort and time, but I believe it is worth my independence. How about you?

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SWAP

Swap in Currency Market is interest rates for currencies pair that being trade. Interest rate also called daily swap procedure or roll over. Interest rate calculate daily and change on daily base. Interest rate is what make fluctuation in the Currency Market. Investor determine a currency is over price or under price by comparing what investor got in return. When investor hold a certain currency, they may earn the interest or they may pay the interest depend on what currency they hold.
When a country increase the interest rate, the price of the currency will go up, since investor will get more return. In vice versa when a country decrease the interest rate, the price of the currency will go down. In the long term interest rate will show ability and stability of the government to pay the interest.
Forex swap is set by the interest rate difference of two selected currencies (the currencies that still in open positions passed over night time). The interest rate which you can earn during the swap period is used by the broker to calculate the price of the swap. Generally, swap is based on the interest rates of the currency you are trading and the open position. For example AUDJPY; AUD interest rate is higher then JPY interest rate (Aug 2013). If you ‘Buy’ AUDJPY then chance is you are going to earn the swap. If you ‘Sell’ AUDJPY then chance is you are going to pay the swap. But every dealing desk / broker have their own calculation. Please contact your own dealing desk for detail.

 

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Healthy Eyes

worker beeMost of the time people discuss about trading techniques. How to make profit, what is the best strategy, how to analyze charts, what has happened with the market, etc. Too focus on trading till forget one important factor, HEALTH, particularly eyes health. Health is very important factor and traders should place this above trading, as you could not make money if you have eyes problem. Staring at monitor can cause eyestrain, blurry vision, difficulty in focusing at a distance, and dry eyes

A simple exercise can help to maintain healthy eyes. It is known as focal point exercises. This is how you do it: pick a point at the other end of the room, or out the window, then, every half an hour stare at that point for two minutes to help the eyes to relax. A simple exercise to maintain your healthy eyes.

The other exercise is eyes yoga. First, open the eyelids, keep the head and neck still, and relax the entire body. Then, raise your eyeballs up to 12 o’clock, and hold them there for a second. Next, lower the eyeballs to 6 o’clock and hold them there again. Continue moving the eyeballs up and down for ten times, without blinking if possible. After ten movements, rub your palms together to produce heat and gently cover them over your eyes, without pressing. Allow the eyes to relax in complete darkness. Repeat this exercise with eyes movements – 9 o’clock to 3 o’clock, 2 o’clock to 7 o’clock, 11 o’clock to 4 o’clock – end each movement by covering your warmed palms over your eyes. Conclude the routine with ten full circles in each direction, as you are tracing the clock’s rim.

Below are simple steps to maintain healthy eyes:

  • Ensure your eyes prescription is up-to-date and adequate for computer use
  • Position your monitor so that your healthy eyes are level with the top of the monitor.
  • Avoid glare on your monitor from windows and lights. Use an anti-glare screen if needed.
  • Choose a comfortable, supportive chair. Adjust it so that your feet are flat on the floor.
  • Blink more if you feel your eyes are dry. Healthy eyes need to be moist all the time
  • If possible, rest your eyes by looking 20 feet away for 20 seconds every 20 minutes to keep your eyes healthy. At least every two hours, get up and take a 15 minutes break.
  • Eat healthy (egg, nuts, beans, fish, fruits, vegetables, lemon juice, salmon, tuna, fish oils, etc)

Source:
http://www.yogajournal.com/health/129

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Break out

According to http://www.thefreedictionary.com/break+out , break out means to begin or arise suddenly. Break out in the Forex market is defined as a price movement in one direction after sideways consolidation phase. Break out can be a break up (the market moves up) or break down (the market moves down). Below is a good example of a break down.breakout

The important key in break out strategy is the ability to identify a consolidation phase. In the market, a trader does not know when or how big the next expansion is going to be, however, by identifying a consolidation phase, a trader prepare for the next market expansion.
From the above picture, notice that the market has been in consolidation for certain times. The first step would be determining the resistance and support level, then, place pending order “Buy Stop” and “Sell Stop” to anticipate break out in both directions. After the market starts to break the resistance or support level, and executes one of the pending order, the opposite pending order can act as the protection in case the market reverses. If the market picks its direction, just delete the other pending order.
Usually after consolidation phase, there will be a momentum, as there is a lot of traders trying to catch this new move/trend. Then, profit taking would take place after two or three candles, one ATR, when the candle body starts to shrinks, or momentum slows down.
Break out strategy has high probability of winning. It may not give a huge profit in one shot, but since it has a high probability of winning, it can be implemented frequently to produce constant income.
To learn more about this topic, please contact us at http://apiaryfund.com/.

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Virtual Private Server (VPS)

A fast computer with fast internet connection is a necessity for a trader. It is crucial to execute trade for the price that we wanted. However, a fast computer is costly, also not everybody is computer savvy and has knowledge on how to maintain their computer. No matter how fast a computer is, without proper maintenance it will get slow eventually. In the last few years, there is a trend using VPS (Virtual Private Server) to increase trading performance.
Virtual Private Server acts like computer, but in the cloud. Trader install their trading platform (such as MT4) and all trading activities are executed through VPS. Trader’s computer or laptop only act as ‘keyboard’ to control the VPS. The benefit of using VPS are :

  1.  VPS works faster in transmitting the orders then ordinary computer or laptop. This may reduce slippage.
  2. Trader can trade from anywhere with different computer or laptop. Let say, the trader’s laptop is broken, one does not need to worry about his/her trading because all of the trades are in the VPS. Trader just need to find/borrow laptop with internet connection then login to the VPS to secure his/her trading positions. In the past, trader needs to re-install all software and equipments all over again in order to get access to the trades.
  3. Save money because trader does not have to buy ‘high end’ computer to get fast trades execution.
  4. In the power failure event, the VPS will keep the trading position (including Take Profit and Stop Loss), so all strategy and pending orders can be execute until the trader has access to VPS.
  5. A trader will not need to waste time to maintain their computer, since VPS usually already has their own IT team to make sure it runs 24/7 without problem.
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ACT

Life is a journey, sprinkled with dreams, filled with courage, and expressed in action. – Tanadi Santoso

Most people I know can be divide into two groups. The first is a group that love to complain for whatever they find. The second is a group that love to dream. The similarity from both : nothing change on their life. They do the same pattern everyday. The way they think is the same. How can you expect a different event if you’re using the same formula over and over again?
A few of them want to learn new stuff. The problem is, they don’t implement their new knowledge. So when I talk to this people, I always find new interesting topics that are useful for me. It become useful because I learn deeper and act to make it real.
Same with trading. When friends or family know I do trading, they start to talk how risky is trading and they have lists of people who lose money in trading. Before, I try to give them the right perspective. But, by the time, I just smile to them and make them feel right on their opinion. Why? Because in trading, I need to meet people that can trade or have interest in trading. I don’t waste my time and energy to talk to ‘deaf’ (psychologically deaf).
Few from my friends have the same interest in money and we talk about money and investment. Also sharing opportunity that we could work on. Still, in trading they don’t ‘jump into the pool’. They follow the news, do practice trading, but don’t have real account. In order to make your dream come true, you need knowledge follow with act to make it real. You need both.
Like Tanadi wrote, : you need courage and express it in action. Most of people I know are afraid to make mistake and don’t have courage to responsible for their act. So they stay in their comfort zone. The problem is, world changes. And lately the changes is crushing economy growth. Require advance skill to survive in the next economy turbulence. For me, as long I can fix my mistake, I’ll imply new skill in order to make my dream come true.

004bull

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