Tag Archives | investing tools

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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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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SPREAD

Spread is one of the trading costs in the Currency Market. A trader needs to take spread into consideration in order to make profit. Most of people forget to include this factor in their trading plan because they are too focus on the trading strategy and analysis.

Spread is defined as the difference between Selling-price (Bid price) and Buying-price (Ask price). The bid is the price at which forex broker is willing to buy the base currency in exchange for the counter currency. The ask price is the price at which the forex broker is willing to sell the base currency in exchange for the counter currency. Forex broker or dealing desk make their living from spread on each trade position that being place through their network.

spread

The Selling-price (Bid price) always lower then the Buying-price (Ask price). It may cause a trader to lose money, if the trader open and close his position at the almost the same time, with the same exchange rate.

Generally currency pairs with high volatility has tighter spread, while currency pairs with low volatility has wider spread. Apart from wide spread, currency pairs with low volatility usually have a lot of gap in price and is more difficult to identify the trend. For example, USDMXN.

Different dealing desk have different spread for each currency pair. Certain dealing desks write off spread but charge commission for each trade position. Then, there are dealing desks that apply spread and charge commission for each trade position.  Some dealing desk offers fixed spread, but usually the spread is wider than variable spread. The advantage of fixed spread is straightforward profit and stop loss calculation during high volatility. The disadvantage is more costly during normal volatility.  

However, lowest spread does not necessary mean that one dealing desk is a good dealing desk. To choose a good dealing desk or forex broker, one need to consider several factors like : does the company list on certain regulator agency, does the company have a good customer service, does the company have good reviews from their client, where are the offices, etc. How to choose a good dealing desk will be discussed in later article.

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3 Advantages of the Forex Market

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Lots of investors prefer different markets for lots of reasons. There’s not really a single answer for why any market is better than another, but today I thought I’d share three advantages of the forex market:

1. Volatility

The volatility of the forex market is sometimes cited as its biggest risk–and I won’t try to tell you that’s not true. Volatility comes with inherent risk.  But just like any other investments, securities with the highest risk also come with the highest yield.

I remember my early days of trading when I’d place an order and go to sleep, only to wake in the morning and find that my hopes and dreams had been crushed overnight. Naturally, I blamed the market when I should have blamed myself. I now know that with proper risk management, as taught in Apiary’s curriculum, you can make the market volatility work in your favor!

 2. Volume

So how does the increased volume of the forex market afford you an advantage? If you’ve had any experience trading other securities, you no doubt are familiar with placing an order and waiting hours, or even days, for that order to be filled. With fewer buyers and sellers in a certain market, you might not always have someone looking to fill an order–so you wait.

But forex is by far the largest market, so volume isn’t an issue. With so many buyers and sellers out there actively trading, you’ll find that you never have to wait for an order to be filled.

 3. Leverage

I’ve written a bit on leverage before, but if you haven’t heard of it before, here’s a simple explanation: Think of leverage as money a broker lends to a trader to increase the trader’s buying power. In the United States, brokers can give traders fifty-to-one leverage. This means that for every dollar a trader puts into an investment, a broker will match it with forty-nine.

Leverage is a huge advantage to the forex market because it gives you more weight to throw around. Because Apiary works through a broker in New Zealand, our traders actually get 100:1 leverage. That means when a newly-funded trader starts working with a $2500 account, they’re really working with $250,000 worth!

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Top 3 Features Apiary Offers for Free

We at the Apiary Fund are very proud of the great products we’ve created to help our traders succeed. So proud, in fact, that we have offer some of them to the public for free! In this blog post, we’ve listed our top three free features:

1. The Investor Profile
The Investor Profile is a personality assessment we launched last year to help traders recognize character traits in themselves that will affect how they trade. Because every trader is different, identifying and understanding your strengths and weaknesses is crucial to finding success in the markets. How can you play to your strengths if you don’t know them?

2. The Sessions Clock
The sessions clock is a tool the Apiary Fund developed to help traders keep time. Because the forex market is a 24-hour market, there is always at least one market open. Knowing when each market opens and closes will help you avoid any unexpected jumps in volatility. So, whether you’re on the road or just experimenting with trading at different times of the day, the sessions clock can help you keep things straight!

3. The Trader Development Preview
The Trader Development Program is Apiary’s training curriculum, developed to help our traders learn the ins and outs of the market in the most effective way. As a preview, The Apiary Fund offers the first course to the public for free! Just enter your name and email on the Apiary Fund’s homepage!

While we do offer some great features free of cost, we don’t just put our best stuff in the window. We have a wealth of knowledge and resources to help make Apiary Fund traders successful!

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Investing Skills Can Be Developed

Investing skills are developed over time like learning to play the piano.  You wouldn’t expect to play a concerto the day you first sit down at the piano, so why do people expect a great performance when they place their first investment?  It’s interesting to me that people put more time into learning an instrument than they do in learning to manage their assets more effectively.  The probability of positive returns is so small in music, yet we commit so much time.  Contrastingly, the probability of a positive return is so great in the financial markets, yet we commit so little time.  It’s an anomaly.  Let me suggest three things you can do to improve your investing skills:

1. Make Time to Develop Your Investing Skills

Investing skills requires time to develop.  My daughter’s piano teacher expects a half an hour of practice everyday.  The book Outliers, by Malcom Gladwell, puts forth the premise that to be an expert in your field requires a devotion to one’s craft for at least 10,000 hours.   I am not sure that successful trading requires 10,000 hours, but I do know that if you do not set aside time to practice, you’ll never master the craft.  The fact is simple:  successful investors – professional or otherwise – set time aside to master their investing skills.

2. When Your Practice Your Investing Skills, Keep it Real

One challenge in practicing to develop your investing skills is that simulation is easy to cheat.  Whether you’re trading on paper or through a demo platform, it’s easy to let things go.  Going back to my little piano performer, she sometimes gets sloppy in her posture, fingering, timing and tempo.  I remember her teacher telling her, “Practice does not make perfect.  Perfect practice makes perfect.”  Since investing is a skill, keep things as real and disciplined as possible so that you practice is beneficial in real life environments.

3. Keep Your Eyes Open for Ways to Develop Your Investing Skills

The good Lord gave you eyes to learn. When practicing your investing skills keep your eyes open and stay observant.  Watch how the market forms, how it develops.  Watch how your strategies interact with the market during the repetitive iterations of your practice sessions.  Skill is developed through testing, observation, adjustments and more testing, but skills development cannot occur if you don’t see the details in both the big AND small picture.  My daughter’s performance on the piano can be altered dramatically depending on the position and pressure of the strike of her finger on the keyboard.  Developing your investing skills requires your attention to detail and your attention to detail will pay dividends in your performance.

I know that not everyone shares my love and passion for investing.  I know there are returns from learning an instrument that cannot measured in monetary forms.  I know that not everyone has the capacity to put the time into practicing his or her investing skills as I have.  Fortunately, investing skills can yield positive returns quickly and a little practice goes a long way.  Investing is a skill that has a high probability of success.  Investing skills can be learned by anyone with the desire to master it.

Author: Shawn Lucas |

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