Return on Investment (ROI)
This
is an old term used in many investment projects and it is used to
determine how profitable the program is. Comparing to Stocks and unit
trust performance which is between 10 to 20% annually, Forex trading
gives higher ROI of 100 to 200% annually. This is due to the leverage of
the currency and the 24 hours trading features which makes it easy to
trade and small capital of 1:200 leverage required to trade and hold.
This in the case of stocks, can be option warrant or contract for
difference, but the holding power is still much less attractive then
Forex.
Leverage
Some
Forex broker accound provide 1:500 leverage, which means you only need
$200 to hold on to a 100k full contract or $20 for mini lot 10K or $2
for micro lot trading (0.1 of mini lot or 0.01 of standard lot).You
can execute 5 trades while still have the margin to carry on and earn
potential $2000 profit with a 200 pips gain (1% to 2% currency value)
compare to $50 for a 5% gain in stock and share assuming 10K capital
used for both trading setup.
Duration of Live trading
In
most case ROI is measured against monthly or annually. A good strategy
Forex trading program will give 10% ROI monthly. Which equal to more
then 100% anuually returns. But this is the average ROI, there may be
months that is -10% and months that is +40%. Therefore, trading is
almost looking at long term consistent profits, not short term gains.
For live trading, at least 12 months of trading would gives a good ROI
indicator of the program.
Profit Factor
This
is important to any Forex trading program as it is a measure of its
true abilities to trade and gain profit. Profit factor is measured by
taking total profit winnings divide by total losses. Any number that is
more then 1 will means that the program actually earn more then it lose.
A good profit factor of 2 or 3 is desirable as it have to handle stop
loss and bid-spread pip losses. This are 2 main problem for many Forex
trading program and one of the most effective ways to counter it is to
increase the profit factor. Anything less then 1.2 is consider no good.
Max Draw Down
Draw
Down is common in Forex trading when the trades has not hit any stop
loss. But comparing to Maximum Draw Down, it is the largest losses the
account made include realized profit (loss) and unrealized profit
(loss). Realized profit refer to trade that loss pips and are executed
by the broker (Buy and then sell or Sell and then Buy). Unrealised
profit is trade that is still holding on yet to let go. This is
significant as it will affect your margin call calculation when you are
running multiple trading programs. As a general rule is to have less
then 15% or 20% draw down. You still have room to run another 2 more
program to maximum your ROI while maintain your account margin.
Source http://business.ezinemark.com/how-to-select-mql4-live-trading-result-for-profitable-automated-forex-trading-7d352ffb1c58.html
Forex Trading Secrets reveals a trading system for the Euro Currency
futures and forex markets that trades in the after hours from 5-11 pm
CST. Our secrets for using stochastics show how to improve the
performance while three new trading systems are developed and fully
disclosed. We use the Tradestation platform to develop this strategy
and show our approach for researching and developing a trading system.
The final strategy is developed throughout the book with an improved
average trade profit and equity curve. -Three fully disclosed trading
systems -Rule isolation -Time diversity -Stochastic trading
secrets -After hours trading from 5-11 pm -and
more............ Capstone Trading Systems is owned by David Bean
who has been trading the financial markets since 1995. He started with
stocks but quickly moved to futures and forex in 1996 and began
developing automated trading systems in 1997. More information as
well as my Tradestation files for the strategy that can be downloaded
are on our website at http://www.capstonetradingsystems.com
Forex Trading Secrets: A Trading System Revealed Click here to see 5 customer reviews and choose from 14 suppliers
Algorithmic trading and Direct Market Access (DMA) are important
tools helping both buy and sell-side traders to achieve best execution.
This book starts from the ground up to provide detailed explanations of both these techniques:
- An introduction to the different types of execution is followed by a review of market microstructure theory. Throughout the book examples from empirical studies bridge the gap between the theory and practice of trading.
- Orders are the fundamental building blocks for any strategy. Market, limit, stop, hidden, iceberg, peg, routed and immediate-or-cancel orders are all described with illustrated examples.
- Trading algorithms are explained and compared using charts to show potential trading patterns. TWAP, VWAP, Percent of Volume, Minimal Impact, Implementation Shortfall, Adaptive Shortfall, Market On Close and Pairs trading algorithms are all covered, together with common variations.
- Transaction costs can have a significant effect on investment returns. An in-depth example shows how these may be broken down into constituents such as market impact, timing risk, spread and opportunity cost and other fees.
- Coverage includes all the major asset classes, from equities to fixed income, foreign exchange and derivatives. Detailed overviews for each of the world's major markets are provided in the appendices.
- Order placement and execution tactics are covered in more detail, as well as potential enhancements (such as short-term forecasts), for those interested in the specifics of implementing these strategies.
- Cutting edge applications such as portfolio and multi-asset trading are also considered, as are handling news and data mining/artificial intelligence.
Algorithmic Trading and DMA: An introduction to direct access trading strategies.
Discover a variety of technical and fundamental profit-making strategies for trading the currency market with the Second Edition of Day Trading and Swing Trading the Currency Market.
In this book, Kathy Lien–Director of Currency Research for one of the
most popular Forex providers in the world–describes everything from
time-tested technical and fundamental strategies you can use to compete
with bank traders to a host of more fundamentally-oriented strategies
involving intermarket relationships, interest rate differentials, option
volatility, news events, and central bank intervention.
Day Trading and Swing Trading the Currency Market: Technical and Fundamental Strategies to Profit from Market Moves (Wiley Trading) Click here to see 12 customer reviews and choose from 33 suppliers
No comments:
Post a Comment