It’s not about the pips, and certainly not about the dollars. Learning to accurately measure your success or failure in each trade is essential to survival…
Don’t get fooled into thinking the forex pip is the building block of trade measurement; it isn’t!
You’ve no doubt heard or read the boasts of supposedly successful traders talking about how much they made yesterday, last week or last month or whatever.
When you first start out in forex trading these impressive claims have the twin effect of making you feel inferior and putting you in awe of the people making them.
If you are in this position now rest assured that you needn’t feel that way.
First off, the really successful traders never boast. They just don’t need to. They are comfortable with who they are.
Secondly, when you have a close look at the claims very few of them stand up to scrutiny.
This is almost always because of the manner in which the vaunted success is measured. All told, there are four main ways of measuring the success of any individual trade or set of trades. Let’s look at those four now.
The first measurement is the most ridiculous: it’s when a trader talks about how many dollars or euros or substitute-any-currency-you-like they have made. The claim is ridiculous for two reasons:
Because what may be a large amount of money to them may be peanuts to you, or vice versa
Because it doesn’t tell you how much of their account they put at risk in order to make those dollars. For example, if they made a thousand dollars yesterday on a trade but their risk in the trade based on where their stop loss was set amounted to five thousand dollars, that’s a very, very poor trade and nothing to be proud of. It’s even worse when you discover that they did not set a stop loss, because in that case obviously their risk was only limited by the size of their account!
The second measurement is probably the most common: Forex Pips. “I had a fantastic day yesterday, I made over three hundred pips” you’ll hear it said. But once more, we have no inkling of how much was at risk in making those three hundred pips. If it was on a single trade and the risk was one hundred pips, that’s a good trade by anybody’s standard. But if they had to risk a thousand pips in order to make those three hundred, it’s obviously a different story.
It becomes even murkier when you do know how much they risked but they are talking about a basket of trades. “I took twenty trades last week and made over three hundred pips, with an average risk of fifty pips per trade”. Now you have to do the maths: twenty trades at fifty pips risk per trade equals one thousand pips. Again, on scrutiny the profit doesn’t seem so great.
Some traders take it a step further and use the third measurement of trade success: Percentages. So a trader will talk about having made 5% on their account in a single trade. This gives perhaps a little clearer picture but has the same shortcoming as the previous methods, in that it doesn’t equate risk to reward. Once more, if they made 5% on their account by putting a total of 10% at risk it was not such a great trade after all.
This brings us to the fourth and ultimate measure of trade success: Units. When using this concept we are directly measuring Return as a fraction of Risk. Simply put, one Unit equates to one measure of risk. Let me explain.
I have a trading account of one thousand dollars. I decide never to risk more than a certain amount, let’s say 1% of that account – ten dollars – in any single trade. I call this amount risked a single Unit, or Position. So, if I make twenty trades over a given period of time, I have risked twenty units of my account:
20×10 dollars equals $200 risked, or 20 units risked. Now I can say that for every ten dollars I make in return, I have profited one unit. So if I made $500 my real profit is:
500 divided by 10 dollars equals 50 units. A good result based on the 20 units risked.
Learn to think as a battlefield commander: how many units do you risk for the possible gain?
Using this process of measurement we know immediately how well a trader has done. If they say “I made two units on that trade” we know it has been a good trade for them, based on the fact that they have made twice the amount they risked.
Contrast this with the situation where they say I made “I made 2% on that trade”. Here we don’t know how well they did unless we know what percentage they risked on the trade.
I urge all traders to think in terms of units risked and units profited. It is the cleanest and most accurate method I have encountered of realistically measuring success in trading.
www.keralalotteries.com PHONE:- DIRECTOR OFFICE FAX www.kerala.gov.in 0471-2305230 0471-2305193 0471-2301740 POURNAMI LOTTERY NO. RN-387th DRAW held on 14/04/2019 AT GORKY BHAVAN NEAR BAKERY JUNCTION THIRUVANANTHAPURAM
The prize winners are advised to verify the winning numbers with the results published in the Kerala Government Gazatte and surrender the winning tickets within 30 days.
Next POURNAMI Lottery Draw will be held on 21/04/2019 at GORKY BHAVAN NEAR BAKERY JUNCTION THIRUVANANTHAPURAM Sd/- Geetha Devi G Joint Director Directorate Of State Lotteries , Vikas Bhavan,tvm
Forex trading software doesn’t have to be automated; many successful traders only ever trade manually. But I am assuming that you have an interest in automation if you are reading this section.
So, just exactly what do people mean by automated trading software? Simply put, a trading robot is a software program that executes a trading strategy automatically, with no need for ongoing input from an external source (i.e. the trader). They are also sometimes referred to as Expert Advisors or EA’s .
Some years ago I was speaking to a broker about EA’s and said something like “we all know they don’t work”. In the next 5 min that broker managed to persuade me to take another look at forex robots.
Of course, I was thinking “hey, you’re a broker, you get paid every time the software trades. And we all know they trade a lot, a nice little earner for you!”
Nonetheless, my curiosity had been roused so I went and did some research. What I discovered completely changed my mind.
Since then I’ve taken an active interest in the subject. While not claiming to be an expert in the technicalities, I have observed the results of auto trading systems enough to convince me that there are a handful of robots that actually can be trusted with your money.
I don’t say put all your faith in any one forex ea; of course the usual risk management and diversification issues apply. However, I now devote a portion of my own personal trading account to forex robots.
Why?
There are many reasons for adopting a hands off approach to your forex trading. These mainly centre around the following issues:
The benefits of absentee trading. Being able to walk away from your computer knowing that a piece of software is doing the job for you frees you up to live your life any way you like.
As a human being, it is impossible for you to trade 24/7. Robots do this without complaint You’ll never miss a trade again…
Emotional issues in trading. Automated trading software is totally unemotional. You can set it up to trade the way you would like to trade (as an ice cool trader, presumably) and entrust the job to it. The robot will do exactly as you had planned, without any of the distractions of niggling thoughts, doubts etc entering into the decision. It’s a good option for dealing with the trader demons of fear and greed.
Entry cost. The market for robots is extremely competitive and this has driven the price down over time. Considering the performance of some of the better robots, the money you pay upfront can soon be recouped if you trade it on a reasonably sized account. (Disclaimer: always trial the forex ea in a demo account first until you are comfortable with its performance)
Research edge: you pay a small amount of money upfront for a piece of software which has been thoroughly researched and tested, with a proven performance track record. No need to spend months or years developing your own system.
Proven performance. You simply do your own research on the available offerings, and select the robot that both suits you and has a proven track record. Again, a big timesaver, if you get it right!
Automated trading software can be a great way for beginners to observe how a professional traderapproaches the market.This gets back to emotional issues, the plague of all forex currency trading beginners. If you select wisely, and only place the robot on a demo account or small live account, you can sit back and “see how it should be done” at your leisure. This was one of the first things that struck me when I started using robots. I would be watching the behaviour of the EA during a trade and contrasting the way it managed to trade to the way I would be tempted to manage the trade. The robot usually did a much better job than me It’s like having a mentor do your trading for you while you stand behind them observing and learning.
Many vendors of forex robots offer a money back guarantee, enabling you to get a refund inside a certain trial period. This can be anything from one to three months, as a rule. This should be seen as a bonus when considering selection of an EA, not a dealbreaker. It may be that one robot is excellent, but gives no money back guarantee, while another robot that is absolute rubbish cheerfully refunds your money if you’re not satisfied. The reasoning is obvious: the vendor of the rubbish robot knows that a certain percentage of customers will for one reason or another (laziness, didn’t know about the guarantee etc) fail to redeem their money.
Last but not least, and taking into account all the above, you may prefer spending time with family and friends than watching charts!
But what about the downsides to using automated forex trading software?
You will most likely want to have a VPS service on which to run the forex robot. This is an extra ongoing, albeit small cost. See VPS services
The very utility of having a robot trade for you without your input can be a source of constant low-level tension for some people. You may find yourself worrying “What is it doing now? God I hope it hasn’t lost me any money!” There are some people who just have to CONTROL every aspect of their trading. Automated trading software is probably not a good fit for these people.
There can be a difficulty in locating a robot that trades the way you want it to, while meeting your other requirements with regards to cost etc. For example, a great many robots scalp the market, and are not suitable for someone whose vision is longer term.
The performance of forex robots generally degrades over time as market conditions change and the code for the robot is “cracked” i.e. stolen and mass distributed. It’s important to monitor performance against your initial expectations, and be prepared to stop trading at the first sign that the robot is no longer doing its job. This can be temporary while you continue to run the EA in a demo account, or permanent in the event that the software shows no recovery in its performance over time.
Last but most definitely not least, anyone thinking of using auto trading software must understand the risks involved. There is a good reason why most robots return a very high win to loss rate (often above 80%, sometimes even 90%). That reason is that simply having such a high win rate means that when you do suffer a loss, that loss is substantial. You must be able to psychologically absorb the occasional such loss in the face of a streak of much smaller wins. It is simple mathematical probability that an automated system that wins 90% of the time has wins that are much smaller than its losses.
If you have lasted this far I guess you are still interested in the possibility of using forex robots. In that case, you may wish to consider the list below under the link to Automated Forex Trading Software. Please note that the usual disclaimer applies to these recommendations: Do Your Own Research and remember that past performance is no guarantee of future results:
Using a VPS service buys you a ton of peace of mind for pennies of outlay…
Which looks more secure, this bank of high end servers in a maximum security centre or your PC?
A VPS service – Virtual Private Server – is basically your own separate, dedicated PC environment running 24 hours a day on someone else’s computer network. More technically, the service runs on a remote bank of servers hosted by a provider hiring out space and bandwidth on these servers to the public.
In other words, you can forget about having any trading software on your local PC and set up your entire trading environment on this remoteserver, as well as any other software that you may incidentally want to run there.
Most often, people use a VPS as a fail-safe mechanism in addition to running programs on their local PC. However, more and more, folks are shifting to this “cloud” concept for their entire trading strategy.
There are many reasons for using a VPS service when you trade forex, most important among them:
A VPS provides an uninterrupted power supply (UPS) service for you, meaning that if your local PC dies or your Internet connection goes down, the VPS remains active, continuing to run your programs. This is certainly true of the better VPS services which have a guaranteed up time of way above 99%.
You can run programs such as automated forex trading robots on a VPS 24/7. This means you can turn your PC off and go about your life secure in the knowledge that your program has the best possible chance of doing its job.
Depending on the service you sign up for, there are varying levels of technical support available should you strike any problems, wish to upgrade etc
You don’t have to use your own PC or laptop or other device in order to accessyour programs. Any PC/laptop/tablet/mobile device capable of accessing the Internet enables you to connect to your programs running on the VPS and monitor or maintain as appropriate.
Leaving the best until last: with a reputable forex VPS provider you will get absolutely minimal slippage due to the fact that their whole business model centres around the fastest access to the data streams your trading orders are transmitted through. For example, the VPS provider I use currently for my forex robot trading – Beeks VPS – locates their forex specific servers in London and New York as close as it is possible to the data feeds for the major liquidityproviders in forex trading.The importance of this cannot be overstated if you are running forex robots. Any popular forex robot will be placing countless orders to the market at virtually the same time, which means that the pool of available liquidity for accepting these orders may be exhausted quite quickly, leaving your orders out in the cold if they are coming from a distant server. Using an extremely low latency forex VPS service gives you the best possible chance of front-running the wave of orders.
As always, do your own research when selecting a VPS. Some suggestions to start with are the following service providers, who have been around long enough to have gained reputations as being reputable, reliable and offering good to excellent service:
As implied above perhaps the best use for a VPS service is for the trader who has decided to run one or several automated forex trading systems – robots. If you want to explore this topic further click to go to Forex Robots
Track the forex trading hours open and close times around the globe in a market that rarely sleeps…
Each timezone has its own trading hours, interlinking with neighbours as they drive liquidity cycles
The forex market opens each week during the Asian time zone, beginning with Auckland, New Zealand when the banking and financial sector starts up around 8 AM (21:00 hours GMT or thereabouts).
Thereafter begins a rolling progression of forex market opening times and closes around the globe.
Next to start is the eastern seaboard of Australia comprising the major financial centres of Melbourne and Sydney. The Australian session is only just getting under way when Tokyo opens 2 hours later, followed by Singapore an hour after that.
This overlapping of market sessions often gives rise to instability and volatility. It can provide great opportunities for trading, and at the same time expose beginning forex traders to great risk.
The new forex trader is well advised to study these times as they relate to their personal trading sessions and adjust their approach accordingly.
A further complication relates to the issue of daylight saving and other seasonal adjustments. Depending on where you live, and therefore whether or not local authorities adjust for daylight saving etc, market open and close times can change by one hour up to 4 times a year. Keep an eye on these seasonal clock adjustments, not just for your own time zone but for the major financial centres such as London and New York.
Above is a representation of the four major global time zones in forex, with open time countdowns updating in real time.
Note especially how the sessions overlap, beginning with the Australasian open in Sydney, progressing through Tokyo, then to London and on to New York.
There are also smaller but quite significant open and close events centred around Central/Eastern European nations such as Russia, and later in the day as Frankfurt opens an hour before London.
The Frankfurt open is especially interesting since it can often push price in one direction only to see a complete reversal when London begins trading!
These overlapping zones represent areas of likely volatility which I think of as “forex tidal wash” areas. If you have ever stood at the mouth of a river as it enters the ocean when the tide is changing you will have observed the turbulence and the washing of one stream of energy into, through and across the other.
In the area where I grew up these tidal washes attract sharks: they like to hunt in the camouflage of the swirling turmoil which also helps to confuse their prey. Does this remind you of times you have entered the market when volatility suddenly increased? I think you can see the connection; it is a time to exercise great caution.
The Three major Tidal Washes are:
Asian Tidal Wash after quiet start in Australia: Tokyo/Singapore opens
European tidal wash after Asia ends: Frankfurt/London opens
The New York Open / London Closetidal wash
A couple of resources that you may find helpful in keeping in tune with the various timeframes as they change during the year due to daylight savings etc. are the following:
http://www.anuko.com : Anuko World Clock is a download for Windows that replaces the regular system clock with several time zones of your choosing. Includes a template for “World Clock for a Forex Trader”, among others.
The concept of forex market trading through different time zones and levels of volatility is a good place to introduce one safeguard a trader can use for these times if they are unable to watch to their open trades: a VPS service.
