trading

it’s been quite a wh­ile since i last wro­te about my trading tests. it was in sept­ember last year when i promised to write as soon as there are some news. well, testing mathematic­al formulas in real time trading, be it virtual or real money, is a long process bef­ore coming to definite concl­usions. i had quite a success in making money with virtual currencies, but in fi­nding an investor who would trade real money with my as­sistance hasn’t been a success at all. investors want to know too much, while i need to keep some parts of my mathematical strategy to myself, to be part of the deal and not casted away. it’s not easy to find a compromise between proving the point without a shadow of a doubt and keeping some trade secrets.

before co­ming to conclusion that my formulas do work, it wasn’t witho­ut hurdles. the test­ing accounts which i mentioned in my pre­vious posts on tradi­ng became inaccessib­le few months ago. in fact three of my android devices crash­ed irreparably (all of them during a few weeks period, one aft­er another), thus i bought three new and­roid devices to make sure i will be able to continue working on my projects. but i did not succeed to ac­cess the previous te­sting accounts anymo­re regardless the ac­cess codes were nice­ly backed up. neither it was possible to recover/reset the accounts because the metatrader4 and metatrader5 demo accounts do not have an email or a phone registratio­n.

never mind, i didn’t waste time and open­ed new testing (demo) accounts. after mak­ing some profit and continuing the tests to increase the pro­fit i lost access to these accounts as well. then i decided not to keep any demo accounts on trading — as soon as i arrived to a reasonably positive balance, making betw­een 1% to 5% profit (in average it took only couple of weeks of trading time while maki­ng tens of trades a day), i deleted the accounts and opened new ones. like this i continued and am continuing my tests now. so far there has been over 20 differ­ent demo accounts wh­ere i made profit, only one of the test accounts is open right now to continue till i will arrive at posit­ive balance.

apart of forex curre­ncies i also began test-trading gold and silver. so far i ha­ve a success, but fr­om my earlier studies about stock market i remember that tra­ding precious metals brings on heavy tax­es, thus i’m trading gold and silver just from mathematical curiosity. my math works with the same success on tra­ding gold and silver.. even better than i expected.. but at this time it’s early to be confident about trading precious met­als because i began trading these very recently. in fact my formulas should work the same on trading anything on stock market when there’s sufficient volatility.

read more on this topic in the category TRADING

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fx: my portfolio.

by now i’ve done some follow-up analysis of my portfolio, on how i ended up with such losses as described in my previous posts in category ‘trading’. what i found is that i had simply over-traded, which in the low volatility and slowly trending conditions meant that cumulative spreads had eaten away even those small profits which i succeeded to generate during some rare turns of tides on some currency pairs. (while during a significant volatility more trades with my strategy means more profit, in low volatility conditions it doesn’t play out that way).

my attempted solution which i practiced for couple of days: i doubled the required minimum price change before modifying positions. the mathematical reality is that bigger changes in prices are way more rare (exponentially negative). while before i was making hundreds of trades a day across my portfolio, then the last few days i made only tens of trades, mostly just watching the prices to fluctuate almost around the value of the spread, which didn’t allow to make any changes in portfolio. i did begin recovering losses, a tiny bit, but this would have meant that instead of generating a reasonable profit in average once a month, in similar market conditions i could be able to generate a reasonable profit in average only about once a year (before it would make sense to close all positions and to begin again with minimum bets). not good, but that’s the reality with low volatility currency pairs.

to counter this situation i had to abandon the balancing of currencies across one trading platform. i continue with the same currency pairs for the test’s sake, but now i take only positive positions (only ‘buy’), which in some sense reduces the risk in case if one currency should crash. as you know, shorting is always way more risky due to the fact that losses can in theory go up to infinity (you will go broke faster), while if you go long you will only risk the total amount on the taken positions.

for balancing risks, now between the trading platforms only, i separated again the strategies: on mt4 i continue with my well tested increasing/decreasing method, and on mt5, exactly with the same currency pairs, also betting ‘long’ (buy) only, i’m after the price trends. thus, if on one trading platform i should lose then on the other platform i will gain.

that’s my current tactics to try to generate profit in low volatility conditions, will see what results it will produce. today i already began recovering losses several times faster than the last few days (surprisingly on both trading platforms), but it may just be a coincidence. will see how the situation develops further.

fx: my portfolio.

the math is all correct but for some reason i keep losing money even with several pleasant medium volatility moments.. i mean i recover some losses but never enough. i should have done better. this week i had to shift some positions between mt4 and mt5, because mt5 had reached its allowed limit on leverage — cannot increase bets on losing positions even though half cash is still in game. today i modified the overall strategy again, a bit. why? because in total, between mt4 and mt5, i’m some 20% in negative.. far from being broke but i don’t feel comfortable with such a trend. a modification was necessary not to continue going into negative with such pace. will see. i like it, it’s interesting: hard during practice should mean easy in real life. friday evening should be with a better trading outlook, to turn losses on some currency pairs into profits. in any case i’m in for a long strategy, not for a fast and risky ‘game’.

re: some responses to comments, category ‘trading’.

first of all thanks for advice N, at least for an attempt to give an advice. i appreciate your effort. below are some responses.

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1.

your comment:

https://youthextension.wordpress.com/2018/08/23/forex-orders-changed-without-me-doing-it-is-that-possible/comment-page-1/#comment-578

Unlikely, could be Swap charges

re:

nope, nothing to do with swaps here. you probably missed the following: “today i noticed that some currency pairs are vacant (no positions) and some are with wrong polarity.”

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2.

your comment:

https://youthextension.wordpress.com/2018/08/15/brokers-too-are-humans-and-having-stomach-disorders/comment-page-1/#comment-579

You may better switch brokers, and while at it the platform as well.

Are you american ? If yes there are some additional rules the broker as to abide.

Btw: trust me, making money in markets is not just math.

And you can also be sure that EVERYTHING has been discovered already, the trick is simply to manage losses, done that properly even if your strategy is simply trowing dice and buy at odd/sell at even numbers.

re:

i am proud to be not american.

“be sure that EVERYTHING has been discovered”? that sounds like a religious conviction, that everything is in the bible, no need to read nor to learn anything else, regardless that “god” had so bad vision he didn’t see farther than 200km (where all the biblical events happened), thought that earth is flat, had so bad memory couldn’t remember back more than 5000 years, and so on.

everything has NOT been discovered, that would be a very arrogant statement by anyone with scientific thinking. in mathematics there are every single week submitted literally thousands of new proofs, collectively around the world. many discoveries, especially in mathematics developed for stock market, are not necessarily made public, so there’s a lot to discover.

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3.

your comment:

https://youthextension.wordpress.com/2018/08/01/brokers-running-scared/comment-page-1/#comment-580

Im sure this problem can be bypassed easy and very likely even automated with requotes to be filled with smaller but matching orders

re:

that’s true. i haven’t explored all the tools available as i have enough to do. i have also mentioned it in another post. right now i do everything manually with market orders. when i see that it won’t work, i will explore programmable options, beginning perhaps with pending orders, stops, etc. … problem with those is that i can’t see how well and when those orders are executed without being constantly online. so far i prefer to place market orders, oversee their execution, and sleep well or do other things without worrying about my portfolio on forex.

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fx: a modification to strategy.

it is night here in italy. i woke up and after visitng my fx accounts i got an idea which i immediately implemented.. will see how it continues now. that should be the safest method of all, with a very long time implementation, perhaps even with no need to close all positions and to start over after generating profit (unlikely however). later i will think more thoroughly about all the mathematical implications, and if necessary i can continue as before, with my well tested strategy.

for the modified strategy to work i had to increase stakes on some of the currency pairs in such a way that it wouldn’t affect my previous method if i would decide to roll it back and continue the old way. in just a few weeks or even days i will see the results, so far i have time to think and to make calculations.

a very important part of the new strategy is that it will allow me to track any changes to my positions very easily — if there are any mistakes on my part or modification attempts by brokers, i will notice the changes immediately with a quick look at all my positions.. now i keep the positions mathematically related between them. if you make a change in one position, you will need to modify many others, which will be too obvious. no more errors possible. i expect this modified method to hold out the tests.

taking a break from trading whenever needed.

in current situation of my fx accounts i may easily take a week off not even looking at them — the worst thing that may happen is that i may lose an opportunity to generate profit during high volatility. if the market keeps moving steadily in one direction i won’t lose much money (nor make much) as the bets are placed in reverse on the accounts, with not too big difference. the most you go in negative is when you exit losing positions to take new positions with increased bets, in attempt to generate higher profits later. but there’s a limit to risk, so, at some point you just stop increasing bets and ‘lie down’ in wait till tide will turn. you can even begin a parallel account to continue the same strategy with lower bets (not to waste time, to keep investing), while the other account is just waiting for right moment to continue trading. so, in theory you could operate several accounts, trading actively on those where stakes are on reasonable level. earlier or later the tide will turn — that’s the principle of random fluctuations — the market will never go in one direction for ever.

my fx accounts, possible steps to take.

the significant negative balance (view previous post) was accumulated today when i was rising my bets on losing currency pairs with bigger steps than before — as you know, if you close your losing pair it will be taken off your balance, and the losses kept accumulating with higher speed, instead of reversing the trend. so, as the bets are high enough, i may let those positions to ‘hang’ now, not to blow the account by increasing bets even further. i would now increase only those negative bets which are low due to previous gains taken and decreasing in value. for a while i would only collect profits when they occur on some currency pairs, to increase my balance, and then would continue to rise bets on losing side, depending on market conditions of course. there may be necessary to enlarge portfolio while decreasing all the bets. but that’s not really the point of the current test. as the matter of fact that’s the first time i test on forex opposite positions on two accounts. when both accounts will generate profit it will be the best proof out there for the strategy to work in almost all conditions (except stagnant market). so, i will try to hang onto these currency pairs without increasing portfolio.

note: when enlarging portfolio, not to lose your already made investments during rising of bets, you must decrease your bets for example from 1 bet of value 10 to 3 bets of value 5, so in fact you invest 50% more, to remain on the same investment level (not to lose money) with lower bets. why? think about it. i’m not going to describe in detail all my formulas.. something must be left to sell as well. there are many more mathematical adjustment techniques, to hang onto your account in difficult situations. those are the ones that truly matter as there are difficult situations coming earlier or later. and that’s the most fun part of it too, as long as you don’t gamble with real money of course.