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.
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.
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.
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