One of the first rules of trading in the Forex currency market, which is aggressively put into the head of a trader, is the mandatory ordering of a stop-loss order to limit its possible loss if the price goes to the side opposite to the open deal. There is no doubt that one of the most important qualities of a trader is the ability to manage his losses. The main problem of stop-loss forex are the standard rules for their installation, for example, above or below local extremes, support or resistance levels and so on. Most non-professional traders have their stop-loss in accordance with these standard rules. In turn, market makers often use this to get their own profit. Often in the market you can observe such a picture - before you start the main movement, the price makes a sharp jump in the opposite direction, "knocking out" the standard stop-loss, and only after that moves in the right direction.
This phenomenon among forex traders is called "hunt for stops" or "stop hanting." As a result, the majority of traders who correctly calculated the situation on the market and opened the position in accordance with the classical rules of technical analysis, instead of profit, receive a loss. Personally, I do not put foot at all, I do not want to program myself for losses. When I learned about the intentional knocking out of the stop-loss, I became even more convinced that I made the right choice. Imagine this situation. The price formed a certain minimum, pushed off from a strong level and rushed up. Most trading strategies in this case recommend placing a stop-loss just below the minimum point.
So do most traders. As a result, a large accumulation of orders is formed. This is well-known market makers. For example, they need the price to move up. They buy a certain amount of asset, which pushes the price up. But the next purchase will be at a more expensive price, which is not profitable for market makers. Then they fix profits and sell a few assets, which causes the market to fall and the stop-loss of traders who placed protective orders at the nearest minimum.
The operation of stop-loss leads to an even greater drop in prices. At the same time, some traders think that there has been a breakdown of the level and are entering sales, which only strengthens the positions of the "bears". And here the price falls below the last local minimum, and market makers start to buy at a more attractive price, which leads to a sharp jump in prices up, as there are no strong levels on the way. Realizing that this was a false breakdown of the level, traders are also starting to open deals for purchase, which causes a rapid jump in prices up. In this case, a new local minimum is formed, for which protective orders are issued. Refuse to stop no one persuades. Everyone decides how to limit their losses, whoever uses stops, and who uses it in other ways. Everything depends on the properties and capabilities of the trading system. Ideally, a perfect trading system should bring profit without stop-loss and take-profit. Separately consider the question of stop-loss without considering the possibilities of the trading system in relation to does not make sense. I think we should dig in this direction.


Cemetery of indicators
I've noticed before that the so-called classical indicators and trading strategies based on them do not work, which is an illusion. More recently, I accidentally found the supporting information, which coincides with my opinion. To you to judge.
So look at the indicators tests:
• Relative Strength Index (RSI),
• Commodity Channel Index (CCI)
• Williams% R.

Next, an electronic shortened translation from a Russian-language site.
«All these indicators are oscillators, which means that their value always fluctuates around some central point (axis), and accordingly, these indicators give the signals similar. More specifically, they signal an overbought or oversold asset, that overbought and oversold is a reversal trading strategy, that is, against the trend, now there is a bit of theory about the testing methods
Purpose: to determine the effectiveness of the RSI, CCI and Williams% R indicators Research range:
• 2012-2015;
• pair: EUR / USD In addition.
I conduct tests without taking into account spreads and commissions, which allows to more accurately determine the potential of the indicator.
Test number 1- Relative Strength Index (RSI)
By itself, this indicator is now very popular, and the main strategy for its use Is the definition of overbought / oversold levels.The value of the indicator RSI is always in the range from 0 to 100, and the signal to enter the trade is formed when its value goes beyond the 70 for sales and 30 for purchases.
Description of the tested strategy:
• Sell when the RSI crosses the mark 70 from top to bottom;
• We buy when the RSI crosses the 30 mark from the bottom up;
• Close the deal on a fixed SL / TP (30 points);
• Indicator period: 14;
• Timeframe: M30.
Test results: Conclusions: The effectiveness of the RSI indicator is 50.96%.
This means that of all open deals only 50.96% were profitable, and 49.04% - loss-making.

Test number 2 - Commodity Channel Index (CCI)
The second no less popular indicator - CCI. Trade it as well as RSI, differs only in the range in which the indicator oscillates.
Description of the tested strategy:
• Buy when the CCI crosses the -100 mark from the bottom up;
• Sell when the CCI cuts the 100 mark from the top down;
• Close the deal on a fixed SL / TP (30 points);
• Indicator period: 14;
• Timeframe: M30.
Test results: Conclusions: The result is the same - 50.96%. Note that the CCI indicator with the same parameters as the RSI opens a lot more deals. More inputs - more noise ...
Test number 3 - Williams% R

Last we will test the indicator Williams% R. He, as well as the previous two signals about overbought / oversold zones. The range is from 0 to -100.
Description of the tested strategy:
• Buy when Williams% R crosses the -20 mark from the bottom up;
• Sell when Williams% R crosses the -80 mark from the top down;
• Close the deal on a fixed SL / TP (30 points);
• Indicator period: 14;
• Timeframe: M30.
Test results: Conclusions: The indicator Williams% R showed this result - 49.75%. But this does not mean that he will constantly give a loss, just the error worked in the negative side.
Testing of the indicators RSI (50.24%), CCI (51.08%) and Williams% R (50.28%) showed that these indicators do not have any profitable potential, and their practical application is practically meaningless».


Crash test indicator Moving Average
I think almost everyone knows about it, and many also use it in their trade. But have you ever wondered how effective it is, and what is the probability of a successful transaction?
Here I will give a shortened electronic translation from a Russian site (publication of 2015).
"Preparing for research In order to more accurately assess the effectiveness of moving averages, it is necessary to leave only a fluctuation in the price (of the schedule) from all factors affecting the performance of the indicator. In other words, we remove the spread, commissions, swap, slippage, which in our study act as extra noise. Thus, we created ideal conditions, which in nature can not be, however, it is such testing that will reveal the potential of the indicator. Naturally, quotes should also be qualitative. In the following experiments we use tick quotes, which allows us to achieve 99.90% quality modeling.
Purpose: To determine the effectiveness of the indicator Moving Average. At the same time, an indicator that, when equal to SL, TP makes profitable trades with a probability of at least 53-55%, can be considered effective. Otherwise, if you include commissions, spreads, swaps, it will automatically become unprofitable. Although I'm more than confident that in the end we will get a deal success of about 50%. For tests from the set of trading strategies for MA, I chose the three most popular ones, and we will test them using trading robots.
Study number 1 - A simple intersection of moving averages.
The first and most common trading strategy for moving averages is the intersection of moving averages. A signal to enter the market is formed when a fast MA crosses a slow MA. Accordingly, we buy when the fast MA is from above, and we sell when the fast MA is from the bottom. In this case, the exit from the market for this strategy can be of two types: fixed SL / TP, or when there is a reverse intersection. Of course, it would be more correct to test the input and output on the intersection, but the version with fixed SL / TP is more revealing for us. In addition, if the entrance to the market does not show any positive results, then the output will not affect anything. Based on the strategy described above, an advisor with three variables was created.
For them we will select the optimal values in the range:
1. SL = TP in the range from 10 to 100 points;
2. Fast MA with a period of 10 to 60;
3. Slow MA with a period from 40 to 100;
So, after carrying out the optimization, it turned out that the most stable parameters are: SL, TP = 40 pip; FastMA = 40; SlowMA = 80. The probability of a successful transaction under strategy No. 1 was 50%. As I expected, optimization is just fitting parameters for a certain period of time. Using optimized parameters for forward test, we got zero results.
My opinion is that a profitable pattern does not need optimization. In addition, other tests showed that the type of moving average and timeframe did not have a significant effect on the result.
Study number 2- Crossing of two middle ones with a filter, from a long-term moving average.
Add an additional filter to the simple intersection, which should exclude counter-trend inputs into the market. The signal to the input is formed when the fast MA crosses the slow one, and all three MAs are directed in one direction. As we have already defined above, optimizing the parameters does not give anything in principle, so I see no reason to run several-hour optimization, we will immediately proceed to testing on standard parameters:
1. SL = TP = 30 points;
2. Fast MA = period 20;
3. Slow MA = period 40;
4. Long-term MA = period 150;
We are testing this strategy: The probability of a successful transaction under strategy No. 2 was 51.72%.
Wow! The percentage of profitable trades exceeded the mark of 50 by as much as 1.7% ... but ... in real conditions with a spread, commission and swap, this percentage easily turns into a negative one. Let's move on to testing the latest strategy
Study number 3 - 200 MA, as support / resistance.
The oldest classical strategy. A moving average with a period of 200, which "symbolizes" 200 working days a year.It is used as a very strong support, or resistance. There is another version of this strategy, when the breakdown of this line is traded. In any case, it is enough for us to conduct only one test, since these strategies are mutually exclusive. The probability of a successful transaction under strategy No. 3 was 51.70%. Again to no avail. Another study proves that, no matter how you twist the Mashki, and whatever you do with them, it will always be nothing more than an "eagle" or "tails".
Summary table with the results Let's collect some more statistics, and put all the results into the table.
As can be seen from the table, the average probability of a successful transaction was almost 51%. Yes, and this 1%, I would easily write off the error. It will not be superfluous to show what will happen if the real spread and commission are used in these studies. For example, the second strategy for the yen showed the best result. By results of researches it is established, that at the indicator Moving Average there are no any positive (profitable) regularities. And the result of its application will not be much different from the usual coin toss. Probably, someone will say that these tests are "about nothing", because it was necessary to add a filter that will determine the trend, tk. Trade with MA is possible only when the market trend. With the latter I agree! However, if you have such a unique filter that determines the trend, then why do you need a random MA? Just open a deal on a trend, and that's it. "


Crash test indicator Bollinger Bands
Short translation from Russian
Bands Bollinger is nothing more than a set of three moving averages. All of them have the same calculation period, only add to the top and bottom, or subtract the standard deviation (price spread). As always, we will define the research objectives.
Test parameters and objectives
Goal 1: Determine the effectiveness of the Bollinger Bands indicator.
Goal 2: In connection with the preparation for a large survey of indicators,
I need to find out which of the approaches to stop loss and profit take is better suited for such studies:
1. Fixed stop loss and take profit, for example, 20 points;
2. SL / TP depending on the current market situation, for example, SL = 40% of the last candle;
3. Closing the transaction when the opposite signal appears.
4. In this case, we will close the transaction according to one of the methods described above.
5. Parameters of the indicator Bolinger Bands: period - 22, deviation - 2;
6. Range of research: 2012-2015;
7. Currency pair: EUR / USD;
8. Timeframes: M1-H4.
I recall that the tests are conducted without taking into account the spread and commissions. Thus, the results of the study will show the real effectiveness of the indicator under test.
Test 1 - Closing on a fixed SL / TP (fixed)
This approach allows us to identify the effectiveness of the indicator to open a deal, but we are missing the opportunity to reuse the indicator readings to close the same transaction. • SL = TP = 30 points; • Timeframe: M30. Conclusions: The above strategy with fixed SL / TP gives 50.27% of profitable trades, while the average profit per trade is 0.16 points.
Test 2 - Closure of flexibly-fixed SL / TP (flex)
These kinds of stop orders should better take into account the market situation, but again, they do not use the potential of the indicator to exit the deal. Most likely the results will be slightly better than in the first test.
• SL = The middle line of the indicator Bollinger Band (at the time of opening the transaction);
• TP = Distance from the central line to any extreme line (at the time of opening the transaction);
• Timeframe: M30. Conclusions: Indeed, a flexible stop order works better.
The number of effective deals is 51.11%, and the average profit per trade = 0.44 points.
Test 3 - Closing when a reverse signal appears (reversal)
A classic option for closing a trade. Personally, I do not like it very much. a complete reversal of the signal takes a long time, and you will now see how fewer transactions will be opened by this method.
• Without SL / TP;
• Close the transaction when a return signal appears;
• Timeframe: M30.
Conclusions: Transactions are smaller, the efficiency is higher (51.21%), as well as the return on each transaction (0.75 points). But in general, as in previous cases, the result is almost zero. The Bollinger Bands indicator has no profitable potential, and, like many other indicators, its effectiveness is not much different from throwing a coin.


Very Important Questions
Forex trading is probably the most ambiguous industry I've ever met in the Internet. There is no "Good" or "Bad", no "Right", or "Not right" ... There is only a subjective opinion! The trader's opinion about the market and what is happening on it. Not surprisingly, there are many questions that can not be answered unambiguously, for example:
• Why did the deal close with a profit? Because the analysis worked, or just lucky, because the price could go in the right direction for some reason.
• The published news provoked the growth of quotations because the published data was good, or was it beneficial to a large player?
• Is the trading strategy working, or is there a profitable series for the testing period, which will soon be replaced by a loss-making one?
• The price faded from resistance, or simply ended the impulse?
The list of such questions can be continued forever ... Obviously, all these questions do not have a single, truly true answer. But all these are trivialities in comparison with 5-th questions, having sounded which it is possible to provoke a stormy discussion, rigid disputes, or even frank abuse ...
1. Does someone earn money on Forex?
To meet a profitable trader is how to find a needle in a haystack. At the same time, there are no guarantees that yesterday's profitable trader will not become unprofitable. Precisely because "profit in the past does not guarantee profit in the future", it is very difficult to single out the earning trader. In this case, often under the earnings is temporary luck. A well-known phrase, which is considered for the right to be mentioned everywhere, says that 95% of traders lose money. However, we will never know what this figure really is: 95%, 99%, or even 99.9%. Personally, I like the latter, because one profitable trader for a thousand sounds plausible, which can not be said of five profitable traders per hundred.
Plausible answer. In most cases, only temporary earnings are possible on Forex. For example, if we look at the profitability statistics for brokers, we see that within a quarter of a large number of traders (~ 33%) can earn. However, if we increased this period to one year, this figure would be closer to 5%, and then to 1%, etc. You can catch a wave, earn a certain amount on it, but if you continue, you will lose everything that has earned. Therefore, if you broke the jackpot, for example, by opening a PAMM-account and earning a decent amount, it's best to stop and not continue. If we talk about regular earnings on Forex, then it is possible only if you understand the nature of the market and at the same time have information that others do not have or that most people do not know about. A simple example. Imagine that there is an organization that wants to sell a very large amount of euro. Of course, she has an interest to do this at the best price, saving a couple hundred thousand. To do this, she plays such a scenario (price movement), so that with the help of available liquidity on the market, incl. and our transactions, to achieve its goal, while not crushing the market itself. Now ask yourself which indicator, or what strategy will be able to predict what the company is thinking of, and at what point does it plan to implement it? Of course, here it would be appropriate to mention that the strategy "against the crowd" is one of the few that takes into account similar scenarios, but I hope you already know about it.
Conspiracy answer. The probability of earning on Forex from a single person is approximately equal to zero, and those isolated cases when supposedly earned exist to ensure that "belief in earnings" does not fade. The very sphere of Forex is an improved version of the pyramid, when you do not need to pay interest, and there is no need to return deposits. The impossibility of earning is achieved due to the fact that the nature of the movement of quotations is close to chaotic, which has no regularities. And if there are no laws, then there is no earnings either ...
2.Who is the Market Maker?
For a long time traders do not give rest to the idea that apart from themselves in the market there is someone who is much larger, more influential and knows what they do not. How can you calmly trade, understanding this? Probably only if you learn to look at the market as a market maker. But is it possible to specifically answer the question, who is a market maker, and what is he like? Is he alone, or are there many? Unfortunately, ordinary traders, incl. and we will never be able to answer these questions. simply are out of reach of organizations that can hypothetically be market makers. It is like humanity, which presupposes the existence of other civilizations, but it is specifically to say how many of them, and what they can not, and not the fact that it will someday.
Plausible answer.
In the category of "market makers" are all market participants who have sufficient capital to somehow affect the price movement in their favor. It can be various corporations, funds, banks, or even individual individuals, for example, from the forbes rating. Marketmaker can also act on behalf of the government of the country on behalf of the central bank. Together, all the above-mentioned participants create the image of a so-called "market maker", but their actions in the market are not coordinated, that is, each pursues its own interests, and only occasionally they cooperate in agreement, or simply by chance. The only thing they have in common is the need to take advantage of the market in financial or political terms.
Conspiracy answer.
There is also a version of the existence of a single market maker, or an organization that has such a strong influence that even central banks are small fish for it. Often talk about a secret society, which includes the most influential people, and also there are references to the Masons. And the role of such a market maker does not always consist only in weaning money from citizens, but, often, in something much higher that we can not understand.
3.What does the price control?
In the trading circles are constantly disputes about what is the source of quotations ... Futures on the euro, interbank, forex, or the cash market? Which of the presented tools is the lead, and which follow it? Particularly, these disputes are taking place when the question of the source is raised: the data of which one can be believed from, and which one should be ignored. A simple example: these are trading volumes. Is it possible to specifically answer, which volumes are more informative: futures, or forex, from Exchange No. 1, or from Exchange No. 2? Given the ambiguous definition of "correctness" in forex, there is no answer to this question either.
Plausible answer.
Each separate source of quotations has its own price for the asset, which is determined by the results of trades within this source. In this case, the synchronism of prices on all sources is achieved through transactions, called arbitration. Imagine that you are walking down the street and see two exchangers, and the purchase rate of one exceeds the selling rate of the other. You, without thinking twice, start to transfer money from one exchanger to another, while earning the difference. This will continue until the price in both exchangers is equalized due to the sharply increased demand in the second exchanger and the excess supply in the first. This is how the connection between the sources of Forex quotes is made, only in a slightly more technological form. Although it is possible and the scenario, when it was in the cash market, there was a large demand among the population, which triggered the growth / fall of quotations.
Conspiracy answer.
The price of an asset is formed in one market (exchange), the rest simply follow it. Interestingly, forex marketers often believe that Forex is the market leader, not the leading one.Perhaps that's how they try to justify their inability to earn on Forex, but if they traded on the CME, then everything would be different ... Most often, centralized exchange markets are considered the leading ones, but not forex, in view of its decentralization.
4.Are your transactions listed on the interbank market?
How much blood was shed in battles on this subject, and all in vain ... After all, there is no answer to this question either. Why is this issue so worried about traders, because in practice it actually does not affect anything? The thing is that by its nature a person does not like very much when someone earns money on it, especially when someone is cooperating with him directly. If the broker openly stated that he was earning your losses, you would never have opened an account with such a company. Another thing brokers who claim to take only their modest commission, and if you received a loss, then this money will work the same as you, only on the other end of the wire. Therefore, in spite of the fact that the trader has not yet learned how to earn money, it is very important for him that transactions, even the smallest ones, be deduced to the interbank market. But is there any way to confirm the conclusion of the transaction on the interbank market? Even if we acquired connections at the brokerage level and found out whether a particular broker issues a deal on the interbank market, or rather, whether it transfers all the transactions to its liquidity provider, then it is not a fact that the liquidity provider itself passes them on. The latter also often uses "kitchen" methods, just on a much larger scale.
Plausible answer. Today, access to the interbank market is not unique, and many brokers do provide such a service. In such conditions, it's nice when the broker himself indicates which of his accounts have access to the interbank bank, and which ones do not. For example, in the specification of accounts in the company Amarkets, we can see that two of the five accounts have access to the interbank market, which looks quite plausible, especially given the minimum requirements for these accounts.
Thus, brokers may well send transactions to the interbank, but not the fact that absolutely all transactions. It is much more reasonable, from the point of view of business, to make a number of filters so that potentially unprofitable customers are spinning within the company, and those that can make a profit - send to the interbank. This model is called a hybrid model, you can read about it and other models in this article. At the same time, there are restrictions on the order's longevity, for example, it is naive to believe that an order of 0.01 lot will be sent to the interbank market, it is cheaper to pay from your own pocket. Proceeding from the foregoing, the dilemma of choosing a broker, which issues transactions on interbank, is absolutely incomprehensible. Much more sensible, as for me, when choosing it would be to pay attention to the reputation, duration of life and feedback in general. For example, when choosing a company with 10 years of experience, you risk much less than opening an account with a young broker of the "withdrawing" transaction to the interbank market.
Conspiracy answer. Interbank for that and the interbank market, that only banks trade on it. Forex transactions reach, at most, a liquidity provider and there, most likely, find a counter order, or the supplier acts as a counterparty. The only thing that Forex connects with the interbank market is the fact that in order to hedge its risks, a liquidity provider can open an aggregate position for each instrument on the interbank market.
5. Does the market play against you?
When a trader overtakes a series of unsuccessful transactions, he involuntarily begins to suspect that it is for his transactions that the market hunts. Very often there are pictures proving that immediately after the activation of the stop order, the price returned to its original position. All this, of course, sounds ridiculous, until the moment the lot of the transaction exceeds, for example, 50 units. And then it's hard to say who actually "kicked" the price ... Therefore, like the previous ones, this question can not find a specific answer.
Plausible answer. In 99% of cases, the price does NOT hunt for your transactions. However, it's another matter if you set this transaction at the level where it was also installed by all other market participants. In this case, you get a whole cluster, for example, stop-loss, which the price is very likely to work. By the way, we have an indicator of such clusters. There are also cases when the individual broker in an absolutely calm market has volatility, and the price instantly activates your stop loss and immediately goes back. But this is rather a dishonest broker game against you, not the market ...
Conspiracy answer. Even if we assume that the market is managed by one instance, it is difficult to imagine that it plays against someone specifically. After all, when someone buys, someone simultaneously sells, therefore, the maximum that can be is that the market plays against the majority. In the last sentence there is logic, but there is no conspiracy. that is the nature of the market, that the majority lose, and the minority earns.
What to do?
For each trader, the questions raised above are very important, especially if he has chosen trading as a profession. But the fact that there is no answer to them can cause a feeling of incompleteness and psychological discomfort, which can negatively affect trading. Imagine that a trader who came to the market to earn money does not know for sure whether someone in this market has earned it before him, and is it possible to earn at all? At the same time he has been trading for some time and all to no avail. Where in this situation to find strength and motivation to continue? First of all, it is worth determining, than for you is trading: a profession, a game of chance, or a hobby?
• If a profession, are you ready to give it as much time as any other profession requires?
• If you are gambling, how much money can you lose so that the game does not turn into a headache?
• If a hobby, then do you enjoy trading, even in case of losses?
The last two options, of course, do not require such a deep immersion in the subject as the first, but I think the next recommendation will be fair for everyone. For each of the 5 questions it is worthwhile to find for yourself a comfortable answer, or at least the point of view that you are following. And, in the future, just do not pay attention to discussions about this. This will be enough to not be distracted from the main purpose of trading - earnings.
Despite the fact that I tried to answer the questions posed, they are also only my subjective opinion, which is not necessarily true.
Open interest.jpg


bulliz wrote:
Mon May 21, 2018 4:35 am
amdudus wrote:
Thu May 17, 2018 5:49 am
Almost ready for a new template with a high-precision oscillator. A link with additional materials at the end of the week.
Hi Amdudus any news on newsletter release?

Many thanks
As a trader, I am well acquainted with many Russian-language and English-language forex forums. And as for me, they all suffer from the same disease - blabbering. The reason is that many came there not for the purpose of exchanging information, but in order to engage in self-assertion, or to search for someone to earn ... All these forums have long lost their relevance, and there is only for lack of an alternative. In this forum, in each topic, I'm afraid to give useful information so that trading is similar to trading, rather than coloring the graphics ... If additional testing is necessary or I'm not sure about something - take a break for detail ...

  1. Similar Topics

    1. Systems that doesn't make sense

      11 Replies 1306 Views

      by ionone, Mon May 10, 2021 10:40 pm in MT4 Indicators

      11 Replies
    2. Help for Introduce Good trading system for Trading

      8 Replies 2365 Views

      by alijvhr, Fri May 14, 2021 5:17 pm in Trading Systems

      8 Replies
    3. [EA] Cost Of Trading

      1 Replies 522 Views

      by ionone, Fri Feb 26, 2021 11:47 pm in MT5 Indicators

      1 Replies

Return to “Express Coding & Commercial Services”