What trading systems can be optimized and how to do it?
Trading is a kind of business. And like every business, it requires perseverance, attention, time and material costs, and most importantly, a system approach, because without it all the previous items will simply be useless. Each company goes through a phase of scaling and optimization or automation of the workflow to reduce future costs. The same happens in trading, but under a different kind. Namely, under the applying algorithmic systems.
An algorithmic trading system is an identical set of rules and principles for completing trading operations of the finished system, except for the fact that all transactions are performed by the program, and not by the fix api trader himself. Sooner or later, every manager comes to this moment. Today, we can talk about those tools that can be automated and optimized in trade, and to analyze whether all systems are amenable to automation.
Let’s start with the first block and let us understand what should be automated first.
I’ll start, perhaps, from the banal – technical indicators. Most traders in the fix apiforexmarket use this indicator analysis to get signals to buy or sell. But you will agree that if the indicators alerted you to the presence of the desired signal, this would greatly simplify the work. Even if you use a standard indicator, it has to be improved much and you need to add exactly your vision of the work with this indicator. If you optimize it to alert you on the presence of a signal (the one that is prescribed in your trading strategy), it would allow you to reduce the time spent on searching for a detailed signal and at the same time will increase the profitability.
But to do this, we still need a human factor, and we cannot trade 24/5. But the robot can. And this is the next step in optimizing the trading process. All the signals that alerted you and made it clear that now is a profitable moment for making transactions can be further improved and turned into an autonomous process, in which, if there is a signal, a deal would already be made. Thus, if the system is working and it has a positive mathematical expectation, then you should think about turning it into an algorithmic program (http://forexzzz.com/aut/).
The next block that we will consider is the fact that not every system can be automated. For there are informal trading systems, which are difficult to describe in the program code.
We can include to the systems that are impossible or difficult to implement, the following:
- Based on support and resistance levels (due to different timeframes, the level can be at a range);
- Wave strategies (personally, I have not seen robots that perfectly mark Elliott waves on the chart, because the same timeframe is included here);
- Subjective algorithms in the form of combination of already formed signals (if you open transactions not in the formation of indicator, but from the fact, it will be possible to accurately describe in the program code, but the result will differ from the expectations).
The easiest way to optimize trade is by using technical indicators, because they are created on the basis of mathematics and figures, which is ideal for writing programming code. To achieve this, the strategy of drozhki has logical parameters and blocks from the opening of a deal to controlling the risk and money management.
To summarize, I want to note that before optimizing the trading systems, it is necessary to conduct repeated testing on historical data, and only after that to apply in the real market. In this issue, different testers of strategies will help you. Also, you can use the built-in tester in the fix api MT4. We can conclude about its effectiveness by analyzing the results of the virtual trade.