Analytics

The fixed ratio money management approach was introduced by Ryan Jones in his book . Like other money management approaches, it increases your lot size as your account grows, thereby compounding your trading returns. It is a lesser-known alternative to the ever-popular fixed fractional (or fixed risk) money management approach. In the fixed fractional approach, you risk […]

I recently came across a trading meme: Jokes aside, it is well known that trading can be a rather stressful activity. If you’re trading using algorithms, you’ve already taken a leap towards becoming stress-free. You won’t have to spend long hours staring at your charts; neither will you face the risk of execution errors. Here’s […]

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Entry selection is arguably the most important component of strategy development. A profitable entry allows profits to accrue quickly, minimizing your time in the market and giving you more flexibility when developing your trade exits. When discussing Entry Testing in the MT4 Development section, I demonstrated the use of simple reversal strategies to rank the profitability […]

Over the years, I have repeatedly found that forex markets are mean reverting in general, with the possible exception of the JPY pairs. Does mean reversion apply to weekend gaps as well? And if it does, can we program a strategy to exploit this phenomenon? Before finding out, let’s cover some causes and examples of […]

Not all entries are created equal. Can we identify higher probability entries, and apply larger position sizing to them? Here I’ll attempt to augment a GBPJPY trend following strategy with dynamic position sizing, and backtest its performance over 18 years.  I… The Kelly criterion is a famous mathematical formula that attempts to maximize your long-term […]

✔ Your resource for automated trading strategy development ✔ Empowering retail traders to create efficient income streams Simultaneously trade multiple strategies, markets and timeframes, any time of the day. Backtest your strategy to quickly determine its long-term profitability and risk profile.  Keep emotions at bay with the automatic execution of your trading rules. 

The forex markets are open 24 hours a day, but not all hours are created equal. Trading volumes are known to vary significantly throughout the day. But I’m not one to listen to anecdotes, so I decided to dissect my broker data and verify it for myself….

Knowledge of intermarket correlations can improve your forex trading win rate.  Here I explain three important types of correlations, and how you can use them to benefit your trading.  Most algorithmic traders like myself swear by technical analysis. Nonetheless,… The ability to efficiently trade a diversified portfolio of strategies is one of the biggest advantages […]

If you’re a trend follower like me, the word ‘breakout’ is music to your ears. An explosive breakout could signal the start of a major price trend. If you trade manually, chart patterns like flags and triangles are often good predictors of upcoming breakouts. Discerning chart patterns using a trading algorithm is rather challenging. Fortunately, […]

A trailing stop loss is a dynamic order that limits the loss you can incur on a trade. Unlike rigid stop losses, trailing stops move whenever the price moves in your favour. If prices move against you, the stop stays in place. The trailing stop distance is usually measured from the most favorable market price obtained […]

The forex markets are open 24 hours a day, but not all hours are created equal. Trading volumes are known to vary significantly throughout the day. But I’m not one to listen to anecdotes, so I decided to dissect my broker data and verify it for myself….

Before diving into strategy development, it pays to verify your algorithm’s logic. Unfortunately, with the numerous trading situations that may play out in real-time, debugging your algorithm can be challenging. Fortunately, Metatrader 4 (MT4) comes with a visual backtester that shows how your algorithm interacts with historical prices. This is Part 2 of a 3-part […]

Contrary to what you often see in advertisements, trading is a long-term endeavour, not a get-rich-quick scheme. You have to stay in the game to win it. Knowing your risk of ruin can help safeguard your account balance…and your mental health. Let’s dive into it! What is Risk of Ruin? Risk of ruin (RoR) is […]