Quantifying a strategy’s performance is a challenge that every trader faces. In a previous post, I discussed MT4’s default backtest performance metrics. At the minimum, I recommend using the return/maximum drawdown ratio to get a measure of your strategy’s risk-adjusted performance. The System Quality Number (SQN) is another popular metric that could help with your […]

I was reading The Art of Currency Trading by Brent Donnelly, where he lists his 25 rules of forex trading. In particular, rule #14 states: There is a time and a place to go big. The idea is to increase your position sizing when you come across very high probability trades, thus increasing your number […]

Traders have long used volume to gain insights into the markets. For exchange-traded assets like stocks, volume refers to the number of shares that changed hands over that period. It is usually plotted below prices, and gives a good indication of the level of participation in the market. Why is Volume Useful? Volume primarily serves […]

The Money Flow Index (MFI) is a lesser-known relative of the RSI that incorporates the use of both price and volume. I’ve previously discussed how tick volume can be used to improve signal reliability. Can the use of volume help the MFI outperform other momentum indicators? Here I’ll build a trend following strategy using both […]

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 […]