How to optimize the trading algorithm?

Trade in financial markets requires the maximum return on the part of market players. Fix api trader should regularly monitor the market’s dynamics and knows the current market data, learn the opinion of other players and of course to form his own vision. The manager should be aware of the risks and act clearly on his working algorithm. In view of the fact that the market is not constant and has a property for regular changes, the trading algorithms should also be adjusted for these events. That is why there is a need for constant optimization of the fixapi trading process.

Optimization of trading algorithms should consist in the direct analysis of trading strategies with the purpose of revealing more favorable parameters of work. It should not be confused that optimization should not completely change the principle of trading systems, but only improve weaknesses. To put it simply, polish all the errors of the algorithm.

The key steps in the trading algorithm optimization are:

  1. Analysis of current activities. Before you begin to optimize, you should know what it is worth to optimize. This stage consists in a certain “disassembly” of the system into separate blocks. Imagine car repair: in order to fix it, you should first disassemble and find out the reason. The analysis of current activities will help the results of trading in the past period and those trading signals that form the strategy.
  2. Analysis of individual filters of the trading strategy. By strategy filters, I mean those elements that are used to analyze: technical indicators, fundamental data, candle combinations, and so on. For example, if you trade using the combination of MA and MACD indicators (, you can test the performance of separate indicators with different parameters and choose the most optimal condition that makes forecast and signal more accurate.
  3. Combination of all filters in one system. Once the separate elements have been disassembled, you should combine them back into the system and analyze the result of the group action. Returning to our example of a car, to check whether it rides, it should be reassembled.
  4. Tracking the adherence to a given work logic. At the same time, after the assembly, it should be analyzed how much the new parameters adhere to the main idea of ​​the trading strategy. The new parameters can disrupt the combination of different filters in the strategy, which means that trade signals can be skipped or operations can be opened, where they should not be. If the logic of the work is not correct, then it is necessary to repeat all the steps from the beginning. Certainly, there are algorithms whose logic of work is difficult to trace, for example, fix api arbitration strategies (, but it is necessary to do this.
  5. Optimization of money management parameters. If everything works as it should be, you should set those parameters that will directly affect the curve of the funds and balance, namely risk and money management. It is necessary to combine various conditions for fix api trading with different parameters. Reducing the risk will not guarantee a stable return. For each strategy, these parameters must be unique. Personally, I recommend to determine the volume of investment in transactions and risk, based on those situations and filters that are now on the market. For example, triggering 5 filters out of 5, we increase the volume, and when 5 filters are given a signal of only 3, we reduce the risk.
  6. Testing on historical data. Once all the parameters have been formed and tested, a global test should be done on accurate quotes over a long period of time (I recommend selecting at least 5 years), as well as on different timeframes to understand how accurate and working the trading strategy has become.

As we have already understood, optimization should be based entirely on repeated testing. It is the test results that allow us to find weaknesses and those that can be improved.

I encourage everyone to optimize their trading approximately once a quarter. It is possible that the optimization may not give the results of those factors that need improvement, but you will be sure of your method action relevance in the foreign exchange fix apiforex market.


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