Should I use the oscillator indicators in trading?

Perhaps the most common way of analysis and prediction the future value of a financial asset is to use technical elements, primarily indicators. What could be simpler than an automatic process, when it is enough for the fix api trader to look at the chart with the indicators and say what further movement is to be expected. The mathematical justification for forecasting quotations has been applied for several years, not even for the first ten years, because all the key technical indicators were created back in the 70-80’s.

The simplicity and efficiency of these technical elements caused an increased interest in the application of these analysis techniques in their fix api trading. In view of this, many technical indicators have been created, and the key ones can be divided into three groups:

    1. Trend Indicators
    2. Volume indicators
    3. Oscillators

We’ll consider today the last ones.

Oscillators are a group of technical indicators, which in their mathematical basis determine the rate of price movement over time. The main goal of these indicators is that they reflect zones of the so-called “overbought” and “oversold” areas.

The overbought zone signals that quotes at this point of time have drastically deviated from their values ​​and have gone to a range that they have not been for a long time. Thus, if the growth of quotations outstrips the technical indicator growth from the group of oscillators (RSI, AO, CCI, etc.), this indicates that the current value of the asset in the fix apiforex market has grown significantly, reaching its maximum in this zone, and you should expect a rollback.

The oversold zone operates exactly the opposite way. If the quotes decrease faster than the indicator’s decrease, then when the technical element’s boundary is reached, it is worth waiting for the damping of the pulse and the beginning of the corrective wave.

These zones are inherently the trade signals used by the trader. However, I would single out one more trading signal, which appears together with the oscillators movement. It’s about divergence.

Divergence is a technical element of analysis that indicates the end of the formed movement and the immediate transition to a new phase of the market. To put it simply, when the quotes decrease, and the indicator’svalue grows vice versa, one should expect the principle of quotes divergence to work and he should open a deal for purchase. But you need other analysis elements to help you find the entry point, because the divergence itself only gives a signal for a turn, and not a specific entry point. The oscillator from Bill Williams – Awesome Oscillator is the best way to determine the divergence, about which you can read more here – https://www.oanda.com/forex-trading/learn/forex-indicators/awesome-oscillator.

Waysofusingoscillators:

  • When the trend is attenuated. Oscillators indicate a possible end of the movement and thus contribute to go out before the turn. Thus, the application of this tool allows you to exit the transaction with the greatest benefit;
  • When the market is flown. If the market formed a lateral movement, then due to overbought and oversold zones, you can determine the entry points. However, one should take into account that the signal will be stronger if overbought and oversold will be at the border of the channel, and not in the middle. This will be an additional filter, which will help fix api trader to enter the position more profitably.

As you can see, the indicator data group allows both to find the entry and exit point. I do not emphasize that oscillators are a “magic wand” for a trader, but this is an excellent tool that allows you to increase your trading result. Personally, I use a technical indicator AO in my trade to determine the divergence, as well as to look for Elliott Wave Markup. Given all the simplicity and efficiency of the oscillators, these elements can be implemented in an algorithmic approach (http://forexzzz.com/product/forex-zzz-lock-arbitrage/), to automate the result.

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 (http://www.investopedia.com/terms/m/macd.asp), 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 (http://www.forexzzz.com/product/forex-zzz-lock-arbitrage/), 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.

 

What if the broker prohibits arbitrage trading?

Throughout the history of financial markets development, exchange speculators were looking for an ideal approach and ways of analyzing financial assets, as well as methods for completing trading operations. Some trading strategies have been replaced by others, and some have improved and work up to this day. But some fix api tradingtechniques have gained such popularity and reliability that forced regulators to limit their trading. Such a technique was arbitrage trading.

Arbitrage consists in analyzing the cost of the same currency pair of the fix apiforex market, but on different stock exchanges. Yes, we know that the forex market is open and everyone can join it. In fact, this is a big exchange. But under the term of “stock market” I mean brokerage companies. With the help of the algorithmic approach, this allows you to conduct an asset analysis by tuning in to find meaningful discrepancies and perform arbitrage trading operations.

You would agree that we often have seen a small exchange rate difference in the quotes of various fix apiforex brokerage companies. And it is on this exchange rate difference that you can earn. Arbitration concludes in determining the maximum exchange rate difference and the opening of transaction on the side of a slower broker (if you conduct arbitrage trading using the fix api Latency Arbitrage technique) or simultaneously on two platforms in the direction of the formed “spread” (if arbitrage trading is conducted using the 2-leg Latency Arbitrage). You can read about the arbitration strategies on the following link:

http://www.investopedia.com/terms/a/arbitrage.asp

However, the most brokerage companies oppose such an approach. And this is understandable. In our market, most companies earn from the losses of their customers. By trading in reliable brokerage houses, which give access to fix api, thereby they encourage algorithmic trading and arbitrage trading, in particular.

Two key reasons why companies prohibit arbitrage trading:

  • Arbitration conducts a lot of trading operations with a short profit taking. Some companies do not give the opportunity to enter their funds until a certain volume is traded;
  • Arbitration conducts risk-free trading. The absence of risks means regular earnings for clients, which in turn means a loss of a substandard company.

Given these bans, the traders began to look for an opportunity to make arbitrage transactions even where it is prohibited. Today, I will talk about the techniques that will allow you to conduct fix api arbitrage trading, taking into account brokerage bans.

  1. Change your trading principle to fix api 2-leg arbitrage. In case of Latency Arbitrage, such an algorithm is very simple to define and there are even special programs that allow to “catch” traders with this approach. As for the 2-leg arbitrage, such an algorithm is difficult to determine. Transactions open with a long period of withholding and may resemble speculative, not arbitrage trading;
  2. Trade through fix api.The very use of this protocol will indicate trouble-free trading, because all transactions will be delivered directly to the market, and thus, the broker will not lose money, but on the contrary, will earn from your commission.
  3. Use secondary software. There are already programs on the market that mask all transactions made by the robot. These programs will circumvent the bans of the brokerage companies and arbitrage trading. The program will mask the operations and will present them to the broker under the guise of transactions opened in a “manual mode.” An example of such a program can be viewed on this link: http://forexzzz.com/product/manual-trading-add-on/

These tools allow you to circumvent the bans of the brokerage company. Each of them will facilitate fix api arbitrage trading and will adjust the process in the right direction. If none of them doesn’t fit to you, you can always use the simplest way – change the broker company.

 

Working patterns in the forex market

Exchange speculators conducted their trading activities more than 100 years ago and devoted themselves to studying market trends. Everyone who came to the market watched its movement and repeatedly analyzed it. These observations, as well as the experiences of the fix api trader participants allowed them to form a number of laws that are commonly called “patterns”.

The pattern, as I wrote above, is a definite market regularity, which has the property to regularly update and repeat itself. Patterns are the key tools in the technical analysis of the fix api trader. Today, the automation of the trade strategies has allowed creation of trading robots that operate on the basis of technical signals formation from patterns.

There are many trading patterns to work on the fix apiforex market, however I suggest you to consider the key ones of them.

Reversaltrendpatterns:

  • Reversal bar. This figure indicates the end of the trend (both ascending and descending). Also this formation is called a “hammer” or “shooting star”. However, whatever they call it, the signal does not change. A key feature of the reversal bar is the long shadow of the candle in relation to the opening and closing of the bar. Thus, the signal can be filtered using the candle’s body to its shadow ratio. Standard value should be at least 1/4. Reversalbar signals that the market setting has already changed and it is best suited to opening positions in the opposite direction from the trend movement. I would also note that the dodge can also be attributed to the reversal bars.

 

  • The jogging figure has the same principles of work as the reversal bar, but it has other filters in its definition. Here, the ratio of the body to the shadow of the candle is not less than 1/4. But besides this, you need to consider the combination of candles. For the upward reversal by the exhibition filter, the formation of the two previous candles where the closing price is lower than the previous ones. After these candles, a reversal bar should be formed. And after it, one bar is confirmed by movement, that is, a bullish one. Thus, the transaction for the purchase is opened after the ports on the bullish candle. The signal to the sales is formed exactly on the opposite.

 

Figures of trend continuation:

    1. Flag. This technical figure indicates the moment when the ascending or descending movement continues after a certain impulse. You could watch it yourself after big fundamental data, when the quotes of the currency pair on the fix apiforex market showed a rapid rise/fall, after which there was a slight correction and lateral movement. Proceeding from this technical figure, it is necessary to open purchases after the breakdown of the upper limit of quotations.
    2. Double bottom (or double top). This pattern is formed on the basis of the wave cycle and indicates the continuation of the trend after the formation of the last wave. Thus, if the figure is formed, one can expect the breakdown of its boundaries with the subsequent movement of 100% of figure height.
    3. The head and shoulders. Similar to the previous pattern, it is formed on the basis of the wave cycle, but has a characteristic difference from one impulsive growth/decrease with smaller areas on both sides. Thus, when this figure is formed, it is necessary to expect its full lower bounds by the subsequent movement in 100% of the top of the pattern (head) to the bottom.

      The list of technical patterns consists of more than two dozen different figures, but the elements mentioned above are confirmed by the time and capital of the fix api traders. Of course, not every strategy is based on these elements or they are simply not needed, as it is in the case of scalping or fixing arbitrage strategy – http://forexzzz.com/product/zzz-2-leg-arbitrage/. However, this tool will optimize your trading process and improve the financial result.

Classic Technical Indicators

Ever since the beginning of the development of financial markets, each participant in the exchange trading has been developing his vision and understanding of the assets movement. Various combinations were created for forecasting the future assets value, fundamental factors that determined the course, as well as the first trading strategies. However, the market did not stand still, and its structure and specifics also changed, but the basic principles remained the same.

In the age of computer technology, it is difficult to imagine any process of activity without the use of automatic tools. The financial market is not an exception, too. During the 80’s and 90’s, most fix api traders developed their own mathematical models, as well as a number of auxiliary tools that could help in trading and which informed the managers about the current market situation. These tools were called technical indicators.

In its essence, technical indicators are a set of specific mathematical operators that analyze the price value and display the value of the indicator in the form of histograms, lines or other figures. Thanks to these values, the fix api trader can relatively navigate to the position of the financial instrument and predict the further movement. More details about the specifics of technical indicators can be read here –http://stockcharts.com/school/doku.php?id=chart_school:technical_indicators. And today, we will consider the most widely known classic indicators.

I highlight several key technical indicators:

    • Moving Average
    • MACD
    • Bollinger Bands
    • Stochastic
    • Awesome Oscillator

Today, we will not look at the indicator code or consider on the basis of which operators it is built. We will consider exactly how these indicators are interpreted by the market participants in their fix api trading.

Moving Average

This is a classical indicator, which displays the presence of a trend on the chart. If the quotes are above its values, it is a signal for an uptrend. If they are below–it is a signal for a descending trend. When the quotes cross the MA line, you should open the purchase/sale depending on the breakdown direction. It should be noted that all the market players use this or that MA combination with different parameters. However, this indicator, in my opinion, does not work well as a signal forpurchases/sales, because at the time of crossing, the price significantly goes away. I use this indicator as a filter to determine the trend’s strength.

MACD

This indicator also applies to the trend indicators group, but it is more advanced than MA. MACD displays simultaneously several trading signals: divergence, the presence of a trend, an overbought/oversold zone. The first signal indicates possible corrections within the trend based on the divergence of quotations with the value of indicator histograms. So, when the value of the asset grows, and the histograms are reduced – a divergence occurs, which signals about correction of quotations down. The signal for purchases (asset growth) operates exactly opposite. Similarly, when the histograms show significant growth or decline – this is a signal for the asset overbought/oversold. In turn, the signal for buying or selling the asset is crossing the signal line value MACD.

Bollinger Bands

This technical indicator is a calculation of the standard deviation based on quotations with a step of 20 bars. This allows you to determine when the trend begins, when the indicator blades begin to expand, and when they return to the regulatory zone, they indicate the end of the trend. Also, this indicator is used to work inside the BB channel: when the quotes of the currency pair on the fix apiforexmarket fend off the indicator’s border, it is worth to open a speculative position in the opposite direction.

Stochastic

This is one of the most popular indicators of oscillators, which demonstrates the zones in which quotes reach the maximum value and you can expect a corrective turn. This indicator acts as a filter for closing positions or trading on small turns. I will also note the fact that Stochastic demonstrates a buy signal when the values ​​of both lines are in the bottom of the indicator, and also the lines intersection is shown in this zone. For sale, the signal appears when the value of the indicator is in the upper area and also the lines intersect from top to bottom.

Awesome Oscillator

Indicator from the group of Bill Williams trading strategy. It is also an oscillator that indicates the signals we considered above: divergence, overbought and oversold, and the current market situation. Personally, I use this indicator to find the Elliott waves. The peak along the AO points to the third wave, and the fourth should always be brought down in the opposite direction.

Money Management Rules: Key Aspects for Saving Funds

As you know, each trader should have his own trading strategy to achieve profitable trading. Thus, he needs to have his own principles of analysis and forecasting the movement of the asset future price. And how accurate the forecast will be, is determined by the profitable trading. However, I do not fully agree with that. After all, you can constantly predict the right direction of the asset, earn on this and with just one transaction to cover all the profits or even to lose funds.

In order to avoid this, effective capital management rules should be applied.

Capital management includes rules of risk and money management, which regulate the entire process of trading on the part of cash flow control. Each of these types has its own function and a number of tasks that must be addressed by means of the risk management. To understand this, let’s look at each of them individually.

Risk management is a set of rules for limiting the fix api trading mode in order to minimize losses in the context of each transaction. Risk management allows the manager even before opening of the transaction to know how much he is willing to lose from this investment. This allows you to prepare the trade based on a certain loss percentage.

Thus, the risk can be set to the following trading parameters:

  • Transaction risk: limiting the possible loss in each transaction;
  • Daily risk: the maximum allowable amount of loss in a single day. In the event of its occurrence, the trading on that day is terminated;
  • Maximum number of loss-making trades: if this limit is reached, the trade also ceases;
  • Weekly risk: similarly, as for the day, you need to limit the possible losses in the context of a week or even a month;
  • Risk reduction when reaching the established limits: I also recommend that in the event of a regular occurrence of risks, you need to limit this parameter (transaction risk) until your trade returns to its previous revenue level.

These risk parameters allow you to monitor possible losses from different sides, which allows you to save your capital.

Certainly, the entire risk control depends on the type of trading strategy and the deposit amount. Some people accept a risk of 0,5%, while others cannot trade in this corridor because of the insufficient deposit amount. Of course, there are strategies, in which the risks themselves are at a minimum level or completely absent. As a rule, this group includes high-frequency algorithms that lead to fix api arbitrage trading- http://forexzzz.com/product/forex-zzz-lock-arbitrage/.

Money management is a control of all open positions. If the risk on the transaction is more in control of a particular transaction, then money management should determine the maximum losses in case of a decline in all transactions, because you can put the risk on the transaction at 0,5% and open 100 transactions, which in future will guarantee -50% of the capital. To avoid this, it is necessary to use money management and combine it with risk management in its fix api trading.

Thus, money management can be determined in the following parameters:

  • The maximum volume in one trade operation: the parameter will allow you to determine the volume based on the risk and further reduce it using money management;
  • Maximum use of margin funds: the amount of all open positions should not exceed the percentage of the capital you set;
  • Full deposit risk control: as I have already mentioned in the example above, money management should signal the trader about the maximum risks in case of triggering all stop loss levels (http://www.investopedia.com/terms/s/stop-lossorder.asp).

These key rules of risk and money management allow you to manage the capital and allocate correctly the investment funds. After all, the main task of the fix api trader is to just keep the capital in the financial market, and only after that to earn money.

 

Classical analysis of financial markets

The financial result of a trader depends on the techniques and methods with which the trade is directly conducted. Each strategy has its own risk and return parameters, as well as specifics of determining the most optimal entry points in the market. However, a number of them have basic principles for selecting a deal and forecasting the future price movement.

These basic principles are incorporated into the classic understanding of financial asset analysis. We will consider today the key classical types of asset analysis.

I will identify the four main traditional types of financial tool analysis used by 90% of the fix api traders:

  • Support and resistance levels;
  • The price channel;
  • Elliott Wave Theory;
  • Patterns of financial markets.

1.  Support and Resistance Levels. The most popular type of trading, which consists of opening positions based on historical zones. These levels do not reflect a one-time testing of price zones, after which there was a corrective movement or impulse breakdown. To understand the principle of work, you can pay attention to the following image:

As you can see, the tool quotes tested the support level, after which they fought back and continued their growth. In turn, a similar quotation behavior was observed with the resistance level when the quotes reached the boundaries of this zone and subsequently turned back. It is in these zones that the most players post their pending purchase orders (in case of a support zone) or sell orders (in case of a resistance zone). I want also to note the fact that after the penetration of the support/resistance level, the past level can change its values. Thus, if the level of support is broken and the quotes go beyond the zone, it will act as a resistance level for future quotations.

2. The price channel, similarly to the resistance and support levels, displays an oblique range, in which the currency pair value moves in the fix apiforex market. Thus, these levels reflect a likely rebound from the inclined lines with a subsequent movement in the trend. This allows us to determine the further movement in the point of view of the market strength (impulse movement). There are technical indicators that display an inclined channel for the movement of the currency pair value, for example, Bollinger Bands and Donchian Channel.

3. Elliott’s wave theory already operates on the market for more than a hundred years and confirmed its right to be used by each fix api trader. The key message, according to this strategy, is the definition of a cycle in the market due to the wave counting. There are 5 waves, two of which are correlation, and three are related to the trend. As a rule, the peak of the second wave should not go beyond the ground of the first one, the target of the third wave is 161.8% of the first wave, the fourth should not go beyond the peak of the first wave and 50% of the third, while the fifth one has a target of 138.2% compared to the third. There is also a corrective formation ABC. According to Elliott, to understand in which phase the market currently is you need to analyze the last 150 candles. This strategy is written by a lot of classic traders and to learn more about it, I recommend you read more than a single book on this topic. Personally, I recommend you the following material –

https://www.metatrader5.com/en/terminal/help/objects/elliott/elliott_theory

 

4. Pattern trade is based on the regularities and technical formations, which are confirmed by the historical movement. This kind of pattern includes the trend continuation: a double bottom or top, figures of a flag and a pennant, a triangle and a “head – shoulders” formation. Also, there are various combinations of price bars, which can be taken as a signal for a trend reversal or the end of an impulse movement.

These classic strategies are used by almost every trader in his trading. And it is not strange, as they are confirmed by the time and the capital of other market participants. Moreover, they have a simple algorithm. However, not each of them can be turned into a trading robot that would trade using these strategies, rather than, for example, a scalping or arbitrage algorithm, which can be automated for the fix api forex markethttp://forexzzz.com/product/forex-zzz-lock-arbitrage/

 

 

How to get around the prohibitionsfrom the brokerage company

Trading is not easy. The market is constantly changing and regularly makes a challenge for the manager. Some trends get changed by others. Tools that showed the exact figures distort the results, and some do not work at all. In addition to everything, broker companies put the stick into the wheels by worsening trading conditions. In this case, this trend has been observed for more than a hundred years, because even in the days of Livermore, brokerage companies tried to inflate their customers.

However, the principle hasnt changed, but the mechanism has suffered a lot of reincarnations. Thus, brokerage companies use the following negative trading tools:

1. Failure to fulfill obligations under the treaty, which is often provoked by a non-return of funds after depositing the amount on the deposit;

2. Establishment of margins (spreads) and slippage of trading orders, which takes potential profit by several points and increases the loss by the same value;

3. Prohibition of the use of algorithmic trading.

There are other tricky moments in the work of brokerage companies, but I think these are the three main inconveniences for a fix api trader, which today we will take a closer look at. I’ll tell you how to get around these three prohibitions/negative factors of the brokerage company.

Let’s start with the first option. The contract.

Of course, it is difficult to find an ideal broker, but let’s be realistic: if the broker does not withdraw money, then there are only two reasons: you violated the terms of the official document or contacted a substandard company. And in most cases it is the second option. Therefore, the problem must be eradicated before it begins. View the ratings of brokerage companies, ask the manager or the forum to find out the opinion of current clients, see the types of accounts and methods of order execution. This will make it possible to form a more detailed understanding of which company is before you, because the result of fix api trading will depend on this. If you are still determined in choosing a broker, then ask for a contract and consult with a lawyer who can identify pitfalls.

Spreads and slippage

This moment is hard to bypass for the trader. But nevertheless, there are methods that allow it to be done. With quality fix api forex brokers this point in itself is absent. But there is also room for them. In order to reduce this figure, I recommend trading directly with liquidity providers for a brokerage company. This can be done with the help of trading via fix apihttps://en.wikipedia.org/wiki/Financial_Information_eXchange. Trading through this protocol ensures that applications are placed directly on the market, which allows using market spreads, without extra charges from the brokerage company and slippage, since all trading operations will be executed on the side of the market.

Of course, fix api brokerage companies ask for amounts to accommodate much higher than the average statistical standards.

Prohibition of the use of algorithmic trade.

As you know, some brokers earn from the losses of their customers, while there are trading robots that demonstrate a highly profitable and the main risk-free trading. That is why brokers restrict or completely prohibit this type of trade. To avoid this, you should immediately choose a quality broker with access to fix api. That is, those companies that pass by the criteria above. But if you already trade on the account and have positive statistics or no means at all, then there is a tool that allows you to trade the algorithm. This is a manual trading module that delivers bids to the broker’s server in the form of manual transactions. The algorithm specifies the use of tools for manual trading when opening positions. Thus, the brokerage company implies that the deals were opened in a manual mode. An example of such software can be found on the link – http://forexzzz.com/product/manual-trading-add-on/

These prohibitions on the part of brokerage companies only complicate the already complicated process of trading. However, for any inactive measures, there are counter-decisions.

 

Varieties of arbitration trading

The more traders, the more there are trading systems. The more systems, the more there are tools for them out there. Incorporating even minimal changes in the financial asset analysis into the fix api trading can radically change the vision of the entire market. For example, with the development of information technology, an enormous number of algorithmic systems have been developed.

Algorithmic systems are typically represented by trade robots or automated market tool fix apiforex software. In terms of development, this approach was fully automated with the type of trade as an arbitration that could not be applied to the foreign exchange market a few years ago. The trade algorithm has made this system a reality.

As you know, the fix api arbitration trading (http://www.investopedia.com/terms/a/arbitrage.asp) analyzes the course values of the same financial asset, but on different stock sites. That is, when the value of the same asset has distinct differences, based on the arbitration approach, the algorithm opens purchase transactions from that fix api broker, where the quotes are lower and sale transactions where the cost is higher, respectively. And when the quotes are returned to the normative values, the transactions are closed and several exchange rate points are recorded.

But this is only one approach towards arbitration trading. I highlight three key types of arbitration:

1. Fix api 2-leg Arbitrage

2. Latency Arbitrage

3. Triangle Arbitrage

The example and basics of the first one I named above. Key difference of the Fix api 2-leg Arbitrage is the opening of two positions toward exchange differences. This is also the principle that the automatic arbitration platform of Lock Arbitrage: – http://www.forexzzz.com/product/forex-zzz-lock-arbitrage/. As you can see from the description, through the use of known liquidity providers, it is possible to achieve a zero risk by selling via the financial protocol FIX.

Latency Arbitrage has a similar algorithm (which analyzes the value of the same currency pair between the fast and slow supplier of quotes), but only makes one deal. For example, when the cost of a currency differs from one site to another, the algorithm opens the transaction toward the values of a faster broker. This is the main problem with this method: such an algorithm is easy to identify and you need to know which broker is slow and which is fast.

Triangle Arbitrage allows you to make deals with one fix apiforex broker, but this algorithm involves opening three deals at the same time. To understand what the algorithm is about, let’s look at an example.

Three parties (a member or currencies) are required to perform such an operation.

We’ll call them player 1, Player 2, player 3.

Player 1 sells currency pair EUR/USD at the price of 1.0880.

Player 2 buys currency pair EUR/GBP for the price of 1.2300.

Player 3 buys GBP/USD for the price of 1.3400.

We see that the third player is buying at the different price from the market of 1.3382 (1.0880 * 1.2300). Thus, according to this arbitration strategy, it is necessary to perform transactions on the triangle and to enter into transactions with three parties according to the following algorithm:

  1. Purchasing EUR/USD of the first player on their own assets (for example, the minimum volume value of the fix apiforex): 100000 / 1.0880 = 91911.76 euros.
  2. Selling euros for pounds to the second player: 91911.76 / 1.2300 = 74425.01 pounds.
  3. Selling pounds to the third player: 74425.01 * 1.34 = 100131.51 dollars.

After these simple combinations, the trader is able to satisfy the three players’ requests and earn from it. The sum of the capital in seconds increased from 100 000 dollars to 100131.51. This is the whole point of triangular arbitration.

These three types of arbitration trading are entirely based on a algorithmic approach, because you need a commercial robot to perform a trade transaction. In the manual mode, this approach is not feasible.

Which set of indicators should I use for trading

The development of computer technology allowed the use of automatic trading elements in trading. So, various auxiliary advisers, scripts and technical indicators began to appear. In the trading terminal of fix api trader, there is a great abundance of various technical elements that facilitate the trading process.

However, such a wide choice of indicators makes you think: “Which technical elements should I use in my trading?” And today I will try to find an answer to this question.

As is known, there are several types of technical indicators:

• Trend indicators: display the presence of trend movement, its strength and current state of quotes;

• Oscillators: these are the leading group of indicators that indicate “overbought” and “oversold” financial asset;

• Volumetric indicators: reflect the presence of increased volatility due to an increase in the number of committed trade transactions;

• Custom: Of course, these indicators do not belong to a separate group. For example, similar indicators in the terminal fix api MT4 (https://www.metatrader4.com/en/trading-platform) are author’s developments, which can be attributed to trend or volumetric, or indicators of oscillators.

Returning to the question of choosing technical indicators, it should be noted that a stable result will be demonstrated by indicators from one group. It is not the species, but the group. For I recommend using in trading a combination of indicators of different types, but of the same group.

What do I mean?

Let’s look at an example. Take the popular forex strategy – “Trading Chaos” by Bill Williams. In his strategy, both trend indicators (Alligator) and oscillators (AO, AC) are used. That is, there are different types. However, they all reflect the direction of trend movement and entry points to the market in the breakdown of local fractal zones. This combination makes it more profitable to enter the market and look for points to exit from it.

To such indicators, I can relate and a combination of the same Alligator with the indicator MACD, or SAR and ADX. But at the same time, the use of the price channel and the indicator of Bollingerwill not make any sense.

Proceeding from this, it is possible to draw a small conclusion: all technical indicators should mutually complement each other and overlap the weak sides. Also, indicators should act in the role of the filter to select the most profitable entry points to the market.

What elements of analysis should be combined with technical indicators?

In addition to using classical computer elements for the analysis of financial assets, I also recommend the use of graphic objects to predict the future dynamics of price quotations of currency pairs in the fix api forex market. Namely:

• Fibonacci levels;

• Support and resistance levels;

• Price channels;

• Figures of the reversal and continuation of the trend.

Similarly to each indicator, the instrument you selected must confirm the predicted movement of quotations. That is, work in combination similarly to other indicators.

For example, when all signals from technical indicators indicate a decline in price quotations, as well as the value of the asset was beaten off from the support/resistance level or the Fibo grid– this is an additional confirmatory filter.

Important! Do not overdo the choice of technical tools for asset analysis. Only a small number of indicators can be combined with each other and, if you have 5 indicators from each group – this will not give a result. The best option is to use 3-4 indicators, as well as their combinations with graphic elements. There are also strategies that do not have indicators in their analysis – http://forexzzz.com/product/forex-zzz-lock-arbitrage/. Personally, I use a combination of MA and the price channel in my trading and compare them with wave formations. Thus, the indicators act as a filter, which confirms the presence of a certain wave cycle.

I draw attention to the fact that when choosing indicators for trading, it is necessary to rely on the very type of trading strategy and, again, apply only those elements that are combined with each other.