Archive for September, 2010

You have probably watched old movies showing the tycoons sitting in Wall Street back offices intently glaring a paper streaming out of old fashioned stock market tickers. Today that methodology for following stock prices is thought laughable.

Speed is often money, and in today’s electronic world the Internet makes information available to all of us at light speed. In the old days, the average person would get quotes each morning from the business section of the newspaper. One might peruse the quote page at three in the afternoon only to be looking at closing prices almost 24 hours old.

For those seeking to rapidly trade this is like driving a car with no windows. The playing field was far from even. Those close to Wall Street has access to fresh information whereas the individual investor often operated with very stale information. This imbalance often presented an unsurmountable obstacle between the average person and stock market profits. However, this no longer applies. With the Internet, anyone can now avail themselves to up to the minute information. There are many different sources for this data, many of which are free.

There are a few things to note when it comes to tickers and the quotes within them. Currently, some free quotes are still delayed by twenty minutes. Although this is nothing compared to the old days, it still presents a real disadvantage. This is especially so for rapid traders. For example, assume your analysis tells you to buy a given stock when it drops to ten dollars. Looking at your 20 minute old free quote you see it hit your $10 entry point. However, in the interceding 20 minutes it has gone back up. You missed your entry point potentially causing you nice profits. Most brokerage accounts provide their clients with free real time quotes and tickers.

Often, these tickers can be highly customized to fit your way of viewing the markets. With today’s society on the run, many devices are now able to access real time quotes from the road, or even from the middle of nowhere. Not only are real time quotes available for American markets, they are now with the masses who can ascertain what the price of gold is in London at two in the morning their local time. The markets today are international and they never sleep.

At any hour, day or night, traders somewhere are watching their tickers. Information is power, and in the stock market it often means money. Old quotes can cause you to drive blind. Good stock market tickers are available to anyone now. You have no excuse to miss executions or opportunities with stale quotes. Know where your stock is right now and be a better trader.

If you buy a currency trading system from a vendor, chances are it won’t make money in line with its track record. Furthermore, if you test your own in most cases it won’t produce the same in real time trading.

Why? The answer lies in curve fitting – if you don’t know what curve fitting is, read this article and it could save you a lot of money.

What is curve fitting?

Curve fitting is when the system rules are bent (curve fitted) to the data, to make it produce a profit. This is very similar to shooting blindly at a barn door with a shotgun and then drawing a bulls-eye around everyone afterwards!

Curve fitting and buying a system

Most of the currency trading systems sold by vendors have great track records in back testing and in most instances never produce the gains in real time.

A hypothetical track record is exactly that:

It’s designed knowing the closing forex prices and of course it’s easy to make a profit when you know the closing price in advance.

Many vendors simply make sure the trading system makes money so they can sell it.

They know it wont work in real time, but that doesn’t matter, their after system sales.

A clue to curve fitted system is:

1. Black box – Where the logic and rules are not revealed.

2. Optimization – This is where the data has to be bent. Clues to an optimized curve fitted system are – unique rules or parameters, for different market conditions or currencies.

The Gamblers Illusion

Of course, on a few years currency trading history there is an apparent order, but just like the roulette gambler who sees number sequences repeating themselves, they will never exactly repeat in the same order again.

Bending the rules and curve fitting to make a currency trading system more profitable is a futile exercise.

If a system is robust and based upon sound logic, it should contain only a few rules and parameters and they should be applied to all currencies and all market conditions.

Of course, not all vendors selling currency trading systems deliberately curve fit, like individual traders back testing their system they do it without understanding exactly what they are doing.

Many individual traders I have seen, back test their systems and make money, but they want to improve profitability, so they simply bend the system to fit the data with lots of parameters and indicators.

When they trade it real time they lose.

They would have been better off with their simpler non curve fitted system!

No snap shot of trading history will produce the same patterns again – it’s an illusion as we have just seen.

When back testing or looking at a system just keep the following points in mind:

1. It should be based around trading the odds.

2. It should be simple with only a few rules or parameters.

3. It should trade all currencies the same way.

4. It should trade all market conditions the same way.

5. If a track record has an absence of drawdown chances are its curve fitted, so if a hypothetical track record looks to good it probably is.

Don’t fall into the trap of curve fitting!

Curve fitting is done by the majority of trading systems sold and most traders when constructing their own fall victim to it.

Curve fitting deliberate or not, is the major reason hypothetical track records that appear to give fantastic growth rates in hindsight fail miserably in real time trading.

Trading a well thought plan can make you money but incorporating discipline into your trading plan is a skill that most traders have yet to develop. It’s the disciplined traders that make objective, informed and unemotional decisions that can literally make his living while trading stocks only 2 – 3 hours a day. Technical and fundamental analysis are great clues and if used properly a trader can make money in the stock market. When you match technical and fundamental analysis with discipline you then have a juggernaut of a plan to make money in the stock market. Learn the secrets of the stock market and profit today.

You won’t believe the money you will be making on your trades with your new found discipline and trading system. It is a breath of fresh air when you realize you have what it takes to make a decisions in a moments notice. The stock market has abundant sources for information and interpolating all that information will give anyone analysis paralysis and the market is not a place for lack of confidence and indecision. Did you look at all the key indicators that you have been told all your life need to be heeded and followed to make money in the stock market? How many financial newspapers and magazines do you subscribe to in order to get an idea of what the market is doing or not doing? Is the feature article quoting a guy who is reliable and trustworthy, and how can you be sure he is right about the predictions he is making? Learn the keys to becoming a successful trader and never work another day at a regular job.

It has taken me years and a large sum of money to learn what I know about the stock market and investing. It is imperative to do it right or risk your hard earned money and fragile ego – most traders are ego maniacs because they are never wrong. Learn to know that you are a person and you can be wrong. Learning to admit that to yourself is a personal victory and as a trader can be an invaluable trait to develop that can save you thousands of dollars. I have seen traders come and go and the biggest problem they have had is the fact that they always thought they were right all the while watching there trading accounts be drained of money.

Almost the biggest part of the game is not to lose money and when you see yourself begin to lose your money then you make the move to protect capital and live to make another trade. Buy and hold is not the best strategy – there are better trading plans. Surefire trading systems has the information you are seeking if you want to become a better trader. When you become a better trader then you free yourself from working 9-5 job. The surefire system is waiting for you.

Real Time Forex Data Feed

In case you do not know it, there are actually boatloads of benefits that you may take pleasure in using Realtime Forex. Regardless of whether you are a newbie in Forex trading or a seasoned veteran in this business, for as long as you are active in Forex trading, you will definitely find it rewarding to be using such technology. Here are some of the other information that might help you understand more why using this Forex trading system can be beneficial for you: Real Time Forex Data Feed

1. Saves Time, Money And Your Effort
First, even if you compare this process with other analogous counterparts, you will see that this particular Realtime system can actually give you the ultimate profits every trader longs to amass. That is why you should aspire to make some savings by cutting on your costs, as well as your time and efforts, then, make it a point to check this system out and purchase in no time. That way, you will immediately be able to gain huge profits doing your Forex trading activities.

2. Allows Flexibility In Your Schedule
What is more, with this kind of system, you have the flexibility to adjust your availability in terms of your schedule. Especially that there are more or less 15 main currency countries spread all over the globe, it would be very complicated to match your time with the time of a particular currency’s country you are trading. But with Realtime Forex, you can immediately trade 24/7 or at least 24/5 as if you were a Forex automated system or Forex robot that does not need to sleep to monitor the trade movements and changes. Real Time Forex Data Feed

3. Helps You Make Better Decisions
Since it is an online system, the advanced technology of Internet can greatly help traders like you know much more about Forex trading. What is more, there are countless of news features, news articles and Forex research materials aid resources available to any trader who wishes to get hold of them.

4. Other Online Forex Tools And Information Available
In addition, due to the wide range of innovations in technology these days, the Internet has made it possible for Foreign exchange to do a somersault. This paves the way to the now available wide assortment of online Forex tools and information that any trader may access from the Internet. These include news about Forex trading, charts to illustrate the ups and downs in the market as well as the changes and movements in the trade. Likewise, there are also reports and statistics available, not to mention the various websites that you may access online to help you know more about Realtime Forex.

5. Home-Forex Trading
Another benefit you may get from this Realtime trading system is that you may conduct your trading activities any time and in the very comforts of your own home. Imagine the time, money and effort you save from being able to stay at home while you earn money. Don’t worry; it is so easy to learn the system; and what is more, you get stay state-of-the-art alerts every time there are new changes in the market. Real Time Forex Data Feed

There are many vendors who sell currency trading signals and traders can then use them to make forex profits without having to study the market and of course you can get software to do the same. Let’s look at the best ways to get superior forex timing with these signals.

The first point to keep in mind is – there are a lot of people who will try and sell you currency trading signals and their not traders, their simply marketing organizations and have no trading experience.

To avoid these people and to find out if a forex signal trading service or forex trading system can generate trades that are likely to make you money, look for the disclaimer below – if a vendor uses it or similar one, don’t buy the system.

Here it is read it carefully:

“cftc rule 4.41 – hypothetical or simulated performance results have certain limitations. unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not been executed, the results may have under-or-over compensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profit or losses similar to those shown”.

The one above is a standard CFTC one and it effectively allows anyone to make up a track record in hindsight – knowing the closing prices.

Anyone can do that, even a child – but forex trading is not so simple, we have to trade going forward.

Look for real time track records and get verification.

Even if you are lucky enough to find a forex signal trading service that has a real time track record – you must understand the logic it is based on, otherwise you won’t be able to follow the signals with discipline.

If you don’t have confidence in the logic and the discipline to follow the signals through losing periods (and you will have them) you don’t have a system!

The traders who buy currency trading signal services, are normally traders who are greedy and looking for a fast buck – or traders who are simply naïve. They end up disappointed and lose their money, because there is no easy money to be made in forex markets.

Of course, you wouldn’t expect there to be, with the profits to be made.

THE BEST WAY…

To enjoy currency trading success is to generate your own currency trading signals, by learning forex trading and building your own system which you can be confident in and you can apply with discipline.

While this may sound daunting – its not and you can do it in a couple of weeks, if you work smart and get the right forex education.

Currency trading success is based upon understanding confidence and discipline and the best and most profitable path is to generate your currency trading signals.

If you have the desire to succeed and a willingness to learn you can do it.