Forex, anyone?

And, yes, Baffled, I knew you'd show up, ha ha. In any event, forex is just beginning to interest me, and i'm trying to figure out how it works, so if anyone (B?) has any tips on reading material, I'd sure love some links. And if there's anything I ought to know about forex with thinkorswim, love to hear about that, too.

I've been following along with some pairs using the trading made simple thread over at forex factory: [www.forexfactory.com]. it uses only the sto, the trader's dynamic index, and a chart w/ a 5 period MA on it. so far, just paper trading, i've been doing okay. But i know i can do better, so I thought I'd open a thread about what tools folks here are using for forex. and what pairs they're trading. and like that.

want to do PM talk as well? that's fine. but the more public we can keep it, the better, i guess.

anyone care to chime in, especially with basics? (ie, the sawtooth indicator might be a little advanced for me ...)

Quote
linter
-------------------------------------------------------
> And, yes, Baffled, I knew you'd show up, ha ha.
> In any event, forex is just beginning to interest
> me, and i'm trying to figure out how it works, so
> if anyone (B?) has any tips on reading material,
> I'd sure love some links...

Busted. Too funny. linter, My only annoyance w/TOS on forex is quotes often seem delayed a minute or more. This really messes with algos because it paints the bars differently from really timely charts. The effect is not so bad for longer timeframes of H1 and up but even H1 suffers some. FXCM is an outfit I avoid like the plague- my experience with them is their platform "conveniently" crashes during high volatility, i.e., just when you should be making money. I've had good experience with Oanda. I don't use MQL (MetaQuoteLanguage) but you can enable your platform for that. Also, while not exactly a "Cadillac" platform like TOS, Oanda is swift, clean, efficient for quotes, opening extra accounts, and loading and transferring funds between accounts. One downside of Oanda is you can't hedge in the same account (OCO, One trade Cancels the Other), so you need to create the extra account for hedging, which takes about 10 seconds.

Okay, since you ask for links... SPAM warning, except nothing on this page is available for sale anymore... this is a pretty good summary of how forex works and some specialty stuff like spread trading http://whattolearn.com/newtoforex.htm .

As far as what algos or methods to use, I'd say pretty much whatever works on other instruments will probably work on forex. Also, in my opinion, trading news announcements should be avoided by new forex traders, unless they have really good algos for it. The most notorious is NFP day, NonFarmPayrolls in USA, which is usually at 8:30am on the first Friday of each month. Extreme volatility. My favorite news calendar is http://www.fxstreet.com/economic-calendar/ . Best to do the free signup thing so you can customize the time and so it'll give you not only the time of the announcement but how many hours/minutes remaining 'til it happens. They also rate possible impact with stars and explain what the announcement is.

I also suggest finding a futures contract that seems to correlate to the forex pair being traded. Correlations come and go these days, but one I've found is lately pretty consistent with EURUSD is the Light Sweet Crude (/CL). Negative correlation to EURUSD. On TOS (for those who don't know), click the Symbol drodown arrow, then the FUTURES tab and browse through to find a contract you think might be related to your pair. Then run it in a lower study like the one below, substituting its name for /CL. Or, try the INDICES or INDICATORS tab:

declare lower;
plot Data = close("/cl" );
plot data20 = average(data,20);

Gamblers roll the dice; Traders load the dice.



Edited 3 time(s). Last edit at 01/25/2016 09:28PM by baffled1.

Hi, Baffled:
Thanks much for all the great info. So, for forex, ToS is not good and Oanda is better? Argggg. But, okay, I'll look into it. I know the guys over at forexfactory use MS4, so my learning curve can be somewhat shortened by doing as they do. At least they are mostly using canned indicators, so i won't have to learn a new language. Hadn't even thought about news in the sense you're talking about. Guess I'll have to take that up too. Nor the correlation business. Dang, that's a lot of new stuff!

I really do like the trading-made-simple idea in the thread I linked to. And on ToS at least, I can use one of your indicators (the one with arrows) that i think is pretty nifty. Maybe I'll look into seeing how to convert it to Metastock.

Let me ask you this. Why do you trade forex as opposed to anything else? Do you find the pairs trend better?

Quote
linter
> Hi, Baffled:
> Thanks much for all the great info. So, for
> forex, ToS is not good and Oanda is better?
> Argggg. ...
...Let me ask you this. Why do you trade forex as
> opposed to anything else? Do you find the pairs
> trend better?

hiya, linter. Glad I could help a little. I trade forex because of the 5x24 trading hours, the instant settlement, a few other reasons. But not because the pairs trend better. Fact, it's often the wild west. I guess I like being able to analyze the data and the only gaps are at weekends sometimes. I think TDA is great for most other stuff- it's just the forex end I don't like. So I say use it for the good stuff and just run it in background for forex while you trade forex on another platform. To learn it, I think it's good to use a practice account some, but when ready to go live, start with no more than $20 and try to double it. Only reload if balance drops to $10 (and only allow yourself to reload once a month). That limits risk, etc, while you learn. And, if you looked at the compounding charts on the link, you can see that there's really no sense loading a lot of cash anyway because if you're good you'll get to big cash levels rather quickly. On Oanda, I preset my trades to be 70% of my available margin so it automatically keeps up with my account growth. A good target is to make 7% a day. An exceptional outcome (for me) is a 10% day.

Gamblers roll the dice; Traders load the dice.

Thanks a bunch. Yes, your website is very helpful in explaining the basics, which is where i am now. Re: ToS -- so do you do the algos and all that on ToS but do the actual trading on Oanda? If so, that sounds like it's the best way to go, rather than delving into MS4, though I do have to say the charts and set up look better for me. Maybe not as sophisticated as ToS but I suppose once you get your trading logic down, either would do well.
Yes, I will start at some point with $20 and see how that goes.
Will keep you posted. And probably ask a bunch more questions.
btw/ what time frame do you trade?

Quote
linter
> Thanks a bunch. Yes, your website is very helpful
> in explaining the basics, which is where i am now.
> Re: ToS -- so do you do the algos and all that on
> ToS but do the actual trading on Oanda? If so,
> that sounds like it's the best way to go, rather
> than delving into MS4...
> btw/ what time frame do you trade?

Yes, that's how I do it. I trade H1 mostly. Longer TFs create drawdown problems for me, since I'm trading at 70% of margin. Shorter TFs require too much watching. Definitely please keep me posted on how you're doing. BTW, there are some little old school tricks I use too, like the probability of an engulf being only about 10% on most charts. I suggest beware trading things like cup-and-handle formations and other normal formations, as they often don't behave like they do in stocks. Sometimes on cup-and-handle the 60% retrace happens, sometimes not, and sometimes after a cup forms the chart will form an inverted cup.

Gamblers roll the dice; Traders load the dice.

linter, I went to the link in your first post. So you want the Traders Dynamic Index in Thinkscript format? One version is published at this thread on another forum (I didn't want to steal it and post it here).

Gamblers roll the dice; Traders load the dice.

Thanks for that, B1. Yes, it's the one I've been using.
I'm not very good w/ chart patterns, so things like cups and saucers are out. otoh, i do believe in candlesticks. one thing i like about the method that uses the TDI is that it is used on heikin ashi bars, which tend to slow things down and (in theory) show trends and trend changes better than regular candlesticks. forex is all 100% new to me, however, so it's going to take a while for me to wrap my mind around it. four days ago, i didn't even know what a pip was. sheesh.

Linter and others, I developed this Golden Mean algo some time ago and still use it today. As you can see from the numbers, it isn't your grandma's Golden Mean of 1.6180. It's an adaptation from it. Won't waste your time explaining why I did this but it works.
USING IT:
1. The paired lineplots are never all 4 in the Cloud at the same time.
2. When the lower pair is in the Cloud, signals downtrend.
3. When the upper pair is in the Cloud, signals uptrend.
4. When both pair are below the Cloud, signals strong uptrend.
5. When both pair are above the Cloud, signals strong downtrend.
6. Crosses of plots in the pairs occur simultaneously and are significant.
7. You also can often see the above conditions forming early, or (more safely) just wait; you'll miss some action but less risk.

Code below is set for EURUSD H1.

#Settings are for EURUSD, but can be modified for any security. Default inputs are for H1;
D1 try (not ideal but closer) 1.01618, 0.01618
input length1 = 1;
input length2 = 1;
#NEXT BELOW IS HALF OF 1618 (THE 809)
input goldmean1 = 1.00809;
#NEXT BELOW IS SIX TIMES 809 (THE 4854)
input goldmean2 = 0.004854;
input midmaxminorval = 2.007;
input midmaxfloat = 6;
def upperlim = ((high[1]+low[1]+close[1])/3)*goldmean1;
def lowerlim = ((high[1]+low[1]+close[1])/3)-((high[1]+low[1]+close[1])/3)*goldmean2;
def upperlimmax = average(upperlim,length1);
def lowerlimmax = average(lowerlim,length2);
plot midmax = (upperlimmax+lowerlimmax)/2;
plot midmaxminor = (upperlimmax+lowerlimmax)/midmaxminorval;
plot midmaxavg = average(midmax,9);
plot midmaxminoravg = average(midmaxminor,9);
plot mmfloat1 = average(midmax,midmaxfloat);
plot mmfloat2 = average(midmaxminor,midmaxfloat);
AddCloud(midmax,midmaxminor,color.plum,color.plum);

Gamblers roll the dice; Traders load the dice.

man, i just don't know what to make of that. what i do know is that it so complicates my brain that i am rendered insensate, not for the first time and certainly not for the last.
i am still trying to find a "system" that i can put my faith in and not think it's blind hope. i am plodding along. we shall see!