Calculating the mathematical expectation of a trading system is one of the first things that should be done to know if the system is capable of making money in the long term. Having a positive mathematical expectation is an indispensable condition that any moderately reliable system must meet. The mathematical expectation measures the amount that [...]
When you design a trading system, or you are looking to buy an automatic robot on the market, you must make decisions according to your preferences. The first thing you should ask yourself is: what am I looking for? It is clear that you are looking to earn a lot of money, yes… this is [...]
This is probably one of the most important articles for long-term success in trading that I have written so far. If I am not mistaken, this is the first time I have written about it, although the issue of risk of ruin is of the utmost importance in achieving long-term profitability. It is about [...]
As traders that we are, or pretend to be, we will spend most of the time looking for the best time to enter the market in a certain direction. In this search, we will use some tools such as technical indicators. From my point of view, any trader who bases his trading on technical analysis [...]
The sequential methodology of Tom DeMark or TD Sequential is a well-known indicator among traders that operate based on the techniques of this author, which has become known in recent years. In fact, this indicator is a mixture of a bit of everything, so it will be liked by both systematic traders and lovers of [...]
The stop loss is a trading order placed in the broker to sell or buy a currency pair (or any other asset in a financial market) conditioned on the price reaching a certain value. It is mainly used to close an open transaction in case the price direction turns against it, hence its name. For [...]
Introduction We have already talked in other articles about the natural evolution of the Trader, from the beginning of his career in the markets until he obtains the knowledge and skills necessary to develop his own profitable Trading System, and now we are going to focus on the different types of trading systems that exist. [...]
Again, as long as I speak of losses, I must start this article by saying that is completely impossible to avoid losses. Sooner or later they come to all traders. A good trader simply accept them consciously, which also involves applying systematic rules to keep the losses well controlled. This article will not discuss [...]
Tell me one thing: how do you validate your trading system? How can you be sure that by following these entry and exit signals from the market you will have profitable results? Just because you have executed a backtest and it has given you good results? In today’s article I propose to rethink your way [...]
As we said in our previous article, we can classify trading systems into two groups: those based on models and those based on exploitation or data mining. In this article we will discuss in detail the systems of the first type, defined as those who propose a model to represent the behavior of the [...]