Drvasant dhar

Drvasant dharDr. Vasant Dhar is a Senior Advisor of the company.

provides valuable guidance to Deep Blue using

over twenty five years of experience in the field of advanced analytics.

In the past,

was a founding principal of the Data Mining Group at Morgan Stanley. Dr. Dhar has had a longstanding career in applying predictive analytics across diverse industries including financial services, new media, and health care.

research is on data-driven predictive analytics in finance, healthcare, and social phenomena.

also writes on IT-driven transformation such as the one currently driving education, and implications for how firms talk to customers and partners and govern data responsibly.

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Thread trading haute frequence(thf)ou high frequency trading(htf)

Thread trading haute fréquence(thf)ou high frequency trading(htf)Thread: Trading Haute Frequence (THf) ou High frequency trading (HTF)

Trading Haute Frequence (THf) ou High frequency trading (HTF)

C'est la derniere file que j'ouvre.

Mais comme 70 % des ordres de bourse a WS proviennent d’algorithme, partager nos connaissances me parait plein de bon sens.

Je commence par Eric Scott Hunsader, fondateur de NANEX

Derriere Nanex se cache l'initiative d'Eric Scott Hunsader, un ingenieur en informatique.

Tout a commence en 1996, lorsque celui-ci a mis sur pied l'ancetre de Nanex, qui a vite ete rachete par quote.

Nanex a ete fondee en 2000, en partenariat avec DTN, avec pour but de fournir les donnees de marche.

Mais la societe est restee confinee a un public confidentiel, jusqu'a ce que le krach eclair de Wall Street le 6 mai 2010 survienne.

Les recherches de NANEX

Ongoing Research - Market Events and Phenomena

Our business is supplying a real-time data service comprising trade and quote data for all US equity, option, and futures exchanges.

We have archived this data since 2004 and have created and used numerous tools to help us sift through the enormous dataset: approximately 4 trillion quotes and trades as of July 2011.

May 6th, had approximately 7.6 billion trade, quote, and depth records.

Quantum astro trading

Quantum astro tradingQuantum Astro Trading

written by Sergey Tarassov

In this article we discuss quantum trading strategies based on astro phenomena. I will try to do that as simple as possible. The module that creates quantum trading strategies is a part of Trading Strategy Constructor module (****). Right now this module employs pretty sophisticated math to find the best quantum strategy; it does that fantastically fast. Without those super fast algorithms, this module would be just some Digital fortress, while the computational time would make it useless.

No matter how sophisticated and complicated all these models/math/algorithms are, there is a very simple idea behind it. I will explain below the core of this idea putting away all math details. The information that you will receive is enough for making you able to create your own quantum astro models (this is why this article sometimes may look like a documentation for this module).

When I first was introduced to mechanical trading systems (it happened in a mid of 90s), I had a feeling that technical analysis tools are not providing a whole picture of the price movement. Having open, high, low, close values plus sometimes volume plus sometimes open interest - gives us the impression that everything is under control, except some small thing, and we will catch this thing soon, very soon. We need just find one, better, indicator - and we will be the winners. And new indicators appear, and again we have the same feeling - one more step, and everything will be OK. And then we begin to see that newly invented technical indicators are very similar to what we already have, and we are still there. The situation with the technical analysis reminds me a crowd in the closed room. People there may regroup, may start different activities, - but it is still the closed room, and they are still not going anywhere. Some missing link definitely persists; what we do is attempts to find that missing link. Where is the missing link located? What is it? Fundamental analysis that considers everything that is going in the World - unemployment, economy reports, government regulations? Might be, though it is not enough, for sure.

IMHO we have to search this missing link taking a more active position. Do not restrict your activity with the explanations of what has already happened; instead, try to model the stock market behavior (and model the economy tendencies as well, considering the big picture). In this case, the usage of astronomy/astrology is very effective.

When I made my first projection line based on astro phenomena almost 15 years ago, I was very impressed. Usually such projection lines look like this:

There was something appealing in those projection lines; they were like a diagram of the stock market's breath, that was pretty clear. Still, that was not the final answer. And my main goal became very clear to me: to create a mechanical trading system that is based on the stock market modeling rather than on some combination of technical analysis indicators. OK, the projection line idea is good, but how can we get buy and sell signals from it? That was one more of missing links; and I spent 10 years trying to answer this question (Timing Solution/Market Trader users saw the steps of this quest in the programs). I always had a feeling that the projection line lives its own life reflecting the breath of the stock market while we need something different to get buy/sell signals. It looks like Quantum Astro model reveals one more missing link.

Let's consider the simplest astro phenomenon, the Sun declination. This is how the Sun declination goes within a year:

The question is: Can we trade the Sun declination?. There are a lot of theories that employ the idea of planetary declination; most of them sound something like this: there is the price turning point when the declination reaches its extreme value (1) or crosses zero (2) or passes some specific degree. Sometimes these theories are true, however the problem is still there: we cannot create buy/sell signals using this information only (trust me, I played with that a lot!). It might be that the astro phenomena give us some hints; but - read all astro finance publications, and you will get so many hints that they become useless in the end of the day. We need something more certain than the statements like this one: when some astro phenomena occur, the price tends to.

Now, how about doing something together? Maybe, it would be a better way to understand what I am talking about. Let us do this: we will trade SP 500 mini futures daily using the Sun's declination. We will use the price history since 1998 till J uly, 12 2010. We will do it step by step.

Everything starts with a general Idea

Before doing anything, we need to have an idea. This general idea will be used to create our models and construct the trading strategy. Let it be this one: SP 500 mini futures price tends to reach its turning point when the Sun's declination is high. Consider it as a hint: You should watch the market attentively when the Sun's declination is high. We can take this statement as a direct order, and we will make several trades within a year. And I guarantee that these will be not so good trades. Astro based models are great with finding turning points, though somehow these models do not see the difference between top and bottom turning points (the inversions problem). So we just keep telling to our program to pay attention to the moments when the declination is high. It does not mean that this system will not trade if the declination is not high. It trades all the time, and when the declination is high, it watches more attentively for trading opportunities.

Quantum model: our idea meets the real price

Now the time comes to employ quantum algorithms. The program watches the real price and evaluates how the real price movement corresponds to our idea. The program generates quantum moving average, it looks this way:

These steps correspond to the moments when something important happens (important - from the point of view of our Quantum model). If the step is opposite to its previous direction, the program considers that moment as a potential buy or sell signal.

Look at the picture below; the program has performed a sell signal when the downtrend step appeared after four uptrend steps:

The height of these steps (quanta) is calculated by special very fast algorithms; these algorithms perform noise filtering as well.

This picture shows how the model high Sun declination works actually:

The Sun declination is displayed overlaying the price chart (this is practically an ideal sinus wave). You can see here that when the declination is high (it does not matter, what declination it is - North or South), we have more trades because quantum moving average is more detailed when the Sun's declination is high.

Final step before real trade

As a last step before a real trade, the program performs one more filtering removing whipsaw trades and performing risk management (if you need it).

Thus the quantum algorithm performs the whole cycle: forming an idea, looking at the real price in respect to this idea and cooking real trades. We have started with a general idea that was initially formed as a hint, and step by step we have dressed this general idea in the clothes of the stock market reality.

Particular this idea would give us the profit $217K (one 100K contract), win/loss=63.4%, it has traded once in 11-13 days (trading days):

Variations

In Timing Solution you can create you own quantum astro models. For example, you may wish to explore this general idea the typical distance between two succeeding turning points is 9 degrees of Mercury's travel path (in other words, it means that Mercury's move for 9 degrees covers the distance between two turning points).

We can do that. As you see on the picture below, this moving average reflects Mercury's movement, the distance between two steps of quantum moving average is 9 degrees of Mercury's movement, and we have more trades when Mercury is fast:

Or you may like this model based on the Moon phases; the quantum moving average reflects the change of the angle between the Moon and the Sun:

I would like to remind you that the program finds itself the optimal angle separation between the planets; in this example the distance between two steps of quantum moving average is 43 degrees of the Moon-Sun angle change.

I used above the simplest examples to make my general idea clearer (use some astro statement together with quantum moving average). In reality you can create more complicated models that involve other planets and other astro phenomena. You can create as well the models that employ dominant cycles etc.

Instruction for Timing Solution users how to create quantum astro models

You can create quantum astro models through #4 Custom section:

and here you should define the Quantum Function:

For your help: clicking f button you get the list of available functions; you can insert any of them in edit box clicking + button:

More t rades when the Sun declination is high

Let start with the example in this article; the system trades more when the Sun declination is high. To repeat what I have done, follow these steps:

#1 Type SUN_DECL formula

#2 Set out of range criteria

#3 Click Optimize button

In several seconds, you will get the sorted list of trading models based on the Sun declination:

You see that the program makes trades when the Sun declination is higher than 4.57 degrees South or 5.27 degrees North.

You can create more complicated formula, like this (superposition of declinations):

(This is just a sample of the program's abilities; I did not get any good results using this formula.)

Trend trigger - a potential turning point takes place when the Sun declination travel path is %X degrees

Set Trend trigger and click Optimize once again:

You will get this:

In this example the quantum moving average jumps to another price level when the Sun declination travel path reaches 1.1 degrees. In other words every time when the Sun declination changes on 1.1 degrees we check this moment as a potential turning point.

Moon phase model

Not bad results are provided by the Moon phase model. This model trades faster if Moon phases change faster.

You can create quantum models that use the planetary speed this way:

Algorithmic trading strategies example

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Turtle trading strategy performance top10binary trading brokers list

Turtle trading strategy performance top10binary trading brokers listTurtle trading strategy performance Top 10 Binary Trading Brokers List losangelesmoving

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Kishore mforex strategy

Kishore mforex strategyKishore M Quantum FX Pro

Does anyone know how much Kishore M earned for the past 2 years? The answer is at least US$4,615,000.00. This is the amount that he earned solely from conducting forex courses in the ASEAN region. Over the years, he has taught more than 100k forex traders to trade forex profitably.

The reason forex traders paid Kishore M so much is because he has what the traders want in order to make profit from the forex market. His methods in analysing the forex market have earned himself not only money, but respects from his fellow students. Some of his students call him forex Guru, but he doesn’t like to be called that way. He sees that everyone should be his own guru as his duty is to pass down his experience and knowledge on forex trading to people who put hope on him. His exposure in Bloomberg News, BBC News Channel News Asia has attracted the attention of public and professionals from London, Singapore, Hong Kong, and Middle East. They have invited him to their respective countries to conduct classes and seminars on methods that he uses to generate profits from Forex trading.

One of the experience that he shared during his recent seminar is he has seen a very weird phenomenon in forex trading. This phenomena did not happen once or twice but most of the time when he’s coaching his students on forex trading. Most of his students lost more than 50 pips in a very short while after opened a position in the market. From there, Kishore M found that this is a common mistake that many traders made when trading forex. They buy while the trend is on the way up only to find out that the trend has reversed the moment they make their purchase and within minutes, their account is busted. He has gone on to make a video on the weird phenomenon and shared it with the public for free. Of course, this is just one of the weird trends Kishore M observed during his classes. There are many more trends that he realized that caused many traders dearly. Imagine, the exact same mistakes repeated by almost all of his students.

Of course Kishore M did not keep the secret for himself. During the trading session with his students, he pointed out the mistakes to them. Much to the relief of his students, they finally know what had gone wrong all this while. After hours of trading, they started to make consistent profitable trades. It’s not only about making profit here, but to understand their mistakes and know the strategy to avoid and counter the mistakes is more important. The strategy is amazingly simple yet powerful. All these traders are also so shocked that just by knowing this, the whole forex trading game changes for them. From consistently making the wrong buy-sell decision, now they are making the right buy-sell decision almost all the time.

It is understandable that not all forex traders are prepared to fork out a few grand on Kishore M’s forex courses. Fortunately, Kishore M is willing to conduct free forex seminars in Singapore and India. The seminars are for those who are interested in knowing more about forex trading. The seminar will give you a different insight on the forex market. However, no strategy will be taught during the seminars.

Besides the free seminar, Kishore M has personally recorded 2 videos in pointing out the most common mistakes traders make when trading forex. In the videos, he also provides the solutions! And best of all, he has made these videos free for public!

In case youre nowhere near Singapore, you can view the videos online. Kishore M named the videos as Quantum FX Pro .

Kishore M Quantum FX Pro

Does anyone know how much Kishore M earned for the past 2 years? The answer is at least US$4,615,000.00. This is the amount that he earned solely from conducting forex courses in the ASEAN region. Over the years, he has taught more than 100k forex traders to trade forex profitably.

The reason forex traders paid Kishore M so much is because he has what the traders want in order to make profit from the forex market. His methods in analysing the forex market have earned himself not only money, but respects from his fellow students. Some of his students call him forex Guru, but he doesn’t like to be called that way. He sees that everyone should be his own guru as his duty is to pass down his experience and knowledge on forex trading to people who put hope on him. His exposure in Bloomberg News, BBC News Channel News Asia has attracted the attention of public and professionals from London, Singapore, Hong Kong, and Middle East. They have invited him to their respective countries to conduct classes and seminars on methods that he uses to generate profits from Forex trading.

One of the experience that he shared during his recent seminar is he has seen a very weird phenomenon in forex trading. This phenomena did not happen once or twice but most of the time when he’s coaching his students on forex trading. Most of his students lost more than 50 pips in a very short while after opened a position in the market. From there, Kishore M found that this is a common mistake that many traders made when trading forex. They buy while the trend is on the way up only to find out that the trend has reversed the moment they make their purchase and within minutes, their account is busted. He has gone on to make a video on the weird phenomenon and shared it with the public for free. Of course, this is just one of the weird trends Kishore M observed during his classes. There are many more trends that he realized that caused many traders dearly. Imagine, the exact same mistakes repeated by almost all of his students.

Of course Kishore M did not keep the secret for himself. During the trading session with his students, he pointed out the mistakes to them. Much to the relief of his students, they finally know what had gone wrong all this while. After hours of trading, they started to make consistent profitable trades. It’s not only about making profit here, but to understand their mistakes and know the strategy to avoid and counter the mistakes is more important. The strategy is amazingly simple yet powerful. All these traders are also so shocked that just by knowing this, the whole forex trading game changes for them. From consistently making the wrong buy-sell decision, now they are making the right buy-sell decision almost all the time.

It is understandable that not all forex traders are prepared to fork out a few grand on Kishore M’s forex courses. Fortunately, Kishore M is willing to conduct free forex seminars in Singapore and India. The seminars are for those who are interested in knowing more about forex trading. The seminar will give you a different insight on the forex market. However, no strategy will be taught during the seminars.

Besides the free seminar, Kishore M has personally recorded 2 videos in pointing out the most common mistakes traders make when trading forex. In the videos, he also provides the solutions! And best of all, he has made these videos free for public!

In case youre nowhere near Singapore, you can view the videos online. Kishore M named the videos as Quantum FX Pro .

Italiano forex-italian forex

Italiano forex-italian forexOnline Trading Academy festeggia il secondo anno di Kansas City

Kansas City, MO (PRWEB) 7 dicembre 2010

Il suo stato due anni da quando online Trading Academy ha aperto la sua posizione 26 a Kansas City. Da quel momento, il proprietario Ron Booth ha imparato molto sul modo migliore per condurre una organizzazione progettata per insegnare agli adulti modo di gestire attivamente i loro investimenti. Per molti, i concetti finanziari che insegniamo sono nuovo di zecca. Dobbiamo usare continuamente i nostri feedback agli studenti di migliorare lefficacia della nostra formazione.

Nel dicembre del 2008, Online Trading Academy ha aperto il suo centro didattico al 7501 College Boulevard in Overland Park, Kansas. Il centro di apprendimento e davvero una scuola con due state-of-the-art aule, con stazioni di negoziazione per ogni studente. Chiaramente, un vantaggio nostri studenti apprezzano e che hanno imparato al commercio, dalla negoziazione ha detto Ron Booth, presidente della Academy Trading Online.

Quasi 400 studenti hanno i laureati del Corso di operatore professionale ha insegnato presso lAccademia Trading Online in Overland Park. In aggiunta al corso di operatore professionale, laccademia ha classi di trading sui futures, opzioni di trading e trading forex. Tutti questi corsi sono tenuti da istruttori leader del settore, in esclusiva per linsegnamento Academy Trading Online.

Se siete interessati a saperne di piu, Online Trading Academy tiene periodicamente corsi di mezza giornata di trading, dove i futuri studenti possono imparare di piu sul commercio attivo e Online Trading Academy Kansas City. Per ulteriori informazioni: tradingacademykc o chiamare il 866-956-7050.

Il Rogue Trader un programma radiofonico Concentrandosi sul Trading online debutta su News Radio 980 KMBZ nel gennaio 2011

Overland Park, KS (PRWEB) 22 dicembre 2010

Il numero di americani che utilizzano trading online per gestire il proprio denaro si moltiplica rapidamente maggior numero di persone prendere il controllo delle loro decisioni di investimento proprie. Il Rogue Trader una radio nuova mostra dedicata specificamente al fai-da-te online debutta commerciante nel mese di gennaio del 2011 su News Radio 980 KMBZ, Kansas City. La mostra sara ospitata da imprenditore, professionista, insegnante e CPA, Ron Booth. Lo spettacolo Rogue Trader coprira compravendita di azioni, negoziazione di opzioni, futures trading e forex trading tra gli altri soggetti finanziariamente correlati.

Come indicato dal nome dello spettacolo, la materia disciplinata sara diverso da quasi tutti gli investimenti mostra attualmente in onda. Guarda, il buy and hold e morto passarci sopra e andare avanti. Ci sono altri modi per ottenere i ritorni che desiderate, dovete solo cercare per loro, ha detto Ron Booth, The Rogue Trader. Questo non e un altro vecchio spettacolo di investire in modo prevalente alla radio di oggi. Im non un pianificatore finanziario, consulente per gli investimenti e infatti non lo vorrei gestire il vostro denaro, anche se mi hai chiesto. Im un commerciante e un educatore.

Mentre lattenzione della mostra sara sui mercati regolamentati, quali azioni, futures, forex e le opzioni, la mostra riguardera anche altre vie per raggiungere rendimenti sui soldi e possono includere auto depoca, carte da baseball e altre attivita non regolamentate attivita.

Lo spettacolo e sponsorizzato da Online Trading Academy Kansas City, una scuola per i trader attivi e investitori situati a 7501 College Boulevard, Suite 275, Overland Park, KS 66210. Per oltre un decennio, Online Trading Academy sta addestrando i commercianti on-line lo stato dei centri di imparare larte di tutto il mondo. Dalla sua apertura nel Kansas City nel 2008, Online Trading Academy Kansas City dispone di oltre 400 alunni nel Midwest. Per ulteriori informazioni visita online Trading Academy tradingacademykc o chiamare il 866-956-7050.

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Vasant dhar

Vasant dharVasant Dhar

Editor-in-Chief of the Big Data Journal

Paduano Fellow, Professor, Head of the Information Systems Group, and Director for the Center for Business Analytics at the Stern School of Business at NYU

Vasant Dhar is Paduano Fellow, Professor, Head of the Information Systems Group, and Director for the Center for Business Analytics at the Stern School of Business at NYU. He has been on the NYU-Stern faculty since 1983.

Dhar teaches courses on Digital Marketing, Trading Strategies, and Prediction. His research is on data-driven predictive analytics in finance, healthcare, and social phenomena. He also writes on IT-driven transformation such as the one currently driving education, and implications for how firms talk to customers and partners and govern data responsibly.

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Dhar has written over 70 research articles, funded by grants from industry and the National Science Foundation. He pioneered the use of machine learning for predictive modeling on Wall Street across proprietary systematic trading, risk management, and customer and salesforce management. Dhar teaches courses at Stern on Trading Strategies, and IT and Corporate Strategy. He is a frequent speaker in academic as well as industrial forums.

Professor Dhar received his Bachelor of Technology from the Indian Institute of Technology in Delhi, and his Master of Philosophy and Doctor of Philosophy from the University of Pittsburgh.

Related Sessions

Panel Discussion: High Frequency Traders The New Market Makers? Location: Krutch Theatre Date: September 30, 2014 Time: 2:00 pm - 3:00 pm View session

Using fibonacci retracement levels with price action

Using fibonacci retracement levels with price actionUsing Fibonacci Retracement Levels with Price Action

A common question among Forex traders is whether Fibonacci retracement levels actually work and whether there is any benefit to using them. I can tell you without a doubt that they do work and they can be beneficial but only if used correctly.

In this lesson well look at two ways we can use Fibonacci retracement levels as part of our trading strategy.

But I dont want to just discuss how Fibonacci retracement levels work and how to use them. There are a myriad of sites on the internet where you can find this information. Instead I want to focus on how we can use these retracement levels in combination with the price action levels and Forex trading strategies that weve come to know.

So without further ado, lets dive in!

How to Use the Fibonacci Retracement Tool

First things first, in order to understand how we can benefit from these retracement levels we first have to know how to use the tool. For purposes of this lesson I will be using MetaTrader 4, however most Forex trading platforms will have a Fibonacci retracement tool built into the platform.

The best way to illustrate how to use the tool is through real-life examples. So lets first start with a rally where well be trying to determine possible levels of support during a pullback.

GBPJPY Fibonacci Retracement Levels

Notice how in the illustration below were using the major swing low as a starting point and the major swing high as the end point. Although there are many swings in between, these two points are the most prominent on this chart.

This isnt to say that you cant use Fibonacci levels on the smaller swings, because you can. However for the way we trade the higher time frames its best to use the major highs and lows. You will find that, generally speaking, the more accurate Fibonacci levels are found when using a higher time frame such as the daily or weekly chart.

As soon as we drag our Fibonacci tool from the swing low to the swing high it becomes apparent that there are several well-defined levels on this GBPJPY chart.

We can now decide which of these levels are true price action levels that we want to keep on our chart. More on this later.

Notice how the 38.2, 50 and 61.8 Fibonacci levels line up with previous minor swing highs and lows. This gives us extra confidence that these are potential reaction levels where the market may reverse.

How do Fibonacci Retracement Levels Work?

This is still a bit of a mystery. Fibonacci retracement levels have been around for a long time. The phenomena was originally discovered by an Italian mathematician by the name of Leonardo Fibonacci in the thirteenth century.

The Forex market has been around that long, you ask?

Not by a long shot. Well I suppose some type of exchange existed, but not the Forex market as we know it today.

Truth is Fibonacci retracement levels have been adapted for use in the Forex market, but they were never intended for this use.

They were originally applied to everything from studies of the universe to defining the curvature of naturally occurring spirals, such as those found in snail shells and the pattern of seeds in flowering plants.

Yes, you read that right snail shells and plants.

For more on how these were identified and the math behind the phenomena, see my lesson on Fibonacci retracement levels .

For this lesson just know that the most important levels are 23.6, 38.2, 50 and 61.8. Although not a true Fibonacci number, the 50% level is by far my favorite. Over the years I have found that the markets are most likely to react at this level.

Price Action and Fibonacci Retracement Levels

At this point you should have a good understanding of how to use the Fibonacci tool and the levels to watch. Now for the really fun part using these levels in combination with what we already know about price action. But I want to preface the remainder of this lesson with one very important point.

While Fibonacci retracement levels have their place, they should never be used alone. Dont assume that just because a market has retraced 50% that it will react. Like anything else, Fibonacci levels are just one more confluence factor that we can add to our trading toolbox.

Now that thats out of the way, lets get to it!

The very best way to use the Fibonacci tool is as additional confirmation. Think of it as a second opinion. The first opinion of course being the price action levels you already have identified on your chart.

From what we already know about drawing support and resistance levels the following two levels are something we should already have on our chart. We can see that the market had traded between these two levels for some time and continues to react to them even today.

So now that we have our key price action levels drawn we can use the Fibonacci tool to see if any levels match. Remember, we havent drawn the Fibonacci levels just yet. The levels on the chart above were identified by using simple price action.

Once we draw our Fibonacci levels, it becomes immediately apparent that the 23.6 and 50 levels match up well with our price action levels we identified previously. This gives us greater confidence that any retracement to these levels should lead to an increase in demand and are therefore more likely to cause a reaction.

What if the Fibonacci levels dont match up to our price action levels, you ask?

Not to worry. A really nice price action level will always outperform a Fibonacci level that happens to fall at an arbitrary level on a chart. Remember, think of the Fibonacci tool as a second opinion. So if your first opinion (price action level) is solid then you dont really need a second opinion, now do you?

One last point about the chart above. If youll notice the 38.2 and 61.8 Fibonacci levels dont match up to the support levels we marked as important. So should we just ignore these?

Well, heres a tip for you. If more than one Fibonacci level lines up on a chart, chances are that the other levels are going to play a role of some importance. That doesnt necessarily mean they will be key levels, but they are probably levels you should at least keep an eye on.

This can be witnessed in the chart above where the 38.2 and 61.8 levels have caused a reaction in the last few months.

Using the Fibonacci Retracement Tool to Find Key Levels

In addition to using Fibonacci levels as a second opinion, you can also use the Fibonacci tool to find key levels that you may have missed.

A word of caution: Use this technique of finding key levels sparingly and cautiously. Using Fibonacci levels in this manner can get you into trouble if you arent careful.

The first key to effectively using the Fibonacci tool in this way is to only use it on the higher time frames. My preference is the weekly time frame. However just because were identifying potential levels on the weekly chart doesnt mean we have to trade the weekly chart.

Lets take a look:

Using a GBPJPY weekly chart, we can clearly see that the 148 level is a key price action level; we dont need Fibonacci to tell us that.

So now lets drag our Fibonacci tool from the swing low to the swing high to see if there are any other levels that we may have missed.

The first thing we should notice is that the 50% retracement level doesnt quite match up with the price action level we identified in the previous chart. But thats okay! Remember that an obvious price action level will always supersede a Fibonacci level.

The next thing we want to do is to look at the 23.6, 38.2 and 61.8 levels to see if there are any other price action levels that we should pay attention to. At a quick glance you can see that the 61.8 level may be trying to tell us something. So lets draw a horizontal level over the 61.8 Fibonacci retracement level and find out.

Now that we have our horizontal level on the chart its obvious that this is a key price action level that we should pay attention to. The chart above shows how the current 61.8 Fibonacci level has impacted price action over the last several years.

Putting it all together

At this point weve covered how to use Fibonacci retracement levels as a second opinion to key price action levels. Weve also seen how the Fibonacci tool can be used to identify key price action levels that we may have missed.

Now its time for the icing on the cake finding a price action signal at a confluent level.

Lets take a USDCAD downtrend and see if we can find a confluent level with a price action signal.

Its pretty obvious that the 50% level lines up perfectly with recent highs on the daily time frame. Therefore we would want to mark this level on our chart and watch for bearish price action should the market rally back to this area.

Sure enough, two months later the market has rallied back to the 1.005 confluent resistance area and formed a bearish pin bar in the process.

This is a perfect example of how we can profit from using Fibonacci retracement levels combined with a simple price action strategy such as the pin bar.

One last point about the chart above. Notice where the market found support again after forming the bearish pin bar the 23.6 Fibonacci level.

In many ways, the reason why Fibonacci levels are so effective is still a mystery. But one great thing about technical analysis is that we dont need to figure out why something works in order to see it working and thus benefit from the results.

One thing that isnt a mystery is that Fibonacci retracement levels work and can be extremely beneficial, but only when used properly and in combination with other trading strategies like those found with price action.

The effectiveness of this combination can be attributed to the fact that both the Fibonacci tool and price action as a trading strategy are widely used among Forex traders. Therefore the likelihood of a market respecting a confluent level becomes somewhat self-fulfilling.

Key Points

We have covered a lot in this lesson, so in closing lets recap a few key points about using Fibonacci retracement levels with price action.

Always use the Fibonacci tool in combination with other price action strategies and techniques. Never trade a Fibonacci level blindly without other factors to help put the odds in your favor. Think of Fibonacci retracement levels as a second opinion to already-established price action levels The Fibonacci tool can be used to identify price action levels you may have missed, but use diligence in verifying that it is a true price action level Once a confluent area has been identified, wait for a price action signal to trade in the direction of the prevailing trend

Are you currently using Fibonacci retracement levels as part of your Forex trading strategy? Share your experience with Fibonacci levels in the comments section below.

I look forward to seeing your comment or question.

Forex patterns-probabilities trading strategies for trending and range-bound markets

Forex patterns-probabilities trading strategies for trending and range-bound marketsForex Patterns Probabilities: Trading Strategies for Trending and Range-Bound Markets

By Brandon Jones | October 1, 2009

Forex Patterns Probabilities: Trading Strategies for Trending and Range-Bound Markets

By Ed Ponsi

John Wiley Sons, 2007

$85.00, 250 pages

Trading volume of approximately $1.9 trillion per day, the forex market is by far the largest and most liquid trading market in the world. Open for trading 24 hours per day, this huge market offers tremendous opportunity. Ed Ponsi opens the door to this market in his book, which is an excellent primer for the beginning forex trader and a source of trading strategies for both novice and experienced traders.

Ponsi is the president of FXEducator and he demonstrates his knowledge as he “cuts up” the technical world of forex into easily digestible chunks. His writing clarity, organization, and in-depth knowledge make the book a good read for anyone interested in trading the forex market.

In four parts, Ponsi defines forex trading and breaks down its complexity. He explains forex trading in a way that both entertains and educates. Ponsi also lays out specific strategies for trading trending markets, techniques for trading non-trending markets, and a well-thought-out program for taking control of a traders destiny.

The book focuses on the fundamentals of successful trading, including spotting specific market conditions such as trending, range-bound and consolidating. It also discusses market tendencies associated with these conditions, such as the tendency for a strong breakout to occur immediately following a tight consolidation. Ponsi explains these forex phenomena (and many others) with brilliant clarity, and he shows how to turn each to the traders advantage. He primarily approaches these topics from a technical perspective, but his writing style makes easy reading of difficult material.

This book is filled with solid information. For example, one important difference between trading stocks and trading forex is the forex market is so large that even institutions or governments cannot dramatically influence market movement on any given day, which gives the retail trader more opportunity for success. Another is that traders need not choose between technical or fundamental analysis. Forex trading success is found using both in tandem. One reason is that economies tend to change more slowly and predictably over time as opposed to companies that can fundamentally change on short notice. This difference makes fundamental analysis critical. A second reason is the Fibonacci ratios are part of the forex “culture” as banks, institutions, hedge funds, and currency traders rely on them to forecast trends; thus, these ratios become a “self-fulfilling prophecy,” which makes technical analysis important as well.

Ponsis informative book is helpful to anyone interested in trading forex and suggests trading the forex market is a sensible option in todays trading world.

Brandon Jones is a writer/editor for affectwriting.

Inside bar trading

Inside bar tradingInside Bar Breakout Strategy – How to Select the Best Inside Bars

In our ‘What is an Inside Bar’ article. we wrote about the inside bar and its importance as a price action strategy which can offer great trading opportunities. Although this is true, not all inside bars are equally effective or profitable to trade.

To review what an inside bar is, here is a review of the inside bar pattern;

An insider bar is a candle that is completely inside the previous candle. To be more specific, the entire price action of the inside bar, (including the tails/wicks) are also inside the previous bar.

This means inside bars are what we call AB formations, meaning they consist of an A bar and B bar.

Inside bars are more common on time frames of the 1hr chart or less, but quantitative analysis suggests they are statistically less accurate. However, above the 1hr charts, inside bars as a whole statistically have a lot more accuracy as a strategy.

Generally, inside bars occur about 10% of the time (of all bars), and are a distinctive price action pattern. Although they are effective as a reversal strategy, they are far more effective when traded as a breakout strategy with trend. In addition, they can also lead to a breakout when they occur at critical support/resistance levels.

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Below are a few among reasons from an order flow perspective why inside bars form:

Price is consolidating after a large up/down move before starting another with trend move

Price is coming up against a critical support/resistance level which shows some hesitation in the market as to whether it will continue with trend or not

Price action and liquidity are dropping before a critical news announcement. Thus, traders are reducing positions while new ones are not entering the market. This lack or reduction in order flow can often cause a small bar, possibly an inside bar

Profits are being taken on a current trending move

As a whole, critical news announcements naturally drain liquidity before the event. Hence, when an inside bar forms prior to such an announcement, it has less importance because it’s a more natural phenomena.

The good thing about an inside bar is it gives us traders a great chance to get into trending moves. How many times have you wanted to participate in a trending move, but have not been able to get a pullback setup? Inside bars often offer us a great opportunity to take advantage of a strong trending move.

However, you still cannot trade all inside bars the same as they are not equal. Therefore, our goal as traders must be to determine whether the inside bar is occurring with trend or counter-trend. As we said before, inside bars function better as with trend setups, so best to look for these during a key trend or impulsive move.

An example below is on the GBP/USD 4hr chart. We can see the trend which is clearly to the upside, meaning the bulls are in complete control. During this time, virtually no bear bars are printed during a 300 pip climb.

But notice in the middle of the chart, we have a bear bar, followed by a blue inside bar. Both of these bars are really inside the range of the bull bar 8hrs prior. The fact that a bear bar, followed by a bull bar, then another bear bar (indecision) was unable to take out the lows of the last strong bull bar, tells us the bulls are still in control. This offers us a great with trend setup using the inside bar strategy.

After the last bear bar, price action climbs for another 250+pips, offering us a great with trend setup.

In Summary

It is important that we realize how best to use the inside bar strategy as it will show up in with trend and counter trend opportunities. We must realize we cannot trade every inside bar the same way, since they signify many different things from a price action and order flow perspective.

However, there are ways to trade them as a high probability strategy. We actually have compiled over 10+ years of quantitative data on inside bars across almost every pair and time frame. Having this statistical data not only gives you information on expectancy, but also allows you to exploit the edge inside bars can off.

If you would like to access this proprietary quantitative data on the inside bar setup, along with other high probability price action setups, then check out the Price Action Course where you can learn how to trade the inside bar strategy with consistency and accuracy.

In addition to getting access to these strategies, you also get lifetime access to the course, dialogue with a community of traders in the traders’ forum, free updates, live trade analysis, and more. To find out more about this price action course, check out the link above, or visit 2ndSkiesForex .

Hft appeals to quants

Hft appeals to quantsHFT Appeals to Quants

Trading firms that apply quantitative strategies are devising strategies to create friction-less trading, thereby reducing transactions costs and boosting alpha. One of these strategies is high-frequency trading.

“To be an effective stat arb shop, you need to think about your cost of trading,” said Mani Mahjouri, chief strategist and chief investment officer at Tradeworx. “Being good at high frequency trading facilitates that part of the process. About four years ago, we made the decision to get into high frequency. We try to maintain a top notch execution platform. Liquidity is like a commodity, with a supply and a demand curve.”

Mahjouri runs the trading business at Tradeworx, including its high-frequency market making business, which does about 1% of U. S. equity market volume in liquidity-providing strategies. Tradeworx also has a statistical arbitrage hedge fund. which has been in operation for 12 years.

“What we’ve discovered is that as time passes, more people are discovering these alpha strategies,” said Mahjouri. “As markets get more liquid, we’ve seen that for any particular alpha, the spread tends to narrow. The scope of the opportunity gets smaller as more people are accessing that alpha, bringing the market closer to equilibrium in an efficient market sense.”

The Securities and Exchange Commission on Tuesday published Part II of its Equity Market Structure literature review, summarizing and discussing papers that address high frequency trading (“HFT”). The papers analyze non-public datasets in which market activity can be attributed to trading accounts that have been identified as engaging in HFT.

A forthcoming Part III of the literature review will address a series of papers that do not have access to datasets in which market activity could be attributed to HFT accounts, but rather use various measures calculable from publicly available market data to proxy for HFT. Such HFT proxies include high message rates, bursts of order cancellations and modifications, high order-to-trade ratios, small trade sizes, and increases in trading speed. These proxies generally are associated with the broader phenomena of algorithmic trading and computer-assisted trading in all their forms.

“While HFT clearly is a large subset of algorithmic trading and computer-assisted trading, the HFT Dataset papers, as well as some recent market events and enforcement proceedings, indicate that other types of automated trading are significant and may be quite difficult to distinguish from HFT in the absence of trading account data that can be used to distinguish different types of market participants,” the SEC said in the literature review.

It always costs money to extract money, whether it’s the bid/ask spread or incurring some information disadvantage by posting a passive order. “Generally, if you want to acquire a position at a given time, you have to give something up in return,” said Mahjouri.

Regulation NMS (National Market Structure), which prevents a trading venue from ignoring, or “trading through,” a better price posted on another trading venue, provided that the quote is accessible electronically, has made the market better for all participants, particularly the end users, but it has also led to a tremendous amount of complexity in the trading paradigm.

“A huge part of our competency is in market microstructure so we’re able to efficiently extract alphas at a lower cost than typical quant funds,” Mahjouri said. “We methodically test our ideas over large data sets, and fine tune our parameters through rigorous back testing. We are able to come up with a set of indicators that stand up under empirical scrutiny.”

How does options trading work

How does options trading workHow Does Options Trading Work

In many ways there are two different options markets: there are the options markets on which average investors participate, and then there are options markets where institutional investors participate. Technically, options are traded on the same market, but the techniques and strategies that institutional investors deploy are very much more complex than those used by individual investors.

One prerequisite to a profitable career in options trading is an understanding of stock trading. Unless you understand how stocks rise and fall in value, then you can’t possibly begin to understand how stock options—a derivative of individual stocks—rise and fall. However, stock options, being the complex investment instrument that they are, bring in another variable that doesn’t much matter with stock picking: time.

Stocks vs. Stock Options

When traders buy and sell stock options they seek not to buy or sell stock. Instead, they are buying and selling the right to buy and sell stock at a certain price. The best example here is one many will experience, regardless of their financial background: purchasing a home. It is common to see that investors and first time homeowners alike place what are essentially options on the right to buy a home when they offer a small down payment for first consideration on new homes being built in a specific neighborhood.

You might, for example, give a homebuilder $5,000 with the understanding that you have the right to buy a home that they are building at any time in the next three years. Should you back out of the purchase of the home, the builder keeps both the home and the $5,000, but you save the money you might have otherwise spent on the home. If you follow through with the deal, you then have the right to purchase a home at the price stated in the contract.

Notice how much of the language is similar here: contract, options, and time. These elements, which are part of the very basic process of buying a home, illustrate better the relationship between stocks and options than any other market.

Time and Volatility

In the example above, the home builder required a premium of $5,000 to purchase the option to buy a home at a certain price within a timeframe that extends two years into the future. But while that homebuilder might accept $5,000 for a two-year timeframe that is largely predictable, it would be reasonable that the same homebuilder would require a larger premium for the option to buy the home if 1) home prices are changing rapidly or 2) the length of the contracted time is extended further into the future.

Many options traders sustain themselves by exploiting these two basic market phenomena. Since the price of options rise when predicting the future movement in stock prices becomes less certain, investors of all types can make money by playing very simple volatility strategies. If the markets are calm and cool, investors would be wise to snap up every option available, and hope that a larger daily range in the price of each stock buoys the general level of option premiums. This concept is the basis of the VIX volatility index, which determines the relative level of expected volatility by evaluating the changes in options premiums on the options contracts for the 500 stocks in the SP 500 index.

Hit the Ground Running

Options are considered risky investments because they are essentially leveraged investments. While this may be alarming at first, consider that this also means that small investors can effectively own a large portfolio of stocks with only a modest investment. Stocks in the $50 price-range, for example, often have options premiums ranging from $.05 to $1, meaning that one contract of 100 shares costs anywhere from $5 to $100, compared to $5,000 for a purchase of straight stock.

Should you have any experience in stock trading, options trading is the next logical step. Consider opening a demo account to “paper trade” the options markets to test your strategies. Alternatively, investors with more risk capital should consider opening an options account and having at it. Whereas “paper trading” allows investors to test their skills without risking their own money, trading with real money requires that new options traders experience something most will never experience in their paper accounts: the emotional influence of rising and falling account balances.