4xlab.net provides the source code and support for 4XLab
Forex Lab dot NET. Forex Simulation Software. Mechanical Trading Systems Forums.
The forums in this website provide source code and support for 4XLab.NET, a backtesting software for the FOREX, or currency exchange market. This FOREX simulation software can be used to test computer trading strategies and develop mechanical trading systems, evaluate their profitability, and ultimately be used to create a trading robot that automatically places currency trades with a FOREX broker using an API.
In here we will also post articles on how to create systems to automatically computer trade the FOREX market.
Since I have long realized that the best way to learn something is to teach what one already knows. I will be writing a series of articles that explains how to build a business around securities trading. The articles will start at a beginners level, introducing basic concepts about the workings of the financial markets. I will then continue to technical analysis of price action. This will be followed by examples of complete trading systems. The emphasis of the articles will be on implementing computer algorithms for the material learned. The articles will continue and evolve until a system has been designed, implemented, and tested.
When trading any kind of security, be it stocks, currency, or futures, one must decide if the price action is in one of three states, going up, going down, or staying relatively unchanged. These decisions are facilitated by the use of technical indicators, which analyze the previous price action and attempt to forecast what the future action is going to be.
More than an accurate price forecast is necessary before attempting to enter the financial markets. A trading system should have a clearly defined exit criteria, and also, allocate the appropriate amount of capital to the trade. Those are the three most important components of a trading system: a clearly defined entry criteria, a clearly defined exit criteria that will capture gains and limit losses, and a sensible capital allocation system that will allow the average of winning and losing trades to be positive.
People attempting to trade the markets are also faced with perhaps the most difficult task. Having the discipline to trust the system being traded will be profitable over the long run, despite ocassional losses. Tiredness is also a factor, a good system is a boring system, good trading becomes boring trading. Eventually, the trader looses concentration and begins to make mistakes. Another factor is the amount of time people are able to devote to trading. Sometimes, opportunities arise at inconvenient hours.
Automation through a computer program as a way to merge a good trading system with an emotionless trading entity. The resulting program will be able to watch the markets for as long as they are open, objectively analyze the price action, determine high probabilty entry points, allocate the correct amount of capital to each trade, and exit the trade when a limit for a loss has been reached, or the profit potential has been realized.
Developing such a program is done in stages. The first stage is to procure historical data and build a simulator which allows a trading system to be evaluated with old data and simulated capital. Then, trading systems are implemented, refined, and optimized. A profitable system is selected. Lastly, an interface is built to connect the trading system to the quote provider and the order taking systems.
Busineses fail because of: lack of a sound business plan, lack of knowledge, not enough capitalization, and lack of discipline. I will address each one of these points in the lectures so that in the end, a complete and working system is built.