Is risk diversification even possible in the forex market? - page 14
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Explain:
http://webmaster.ayrveda.ru/Forex_Tester/Forex_Tester.html
Trading in the tester with a lot of instruments is too tense on this tester.
(it's not convenient to move stops + you can't see what your take profit is in money, not in pips, etc.)
That's why I initially decided to trade only on the 1st instrument, to avoid constant scrolling up and down and watch where and what's in my position number 21 (for example).
That is, I simply, for example, traded a deal and immediately move downwards (scrolling) in search of a new opportunities.
As soon as I see it, I immediately take the first instrument that appears (no matter what kind).
That's all.
Try to move from simple to complex - try to use some kind of system (if you have one, if not then there is no point in trading either) to achieve a stable positive success (not necessarily spectacular) in one traded instrument. The classics for the basics - the eurodollar pair, the best conditions for trading. After that try to test the system on other pairs, be sure to consider the difference in trading conditions. If your system is positive on other pairs as well, you are probably on the right track.
P.S. I trade by paternals - so I don't care which tool.
I traded my own patterns, that's why it makes no difference for me. I used to have 5000 of them on Nysa and all traders traded them in the same way.
They don't fixate on one instrument for the fund (it's a wild card there).
Every day they trade new instruments as a rule.
(before the market opens, they do a risk assessment).
I do not understand why they have to trade on the first instrument?
(what is the point?)
(there will be practically no trades in a day...)
+ trying you mean for how long?
(what period?)
Now the promised clarification.
So, why do I not consider the RNP information to be empty:
1. You can use UXO to sit out unpleasant market events that you know about in advance. For example, you have an open buy position in EURUSD. It is in a small minus position, and IMPORTANT news on EUR or USD is approaching. The market does not allow you to close the position at zero, but you do not want to take a loss. The news is a guessing game, you may get lucky or you may get hit in the head. What to do? You open two more positions: buy USDJPY and sell EURJPY, forming a market-neutral portfolio. The news comes out, the market wobbles and you gradually decide on the direction of the move. You close positions that are directed against the trend, and open a position in the direction of the trend, in which you make a profit.
2. You can use RNP as a filter. For example, if I open sales on EURUSD, PFR will impose limitations on position opening directions on USDJPY (only sales) and EURJPY (only purchases). I may not open positions on USDJPY and EURJPY. I may make enough profit on EURUSD, but if I decide to open positions on the other two currencies, the direction of their opening is rigidly set. Using this technique I increased my deposit 19 times in 18 days! This result is recorded in Danik's thread about a million.
3. You do not need any stops when you are using the RNP!
I think it is enough.
Look above, I gave a link and a quote to your interpretation of "UXO".
In the currency of the deposit.
1. opening two accounts with differently oriented synthetics - THIS IS NOT TRADING, THIS IS EXPERIMENTAL to confirm the claim that a market-neutral portfolio DOESN'T NEED AN OPENING DIRECTION.
2. I still fully subscribe to the post you refer to. It's classic arbitrage (Bid > Ask), only with the entry and exit separated by time. Not sure what you disagree with.
Do you mean try where exactly - on a demo, on a tester or on a real?
P.S. I trade on paternas (my own) - so I don't care which instrument.
I traded my own patterns, that's why it makes no difference for me. I used to have 5000 of them on nais and all traders traded them in the same way.
They don't fixate on one instrument for the fund (it's a wild card there).
Every day they trade new instruments as a rule.
(before the market opens, they do a risk assessment).
I do not really understand why they have to trade on the first instrument?
(what is the point?)
(There will be practically no trades during the day...)
In that the result will be the same, but the opening directions of the synthetic are DIFFERENT.
You have to trade with the same synthetic in the same account.
Yes, using this method you can make a profit (note, I have not denied this possibility before or now). But the profit can be obtained with a favorable combination of market circumstances. And now I come to the point where we are at odds:"This is trading without risk, because the portfolio is neutral. I believe that using such a design does not guarantee safe trading and there is always the possibility that an open portfolio will fail to close with a positive result. Therefore, I think the term "market-neutral portfolio" is incorrect in relation to what you are talking about.
I still subscribe to the phrase: "It is a risk-free trade because the portfolio is neutral" because that phrase was referring to ARBITRATION. Arbitrage is, by definition, risk-free trading! That is why there is such a fight against its use. Well then the question arises: What does neutrality have to do with it? It has to do with the fact that this arbitrage I referred to in the quote is time-differentiated. That is, there is a time lag between opening and closing a portfolio, and this lag can be quite large (from several minutes to several tens of minutes or even hours). During this time, very bad things can happen in the market. It is the NEUTRALITY of the portfolio that eliminates the risks associated with adverse market events. This is why I consider it to be risk-free trading. But even a neutral portfolio does not exempt us from the RISKS associated with an EXECUTION.
(I have heard that a brokerage house may not pay out the winnings associated with such a strategy...)
I've written it all down, all you have to do is check it out.
Understand one simple thing - no-one is going to make decisions for you.
What message was it in?
I read that arbitrage as a strategy based on the fact that DTs quotes are sometimes wrong.
(compared to banks).
Hence my question - is it possible to make money with banks or not?
+ Where did you read that I would ask to take decisions for me?
Just asked a question in the expectation of getting a straight answer.
(yes or no)
P.S. If it works only in DC - then what's the point of me checking, if I'm not going to trade there anyway
(So far I see an option for myself to trade only through the bank.)
I still subscribe to the phrase: "It is a risk-free trade because the portfolio is neutral" because that phrase was referring to ARBITRATION. Arbitrage is, by definition, risk-free trading! That's why there is such a struggle against its use. Well then the question arises: What does neutrality have to do with it? It has to do with the fact that this arbitrage I referred to in the quote is time-differentiated. That is, there is a time lag between opening and closing a portfolio, and this lag can be quite large (from several minutes to several tens of minutes or even hours). During this time, very bad things can happen in the market. It is the NEUTRALITY of the portfolio that eliminates the risks associated with adverse market events. This is why I consider it to be risk-free trading. But even a neutral portfolio does not exempt us from the RISKS associated with an EXECUTIVE event.
you can count, be sure, subscribe that trading this way is risk-free. The argument is ironclad: "Arbitrage is by definition risk-free trading!" . As Kozma Prutkov said: "If you see a sign on the cage with a buffalo that it is a tiger - do not believe your eyes!
I suggested you to make a simple calculation or check in the Strategy Tester using historical data, which positive and negative equity movements your "neutral" portfolio will have. You didn't go beyond the question of whether I did it myself, and you continue to "subscribe" without any proof. And elementary calculations and running in the tester show that trading your version of the "neutral" portfolio is not risk-free. And the risk is not related to the execution of orders, but is a consequence of the possibility of price movements in an unfavourable direction for the open position.
This leads to the conclusion that either you have been deceived that arbitrage is by definition a risk-free form of trading, or your method is not arbitrage and therefore the portfolio is not neutral.