TradeJuice.Com Trading Articles Weblog

Heads Up every one!

I have just found out that Mark Mc Rae is launching a new forex site. I was just there now and its one to book mark. It is not complete yet and is only officially launching some time next week.

But here’s the inside track! Mark has spilled the beans, he has taken all the Forex tutorials we have all be scratching for and making them available to the public.

So go and take a look at the site: Marks Forex or Interbank Forex Currency Trading

Pivot Point Tuition – The reason pivot points are so popular is that they are predictive as opposed to lagging. You use the information of the previous day to calculate potential turning points for the day you are about to trade (present day).

Because so many traders follow pivot points you will often find that the market reacts at these levels. This give you an opportunity to trade.

Before I go into how you calculate pivot points, I just want to point out that I have put an online calculator and a really neat desktop version that you can download for free HERE

Emini Simulated Trading – The “voodoo science” theory would make sense if it wasn’t for the fact that there is a significant number of traders who are able to consistently make profits in the stock/futures market. These traders use technical analysis as their main tool. Since any trader has or can have access to the same TA tools we have to ask how can a small group of traders consistently win and the other larger group, more or less consistently lose in the stock market game. What is it that winning traders know about technical analysis that gives them the upper hand?

The most recent GDP figures seem to echo what Fed Chairman Greenspan said in February in his semiannual Monetary Policy Report to the Congress. For brevity’s sake I’ll condense his opinion about the U.S. economy into three words: All is well.

I could offer a fact-filled and scathing rebuttal, but why be quarrelsome? Instead I’d like to answer this simple question: “How quickly can a very large industrial economy go from good to bad?” My case-in-point is recent indeed — up through the business news as of February 16, 2005. All the headlines and subheads come from BBC News reports. Please note the dates.

Read This Article by Robert Folsom

I am frequently asked how long one should backtest a trading system. Though there’s no easy answer, I will provide you with some guidelines. There are a few factors that you need to consider when determining the period for backtesting your trading system:

Trade frequency
How many trades per day does your trading system generate? It’s not important how long you backtest a trading system; it’s important that you receive enough trades to make statistically valid assumptions*: If your trading system generates three trades per day, i.e. 600 trades per year, then a year of testing gives you enough data to make reliable assumptions*. But if your trading system generates only three trades per month, i.e. 36 trades per year, then you should backtest a couple of years to receive reliable data.

Underlying contract
You must consider the characteristics of the underlying contract. The chart below shows the average daily volume of the e-mini S&P:

It doesn’t make sense to backtest a trading system for the e-mini S&P before 1999, because the contract simply didn’t exist! In my opnion it doesn’t make sense to backtest an e-mini trading system before 2002 because at that time the market was completely different; less liquidity and different market participants. I believe that a reliable testing period for the e-mini S&P are the years 2002 – 2004.

* What is “statistically valid”?
Recently I received an article from a Ph.D in statiscs. He explained the correlation between the sample size and the “margin of error” in the table below. The bigger the sample the smaller the margin of error, but usually a sample date of 200 trades should be sufficent. If your trading system generates enough trades, then you should use 500 – 600 trades.

Read Article with images: Back Testing