Developing an Intimate Relationship with The British Pound!

[marc walton]

One Key to Forex Success: Developing an Intimate Relationship with One Currency Pair. Entry for the summer competition from Irina. I do go on sometimes but learning to specialise with a few pairs or even one as Irina suggests here is definitely recommended. You will discover the rhythm, the nuances & characteristics that each pair has. How they react to news. Different times of day. Ranges etc etc


Here is Irinas article:

Not long after joining Marc’s excellent mentorship program, I started thinking how to combine his trading ideas with my own to generate consistent profits. Even better said, my restless mind is trigerred by Marc’s ideas, and, day in and day out, I find myself thinking about ways to transform them into robust algorithms.


Being a Mathematician by training, it comes naturally to me to want to understand certain things on the deepest conceivable levels.


I believe that one key to success in Forex is narrowing down your focus. That is a very difficult task with the plethora of learning resources available online, and even within Marc’s program, sometimes it is hard to keep a really narrow focus.


What I mean by this is that, for example, I really wish I would jump in after Marc points the “once in a million years downward pointing Bollinger band” as a sufficient reason to short the swissie.


But then I step back, realizing that I do not ’know’ the swissie, so at most I should place the trade on a demo account.


If the big banks have one trader for each currency pair or currency derivative, it seems a wise choice for a newbie trader to focus her attention on one currency pair, and learn it as well as she can.


I chose the GBP/USD, and started following it every single day for the past three weeks, and I also started keeping a journal.


My goal is to become an expert at trading the London breakout/M1 method on the GBP/USD. Certainly there are pips to be made: the typical daily range of the GBP/USD in the Asian trading session is 55 pips, while the 24 hour daily range is typically 3 times that.


The big moves typically occur in the London morning session, but sometimes a breakout can start as early as 6:30am London time, and today’s (July 30) rally happened during the London afternoon.


The days on which the Bank of England releases its minutes or when Mervyn King speaks are days when I am going to not daytrade the pound: the spikes are too gigantic and unpredictable. The days when big news are released, such as the GDP, are not the same story because one has a historical time series of actual and forecasted values.


One project that I would like to accomplish as part of building a deep intuition for the GBP/USD (or any other pair, for that matter) is to construct a database of historical prices and manipulate it with SQL/Q/KDB.


At the moment I am clueless about database programming. Of course there is data in the History Center of any Metatrader platform, but the goal would be to get the data and analysis of the currency pair of choice away from Metatrader.

For instance for data spaced at 15min intervals, the number of entries that ForexMeta holds is 6806, going back to late April.


To build this lofty database I am planning to try to link Open Office Calc (the freeware version of Excel) with Metatrader, by checking the “enable DDE server” option.


Another task that I would like to accomplish is to write some C++ code that would tell me every day how many crossings of the horizontal lines that represent the maximum and minimum during the Asian range, are achieved during the London morning session.


Also, I would like to construct a histogram for the price range in the Asian session and then decide above what percentile of the histogram I am going to take breakout trades.


On days when the range is 35 pips, I will probably want to stay out. Intuitively, with a lower Asian range, the crossings of the two horizontal barriers would give less accurate signals for the breakout.


I wish I were further ahead with my goal of becoming intimate with the cable, and had some database in place and some C++ code, but hopefully by writing this down and

sharing it with other members, I will manage to stay on track. Any database programming experts in here?? Irina

[capsmart]

Hello Irina and Marc,
I used to be a programmer myself back in the DOS age. At that time things were easier. 90% of the code did the calculations and 10% was the communication with the user. Now you have to spend too much time to see if the right click was pressed, if the arrow is visible and if the font is installed.
I think using just excel (without the DDE) is enough for statistical analysis. There is plenty of memory available to store thousands of rows but if you have the time and will maybe a C++ program would work faster and be more flexible.