article originally from FMZ.COM

Ten classic model ideas of programmatic trading strategies

www.fmz.com

1.

Interval breakthrough

The volatility range breaks through trading, triggering a breakout trade operation on the day based on a percentage of yesterday's volatility. If yesterday's volatility is abnormal, the necessary adjustment should be made to ensure its reasonableness.

Main features: intraday trading strategy; close all position when market closed at the day. interval breakout based on the relationship between yesterday's amplitude and today's opening price;

yesterday's amplitude = yesterday's highest price - yesterday's lowest price;

upper track = today's closing price + N * yesterday's amplitude;

lower track = today's closing price - N * Yesterday's amplitude;

when the price breaks through the upper track, buying long; when the price falls below the lower track, selling short.

2.

Fiali four price

Yesterday's high, yesterday's low, yesterday's closing price, today's opening price, can be called the Filip four price. It is the main breakthrough trading strategy reference system adopted by Japanese futures trading champion Fiali. In addition, because of Fiera's subjective mental trading model, it decided that it also combined and applied the “resistance line” in the actual transaction, namely the resistance line and the support line.

Main features: intraday trading strategy, close all position when market closed at the day; Fiali four price refers to yesterday's high, yesterday's low, yesterday's closing, today's opening;

upper rail = yesterday's high;

lower rail = yesterday's low;

when the price breaks through the upper track, buying long; when the price falls below the lower track, selling short.

3. Sky Garden

Breaking out when the market opens is the fastest way to enter the market. Of course, the probability of error is also the highest. The direction of the first K-line, which is the standard for judging the possible movement direction of the day. It is more effective when the opening is a gap opening high or low.

Main features: intraday trading strategy, close all position when market closed at the day; Sky Garden is used when the day is gap open for the opening price, that is, when the opening price is >= yesterday's closing price*1.01 or the opening price is <= yesterday's closing price*0.99;

upper track = The highest price of the first K line;

the lower rail = the lowest price of the first K line;

when the price breaks through the upper track, buying long; when the price falls below the lower track, selling short.

4.

Sideways breakthrough

It is easier to achieve quantitative breakthroughs in form, such as fractal, narrow cross-section breakthrough, various K-line combinations, double-bottom and double-top; it is difficult to achieve quantitative morphological breakthrough, with trend line and arc top and bottom, also various of classic techniques shape such as flag, diamond, and triangle. The trend is followed by consolidation, and the trend is after consolidation. The trading strategy of the sideways breakthrough fully reflects the price fluctuation law of the volatility cycle. What we need to do is to reasonably quantify the definition of consolidation, such as the span of the period and the magnitude of the fluctuations.

Main features: intraday trading strategy, close all position when market closed at the day; sideways breakthrough when the high and low points of the past 30 K lines fluctuate within 0.5% of the upper and lower axis;

upper rail = the highest price of the past 30 K lines;

lower rail = The lowest price of the past 30 K lines;

when the price breaks through the upper track, buying long; when the price falls below the lower track, selling short.

5. Turning trading

Relatively speaking, breakthroughs based on fixed points may be subject to changes in the price range of the variety; while breakthroughs in fixed percentage ranges are less likely to be similar, unless the level of volatility of the variety changes dramatically.

Main features: intraday trading strategy, close all position when market closed at the day; turning to trading based on today's opening price;

upper rail = today's opening price + today's opening price * 0.01;

lower rail = today's opening price - today's opening price * 0.01;

when the price breaks through the upper track, buying long; when the price falls below the lower track, selling short.

6. HANS123

As a breakthrough trading strategy widely popular in the foreign exchange market, HANS123 breaks through the high and low points of the number N of K line after the market opened, as a criterion for triggering trading signals. This is also an early stage trading mode, with price envelopes, time confirmation, fluctuation range and other filtering techniques, it can improve its odds.

main feature:

Intraday trading strategy, close all position when market closed at the day; HANS123 is ready to enter after 30 minutes of opening;

Upper rail = 30 minutes highest price after opening;

Lower rail = 30 minutes lowest price after opening;

when the price breaks through the upper track, buying long; when the price falls below the lower track, selling short.

7. Daily average ATR breakthrough

We have reason to believe that when a certain extent of ATR volatility has occurred, we are more willing to gamble the volatility of the day to continue to develop in the direction of a certain ATR. The benchmark for comparison may be the opening price or the day or the new highest and lowest record price has been set.

Also, can calculate the ATR in the past 10 days.

main feature:

Intraday trading strategy, close all position when market closed at the day; The daily average ATR breaks through the relationship between today's opening price and the average ATR of the past N trading days;

Upper rail = today's opening price + N trading day average ATR*M;

Lower rail = today's opening price - N trading day average ATR * M;

when the price breaks through the upper track, buying long; when the price falls below the lower track, selling short.

8. ORB breakthrough

The ORB breakthrough trading was first proposed by US fund manager Toby in 1988. He measured the opening price by the smaller of highest price and the lowest price. Once the market exceeds this range, it is considered a real breakthrough. In practical applications, breakthroughs in early stage trading and breakthroughs after narrow fluctuations can be used as effective filtering conditions.

main feature:

Intraday trading strategy, close all position when market closed at the day; The ORB failure breakthrough is based on the past N trading day ORB indicators;

Upper rail = today's opening price + N days ORB*M;

Lower rail = today's opening price - N days ORB*M;

when the price breaks through the upper track, buying long; when the price falls below the lower track, selling short. If the number of failures was high in the past, and the probability of the next success will be higher.

9. Time-average price breakthrough

The time-sharing average price yellow line is widely used in the time-sharing average price trend chart of various trading software. Therefore, its position is particularly prominent in terms of the self-fulfilling language of the trading strategy.

main feature:

Intraday trading strategy, close all position when market closed at the day; The time-sharing average price yellow line is based on the average price of today's time-sharing chart;

Upper rail = yellow line of the hourly average price of the day;

Lower rail = yellow line of the hourly average price of the day;

when the price breaks through the upper track, buying long; when the price falls below the lower track, selling short.

10. ATR volatility breakthrough in the day

Focus on the assessment of changes in short-term market volatility. The volatility breakthrough has the ability to adapt to the market to a certain extent, and the ability to adapt to different market environments is stronger in practical applications.

main feature:

Intraday trading strategy, close all position when market closed at the day; the intraday ATR breaks through the ATR based on the opening price of the K-line and the past N cycles;

Upper rail = the K line opening price + N period ATR * M;

Lower rail = the K line opening price - N period ATR * M;

when the price breaks through the upper track, buying long; when the price falls below the lower track, selling short.

article originally from FMZ.COM

article originally from FMZ.COM

Bernard Baruch was born in 1870 in South Carolina and graduated from the City College of New York. Baruch is a successful example of starting from scratch and a stock trader who is good at grasping opportunities, as well as a flexible investor, also a politician who is familiar with economic development, investing in ghosts and speculative masters.

Baruch proposes to pay attention to three aspects of the investment object: first, it must have real assets; second, it is better to have a franchise advantage of operation, which can reduce competition, and the way out for its products or services is more assured; The third and most important is the management ability of the investment target.

Baruch cautioned that he would rather invest in a company that has no money but is well managed, and don't touch the stocks of a well-funded but poorly managed company. Baruch also paid considerable attention to the control of risk. He believes that it is necessary to keep a certain amount of cash in the hands; it is recommended that investors must reassess their investment at intervals and see if the stock price can still meet the original expectations. He also reminded investors to learn to stop loss: the mistake is inevitable, the only choice after the mistake is to stop the loss in the shortest time. Baruch did not agree with the so-called excess returns, and he cautioned against trying to buy at the bottom and sell at the top. He said: "Whoever says that he can always sneak into the top, it is a lie." He also reminded investors to beware of so-called insider information or hearsay, and investment mistakes are often cast into it. Therefore, some people blame Baruch for thinking that one of the reasons why he was called a “speculative master” was his seemingly desperate style.


"The masses are always wrong" is the first essence of Baruch's investment philosophy. Many of his deep understanding of investment are derived from this basic principle. For example, Baruch advocates a very simple standard to identify when it is the low price that should be bought and the high price of the sale: when people cheer for the stock market, you must sell decisively, regardless of whether it will continue to rise or not; when stocks are cheap enough that no one wants, you should dare to buy, regardless of whether it will fall again. People are often surprised by Baruch's judgment and his ability of grasping the fleeting opportunities.

He believes that any so-called "real situation" in the stock market is indirectly conveyed through people's emotional fluctuations; in any short period of time, the rise or fall of stock prices is mainly not due to objective, non-human economic forces or Changes in the situation, but because people react to what is happening. Therefore, he reminds everyone that the basis of judgment is understanding. If you understand all the facts, your judgment is correct. On the contrary, your judgment is wrong. In all aspects of the public's psychological understanding, Buffett and Baruch are exactly the same. Isn’t that Buffett always say you have to shrink your hands when the public is greedy, and to be aggressive when the public is afraid? The two masters have many similarities in the investment philosophy.

Baruch’s investment approach is more flexible and he advocates stop loss firmly. He said that if investors have the awareness of stoping loss, even if they only do three or four times every ten times, they will become rich. He wants investors to have plan B so they can turn around and leave at any time. Buffett seems to be more assertive and don’t change the investment plan easily that has been formulated. He said: "If you can't carry out the plan with ease after the stock price has fallen by half, then you are not suitable for stock investment." What can be done is that Buffett is cautious in choosing stocks. In this way, Buffett is like a well-trained Tai Chi master, and Baruch is more like a swordsman sealing the throat.


The basic qualities that investment and speculation must have:

1. Self-reliance. Must think independently. Avoid emotionalization and remove all environmental factors that may lead to irrational behavior.

2. Judgment: Don't let go of any details - think for a moment. Don't let what you want to happen affect your judgment.

3. Courage: Don't overestimate the courage you might have when everything is bad for you.

4. Agile: Good at discovering all the factors that may change the situation and the factors that may affect public opinion.

5. Cautious: Be easy, otherwise it is difficult to be cautious. When the stock market is in your favor, you need to be even more modest. It is not a cautious act when you think that the price has reached the lowest point; you’d better wait and see, it is not late to buy later. It’s not a cautious act to wait until the price rises to the highest point – it’s probably safer to get out of the hand.

6. Flexibility: Consider all objective facts together with your own subjective view. It is necessary to completely abandon the attitude of stubbornness – or “self-righteousness”. The idea of ​​earning a certain amount of money over a certain period can completely ruin your own flexibility. Once you decide, act – don't wait and see what will happen to the stock market.


The psychological literacy that must be possessed by investment and speculation:

Almost everyone can't escape being controlled by their own emotions: they are either too optimistic or too pessimistic. After you have mastered the objective facts and formed your own opinions, please watch the trend. You should know what should happen in the market, but don't mistake it for what will happen in the market. The more the public intervenes in the stock market, the greater its power. Don't try to work against everyone, and don't stand too forward. If it is a bull market, of course, don't sell short. However, if there is a possibility of reversal or if you are worried about holding stocks, you will not be able to stay for a long time; vice versa.

When the stock market panics, the best stocks don't expect to sell a reasonable price. Pay close attention to all things that inspire or horrify the public. When the stock price climbs, considerate comprehensively what will make it climb higher. On the contrary, of course, you must also think about it. Don't forget history. The same thing when the stock price falls. Pay attention to the mainstream, but no need to have too many companions.

"Stop the loss and let the profit continue." Overall, the action should be fast. If you can't do this, please reduce your intervention. In addition, please reduce the intervention once you have doubts. After making up your mind, you should act immediately, and you don't have to consider the market reaction. However, when planning, you must consider the market trends from time to time.

Compare the two with a full understanding of past conditions and a comprehensive grasp of the current situation. Psychologically prepared for all obstacles, and excessive action will always lead to overreaction.

Unpredictable ingredients: The “opportunity” factor needs to be considered and you need to be prepared in financial, mental and physical factors.

article originally from FMZ.COM

A conclusion that I get from years of trading-----

When you are concentrated, you will be oblivious of yourself and forget those messy thoughts, namely a state of "unintentional". If you got this calm feeling, which is amazing, you need to maintain this in your work and life so you can achieve more success. The more we use this feeling, the better result we get then more skilled we are using.

I used to listen to more senior friends: "Don’t be too close to the stock. The closer you go, the worse you will be." It’s correct. However, the stock market needs to be learned. If you don't go deep into the research, how can you be wise? So, at first glance, this seems to be very contradictory. But this is a question of high skill: people with deeper skills can stay close to the market without being confused by the market.

Learning and actual operations, from a certain point of view, are two different things. It belongs to two different stages. When studying, we must be serious in thinking things over deeply, and researching repeatedly. The spirit of perseverance is important, as well as careful work, aiming at the pursuit of perfect high standards, and not to be sloppy in the details.


In short: you need to be incisive and subtle, then you gain success. However, when your skill is practiced and you enters the market, you go to a higher level in which you will be bold and resolute, not punctilious in details and only focusing on the general trend.

In other words: When you are a student, it is inevitably being close to the market, because you need to look at it, dissect it, analyze it, and have to go very close to it. However, when it comes to reaching the edge of the winner's realm, it feels that there is a distance from the market and it is no longer as close as it used to be.

When we do trading, it is also the same four layers: At beginners’ phrase, there will be many wrong ideas and techniques, which will make us doubt the correct method, even do not want to learn, so it is very necessary to focus on studying at this time.

I hope that the garbage knowledge in the brain will be removed. Then the burden of brain is lightened, and a good weight loss effect is achieved, which is a very natural state. At this point, operating the stock naturally follows the Fa-rectification, not deliberate, not tweaking. Since you have reached the height of unintentional heights, it’s undoubtedly the best time to work harder. Currently, everything is developed normally, trading is operated naturally, and you are free from emotional shackles. Everything is natural, and you just go with it, achieving with minimum fuss and maximum efficiency.

What is said above is normal steps of learning. However, most people probably have no chance to follow the steps to learn. For my part, the actual situation is as follows:

1. I just entered the market, I don’t know much, I don’t care much, I’m lazy, and I look at the market table occasionally. (In fact, this is a bit of a state of "unintentional")

2. Suddenly one day, I felt that the opportunity to enter the market came. I went to buy stocks (or emptied) (because I was "unintentional", it was easier to find real and big opportunities to enter.)

3. After a little bit of sweetness, I want to learn more (in fact, I want to learn more short-term operation knowledge), to see if I can "frequently operate" so that I can make more money (this is greed, then I began to lose the realm of "unintentionality" and entered the world of deliberate creation. This heart is a delusional heart, no longer pure.)

4. When I realized that I was going in the wrong direction, I made up my mind to jump out of small places, small details, small short lines, and small patterns. I wanted to find my original heart back, which was pure and kind.

5. Then I got rid of weed and kept the flower of the leek. I returned to the state of “lazy” when I first entered the stock market, but that was only the surface. The correct knowledge was ready.

6. While waiting for the next opportunity, I will not ask for it, I will not be anxious, and I will not lose my heart. Because I have forgotten that I am waiting (ahh, I envy this kind of relaxing life)

7. The opportunity is coming... "The god of opportunity will come knock my door" - if you are ready, you will hear the ringtone. You don't need to listen every night, every minute, every second. When the opportunity comes, you will know and naturally act.

Often listen to some investors complaining that technical analysis methods are not reliable, and some even think that technical analysis methods are useless. I believe that some investors have such complaints because they cannot correctly understand and recognize technical analysis methods, and they misuse technical analysis methods in market practice. The technical analysis method is a scientific summary of market experience. After several generations of research, innovation and development in the modern market, the technical analysis method system has become more mature and perfect. However, technical analysis methods also have their limitations. For example, a technical analysis method is not a panacea. It may be suitable only for some specific market environment, but it is powerless for another market environment and may even lead to errors. Therefore, correct understanding and in-depth understanding of the characteristics of technical analysis methods, recognizing the market environment applicable to each technical analysis method is the key to effective application of technical analysis methods.


1. Common misunderstandings and errors are applied in the application of technical analysis methods. Investors who lack analytical experience often have the following misunderstandings and applications:

(1) Over-reliance on technical analysis results. Some investors believe that technical analysis methods should be accurate analytical tools, so they are superstitious about the predictions drawn from an analytical method. I encountered an investor T at work. T is an economics lecturer. He is very fond of technical analysis methods. Once, he made 50 units of soymeal futures selling orders at 2,900 yuan/ton according to his technical analysis results. As a result, soybean meal futures did not fall and went up, and broke through 3000. At the key resistance level of the price, I urged him to stop the loss as planned, but he refused to implement it and took out the drawings and explained: “I still insist on bearish because there is a technical analysis method to support my short view.” Finally The soybean meal futures soared to over RMB 3,400/ton, and the investor suffered heavy losses.


(2) Use an analytical method as a universal tool for market forecasting. Some investors think that every technical analysis method can be applied to any market environment. For example, regardless of whether the market has a trend or no trend, they all have to look at the moving average, or whether they are clear or not, they are obsessed with the waves theory. ̈ It is obvious that the moving average method is generally applicable to a trending market. However, if it is used in the oscillating consolidation market, the information it buys and sells is mostly a false signal. If investors use this information to make a trading, they will be punished by “left slap, right slap”, and some investors are in the trading. Buying also loses money, and selling also loses money. The reason is this. Wave theory analysis is one of the best and most valuable technical analysis methods recognized by investment guru, but it is not omnipotent. In practice, we often see that sometimes the market wave shape is very clear, very easy to identify and count, but when the market is too strong, due to the extension and extension of the waves, the waves are confused; when the market is in a trendless During the consolidation period, due to the multiplicity and various structures of the adjustment waves, the number of waves is very complicated or easy to be wrong.


(3) Ignore the market environment and misuse technical analysis methods. Some investors do not consider the market environment, unilaterally and habitually apply their own familiar technical analysis methods, such as the habit of applying moving averages and KD indicators, and lack of research on the application of other analytical methods. Some are also accustomed to using a single analysis method, forgetting the teachings of Dow's "different analytical methods should be mutually validated." The above misunderstanding and misapplication have greatly affected the effective use of technical analysis methods.

2. Correct understanding and recognizing is the key to technical analysis applications

Practice has proved that the key to the application of technical analysis methods is the correct understanding and recognizing of technical analysis methods. I believe that the technical analysis methods should be correctly understood from the following aspects:

(1) The technical analysis method is a mirror, and history will repeat itself, but it is by no means a simple repetition.

The emergence of technical analysis methods allows people to use the historical information of the market to make inferences about future market changes. The pioneers of technical analysis believe that "history will repeat itself," but this reenactment is by no means a simple repetition. For example, the Shanghai Composite Index has experienced a 7-year bull market, showing a complete five rising waves. Among them, 1, 3, and 5 push waves have 5 sub-wave structures, but their internal structure, running time, and length of the waves. They are all different.

(2) Technical analysis mostly uses statistical analysis as a means, and its analysis result is a probabilistic event, not an absolute event.

This understanding is crucial. It allows you to objectively and dialectically treat the results of each technical analysis without making any of the mistakes mentioned above. For example, after the closing of the market on a certain day, analysts A and B analyzed the trend of the next day's soybean futures based on the internal information of the Dalian soybean futures market. A predicts that prices will rise, and B predicts that prices will fall. It can only be determined by the price trend of the next day, and no one can decide before this. This example shows that the market analysis result is only a kind of prediction. It may or may not be correct. The prediction result should be used as the basis for formulating the investment plan, but the plan must be prepared to cope with the error of the prediction result. The stop loss item in the investment plan is the necessary measure to prevent the analysis result from going wrong.

(3) Each technical analysis method has advantages and disadvantages, and each is applicable to a certain market environment, and is not applicable to all markets.


For example, trend indicators (moving average method, etc.) are suitable for use in a market with a trend, and in the consolidation market, in general, its application value will be reduced. The swing indicator (strong index, random index, etc.) is suitable for consolidation, and the application value is reduced in the trend of the market. Therefore, there is no difference between the technical analysis methods and the difference between the applicable and the inapplicable to the specific market. Do not give up some methods easily, and do not arbitrarily apply a certain method. Investors must master the application characteristics of technical analysis methods and select different analysis methods for different market environments.

3. Use several points of technical analysis methods

How to use technical analysis methods? I propose the following points:

(1) Each technical analysis method must be carefully studied and deeply understood. While mastering the basic application knowledge of the method, it is necessary to focus on understanding its advantages and disadvantages and the applicable market environment.

In the market analysis, the choice of an analytical method is like doctors treating diseases and medications. Different treatments should be used for different diseases, and different prescriptions should be used for different diseases. Although a prescription can not cure all diseases, it can play a role in the treatment of certain diseases. Similarly, a technical analysis method cannot effectively predict all markets, but its prediction for a certain type of market is very effective. Therefore, we must use the strengths of each analysis method to avoid its shortcomings and beware of misuse.


(2) Pay attention to the mutual verification between different methods.

The originator of technical analysis methods - Dow Jones, in the description of his theory, emphasizes the mutual citation analysis between different methods. This is an important rule of technical analysis. Wave theory master Bochet is the champion of the US Options Trading Competition. He is good at grasping the bottom of the market. According to reports, he used the cross-analysis of periodic analysis, wave analysis and the opposite theory to judge the stage of the market. I have a profound understanding in the analysis and practice. When using the technical analysis method to analyze the market trend, it is necessary to use the fundamentals to confirm. The market is complex and ever-changing, and simple analysis is bound to be error-prone.

(3) Be sure to have your own mental preparations that will make mistakes and correct mistakes.

Practice has proved that no matter how closely analyzed, the possibility of error still exists. The forecast can only provide the possibility of an event, and cannot provide the certainty of the event. The conclusion of the analysis must be confirmed by the market. Don't be superstitious about your analysis. When the market has proved that you are wrong, you must resolutely and decisively correct it. "The market is always right, and the mistake is always your own." This motto is a must-have for mature market analysts, and must be kept in mind in the application of technical analysis methods.

article originally from FMZ.COM

Charlie Munger said:

“A long time ago, when I realized that owning a certain temperament could make people successful, I tried to strengthen this temperament. For the financial industry, the importance of temperament far exceeds IQ. If you do this, you don’t need to be a Genius, but it really needs to have the right temperament."


Are the following phenomena happening to you?

1.

Indulge in the daily rise and fall of stocks.

I can't stand not to care quotes every single day. Even when I am chatting with friends, at a meeting, waiting a red light in my car, going to the bathroom, I have to take out my mobile phone from time to time to see the stock trend. I’d rather trading time lasts 24/7.

2.

Cannot bear a temporary loss.

When stocks rise, you are smug, and when stocks fall, you are scratching your hearts. The rise and fall of stocks even affects your normal work and life.

3.

Want to make quick money in the stock market.

Always thinking about getting rich in the stock market overnight, when losing money, wanting to get back quickly, when earning money, anxiously wanting more.

4.

Pay special attention to stocks invested by others.

Once others make mistakes, you criticize. If others' stocks rise, you sigh alone or have the urge to chase.

5.

It is difficult to tolerate different views of other investors.

When the investment ideas are different, the bad words are out. I am deeply impressed by this. If you post a point on the forum or platform that is slightly different from other personal judgment or the next day’s trend, taunt voices are coming to you. There is no bigger view at all (even waiting to the next three days).

6.

Try to explain every accidental fluctuation in the market.

Trying to blame the "natural disaster" on the poor investment results. For example, the central bank's monetary policy is chaotic, politicians do not understand economics, and improper rescue measures.

7.

Constantly collect new data to support one of your own investment perspectives.

Ignore data that cannot support your point.

8.

Constantly compare yourself with various indicators.

Compare whether you have outperformed a certain index and whether you have outperformed a certain fund.

9.

Lack of independent thinking.

You don’t do homework, listen to the "so-called" expert gossip, blindly believe in celebrities, and can't tell the difference between TV shows and real investment ideas.

Are the above phenomena familiar? Or is it happening to you? If you have already got a few of them in the above situations, I am sorry, I can give you a positive answer--say goodbye to the stock market. You can't stand on this market for a long time. Maybe you are lucky to run into bull market and make a fortune, but the big probability would cut your profits or you even lose money in the subsequent adjustments.


So, what can we do to remain invincible in the stock market for a long time? How to be a successful investor?

Develop the investment character of successor.

1.

The development of "vision"

The stock market is wonderful. It allows you to buy things value 2 yuan or even 5 yuan using 1 yuan. The premise is that you must have enough vision. Statistics show that the stock market has a major opportunity to change its life track every 10 years, an opportunity every two or four years. The key is that you have vision to see this and put it into action, instead of staring at your stocks every day, If an investor doesn’t have the vision to see in 2-4 years, he won't be able to wait for the big bottom of the history to seize the big money-making opportunity. Of course, if you have a vision of ten years, it is better.

2. the development of "mentality"

When you have enough vision, it's easy to be mentally calm. When you have the feeling that money fluctuations in the stock account has nothing to do with you, you are close to making money. When you got this calm and indifferent mentality, you will not drift with most others.

3. "Patience" development

The arrival of investment opportunities requires patience. In order to wait for Disney's investment opportunities, Buffett has been paying attention for 30 years; in order to wait for silver investment opportunities, he has another 30 years, and his efforts have paid off. His waiting allowed him to get the lowest price of silver price for 650 years; Coca-Cola--the only big blue chip, Buffett paid attention for 52 years, until 1988, the brain and the eyes established contacts, putting it into his heavy positions. Yes, the stock market is always full of opportunities. The patient investor just needs to wait quietly until the turtle falls into the jar and the money is piled up in the corner. All we need to do is go to pick it up.

Holding shares also requires patience. As long as the chosen quality company can continue to improve its intrinsic value at a previous rate, you should be patient. Buffett holds CEICO, which has been more than 20 years old; the Washington Post, which has been more than 30 years. Time is friend of excellent companies. Buffett's patience has been greatly rewarded. CEICO has increased its value by more than 50 times and the Washington Post has more than 120 times.

4. The development of "self-discipline"

When you have mastered some investment methods, what you need to do is being united of knowledge and practice, otherwise everything will be a bubble.

Establish an investment system that suits you


Both small and medium-sized investors and institutions, funds, including Masters such as Buffett and Soros, they all have their own investment systems. Buffett and Soros are the world's top two investment masters. They have earned tens of billions of wealth through investment speculation and proved their success with practice.

But the two masters are different investment systems. Buffett took Graham's value investment and combines Fisher's and Munger's ideas to form a mature system of his own, sticking to it and achieved great success in his life. Soros was inspired by the philosophical mentor to present his own reflexive theory and use this as a core to guide his speculation, and he also achieved extraordinary success. Although the investment systems and profit models are quite different, they have achieved success by forming their own systems and adhering to their own systems.

In the stock market, it is not high IQs earn money from low IQs, nor people highly educated earn from those in low educational background. The past is not in this way, also it’s impossible in the future.

Buffett and Soros can have their great investment performance not because they’re smarter than others.

Developing the character of successor and building an investment system that suits you is the key to determining your success.

Investment is not the whole of life, we also have poetry and wonderland, as well as family and friends.

article originally from FMZ.COM

article originally from FMZ.COM

Stop Loss is a must-have trading skill for futures investors. For novices, many people believe that everyone must go through the process of losing money before they can reach the other side of success, and losing money is the “tuition fee” that investors must pay. If this is the case, the author hopes that this "tuition fee" is best to "pay by installment" instead of "paying tuition in one lump sum". After all, many loss-money experiences make it easier for investors to pay attention to the correct ideas and methods of futures trading.

Loss-money must worth the losing! There is also a trading idea that the loss caused by the planned stop loss is not a loss, and the real loss is the loss outside the planned stop loss. In mature futures trading, investors generally only trade when the expected profit-loss ratio exceeds 3:1. If you invest in this principle, you will not be prone to losses in the long run. In general, the final loss is due to an unplanned excess stop loss due to a stop loss ratio of 3:1. Most of this loss comes from the so-called sudden stop loss. Therefore, controlling sudden stop loss becomes one of the important means and ability for futures trading success.

Planned stop loss

From the surface point of view, the planned stop loss is the stop price level or condition signal set when the trading plan is formulated. However, from a deeper understanding, the planned stop loss (which can also be said to be a stop-loss action) can be executed at a price set according to the plan in actual operation. Generally, the market trend has a continuous price and sufficient market liquidity. .

Stop loss methods can generally be divided into three categories: fixed stop loss, trailing stop loss and conditional stop loss. Fixed stop loss, which is the amount by which the stop loss is fixed by defining a specific stop loss position. For example, 10% stop loss method or technical form price stop loss. This type of stop loss generally has a clear plan loss limit, which can well reflect the principle of profit and loss ratio of 3:1. This type of stop loss method is easier to understand and simple to implement.

Tracking Stop Loss is accomplished by setting and tracking the relevant Stop Loss conditions and signals. This type of stop loss generally does not set a specific stop loss price. The advantage is that it can be used in combination with trading conditions. Since the stop loss position is variable, most of the trailing stop loss also has the function of take profit tracking, which is conducive to the purpose of effectively expanding profitability. For example: moving average stop loss, channel stop loss, trend line stop loss, etc. Because the trailing stop loss strategy is closely integrated with the homeopathic trading philosophy, many old traders prefer to use trailing stop loss. It is a better stop-loss strategy that helps traders capture the vast majority of a trend.

A conditional stop loss, that is, by presupposing that certain conditions will occur in the market, and then closing out if there is no expected situation. If the important information of the fundamentals is published, it is expected that the information will be bullish, but if the information after the publication is inconsistent with expectations, it will be closed. For another example, if the expected futures price should change in a certain period of time, but the expected change does not occur after that, then the closing out can also be regarded as a conditional stop loss. To say that the popular point is that it did not happen at the time of the occurrence, that is, the conditional stop loss. This method is generally less used by investors. And because the method has more subjective judgment components, it is better to use it in combination with other methods, which is more stable.

In short, there are many ways to plan a stop loss, but no matter what kind of stop loss method you take, it must be clear and enforceable.

Burst stop loss

A sudden stop loss is a stop loss when the planned stop loss cannot be effectively executed. It is manifested as an unexpected situation, or no continuous price can be executed, or a planned stop loss due to insufficient liquidity. A sudden stop loss is a loss that exceeds the planned stop loss.

For example, if someone is buying long at the price 5000, the planned target is 5300, the planned stop loss is 4900, and the planned profit-loss ratio is 3:1. However, due to the sharp slump overnight, the price jumped beyond its stop loss to a sharply lower opening around 4700, which made it all overwhelming. After some struggle, it still rebounded to around 4850. After that, the price will start a sharp rebound. This situation is a typical sudden stop loss. In this case, investors face very great mental pressure and the ideological struggle is also very intense. On the one hand, the price has already touched the stop loss. According to the plan, it is necessary to stop the loss. On the other hand, because the futures price is excessively oversold, the futures price may rebound sharply at any time. If the stop loss may stop at the low level, if not Stop loss, and the possibility of continued decline. All kinds of ideological struggles seriously interfere with the investors' normal decision-making thinking. At this time, if the price continues to fall, it may cause investors to make psychological stops at any time.

In the above example, the person's loss can be divided into two parts. That is, total loss = planned stop loss, sudden stop loss = (5000-4900 yuan) (4900-4750) = 100 150 = 250. The total loss per mouth reached 250, which is almost equal to 300 of the original planned profit. At this time, the profit-loss ratio becomes 1:1. If this is done for a long time, it is difficult for investors to make money in the futures market.

In actual trading, there are many such examples, especially in terms of emergencies. In addition, the market sometimes makes a sharp rise and fall due to the drastic changes in the market, so that investors can not effectively stop the loss as planned. Therefore, it is very important for investors to effectively avoid or mitigate sudden stop loss.

Countermeasures and Suggestions

Sudden stop loss is difficult to avoid, but to some extent we can still reduce the loss of sudden stop loss through some measures. The author believes that to effectively reduce the loss of sudden stop loss, the first is to strengthen the research on varieties and understand its characteristics. Second, we must conduct reasonable fund management. In addition to ensuring that the account does not have a vicious loss, reasonable fund management can also alleviate the psychological pressure of the trader and stabilize its judgment ability, which is conducive to subsequent operational transactions. Third, increase the ability to judge transactions. In the example above, the futures price is in a short-term downtrend. When the customers rebounded from the trend, they did not fully realize that the performance in the first half hour before the market closed was very weak. At this time, it is not suitable for entering the market to buying long, and it is not suitable for holding multiple positions overnight. Fourth, improve the trading plan. A good trading plan should sometimes include a response to the occurrence of a sudden stop loss.

For a sudden stop loss, its psychological impact on the trader is very large. This requires traders to constantly understand the degree of psychological impact of market changes on them, and to grasp the ways to reduce panic. In addition, when the sudden stop loss occurs, the recovery of trading psychology is also necessary. The best way is to be good at forgetting. In order to stop loss in the market, you must be good at making two forgets: The first is to forget the purchase price. No matter what price you buy, you must immediately forget your purchase price after buying. Only decide according to the market itself, when should you stop the loss according to plan, and do not let your subjective feelings and emotional influences on the execution of the trading plan. The second is to forget the stop loss price, that is, to forget the stop loss immediately after making the stop loss, not to be bitten by the market. Should not hesitate to act again when the market reappears trading signals.

The last thing I want to emphasize is the words of a professional: "Always stand at zero." Just as a purchase may make a mistake, the stop loss will make a mistake. When you find your own stop loss error, you must overcome the psychological obstacles and run into the forward team again.

In short, we must use rationality and decisiveness to overcome greed and luck, and we can walk with the market for a long time.

article originally from FMZ.COM

glad you like it , thanks a lot!

article originally from FMZ.COM

Bahrain Bank trader Nissens was once regarded as a machine for making money in Bahrain Bank. In 1994, due to his optimistic view on the Japanese economy, he held a large number of Nikkei index bullish futures contracts, which he thought would make a big profit. Unexpected Japanese Kansai earthquake caused the Nikkei index to plunge all the way. Under the premise of being too optimistic about the market outlook and under the pressure of keeping superiors uninformed, he continued to struggle buying at the lower price to diluted the cost price, which at end shocked the whole world, causing the Bahrain Bank lose trading account. Then, the Nikkei futures went up again, and Nissen fell before dawn.

On the road of trading, many people will fall before dawn. Nissen's case is just one of many. Nissen's run-in period with the financial speculation market is too short, the market is not well understood, and his risk awareness and management of the financial market are immature. Sudden wealth and media touts, can easily make a trader who entered the battlefield faint. The ending is also expected by the veteran. Financial market is very professional, magical and tempting. Everyone who comes to the market has confidence in himself. There is no shortage of elites, but it cannot tell who got real power and can stand out. In the frequent entry and exit day after day, your money is being consumed. In the long-term shocked stop loss, your capital is decreasing, and your confidence will become more and more fragile in constant loss. Generally, most people will retreat in a year. This is why many futures companies have many dormant accounts. When your survival lasts three years, no matter profits or loss you’ve taken, whether you are happy or miserable, it proves you are persevering and your psychological endurance is above the average, but it takes at least another two years for you to become mature. Though I have seen the amazing persevering traders who is still on detour after ten years. Therefore, in this long process, most of them are constantly wrestling, no hope for a trace of light, and can't afford to toss after frontal attacks again and again, then choose to leave with sorrow, which is also a kind of wisdom.

Buying and selling, seemingly simple transactions contain extremely profound truth, and this profound truth cannot be easily grasped by most people, let alone fully implemented. For this reason, this is one of the industries with the highest elimination rate, which is more severe than the 28 effect. If the ratio of maintaining long-term profit in industry is 1%, the ratio in stocks is 1‰, and the ratio in futures foreign exchange transactions is at least 0.01%.

This is a market of game, a market where a few people can succeed, and a marathon of endurance and wisdom.

Without a clear goal, you will often feel like to retreat; without a reasonable strategy, you will continue to detour; without the perseverance, you will be beaten by market; without the right ideas and methods, you will always go all the way to the black road; without deep sense of risk in the market after cruel beat, , you may still need to endure a long night even if you see a glimmer of light. Is there a chance to see the dawn? No one can really help you, but only by yourself. No one can answer you, except time.

When the tide of time recedes, you will know whether you can be one of the few people who can meet the dawn.

And the only thing to get that day to see the tide gradually recedes, is patience.

article originally from FMZ.COM

article originally from FMZ.COM

Investors should follow golden mean, avoiding willfulness, and they need to cultivate a quality, to fear the market, which involves whether we really understand the market characteristics, and truly understand the meaning of financial transactions.

1

Insist on in-depth research

“Learn about the economic situation, understand the business rules, and wait for market opportunities;” These sentences are intended to express the theoretical background and business practices of investors, as well as the trading principles followed. As a fundamental investor, you must have considerable economic knowledge and business thinking skills. Investment needs business logic, also needs to adapt to the characteristics of the financial market, pay attention to the market rhythm, and wait patiently for market opportunities.

2

Emphasize the security of the principal

"Respond to changes in the market, weigh profit and loss, strictly control risk." This is intended to emphasize the requirements of the transaction on the state of mind and experience. Getting market changes should not only on the big trend, but also needs to deal with the fluctuations, maintain the market sensitivity, and balance the profit and loss. Financial markets don’t approve advance rashly, survival is the first, and making money is second. A sound security strategy must be built. The financial factors of the market, such as the herd effect, the hot money, the emotional chasing, once a market trend is formed, it will not end in a day or two. As the theory of reflexivity described by Soros, the market will repeatedly strengthen itself. After entering the market, if the direction is right, the profit should be taking as far as possible; if the reverse is fluctuating, it is necessary to stop the loss. Although the fundamentals are already reasonable, it doesn’t mean the time to trade has arrived.


3

Appropriate expectation of income

“Humanity prefer to be optimistic, and the market is chaotic, treat expectations of income rationally;” This one is intended to warn of overcoming optimism in fund management and risk control, especially to be alert to the situation that obsessed with so-called opportunities resulting in too big amount of funds and entering the market too early. Because of human subjective stubbornness and thinking inertia, it is easy to think paralyzed and to be blindly optimistic. The market is complex and changes are instantaneous, so the amount of funds should be small, the position should be short, and the exit should be fat when it’s supposed to be. Amplifying psychological expectations, pursuing huge profits, and unwilling to eat small losses often lead to big losses. Don’t be passively beat and be controlled by others, if you ain’t feel right, run immediately and reduce the loss of principal in time. There is a chance behind only when you live.


4

Enhance investment skills

"Doing business is like fighting a battle." This one is intended to describe the market as a battlefield. A professional investor is a businessman, just like a battlefield commander. Traders need to have comprehensive quality and excellent character, and they must establish a cautious war mentality, be flexible and understand the responsibility. Compared with the business process of the entity business, the futures are highly compressed in time. Although the market price must return to commercial value, the process is full of twists and changes, and may face huge changes of profits and losses in an instant. Therefore, futures need to pay attention to a kind of array method according to a routine, and it cannot be chaotic and gambled unruly. The use of funds must be based on safety, making early plans in the risk control, make a prompt decision in case of changes, leave safely with funds. At the same time, trading requires not only caution, but also the need for courage. When the market turns, it is necessary to decisively enter the market, the so-called “others are greedy, I fear, others fear me greed.”

Setbacks are inevitably in trading, so it definitely needs learning and improving from them.

article originally from FMZ.COM

Article originally from FMZ.COM

The details of the trading and the overall market understanding, both are what you need

The ability of the trading professionals to judge the overall situation and details of the market is far from comparable. Before the trading, he will pay attention to the following aspects of the market and clearly give the answer:

(1) Is the current market environment suitable for operation? Is there a trend in the market? If there is no trend, what kind of form is the market likely to be building? Is it a bottom reversal pattern, a top reversal pattern, a trend relay pattern, or a temporary disorientation to be observed? Where is the important support or barrier level?

(2) If there is a trend, what level is the trend? Is the bull market or a bear market? Early, mid or late in a bull or bear market? If it is a secondary reentry trend, which position has it retreated to the length of the previous trend? 33%, 50% or 66%? What is the status of the daily, weekly and monthly chart? What is the relationship between market long-term, middle-term and short-term trends?

(3) Is there a symbolic K-line, resonance, anti-vibration, over-head signal on the daily, weekly, and monthly K line graphs? If so, what kind of market is indicated? Are there any important technical phenomena such as gaps, single-day/single-week/single-month reversal, over-ups, over-slipping?

(4) Is the market in a normal state of advancement or an extreme state? Does the volume (position) verify the price change?


This is the overall situation, that is, the overall judgment of the trader on the macro and micro position of the market, the long-term and short-term direction of the market. Traders derive from this judgment the long-term and short-term bullish or bearish conclusions of the market and act accordingly. Normally, professional traders only enter the market when the market's long-term and short-term movements are in the same direction. If the market is not consistent in the long-term and short-term direction, he will either not trade or engage in short-term trading. Before actually entering the game, he will also clarify the following questions:

(1) How will the market evolve the most from week to month?

(2) If you decide to wait and see, how long does it take to wait and see? If you decide to enter the market, the amount of position that you will hold for buying-long or selling-short?

(3) At what exact point that you want to jump in? Where is the profit target?

(4) What kind of trading system are used to enter the market? Where is the protective stop loss order placed?

(5) If I make a mistake, how much risk do I intend to take?

This is the detail view, the ability of traders to actually deal with the various new situations and challenges that your trading position is constantly facing. The overall situation understanding is in the scope of trading technology, and the details are in the scope of trading strategies. The overall situation focuses on “knowing” and the detail view focuses on “doing”. Successful trading are inseparable from the integration of macro and micro judgments, and the unity of knowledge and action.


We refer to the trader's view of the overall market structure and long-term trend as macro judgment, and the view of the detailed position and short-term trend of the market is called micro-judgment, and the two are collectively called the overall situation understanding. From the point of view of actual combat needs, this two cannot be neglected in any one of them, otherwise they will not be considered to have a good overall situation understanding. In general, non- margin trading rely more on correct macro judgments, while margin trading relies more on correct micro-judgment. Traders who are better micro than macro are able to self-insure in margin trading and earn more money than in non-margin trading, but a common feature is that it is difficult to make big money in only one aspect; Traders who are macroscopic and not good at the micro level are able to make big money in non-margin market, but they will make huge losses in margin trading. Because of the nature of the leverage and the character that is often unwilling to stop loss, they will die in the latest darkness of pre-dawn because they can't wait for the market to prove their judgement correct. Therefore, for individual traders, it is impossible to engage in margin trading without understanding micro-level of the market.

Since a trader lacks a high-accuracy macro-judgment or can't hold on to their judgment, they will not be able to make big money, so to some extent they must trust their own macro judgment. Because of this, macro judgments can easily become a stubborn preconception. If the position is in trouble, it may be wise to put aside your overall judgment and long-term view of the market. It may be imperative to close position or lower the position in time so that it does not interfere with the overall security of the fund. To know that all the big trends are starting from the small trend, you must know the truth of "the embankment of a thousand miles, collapsed in the ant hole"! Although it is unpleasant to admit mistakes, sometimes it is necessary for us to ask ourselves: "Is it really wrong? Even if it is only temporarily wrong, can I afford the loss caused by continuing to maintain the position?" There are contradictions within the overall situation, that is, the contradiction between the macro and micro trends of the market; there is also a contradiction between the overall view and the detail view, that is, the contradiction between "view" and "fact". The stop loss is to admit mistakes, and the timely stop loss is to admit mistakes at the least cost.

Article originally from FMZ.COM

By QuantStart Team

I've recently received many emails from individuals wishing to change careers from engineering, academia and IT. Quantitative finance has become a particularly attractive area recently due to the intellectual challenge and high remuneration. A question that constantly arises in these emails is "what do I need to study to convince an interviewer to give me a job?". This is the first in a three-part series that will discuss how to form a self-study plan to gain a job in the quantitative finance industry. This post will discuss how to self-study to become a quantitative developer. The other two will concentrate on quantitative analysts and quantitative traders.

Any career in quantitative finance requires a degree of generalisation rather than extensive specialisation. Quantitative developers are no different. They must fit into a team of traders, financial engineers and IT support in order to help investment banks price and sell new structured investment products or help funds develop trading infrastructure and portfolio management systems.

Scientific Computing

The most common route into quantitative development is via an academic background in scientific computing. This is because the core skills necessary for a "quant dev" are advanced programming skills and numerical algorithm implementation. These skills are developed as a matter of course within a grad school research environment for the physical sciences or engineering. If this is your background then your task will be to get to grips with the specific products and numerical algorithms used within quantitative finance, as your general implementation and programming skills are likely to be sufficiently developed.

However, if your background is not in scientific computing, there are still plenty of opportunities to become a quantitative developer leveraging a background in programming. At the very least though you will need to be familiar with implementing algorithms, the practice of which I will discuss below.

Programming Skills

First and foremost a quantitative developer IS a software developer. Thus the role will almost exclusively be 100% programming based. You will find yourself optimising trading prototypes or developing trading infrastructure from scratch. If you're targeting bank roles, then you will likely need to be using C++, Java or C# in a Microsoft/Windows environment. If you are targeting hedge funds then you will likely be translating MatLab or R into C++ and/or Python. Funds tend to use Java and C# less, since they're often in a UNIX environment where C++ and Python make more sense. If you have a background in either of these programming environments, it makes sense to develop your strengths and stick with software you know well. Thus if you know Java, for instance, it would be wise to target investment banking roles. I've written an article on programming languages for quant developer roles if you want more detail.

Assuming you are a competent programmer and are happy changing to the software most widely used in the financial industry, then I would suggest learning C++ and Python extremely well, as that gives you the most cross-sectional capability across different sectors of the industry. Here is my suggested study plan to become a good C++ programmer:

Read through the entirety of Accelerated C++ by Andrew Koenig. This book will get you up to scratch on C++ syntax and, in particular, will go into detail about pointers and memory management. This is an area that many programmers (including those from a Java and C#) background will not be as familiar with. It is best to read through while implementing the examples, either with Microsoft Visual Studio or the GCC compiler on Linux/UNIX, in order to practice the syntax, rather than just reading it!
Read through (multiple times!) the entirety of Effective C++ by Scott Meyers. I've repeated this advice consistently across the site, but it still bears saying again. This book will take you from a beginner C++ programmer to an intermediate programmer who is ready for interview. This book is harder to actually practice in front of the terminal, as Meyers sets up some complicated examples. One way of running through this book would be to determine where in your own projects you can apply the patterns.
If you are applying for C++ jobs directly, you will probably want to go beyond these two works. Scott Meyers has also written More Effective C++ and Effective STL. You will then need to consider the Boost library, multithreaded programming and Linux operating system fundamentals to become a true expert.
Similarly for Python:

If you are already a skilled C++/Java/C# programmer, then read through certain sections of Learning Python by Mark Lutz. In particular, skim Chapters 4-9, which discuss Python's built in types. Chapters 10-13 discuss Python's syntax for branching and looping, so they can also be lightly read to determine syntax. However, it is worth spending significant time on Chapters 14-20, as they discuss Python specific features such as Iterations/Comprehensions and advanced function usage. Sections V and VI cover namespacing and object-oriented programming, and how these concepts differ in Python from a language such as C++/Java. If you want to be a good intermediate Python programmer, then you should also consider the remaining chapters in the book. Remember though that this book is over 1,000 pages long, so you will need to pick and choose the sections relevant to your background.
Mark Lutz's second book, Programming Python, is on actually building applications within Python. This will take all of the syntax knowledge gained in the first and allow you to start building robust applications. This will help you become a much better Python software engineer.
For those who are definitely keen on the quantitative trading side of the industry, it will be necessary to learn how to carry out data analysis within Python. This is a skill often picked-up while in grad school, but Python for Data Analysis by Wes McKinney nicely covers some of the newer libraries available such as SciPy and pandas.
After following the above plan you should have a good chance at any C++ or Python interview. However, in order to solidify your developer skills it is necessary to be aware of some of the recent innovations in software engineering, which only tend to be figured out "on the job", but can certainly be studied and practiced at home in your spare time.

Software Engineering

Being a good interview candidate for a quant developer position requires that you become both a good programmer AND a good software developer. Many can learn the former from textbooks and practice. However the latter can only be learnt from working on larger software projects, generally with other developers. However, this does not mean it cannot be incorporated into a home study program! For instance, it is now easy to contribute to open source software projects via the internet. One of the largest quantitative finance projects is the

QuantLib

project. Reading through (some of) the source code to this project will give you a good idea at how large-scale C++ software projects are written.

To become a good software developer it is necessary to understand how to craft large-scale software projects. For modern software development this requires using version control, continuous integrationand other agile practices. Here is a study plan to help you get to grips with these concepts:

Read through both Steve McConnell's Code Complete and Robert Martin's Clean Code. Both of these books will cause you to seriously rethink how you go about designing software, from first principles. For instance - how much time do you spend upfront designing your software beforetouching the keyboard? Both of these books will save you hours of wasted code development. I would suggest applying as many of the tips within these books to your projects as soon as possible to remove any bad habits. They are also great to discuss at interview, as you'll invariably be asked to write some code.
A discussion on good software craftsmanship would not be complete without mentioning Design Patterns, also known as the "Gang Of Four" book. This book is highly relevant for a language such as C++, although less so for a scripting language such as Python. You will likely notice that you are using similar designs in your code. This book helps you determine when and where they should be applied. One benefit is that other good developers will be aware of them - making your more popular among your development peer group. It is quite a hard read for self-study, so try and pick 2-3 designs such as the Factory, Decorator or Singleton that are used most often and then work your way through from there.
When working on large-scale software projects with multiple team members it is an absolute necessity to make use of version control software. Automatic revisioning, rollback, branching/merging and better testing capability means that version control is ubiquitous in nearly all (good) software institutions. The two big contenders are Git and Subversion (SVN). I would suggest becoming familiar only with Git as SVN is similar (if a little harder to use!) and most institutions are replacing their SVN repositories with Git equivalents. There is a free eBook on learning Git, Pro Git, which I suggest you work your way through. It will save you hours of wasted development time!
Some industries are now turning towards continuous integration practices, which encourage continuous testing and deployment of code via a fully automated testing and deployment system. Although you are likely to be able to pick up most of how a CI system works "on the job", you might want to impress your interviewer by demonstrating your knowledge of the subject via working through a book such as Paul Duvall's Continuous Integration.
Database Interaction

Although becoming an excellent programmer and an excellent software developer are the prerequisites to gaining an interview position, you will also be asked problems relating to data storage and analysis. One of the key components in a quant dev's day to day life is interacting with databases. Thus a certain level of maturity with database handling is to be expected. If you have never utilised a data storage system, then the best way to start is by beginning to understand Relational Database Management Systems (RDBMS) and their language - Structured Query Language (SQL). Common RDBMS' include Microsoft SQL Server, Oracle and MySQL. Other types of data store systems include the so-called NoSQL data stores, including 10Gen's MongoDB and Cassandra.

The best way to begin learning about RDBMS is to install an open source version (as you can download them for free!) and follow the reading list below. It is beyond the scope of this article to teach you how to install an RDBMS, but you can try MySQL, as this is a very common database within hedge funds. SQL Server and Oracle are more likely to be prevalent within banking. Once you have installed a database such as MySQL, use the following guides to help you understand storage and access of data:

If you have no familiarity with SQL then the O'Reilly book Learning SQL by Alan Beaulieu is a great start. It covers all of the beginner and intermediate SQL you will need to know to store, access and provide reports for data. It will discuss database optimisation in a brief way as well. Make sure you read the entire book as all of the material is relevant for day to day quant dev database duties. For specific database tasks, you will want to have a look at the O'Reilly SQL Cookbook. I found this book incredibly useful when I was a quant dev, as I was continually pulling it off the shelf to look up a certain date/time or reporting query! There's no need to read this cover-to-cover, but certainly having an overview of the contents and where to look the material up is useful.
Although quant devs are not often database administrators, if you wish to learn more about advanced MySQL optimisation, then the following two books, while certainly not necessary, are highly useful if you are running into database problems: High Performance MySQL and MySQL High Availability.
Finance and Numerical Algorithms

Since a quantitative developer works in the financial markets, it is useful to have a relatively good understanding of the products that banks produce or the instruments that funds will be trading. Thus it will be necessary to familiarise yourself (broadly) with the equities, forex, fixed income, commodities and related derivatives markets. In particular you want to be continually thinking about how this data is represented, stored and accessed as a big part of a quant dev's job is to provide storage and access to financial data. Once in the job you will almost certainly concentrate on one particular area in depth, so make sure your initial research is quite broad.

Of more relevance are the algorithms used in quantitative finance to carry out both instrument pricing and algorithmic trading. The investment bank derivatives pricing techniques will almost certainly concentrate on Monte Carlo Methods and Finite Difference Methods, both of which rely on knowledge of probability, statistics, numerical analysis and partial differential equations. These are all topics which a good student will be familiar with in grad school, but for those considering a career change, you will need to gain a good understanding of these methods if you wish to become an options pricing quant developer in a bank.

For hedge funds, you will likely be implementing trading infrastructure - either low or high frequency. This will involve taking an algorithm already coded up in MatLab, R or Python (or even C++) and then optimising it in a faster language, such as C++, as well as hooking up this algorithm to a prime brokerage application programming interface (API) and executing trades. The skills required here are quite disparate. You will need to be able to pull together data from various sources, put it into the correct context, iterate over it rapidly and then generate on-demand reports either in fixed-format (PDF), over the web or as an API itself. These skills are hard to learn from books directly and require a few years of software development experience in the technology industry.

In order to read about these topics further, please have a look at my C++ Implementation articles, my Python Implementation articles and the Quantitative Finance Reading List.

Applying for Jobs

Although the above list looks like an extensive amount of material to study, this will only be the case for somebody completely new to programming. It is unlikely that a quantitative developer position would be suitable for such an individual and I assuming that your own background will be in programming or the physical sciences. Make sure to read only the sections you deem relevant to your own situation, as otherwise you could easily spend a few years of your spare time learning the above material!

Once you believe you are ready for interview then you will need to begin the process of contacting quantitative recruiters. There are specialist firms that deal with investment banks and hedge funds. If you require specific names, then feel free to email me at mike@quantstart.com and I will happily point you in the right direction.

Any good recruiter will discuss your background to a reasonable degree of detail as they are putting their reputation at stake when they recommend you for an interview. Recruiters aren't generally highly familiar with the technicalities of quantitative technology and nor do they need to be. However, this does mean they have to rely more on "buzzword matching" for their own CV/resume filtering. Make sure if you are strong with C++ that you state "C++ skills - strong" and reference the STL, Boost and any C++ projects you have worked on, for instance. Do not be modest about your skills, but also do not overstate them. If you write anything on your CV/resume, it is fair game to be grilled about it in a technical interview!

Since the job market (in 2013) is not the best (particularly at entry-level) right now, you might find it will take a while to get the job you are looking for. The trick is to keep trying as with each interview you attend, you'll gain more knowledge about what the recruiters and interviewers are looking for and so you'll be able to tailor your study towards this.

If you have any questions at all about becoming a quant developer at all please take a look at this article on my own experiences as a quant developer or email me at mike@quantstart.com.

article originally from FMZ.COM

Guide: Wall Street investment masters in the face of the ever-changing stock market, some people through the brave bargain Stock market is changing all the time, when facing this, some of Wall Street investment masters accumulate huge amounts of wealth through distinguished victory of brave bargain-hunting, while some of them suffer failure by buying at hillside. Now we take a lesson from those masters and perhaps get inspiration from them.


Warren Buffett

Quote:

When the stock market rises sharply, leave in time; when the stock market crashes, take the opportunity to buy cheap; if it crashes more, buy more, instead of selling stocks painfully.

Story:

Buffett experienced four stock market crashes in his life, namely 1973, 1987, 2000, and 2008. One or two years before the stock market crash, Buffett left the market early, and did not participate in the last wave of market but looked on others in the stock market. When the stock market fell, he peacefully entered the market to pick up the stocks that he think have future increase.

Take the 1987 stock market crash as an example. When the stock market plunged 36% from August to October 1987, the stock market fell fast and the rebound was fast. As a result, Buffett could only regret that there was no time to “let the bullets fly”. In the face of the investment opportunities that have rushed, Buffett is still very calm, because he believes that the next opportunity will come, just wait patiently. The revelation that Buffett got is that sometimes the plunging is rushing, you can't grasp the opportunity of bargain-hunting. Don't blame yourself for not controlling every opportunity, it may cause further improper investment behavior.

After the second year of the plunge, Buffett began to buy Coca-Cola in large quantities. By 1989, he has bought Coca-Cola for $1 billion in two years. After 1994, he continued to increase his holdings to a total investment of $1.3 billion. At the end of 1997, Buffett’s market value of Coca-Cola’s stock rose to $13.3 billion, earning 10 times in 10 years.

Lesson:

There are three main measures taken by Buffett when the stock market plunges: First, the selected investment industry. As long as the net assets far exceed the stock price, buy. The second is to do the value band. He first calculates the intrinsic value of each share through the overall value of the listed company, and then compares it with the stock price. If the intrinsic value is much higher than the stock price, then buy it and sell it when the stock price rises. The third is to invest only with spare cash. Even in the face of those big bulls that are expected to rise 100 times in the next 10 years, Buffett insists on investing only in idle money, and waiting for opportunities if he loses.


Peter Lynch—angel of stocks

Quote:

The historical law of stock market volatility tells us that all the big falls will pass and the stock market will always rise even higher. Historical experience also shows that the stock market crash is actually a risk release, a good opportunity to create investment and buy those very good company stocks at a very low price. But bargain-hunting is not that simple. Instead of constantly hunting and being quilted, it is better to wait until the bottom appears.

Story:

When the US stock market crashed in 1987, many people were turned into extreme poverty from the millionaires, and they collapsed and even committed suicide. At that time, US securities superstar Peter Lynch managed more than $10 billion in the Magellan fund. In one day, the fund's net asset value lost 18% and the loss was as high as $2 billion. Like all open-end fund managers, Lynch has only one option: selling stocks. To cope with the large redemption, Lynch had to sell all the stocks.

After more than a year, Peter Lynch still feels scared when he recalls. "At that moment, I really can't be sure whether it is the end of the world, or we are about to fall into a serious economic depression, or something not so bad, just Wall Street is about to die?"

After that, Peter Lynch continued to experience many stock market crashes, but achieved very successful performance.

Lesson:

First, don't sell all your stocks at low price because of panic. If you sell stocks desperately in a stock market crash, your selling price will often be very low. The market in October 1987 was frightening, but there was no need to throw stocks on that very day or the next day. In November of that year, the stock market began to rise steadily. By June 1988, the market had rebounded by more than 400 points, which means that the increase exceeded 23%. Second, we must have firm courage in holding good company stocks. Third, we must dare to buy good company stocks at low prices. Plunging is the best chance to make big money: it’s a chance to earn huge wealth in this kind of stock market crash. A plunge creates good opportunity to make big money.


Benjamin Graham: Godfather of Wall Street

Quote:

First, never lose money; second, never forget the first one.

Story:

Graham is the mentor of Buffett, the father of securities analysis, the originator of value investing. In September 1929, the Dow Jones index rose to a maximum of 381 points and then began to fall. On October 29, the Dow Jones index plunged 12%, which was described as the “worst day” in the 112-year history of the New York Stock Exchange, namely the most famous “Black Tuesday” in history.

In November 1929, the Dow Jones index fell to a minimum of 198 points and then bounced. By March 1930, it had risen to 286 points, with a rebound rate of 43%. So many investors believe that the worst period has passed and the stock market will have a big reversal. Graham also thought so, so he began to enter the market.

He bought all the stocks that were very cheap from the perspective of value assessment. In order to achieve greater profitability, he also used margin to leverage. But the stock market rebound continued until April and then began to plunge. The Dow Jones index fell 33% in 1930, while Graham managed a fund loss of 50.5%. By July 1932, the Dow Jones index had reached a minimum of 41 points. From the highest point of 381 points, the biggest drop was 89%, while the Graham-managed fund lost 78%. The super-big bear market almost made him go bankrupt.

Graham later re-emerged and wrote the investment Bible "Security Analysis" and "The Intelligent Investor" to sum up an eternal principle of value investment: the margin of safety.

Lesson:

Safety first, profit second.


Bill Miller: Geek of Reverse Investment

Quote:

I often remind my analysts that company's information completely represents the company's past, and the stock's valuation is 100% depending on the future.

Story:

The Legg Mason Value Trust, managed by Miller, consistently defeated the Standard & Poor's 500 Index during the 15 years from 1991 to 2005, creating the most brilliant fund manager record ever, and was hailed as the most successful fund manager of his generation. However, in just one year, this honor was destroyed by his own hands.

In the subprime mortgage crisis, many of companies' stocks fell sharply (which were originally good). Miller believed that investors had overreacted, so he bought in against the market. He thought that the crisis was a great opportunity to make money, and the crisis turned out to be the worst bear market after the Great Depression. Although the investment decisions of his reverse operations over the past 15 years have proved to be correct afterwards, this time it has been miserable. Miller’s stock list is like the “Martyrs List” in this crisis: AIG, Bear Stearns, Freddie Mac, Citigroup, Washington Mutual Bank, etc.

In 2008, the 58-year-old Miller said in an interview: "I have not been able to properly estimate the seriousness of this liquidity crisis from the beginning." Although Miller used to make money from market panic, he said that this time he did not expect the crisis to be so serious, and the fundamental problems were so deep that the high-quality listed companies that were the market leader actually fell. “ I still lack experience,” Miller said. “Every decision to buy stocks is wrong. It’s terrible.”

Lesson:

“Any exceptionally successful portfolio can succeed in a certain period of time is because of the price misplaced insurance. The market’s estimation of this future is wrong. We compare the market’s valuation of the company and our valuation of the company, using a combination of factors to find the price misplacement."


George oros: Financial Predators

Quote:

The history of the world economy is a series based on illusions and lies. To gain wealth is to recognize the illusion, invest in it, and then quit the game before the illusion is recognized by the public.

Story:

Soros believed that the Japanese stock market had a huge bubble before 1987, and then he sold out the Japanese stocks. The result was a fiasco. The Japanese stock market was in bull till 1989. Soros advocated on the Wall Street that the US stock market would be firm and the Japanese stock market would collapse, but the result was the opposite: the US stock market crashed and the Japanese stock market was firm.

In September 1987, Soros transferred billions of dollars in investment from Tokyo to Wall Street. However, the first major collapse was not in the Japanese stock market, but the Wall Street in the United States.

On October 19, 1987, the Dow Jones Average in New York plunged 508 points, setting a record for the time. In the next week, the New York stock market fell all the way down. The Japanese stock market was relatively strong. Soros decided to sell a few large long-term stock shares he was holding.

After the other traders caught the relevant information, they took the opportunity to slam down the stocks that were sold, which reduced the cash discount of futures by 20%. Soros lost about $650 million to $800 million in this Wall Street crash. The collapse caused the quantum fund's net assets to fall by 26.2%, much larger than the 17% decline in the US stock market. Soros became the biggest loser of this disaster.

The reason for Soros’s fiasco in the past was, in the final analysis, speculative psychology, trying to figure out the market’s opportunity arbitrarily, which caused huge loss.

Lesson:

The mistake is not shameful. It is shameful that the mistake is already obvious and not to correct. Taking risks is blameless. But remember that you must not be desperate. Right or wrong is not important, the key is how much you lose when you make a mistake, and how much you earn when you were right.


Philip Fisher: father of growth stock value investment strategy

Quote:

Learn to spend a lot of time researching and don’t rush to buy. In a continuously falling market, don't buy stocks too quickly that you are unfamiliar with.

Story:

In 1929, the US stock market was in a frantic bull market before the collapse, but Fisher found that many industries in the United States had unstable prospects and the stock market had a serious bubble. In August 1929, he submitted a report to the senior bank executive “The most serious bear market in 25 years will begin.” This can be said to be the most impressive stock market forecast in Fisher's life. He said: "I am inevitably dazzled by the stock market. So I look around for some fairly cheap stocks, because they have not yet risen in place." In October 1929, US stocks collapsed, and Fisher failed to survive. He suffered a heavy loss.

Lesson:

Fisher began to understand that the main factor determining the stock price was not the P/E of the year, but the expected P/E for the next few years. He said that if you can cultivate your own ability to predict the possible performance of a stock in the next few years within a reasonable upper and lower limit, you will find a key to not only avoid losses, but also earn a lot of profits.

article originally from FMZ.COM

it depends, i can't give you a specific number, because i don't know the size of your fund, for a conservative fund management. i would suggest don't use any leverage at all. when you feel that this is a suitable strategies and start to gain some steady profits, then you start to add leverage on it.

article originally from FMZ.COM

Advantages and models are the primary key

The four successful steps that have been discussed above: relative advantage→ mode system(strategy) → discipline →fund management, which is more important?

If there is no advantage and mode, you can't win the game even with the best discipline and money management. The most important is the advantage and model. Speculators are constantly exploring or improving. They are concentrated in these two steps, so speculation in the market is biased towards technical analysis and various market indicators. .

There is a book named Encyclopedia of market indicators. The author Colby lists 127 different market indicators in the book. The purpose of this kind of books is to help readers find an advantage and turn it into a winning model. Its starting point and purpose are very good, but it is more important to find the trend or turn of the market faster and more accurately than your opponents. Currently, almost 99% of speculators know how to use technical analysis and market indicators. If everyone uses the same skill, how can there be a 'relative advantage'? So 95% are still losers.

“Speculate” in Latin's original intent is “observe”, which means spending time and effort to observe to find an advantage. If you can find the market direction faster and more accurately than your opponent with the indicators and technologies that the opponent does not have, isn’t that a relative advantage? Therefore, to become a part of 5%, you must learn from the beginning, learn the relevant indicators and techniques, and then observe, think and practice to develop your own unique model.

Keep making notes

People always ask, where cto find successful speculators? The answer is simple: if you can find a speculator with detailed notes, he is a successful speculator. If you write detailed notes every time you operate, you can have a review--which speculation is done right, which one is wrong, and what to do next time. This will make you grow quickly.


The notes are helpful for us to delve into the 'advantages', improve the model, test the discipline and manage the funds well. People always forget whether their speculative activities are wrong or right. Where is the mistake? So good notes help us think and reflect. If you ask about the high and low of the Hang Seng Index today, you definitely remember. But what about three weeks ago?

If you can't remember, how can you improve? The notes will be able to achieve the new effect.

If I can get to know the importance of notes early, I don't have to go a long way. But this habit is not easy to develop and it needs hard work.

Many speculators agree to scrutinize the detailed record and discover the advantages. There is nothing more than this: (1) follow the trend (2) stop loss quickly (3) expand the profits.

The question is: (1) how to take advantage of the trend? When will the trend turn or turn around? This is what I say of 'relative advantage' and 'mode operation'. Stop Loss and expanding profits, is the ultimate goal of 'disciplined operations' and 'fund management’.

The last piece of advice, don't misunderstand ‘tips’, ‘tips’ is a reward for good waiters. In the speculative market, there are no free lunches and no 'tips'.

Making use of emotions flexibly

There are many different emotions in people's growth, including joy, anger, hope, shyness, jealousy, regret, etc. Any emotion will affect our behavior. Here we don't talk about good and bad influences. But speculators should not pursue the realm of no desire. We must understand that emotions will affect our speculation and we need to use them. It is important to remember to use emotions, to take advantage of the situation, rather than to control it.

The speculative market is basically controlled by two major emotions. One is greed, the other is fear, and these two are difficult to handle, so the success lies in how to use these two. Those who know how to use this emotion, tend to be the 5% winner, while 95% of them are beaten by these emotions.

Speculators should practice using stop-loss and take-profit, and gradually change the mind of losing less and fear of losing profits into a winner’s mind of rapid stop-loss and profit expansion.

The two winner behaviors of ‘quick stop-loss’ and ‘make profit expansion’, which one is easier to do? There are different opinions. I think it cannot be generalized because of personality. ‘Quick Stop Loss’ is an active act. ‘Let profit expand’ is a passive act. It depends on your patience and personality. But as long as you make good use of stop loss and taking profit, you can succeed by practicing. The four stop-loss methods are relatively simple to make a profit because speculation has profit. There are four methods commonly used to stop loss.

1. Fix at the support level. Some people like to add five or ten points. Because this is the most common way. If everyone set in the support position, it’s more possible to crrash, so it is not the method commonly used by the winner.

2. Use the price to close the position. That is, when trading, clearly plan to prepare for the loss of only 50 points of the index or $2,500. This is also a good way to manage money, because if there is a winning mode, in a winning rate of 60%, each time winning an average of 60 points, so that it stops at 60 points or less each time, the result will be good in long term. But it needs to be sure that the winning rate of the mode is really 60%, otherwise the result will be different.

3. Indicator stop. When the speculators buy and sell according to their own indicators, and the stop loss and stop earning are placed in the mind, if the indicator no longer has the trading signal, it will stop immediately. Because when your indicator does not give you the signal to buy and sell again, you have no reason to stay in the market, you should immediately leave and wait for the next opportunity.

4. Time stop. Speculators use their own mode, using time as a guideline. In the 30 minutes or 60 minutes after the sale, the profit or stop loss will be terminated. This method is very personal and depends on the individual's speculative model. I don't recommend it because it is not suitable for general speculators.

article originally from FMZ.COM

article originally form FMZ.COM

Relative advantage, strategy, discipline, fund management

First learn a trick (relative advantage), then solidify this trick, you will be a successful speculator. Also solidify your trading patterns, trading strategy, trading variety and your trading cycle, as well as trading opening and closing position, trading position, trading position strategy of addition and subtraction.

The relative advantage is necessary for an investor. Without it, the investor is doomed to failure. After that, strategy, discipline, and fund management are needed, but the opposite is not working.

The only purpose of speculation is to make money. If this goal is not clear, it will be difficult to become a successful speculator. The four steps of a successful speculator:

First, there must be a 'relative advantage';

Second, turn this relative advantage into a positive expectation trading system;

Third, implement this model with discipline;

Fourth, effective fund management.

Successful speculation


1.relative advantage

The most basic and important thing is to find a relative advantage. Some people may find it in a few months while some others may need a few years, or may not find it in a lifetime. This requires a lot of efforts, study and observation. Without this advantage, it would be impossible to win this game of speculation. That is why 5% of people can win 95% of them regularly and permanently. This has nothing to do with IQ, education, experience and age. How to find this relative advantage? Here are some of the indicators that have been popular:

1. Put Options/rate of Call Option

2. Contrarian indicator. According to this, if many others buy Put Options, the market will rise. If they buy Call Option, the market will fall.

3. Use the rise and fall of US Treasury bond price to predict the rise and fall of the Dow

4. Open interest

Discover the advantage of winning from the law of operation: Larry Williams, a famous speculator, used $10,000 in commodity speculation in the 1970s and earned $1 million a year. He found the 'relative advantage' in the observation of market, using open interest as an indicator. He observed that only the big one sell a lot positions, the number of open positions increased greatly (the information was underdeveloped at that time, very small speculators first sold short) And the big one has an advantage, so Williams followed up immediately. If the open position begins to fall, he will close the position immediately. It was a simple observation, thinking and experiment, and it brought 1 million.

The advantages of these ‘one-of-a-kind’ have given the discoverers a long-term and impressive return. But when many speculators followed, there was no ‘relative advantage’ and no lasting success. They need to find another “relative advantage”. To win money constantly, you must constantly strive and find new ideas.

I believe that any speculator will have his own discovery. For example, a unique graphic or indicator can often bring profits. This graphic may only appear once a day, or only once in a few weeks. If you can cooperate with the patience, act only when the graphics or indicators appear, isn’t that your own 'relative advantage'? It will beat a lot of opponents. I believe that all speculators can do it. The key is to operate with patience and discipline. Of course, it’s better when this kind of graphs or indicators appear more. Being patient and disciplined to do everything is an important factor in success, not just in speculation.

2.strategy

Turn this relative advantage into a positive expectation trading system. After finding the advantage, it should be transformed into a sustainable mode that can be operated. Then, try it many times in real speculation till the winning rate is above 80% (the winning rate of more than 80% is my requirement). There are a lot of ready-made models available in the market that only achieve a winning rate of 55%, but the actual operation may not be able to reach their promise. You can try it in historical data first, and then try it in the actual speculation until your satisfaction; then try to improve the mode continuously, simplify it, and the simpler the better. As Einstein said, ‘Don’t make things simple, make it simpler’.

A model that can be used and wins money is a good model; on the contrary, one model packaged in high-tech or complicated but cannot win is not a good model. The market geeks described in the book of The Market Wizards written by Jack D. Schwager, which one of them bought a software model for $1,000 and it’s successful? The answer is none.

Whether the speculative model should be mechanized is a long-standing issue. The advantage of mechanization is to minimize human error and psychological barriers; the harm is that the operator will not constantly thinking and improving. Look at the 90% of day traders in US market, all with full mechanical operation. But 95% of them are losers. I believe that it is best to combine 80% of mechanical mode and 20% of the operator's observations and ideas, such a semi-automatic mode should be the best match. The complete 100% mechanical model, lacking the adaptability to the changing market, is doomed to fail. Is the model bought in the market available? There is no unearned income.

Discipline

Adherence to discipline is the way to success. When you succeed in creating this model after failure, learning, and hard work, you must perform with discipline, or the time, money, and effort you pay will be wasted. Once you understand the purpose of speculation is to make money, your discipline will be improved. If the purpose is only for entertainment, the discipline will be relatively reduced. So the purpose must be clear - making money.

Fund management

The purpose of fund management is to help speculators get the best profit. If your mode of operation can't bring profits, even the best money management in the world will not be useful to you. The best money management in the world can't replace the “relative advantage”.

The best fund management is based on individual circumstances, depending on each person's capital, winning rate, risk tolerance, return requirements and time constraints. Therefore, we only need to refer to other people's methods to develop a fund management method in line with our own situation. The four speculative processes, each step, can be explained in details with a book. I only make a brief introduction, hoping to make the readers have a clearer mind, reduce the time to success and don't get lost.

The four steps are the only way to go, and generally take ten years. Ten years is the time that several famous speculators I know are spending. I have been speculating for more than a decade and have not been successful. So is there a shortcut? There are no shortcuts, but you can shorten the road to success--finding a mentor. why? If you have a successful mentor, you can greatly shorten your study time and process without traveling a tortuous road. But finding a successful speculator as a mentor is not easy, only a few lucky ones can find one. The world's chief golfer ‘Tiger Wood’ also has coach, which makes it very clear.

article originally form FMZ.COM

sorry, i am new to this forum， my rank don't allow me to post any pics, here is the clearer version of this strategy, https://www.fmz.com/bbs-topic/2740

you just make me laugh so hard, a person just use his ignorance and arrogance to judge something so quick and want to make profit in this market, what can i say? you really need some "luck"

do some search, i am the author of this article, who told you i copy and pasted it from somewhere, please, point out the source. because you see a quote? and one more thing, if you don't like it, there are some blacklist function in this forum, just added me in, a show off of your ignorance just really funny. how it possible you kind of people can make any profit in the market, i wonder. also you give me my next article's topic, thanks about that.

article originally from FMZ.COM  if you are interested in clearer version of this strategies with image and source code, please come to us at : https://www.fmz.com/bbs-topic/2740

Lawrence primer graphic

Foreword

The term "chaos" originally refers to the description of the chaotic state of the universe. The idea is that the result is inevitable, but because the existing knowledge cannot calculate the result, because the calculation itself is changing the result, the maximum or minimum result may appear at the end, and there is no necessity.

This is very similar to the trading market, where participants change the market when they analyze the market and put it into action. The market has eternal variability. When the participants understand the new form of the market, the market also knows that it is recognized by the participants, and the mutation happens.

And it will tend to mutate in the direction unknown to the participants. It has enough intelligence to prevent participants from capturing its changing laws. That is, the market is not stable, and the past understanding of the market cannot represent the future.

What is "Chaos operation"?

The "Chaos operation" method is a complete set of investment ideas, trading strategies and entry and exit signals, invented by Bill Williams. It has been popular in the United States since the end of the last century and has been recognized by many investment experts and professional traders.

At present, many investors in the world use "Chaos operation" method to participate in market trading. Because cryptocurrency financial market is a new market comparing to the traditional financial market, and chaos theory is also a relatively new trend idea in this market, there are few people studying "Chaos operation" methods in cryptocurrency market.

Since the "Chaos operation" method is a highly universal trading strategy, it can be applied to almost all financial investment fields, including stocks, bonds, futures, foreign exchange, and digital currency. Therefore, I hope to improve everyone's investment strategy through this article.

Chaotic algorithm architecture

As the name suggests, the theoretical basis of "Chaos operation" is chaos theory, which was proposed by meteorologist Edward Lorenz and is one of the greatest scientific discoveries of the late 20th century. The famous "butterfly effect" was proposed by him.

Bill Williams creatively applied chaos theory to the field of financial investment, and combined with fractal geometry, nonlinear dynamics and other disciplines, created a series of very effective technical analysis indicators.

The entire "Chaos operation" method is composed of five dimensions (technical indicators):

Alligator line
The Fractal
The Momentum
Acceleration
The Balance Line


Alligator line

The Alligator line (above) is a set of balanced lines that use fractal geometry and nonlinear dynamics. The essence is to extend the exponentially weighted moving average, which is one kind of moving average lines, but the calculation method is slightly more complicated than the ordinary moving average. First look at the definition of the the Alligator line:


First define the price midline, which is the average of the highest price and the lowest price. For the "lip kiss", which means the small cycle of the midline is averaged again. For the "Tooth", which means the middle cycle of the midline is averaged again. and For the "crotch", which means the big cycle of the midline is averaged again. In actual trading, we use the crotch.

Fractal

The fractal (above) is to open palm in the front, with the finger facing up, the middle finger is the upper fractal, the little finger and the ring finger on the left, and the index finger and thumb on the right represent the K line that haven't reach the new high price. A basic fractal consists of these five K lines.


In the same way, the lower fractal is the finger pointing down. If the recent upper fractal is been breakthrough, and the price retracement does not fall below the nearest lower fractal, it can basically be judged that the market may turning bear to bull, and vice versa.

Strategy Logic

This strategy is based on the combination of the Alligator lines and fractal indicators of chaos theory. A set of exponentially weighted moving averages lines are used as the base price for the the Alligator line and fractal indicators.



opening Long position: If currently there is no long position, and the closing price rises above the upper fractal, and the upper fractal is above the the Alligator line.

opening Short position: If currently there is no short position, and the closing price falls below the lower fractal, and the lower fractal is below the the Alligator line.

closing Long position: If the closing price falls below the the Alligator chin.

closing Short position: If the closing price rises above the the Alligator chin.

Strategy source


here is the strategy source link, you can open the link and run it directly:

http://Https://www.fmz.com/strategy/129077

Backtest

In order to bring the backtesting closer to the real-market environment, the commission fee is set to be 2 times of the exchange standard, and the opening and closing positions price are added to the slippage of 2 pips. The back-tested data is used the houbi.com BTC_USDT futures.



To sum up

In summary, the essence of the "Chaos operation" method is to find a turning point, without having to care about how the market goes, and do not need to care about the true and false breakthroughs. If it breakthrough the fractal, the order will enter immediately. This is also the original intention of this article. Never try to predict the market, but to be an observer and follower.

article originally from FMZ.COM  if you are interested in clearer version of this strategies with image and source code, please come to us at : https://www.fmz.com/bbs-topic/2740

good for you! wish you the best luck! loving something, just like loving someone, there are methods and rules to overcome difficulties. someone saying that passion will go all the way down, i never believe such things, one day, no matter how passion you are, you will get a period that feeling bored and overwhelmed, the important thing is that how to manage your passion and keep the interests going. you must consider the worst circumstances all the time. manage your risk, not your profit. because the profit is unknown, the risk is certain!

glad you guys like it, i just feel that if we cant predict the future,  only learn from the past,  then let's just focus on past on certain time of our decision making, but we cant fall into that chaos. especially emotionally.