1 2 3 Sistema De Comercio

Forex estrategia de negociación # 4 (Simple 1-2-3 oscilaciones)

Enviado por Edward Revy el 28 de febrero de 2007 - 15:30.

Y aquí estamos de nuevo hablando de la estrategia que resistió la prueba del tiempo. Este método de comercio de Forex se basa en el mismo estudio de la definición de los niveles de apoyo y resistencia y el comercio sobre el hecho de su violación.

Una configuración de negociación requiere sólo un gráfico abierto y sin restricciones para las preferencias de moneda o tiempo.

Reglas de entrada: Una vez que el precio lo hace a través de la "línea de pivote" - línea blanca punteada en la siguiente figura (dibujado con el último pico de precios) - y cierra arriba (para la tendencia alcista) o inferior (para la tendencia bajista) .

Reglas de salida: no establecidas. Sin embargo, la salida se puede encontrar usando el método de Fibonacci; O los comerciantes pueden medir la distancia entre el punto 2 y el punto 3 y proyectarlo en el gráfico para salir.

Adiciones: como una herramienta adicional los comerciantes pueden utilizar MACD (12, 26, 9). Las reglas para la entrada entonces será el siguiente - vamos a tomar una orden de venta:

Cuando las líneas de MACD cruzan hacia abajo, usted busca la configuración 1-2-3 para formar. Cuando el precio comienza a "atacar" la "línea pivote", comprueba que MACD está todavía en modo VENTA (dos líneas se dirigen hacia abajo). Una vez que el precio se cierra debajo de la "línea de pivote" - lugar Orden de venta.

El mismo gráfico: MACD (12, 26, 9) se agrega.

Una de las primeras estrategias comerciales que me enseñaron cuando comencé a operar fue el sencillo patrón 123. Mientras que no puedo negociar cada sistema que escribo sobre cada día, el sistema 123 puede dar entradas exactas y paradas apretadas.

El sistema de comercio 123 es un sistema de ruptura donde etiquetar el actual punto alto o bajo 1 el siguiente alto o bajo es el punto 2 y el retroceso alto o bajo es el punto 3. Nuestro punto de entrada para el comercio es siempre la ruptura de punto 2. Veamos una carta de GBP / USD 15 min en la que he identificado una serie de operaciones basadas en la 123pattern. He etiquetado los 123 patrones y alto-encendido el azul del primer comercio. El mercado se rompió y luego retrocedió e hizo una nueva alta. En esta etapa, el mercado podría haber ido en cualquier dirección, pero cuando no pudo seguir abajo de la anterior baja esto era una buena indicación de una inversión, pero no una confirmación, la confirmación sólo llegaría a la ruptura del punto 2, siempre que el precio no No va por debajo del punto 1 del patrón.

A la ruptura del punto 2 en nuestro patrón la nueva tendencia se confirmó y entramos en el comercio de largo en 2,0312 con nuestro objetivo inmediato de la alta anterior en el mercado en 2,0390 alrededor de 70 pips por encima. La pérdida de stop fue colocada justo debajo de 2.0239.

La relación de recompensas de riesgo no fue grande en el comercio a 1: 1, pero el objetivo de beneficio se logró.

El comercio siguiente, altas luces anaranjadas volvimos a entrar en la rotura de 2 en 2.0275 con una parada mucho más apretada en 2.0312. El objetivo en este comercio el mínimo anterior en 2.0090. El movimiento hacia abajo se detuvo en 2.0098 justo debajo de nuestro objetivo. El comercio se cerró cuando el precio se rompió por encima del máximo del retroceso 115 pips de nuestra entrada.

También hubo un tercer comercio, (Blue High Lites) como podemos ver el patrón es bastante común y puede aparecer un número de veces a la semana. El método también se puede utilizar eficazmente en todos los marcos de tiempo.

Al igual que con todos los sistemas de comercio que pueden ser más eficaces cuando se utiliza junto con otros indicadores. Un indicador popular para usar con el patrón 123 es un promedio móvil exponencial de 21 que he agregado al mismo gráfico. En este caso entramos en el mercado cuando el patrón 123 es confirmado por una ruptura del 21 ema.

Podemos permanecer en el comercio hasta que alcanzamos un objetivo predefinido o hasta que el precio se rompa por encima o por debajo del 21 ema que confirma la inversión. La pérdida de parada inicial es la misma que el método normal. La línea rosa móvil promedio se ha añadido a la misma tabla y confirmó todas las operaciones anteriores cuando el precio rompió nuestro punto 2 también había violado el 21 ema para dar más confirmación del comercio.

Otro indicador eficaz para usar con la formación 1 2 3 es bandas de Bollinger. En la siguiente tabla he añadido una banda estándar de Bollinger. Usando las bandas de Bollinger esperamos hasta que el precio golpee o penetra y la banda externa o la línea central antes del punto de ruptura 2. Viendo el precio del comercio 1 penetró la banda inferior antes de volver y formando la alta en el punto 2 luego volvió a caer para formar el punto 3 que fue Mayor que el punto 1. Cuando el precio rompió el punto 2, nuestras bandas de Bollinger comenzaron a ensancharse confirmando aún más el movimiento ascendente.

El comercio 2 también penetró en la banda superior antes de volver y formar el punto 2. El punto 3 se estancó en la banda central antes de romperse. Nuestra pérdida de parada es la misma que en los otros métodos, pero aquí nuestro objetivo puede ser la banda inferior o hasta que obtengamos un patrón de inversión.

Todas las otras operaciones también se confirman con las bandas de Bollinger. Resumen

Ejercer paciencia mientras espera que el patrón se forme

Sólo entrar en el comercio en la ruptura del punto 2

Establezca Parar pérdida por encima del punto 3.

Si utiliza la estrategia 21 ema entonces sólo entrar en el comercio cuando el precio rompe la línea de correo electrónico, así como el punto 2 en el patrón.

Si utiliza el método Bollinger, el precio del método debe tocar primero una banda externa o central y luego invertir para formar el punto 2.

Las mejores operaciones serán cuando la entrada sea confirmada por el ensanchamiento de las Bandas de Bollinger y un rebote de uno de la línea central de la banda.

Publicado por Graham du Plessis en 19:36

ADVERTENCIA DE RIESGO

Antes de decidir participar en el mercado Forex, debe considerar cuidadosamente sus objetivos de inversión, el nivel de experiencia y el apetito por el riesgo. Lo más importante es no invertir dinero que no puede permitirse perder.

Existe una considerable exposición al riesgo en cualquier transacción de divisas fuera de la bolsa, incluyendo pero no limitado a apalancamiento, solvencia, protección regulatoria limitada y volatilidad del mercado que pueden afectar sustancialmente el precio o la liquidez de una divisa o par de divisas.

Por otra parte la naturaleza apalancada del forex significa que cualquier movimiento del mercado tendrá un efecto igualmente proporcional en sus fondos depositados. Esto puede funcionar en su contra, así como para usted.

Existe la posibilidad de que usted pueda sostener una pérdida total de fondos de margen inicial y ser requerido para depositar fondos adicionales para mantener su posición. Si no cumple con cualquier requisito de margen, su posición puede ser liquidada y usted será responsable de las pérdidas resultantes. Para manejar la exposición, emplear estrategias de reducción de riesgo tales como órdenes "stop-loss" o "limit"

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123 Sistema de comercio

Obtenga beneficios con el sistema de comercio 123

Necesitamos un buen sistema de comercio de divisas para obtener buenos resultados, y debemos hacer una estrategia de comercio simple para que pueda utilizar constantemente por su usuario. De mi investigación encontré un sistema de comercio simple y fácil de usar. Este sistema es ampliamente discutido en los foros de comercio de divisas en la web y esto podría ser recurso de inspiración para hacer un sistema de comercio que coinciden con los comerciantes característica.

Esta estrategia comercial utiliza la técnica 123. Esta técnica es como el método de contar olas para predecir la dirección de la tendencia del mercado. Este sistema comercial se utiliza para determinar la posibilidad de inversión de tendencia. 123 sistema de comercio ¿Cómo definir 1, 2 y 3 de comercio?

1 es cuando el mercado está en movimiento de tendencia y comienza a retroceder, 2 es el borde de nivel de retracement, 3 es cuando el mercado ya alcanzó 61,8% de nivel de retraimiento de fibonacci desde el punto 1 y 2, pero todavía por debajo del punto 1. Nuestra entrada Nivel es cuando el precio de mercado a través del punto 2 y nuestra pérdida de stop está por debajo del punto 3 (posición larga) o por encima del punto 3 (posición corta). O si el precio de mercado está en el mercado activo, podemos establecer nuestra pérdida de stop en por debajo o por encima del punto 1. Y los diferentes entre el punto 2 y el punto 3 podemos utilizar para nuestro objetivo de beneficio. Es fácil a la derecha. No tenemos que usar ningún indicador técnico en absoluto.

Trading 123 ejemplo, gráfico de 15 minutos GBPUSD el 13 de diciembre de 2010, el precio de mercado fue de 1.5793 y luego el precio de mercado se movía hacia abajo en 1.5718. Este nivel era el punto 1. El punto 2 estaba en 1.5765 donde el mercado corrigió. Y luego utilizamos la herramienta fibonacci para medir la posibilidad del punto 3. Con la medición de retracement tenemos que 61.8% está en el punto 1 y el punto 2, y conseguimos el punto 3 alrededor de 1.5736. En el gráfico de negociación el precio de mercado es superior a ese nivel pero no superó el punto 1. El punto 3 era válido.

Después de que decidimos el punto 123, esperamos que el precio de mercado pase por encima del punto 2, y usamos este nivel como señal de compra abierta de compra y el nivel de pérdida de parada es pares pips por debajo del punto 3 o por debajo del punto 1. El objetivo de beneficio era el diferente entre Punto 2 y punto 3. Podemos usar 2 lotes para nuestra transacción. El primer lote fue eliminado si el nivel objetivo de beneficio alcanzado. Y luego cambiamos nuestro primer nivel de stop loss en la segunda parada de pérdidas, con este sistema de gestión de dinero podemos liberarnos del riesgo comercial. Nuestro comercio secundario se mueve en la pérdida de la parada secundaria. Este sistema de comercio es compatible con el precio de mercado de alta volatilidad, y significa sesión de negociación de Euro y América.

Tal vez usted quiere leer otros artículos sobre el sistema de comercio - Scalping sistema de comercio Mucho comerciante de forex profesional utilizando el sistema de comercio de scalping y obtener enormes beneficios. En este artículo vamos a discutir sobre scalping estrategia comercial.

- Tendencia Retracement Trading System Hoy voy a compartir acerca de scalping sistema de comercio utilizando el promedio móvil exponencial y MACD indicador de divergencia de convergencia promedio móvil.

- Renko Chart Trading System El gráfico de Renko es hecho por el japonés, este indicador apenas referido con el precio de mercado, el volumen y el marco de tiempo no se utilizan. La forma de la carta de Renko es como un ladrillo.

- Aroon Indicator Trading System Indicador Aroon ayuda a los operadores de divisas para determinar la tendencia del mercado. Los indicadores de Aroon reflejan el valor porcentual y los oficios entre 0 y 100.

- DeMarker Trading System Este es nuestro primer artículo sobre DeMarker indicador, en este artículo usted puede aprender acerca de DeMarker sistema de comercio. Usted puede estudiar acerca de DeMarker indicador de compra y venta de señal de comercio.

Hola comerciante Compañero, En este post, le presentaré a sistema de comercio hecho a medida que se ve bastante bien. Este sistema de comercio manual contiene 4 indicadores principales. No creo este indies, sólo algunos mezcla y partido

1. Indicador 1-2-3 2. Indicador de zig zag personalizado 3. Indicador de Sweetspot 4. Indicador de tiempo (muy útil)

El tiempo es todo en la divisa, por lo que tener en cuenta que si desea comerciar con este sistema, debe celebrar su mano hasta el final de la vela. Mercado en algún momento impredecible y arriesgado, pero podemos reducir el riesgo mediante el uso de indicador de tiempo y esperar hasta que el cierre de la vela. Aquí está la captura de pantalla del sistema

Las normas

LONG Comercio por lo menos 2 condiciones deben cumplirse: 1. La segunda alta superposición anterior alta 2. Candelabro cerca de la sweetspot 3. Zigzag flecha se dispara

Corto Comercio por lo menos 2 condición debe cumplirse: 1. La segunda alta por debajo de la anterior alta 2. Candelabro cerca por debajo de la sweetspot 3. Zigzag flecha va hacia abajo

Estrategia de inversión: El patrón 1-2-3

Una de las estrategias de inversión que se pueden utilizar para invertir el mercado comercial es la estrategia de patrón 1-2-3 basada en Fibonacci. No importa cuán lejos se mueven los mercados, siempre habrá espacio para una inversión del mercado cuando los fundamentos que impulsaron la tendencia anterior cambian. El patrón de reversión 1-2-3 está diseñado para atrapar tales inversiones de mercado antes de que se produzcan de manera que en el momento de la inversión, ya estaría esperando para tirar del gatillo.

La estrategia de inversión 1-2-3 depende de que el comerciante sea capaz de:

Reconocer una configuración para una inversión del mercado.

Convierta la configuración en beneficios.

La identificación del patrón comienza con la identificación del movimiento 1-2-3 de la acción de precio en las cartas. El gráfico diario proporciona espacio para este análisis, aunque el gráfico de 4 horas también puede utilizarse como sustituto. Estos gráficos se utilizan para la identificación de tendencias. Las verdaderas inversiones del mercado se pronostican a partir de la verdadera tendencia. Gráficos de menor tiempo no muestran la verdadera tendencia, ya que sólo reflejan los movimientos del mercado intradía.

Una vez que se identifica la tendencia, el siguiente paso es identificar el patrón 1-2-3 cuando ocurre. La secuencia "1-2-3" es el movimiento que la acción del precio hace antes de la inversión. La acción del precio se mueve en la tendencia y se remata hacia arriba o hacia abajo en el punto 1, se mueve en la dirección opuesta como un retroceso al punto 2, luego se mueve hacia atrás en la dirección de tendencia inicial a un punto 3 que representa un nivel de retraimiento Fibonacci de a Línea 1-2, entonces la acción de precio se mueve en el modo de inversión desde el punto 3, sacando un nivel clave de soporte o resistencia formado por el punto 2 en su trayectoria.

Así que la identificación de la configuración de inversión 1-2-3 requiere una comprensión de estos puntos:

Necesita una herramienta de línea de tendencia para dibujar la línea del punto 1 al 2.

Necesita la herramienta de retroceso de Fibonacci para identificar el retroceso de 38,2% o 50% de una línea trazada del punto 1 al 2, que es inferior al punto 1 en una tendencia alcista y superior al punto 1 en una tendencia a la baja.

El nivel de retroceso es el punto 3.

Entender el grado de retroceso, por lo tanto, ayudará al comerciante en cuanto a dónde se hará la entrada para las operaciones de reversión.

El comercio corto es una reversión a la baja siguiendo el modelo 1-2-3 que se forma a partir de una tendencia alcista anterior. La tendencia alcista supera en el punto 1, luego invierte hacia abajo para encontrar soporte en el punto 2. El punto 3 es un retroceso de 38,2% o 50% de una línea trazada de la línea 1 a 2. El punto 3 está a un nivel horizontal inferior al punto 1. Desde el punto 3, el precio se invierte hacia abajo, rompiendo el soporte en el punto 2. El comercio se inicia realmente en el punto en que se rompe este nivel de soporte. Así que todo lo que el comerciante tiene que hacer es buscar la formación 1-2-3 que se forma antes del punto de negociación.

Una vez que se identifica el patrón 1-2-3, la siguiente etapa es intercambiar la rotura del soporte en el punto 2. Debe dibujarse una línea horizontal desde el punto 2 hacia fuera, de modo que la línea pueda ser utilizada como punto de entrada, Así como el punto de referencia para establecer una Pérdida de Stop.

1-2-3 Configuración de inversión para el comercio corto

Podemos ver a partir de esta instantánea que el punto 3 está en el nivel de retroceso del 61,8% de la línea 1-2 (no se muestra). Esto puede confirmarse trazando la herramienta de extensión de Fibonacci del punto 1 a 2 y haciendo una anotación de en qué nivel se situará el punto 3. El precio se desplaza hacia abajo a partir del punto 3, y el comercio puede considerarse como una orden de venta en la ruptura del soporte horizontal en el punto 2.

El comercio largo es una inversión hacia arriba siguiendo el modelo 1-2-3 que se forma a partir de una tendencia bajista anterior. La tendencia bajista termina en el punto 1 y luego se invierte hacia arriba para encontrar resistencia en el punto 2. El punto 3 es un retroceso de 38,2%, 50% o 61,8% de una línea trazada de la línea 1 a 2. El punto 3 está a un nivel horizontal más alto que Punto 1. Desde el punto 3, el precio se invierte hacia arriba, rompiendo la resistencia en el punto 2. El comercio largo se inicia realmente en el punto donde este nivel se rompe. Así que todo lo que el comerciante tiene que hacer es buscar la formación 1-2-3 que se forma antes del punto de negociación.

Después de permitir la formación de los puntos 1, 2 y 3, trace una línea horizontal desde el punto 2 hacia el exterior para formar la línea de resistencia de referencia. Ir largo cuando esta línea de resistencia se rompe por la acción de aumento de precio de inversión. A veces, después de que la vela se ha cerrado por encima de la línea de resistencia, la acción del precio puede intentar retroceder a la resistencia rota. Cuando esto suceda, ingrese largo en ese punto. Una orden de límite de compra funcionará bien en este caso.

La línea horizontal es la línea de referencia en este caso, y una colocación de stop loss pocos pips por debajo de la línea (orden larga) o por encima de la línea (orden de venta) funcionará bien. Esta línea suele ser un fuerte nivel de soporte o resistencia y generalmente se mantiene la mayor parte del tiempo.

La toma de ganancia se deja generalmente a discreción del comerciante. Sin embargo, esto debe establecerse de acuerdo con directrices razonables. Por ejemplo, un comerciante puede decidir establecer el beneficio de tomar como doble o triple de la pérdida de parada, o puede decidir utilizar una parada de arrastre una vez que un número determinado de pips se ha alcanzado.

La estrategia de inversión 1-2-3 debe ser ensayada en una plataforma de demostración. Se debe prestar mucha atención al uso de la herramienta Fibonacci en la determinación del punto 3, y también a dibujar el patrón 1-2-3 completo una vez que se haya formado.

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Just like a a drunk man leaving a bar follows a random walk. His dog also follows a random walk on its own. The paths will diverge. Then they go into a park where dogs are not allowed to be untied. Therefore the drunk man puts a strap on his dog and both enter into the park. Now, they share some common direction, their paths are co-integrated. see Murray [ 11 ].

A good intro is also given by Carol Alexander in [ 2 ] "Cointegration and asset allocation: A new active hedge fund strategy".

Definition: Two time series x t and y t are co-integrated if, and only if, each is I (1) and a linear combination X t - a - b Y t . where b 1 № 0 is I (0)

In general, linear combinations of I (1) time series are also I (1). Co-integration is a particular feature not displayed between arbitrary pairs of time series.

If two time series are co-integrated, then the co-integrating vector ( b 1 ) is unique

Granger (1981) introduced the case

where the individual time series are I(1) but the error term, u t . is I(0). That is, the error term might be autocorrelated but, because it is stationary, the relationship will keep returning to the equilibrium or long-run equation y t = a + b x t

Granger (1981) and Engle and Granger (1987) demonstrated that, if a vector of time series is cointegrated, the long-run parameters can be estimated directly without specifying the dynamics because, in statistical terms, the estimated long-run parameter estimates converge to their true values more quickly than those operating on stationary variables. That is they are super-consistent and a two-step procedure of first estimating the long-run relationship and estimating the dynamics, conditional on the long run becomes possible.

As a result, simple static models came back in vogue in the late 1980's but it rapidly became apparent that small sample biases can indeed be large (Banerjee et al, 1986).

Two major problems typically arise in a regression such as (1 ). First, it is not always clear whether one should regress yt on xt or vice versa. Endogeneity is not an issue asymptotically because the simultaneous equations bias is of a lower order of importance and, indeed, is dominated by the non-stationarity of the regressor. However, least squares is affected by the chosen normalisation and the estimate of one regression is not the inverse of that in the alternative ordering unless R 2 =1.

Secondly, the coefficient b ^ is not asymptotically normal when xt is I(1) without drift, even if ut is iid. Of course, autocorrelation in the residuals produces a bias in the least squares standard errors, even when the regressor is non-stationary, and this effect is in addition to that caused by non-stationarity.

The preceding discussion is based on the assumption that the disturbances are stationary. In practice, it is necessary to pre-test this assumption. Engle and Granger suggested a number of alternative tests but that which emerged as the popular method is the use of an ADF test on the residuals without including a constant or a time trend.

Note the similarity of 10 and 16. apart from the nature of the error term, i. e. a Difference Stationary Series can be written as a function of t, like a Trend Stationary Series. but with a MA error term.

In finite samples a Trend Stationary Series can be approximated arbitrarily well by a Difference Stationary Series. y viceversa. The finite sample distributions are very close together and it can be hard to tell them apart.

A difference between them is that a shock to the system ( D e ) has a temporary effect upon a Trend Series but a permanent effect upon a Difference Series. If we interpret 'shock' as a change in government policy, then we can see the importance of finding whether variables are Difference Series or Trend Series.

A non-stationary series is said to be integrated, with the order of integration being the number of times the series needs to be differenced before it becomes stationary. A stationary series is integrated of order zero, I(0). For the random walk model, y I (1).

Most economic variables are I (0) or I (1). Interest rates are likely to be I (0), they are not trended. Output, the price level, investment, etc. are likely to be I (1). Some variables may be I (2). Transforming to logs may affect the order of integration.

Pairs Trading Model

The investment strategy we aim at implementing is a market neutral long/short strategy. This implies that we will try to find shares with similar betas, where we believe one stock will outperform the other one in the short term. By simultaneously taking both a long and short position the beta of the pair equals zero and the performance generated equals alpha.

Needless to mention, is that the hard part of this strategy is to find market neutral positions that will deviate in returns. To do this we can use a statistical tool developed by Schroder Salomon Smith Barney (SSSB). The starting point of this strategy is that stocks that have historically had the same trading patterns (i. e. constant price ratio) will have so in the future as well. If there is a deviation from the historical mean, this creates a trading opportunity, which can be exploited. Gains are earned when the price relationship is restored. The historical calculations of betas and the millions of tests executed are done by SSSB, but it is our job as portfolio managers to interpret the signals and execute the trades.

Resumen:

find two stocks prices of which have historically moved together,

mean reversion in the ratio of the prices, correlation is not key

Gains earned when the historical price relationship is restored

Free resources invested in risk-free interest rate

Testing for the mean reversion

The challenge in this strategy is identifying stocks that tend to move together and therefore make potential pairs. Our aim is to identify pairs of stocks with mean-reverting relative prices. To find out if two stocks are mean-reverting the test conducted is the Dickey-Fuller test of the log ratio of the pair. En el

A Dickey-Fuller test for determining stationarity in the log-ratio y t =log A t - log B t of share prices A and B

In other words, we are regressing D y t on lagged values of y t .

the null hypothesis is that g =0, which means that the process is not mean reverting.

If the null hypothesis can be rejected on the 99% confidence level the price ratio is following a weak stationary process and is thereby mean-reverting. Research has shown that if the confidence level is relaxed, the pairs do not mean-revert good enough to generate satisfactory returns. This implies that a very large number of regressions will be run to identify the pairs. If you have 200 stocks, you will have to run 19 900 regressions, which makes this quite computer-power and time consuming.

Schroder Salomon Smith Barney provide such calculation

By conducting this procedure, a large number of pairs will be generated. The problem is that all of them do not have the same or similar betas, which makes it difficult for us to stay market neutral. Therefore a trading rule is introduced regarding the spread of betas within a pair. The beta spread must be no larger than 0.2, in order for a trade to be executed. The betas are measured on a two-year rolling window on daily data.

We now have mean-reverting pairs with a limited beta spread, but to further eliminate the risk we also want to stay sector neutral. This implies that we only want to open a position in a pair that is within the same sector. Due to the different volatility within different sectors, we expect sectors showing high volatility to produce very few pairs, while sectors with low volatility to generate more pairs. Another factor influencing the number of pairs generated is the homogeneity of the sector. A sector like Commercial services is expected to generate very few pairs, but Financials on the other hand should give many trading opportunities. The reason why, is that companies within the Financial sector have more homogenous operations and earnings.

The screening process described gives us a large set of pairs that are both market and sector neutral, which can be used to take positions. This should not be done randomly, since timing is an important issue. We will therefore introduce several trading execution rules.

All the calculations described above will be updated on a daily basis. However, we will not have to do this ourselves, but we will be provided with updated numbers every day, showing pairs that are likely mean revert within the next couple of weeks. In order to execute the strategy we need a couple of trading rules to follow, i. e. to clarify when to open and when to close a trade. Our basic rule will be to open a position when the ratio of two share prices hits the 2 rolling standard deviation and close it when the ratio returns to the mean. However, we do not want to open a position in a pair with a spread that is wide and getting wider. This can partly be avoided by the following procedure: We actually want to open a position when the price ratio deviates with more than two standard deviations from the 130 days rolling mean. The position is not opened when the ratio breaks the two-standard-deviations limit for the first time, but rather when it crosses it to revert to the mean again. You can say that we have an open position when the pair is on its way back again (see the picture below).

Figure 1: Pairs Trading rules

resumen:

Open position when the ratio hits the 2 standard deviation band for two consecutive times

Close position when the ratio hits the mean

Furthermore, there will be some additional rules to prevent us from loosing too much money on one single trade. If the ratio develops in an unfavourable way, we will use a stop-loss and close the position as we have lost 20% of the initial size of the position. Finally, we will never keep a position for more that 50 days. On average, the mean reversion will occur in approximately 35 days. and there is no reason to wait for a pair to revert fully, if there is very little return to be earned. The potential return to be earned must always be higher than the return earned on the benchmark or in the fixed income market. The maximum holding period of a position is therefore set to 50 days. This should be enough time for the pairs to revert, but also a short enough time not to loose time value.

The rules described are totally based on statistics and predetermined numbers. In addition, there is a possibility for us to make our own decisions. If we for example are aware of fundamentals that are not taken into account in the calculations and that indicates that there will be no mean reversion for a specific pairs, we can of course avoid investing in such pairs.

From the rules it can be concluded that we will open our last position no later than 50 days before the trading game ends. The last 50 days we will spend trying to close the trades at the most optimal points of time.

Resumen:

Stop loss at 20% of position value

Beta spread <0.2

Sector neutrality

Maximum holding period < 50 trading days

10 equally weighted positions

As already mentioned, through this strategy we do almost totally avoid the systematic market risk. The reason there is still some market risk exposure, is that a minor beta spread is allowed for. In order to find a sufficient number of pairs, we have to accept this beta spread, but the spread is so small that in practise the market risk we are exposed to is ignorable. Also the industry risk is eliminated, since we are only investing in pairs belonging to the same industry.

The main risk we are being exposed to is then the risk of stock specific events, that is the risk of fundamental changes implying that the prices may never mean revert again, or at least not within 50 days. In order to control for this risk we use the rules of stop-loss and maximum holding period. This risk is further reduced through diversification, which is obtained by simultaneously investing in several pairs. Initially we plan to open approximately 10 different positions. Finally, we do face the risk that the trading game does not last long enough. It might be the case that our strategy is successful in the long run, but that a few short run failures will ruin our overall excess return possibilities.

General Discussion on pairs trading

There are generally two types of pairs trading: statistical arbitrage convergence/divergence trades, and fundamentally-driven valuation trades. In the former, the driving force for the trade is a aberration in the long-term spread between the two securities, and to realize the mean-reversion back to the norm, you short one and go long the other. The trick is creating a program to find the pairs, and for the relationship to hold.

The other form of pairs trading would be more fundamentally-driven variation, which is the purvey of most market-neutral hedge funds: in essence they short the most overvalued stock(s) and go long the undervalued stock(s). It's normal to "pair" up stocks by having the same number per sector on the long and short side, although the traditional "pairs" aren't used anymore. Pairs trading had originally been the domain of BD's in the late 70's, early 80's before it dissipated somewhat due to the bull market (who would want to be market-neutral in a rampant bull market), and the impossibility of assigning "pairs" due to the morphing of traditional sectors and constituents. Most people don't perform traditional "pairs trading" anymore (i. e. the selection of two similar, but mispriced, stocks from the same industry/sector), but perform a variation. Goetzmann et al wrote a paper on it a few years back, but at the last firm I worked at, the research analyst "pooh-paahed" it because he couldn't get the same results: he thinks Goetzmann [ 7 ] either waived commissions, or worse, totally ignored slippage (i. e. always took the best price, not the realistically one). Here's the paper. source: forum http://www. wilmott. com

some quotations from this paper: "take a longshort position when they diverge." A test requires that both of these steps must be parameterized in some way. How do you identify "stocks that move together?" Need they be in the same industry? Should they only be liquid stocks? How far do they have to diverge before a position is put on? When is a position unwound? We have made some straightforward choices about each of these questions. We put positions on at a twostandard deviation spread, which might not always cover transactions costs even when stock prices converge. Although it is tempting to try potentially more profitable schemes, the danger in datasnooping refinements outweigh the potential insights gained about the higher profits that could result from learning through testing. As it stands now, datasnooping is a serious concern in our study. Pairs trading is closely related to a widely studied subject in the academic literature mean reversion in stock prices. 2 We consider the possibility that we have simply reformulated a test of the previously documented tendency of stocks to revert towards their mean at certain horizons. To address this issue, we develop a bootstrapping test based upon random pair choice. If pairstrading profits were simply due to meanreversion, then we should find that randomly chosen pairs generate profits, i. e. that buying losers and selling winners in general makes money. This simple contrarian strategy is unprofitable over the period that we study, suggesting that mean reversion is not the whole story. Although the effect we document is not merely an extension of previously known anomalies, it is still not immune to the datasnooping argument. Indeed we have explicitly "snooped" the data to the extent that we are testing a strategy we know to have been actively exploited by risk arbitrageurs. As a consequence we cannot be sure that past trading profits under our simple strategies will continue in the future. This potential critique has another side, however. The fact that pairs trading is already wellknown riskarbitrage strategy means that we can simply test current practice rather than develop our filterrule ad hoc.

Optimal Convergence Trading

From [ 10 ], Vladislav Kargin: "Consider an investment in a mispriced asset. An investor can expect that the mispricing will be eliminated in the future and play on the convergence of the asset price to its true value. This play is risky because the convergence is not immediate and its exact date is uncertain. Often both the expected benefit and leveraging his positions, that is, by borrowing additional investment funds. An important question for the investor is what is the optimal leverage policy. There are two intuitively appealing strategies in this situation. The first one is to invest only if the mispricing exceeds a threshold and to keep the position unchanged until the mispricing falls below another threshold (an (s, S) strategy). For this strategy the relevant questions are what are the optimal thresholds and what are the properties of the investment portfolio corresponding to this strategy. The second type of strategy is to continuously change positions according to the level of mispricing. In this case, we are interested in the optimal functional form of the dependence of the position on the mispricing."

See also discussion on optimal growth strategies in [ 9 ].

Optimal Trading in presence of mean reversion

Formally, a stochastic process is stationary if all the roots of its characteristic equation are >1 in absolute value. Solving is the same as solving a difference equation.

we rewrite it as y t - r y t -1 = e t or (1- r L ) y t = e t . Hence this will be stationary if the root of the characteristic equation 1- r L = 0 is >1. The root is L = 1/ r which is >1 if r <1. This is the condition for stationarity.

Example II: y t = 2.8 y t -1 -1.6 y t -2 + e t The characteristic equation is 1 - 2.8 L + 1.6 L 2 = 0. From this we get L = 1.25 and L = 0.5 are the roots. Both roots need to be greater than 1 in absolute value for stationarity. This does not apply here, so the process is non-stationary.

However, in practice we do not know the r values, we have to estimate them and then test whether the roots are all >1. We could estimate

H 0: r = 1 ( non stationary ) (31)

H 1: r < 1 ( stationary ) (32)

using a t-test. Unfortunately, if r =1, the estimate of r is biased downwards (even in large samples) and also the t-distribution is inappropriate. Hence can't use standard methods.

Instead we use the Dickey-Fuller test. Re-write 30

H 0: r * = 0 ( non stationary ) (34)

H 1: r * < 0 ( stationary ) (35)

We cannot use critical values from the t-distribution, but D-F provide alternative tables to use.

The D-F equation only tests for first order autocorrelation of y . If the order is higher, the test is invalid and the D-F equation suffers from residual correlation. To counter this, add lagged values of D y to the equation before testing. This gives the Augmented Dickey-Fuller test. Sufficient lags should be added to ensure e is white noise.

95% critical value for the augmented Dickey-Fuller statistic ADF =-3.0199

It is important to know the order of integration of non-stationary variables, so they may be differenced before being included in a regression equation. The ADF test does this, but it should be noted that it tends to have low power (i. e. it fails to reject H0 of non-stationarity even when false) against the alternative of a stationary series with r near to 1.

the term е i =1 p d i D Y t - i gets lumped into the errors u t . This induces an AR(p) structure in the u s, and the standard D. F. test statistics will be wrong. There are two ways of dealing with this problem:

Change the model (known as the augmented Dickey-Fuller test), or

Change the test statistic (the Phillips-Perron test).

The Augmented Dickey-Fuller Test

Rather than estimating the simple model, we can instead estimate:

and test whether or not r = 0. This is the Augmented Dickey-Fuller test. As with the D-F test, we can include a constant/trend term to differentiate between a series with a unit root and one with a deterministic trend.

The purpose of the lags of D Y t is to ensure that the us are white noise. This means that in choosing p (the number of lagged D Y t - i terms to include), we have to consider two things:

Too few lags will leave autocorrelation in the errors, while

Too many lags will reduce the power of the test statistic.

This suggests, as a practical matter, a couple different ways to go about determining the value of p:

Start with a large value of p, and reduce it if the values of di are insignificant at long lags - This is generally a pretty good approach.

Start with a small value of p, and increase it if values of di are significant. This is a less-good approach.

Estimate models with a range of values for p, and use an AIC/BIC/ F-test to determine which is the best option. This is probably the best option of all.

A sidenote: AIC and BIC tests:

The Akaike Information Criterion (AIC) and Bayes Information Criterion (BIC) are general tests for model specification. They can be applied across a range of different areas, and are like F-tests in that they allow for the testing of the relative power of nested models. Each, however, does so by penalizing models which are overspecified (i. e. those with "too many" parameters). The AIC statistic is:

where N is the number of observations in the regression, p is the number of parameters in the model (including r and a ), and s p 2 is the estimated s 2 for the regression including p total parameters.

Similarly, the BIC statistic is calculated as:

2.1 The KPSS test One potential problem with all the unit root tests so far described is that they take a unit root as the null hypothesis. Kwiatkowski et. Alabama. (1992) provide an alternative test (which has come to be known as the KPSS test) for testing the null of stationarity against the alternative of a unit root. This method considers models with constant terms, and either with or without a deterministic trend term. Thus, the KPSS test tests the null of a level - or trend-stationary process against the alternative of a unit root. Formally, the KPSS test is equal to:

estimated error variance from the regression:

for the model with a trend. The practical advantages to the KPSS test are twofold. First, they provide an alternative to the DF/ADF/PP tests in which the null hypothesis is sta-tionarity. They are thus good "complements" for the tests we have focused on so far. A common strategy is to present results of both ADF/PP and KPSS tests, and show that the results are consistent (e. g. that the former reject the null while the latter fails to do so, or vice-versa). In cases where the two tests diverge (e. g. both fail to reject the null), the possibility of "fractional integration" should be considered (e. g. Baillie 1989; Box-Steffensmeier and Smith 1996, 1998).

General Issues in Unit Root Testing The Sims (1988) article I assigned is to point out an issue with unit root econometrics in general: that classicists and Bayesians have very different ideas about the value of knife-edge unit root tests like the ones here.1 Unlike classical statisticians, Bayesians regard (the "true" value of the autocorrelation parameter) as a random variable, and the goal to describe the distribution of this variable, making use of the information contained in the data. One result of this is that, unlike the classical approach (where the distribution is skewed), the Bayesian perspective allows testing using standard t distributions. For more on why this is, see the discussion in Hamilton.

Another issue has to do with lag lengths. As in the case of ARIMA models, choosing different lag lengths (e. g. in the ADF, PP and KPSS tests) can lead to different conclusions. This is an element of subjectivity that one needs to be aware of, and sensitivity testing across numerous different lags is almost always a good idea. Finally, the whole reason we do unit root tests will become clearer when we talk about cointegration in a few weeks.

ECM is generalized to vectors:

The components of the vector x t = ( x 1 t . x 2 t . xnt ) are cointegrated of order (d, b), denoted by xt CI(d, b), if

All components of x t are I(d) and There exists a vector b = ( b 1 . b 2 . b n ) such that b x t is I(d-b), where b > 0. Note b is called the cointegrating vector.

Points to remember:

To make b unique we must normalize on one of the coefficients.

All variables must be cointegrated of the same order. But, all variables of the same I(d) are not necessarily cointegrated.

If x t is n x 1 then there may be as many as n -1 cointegrating vectors. The number of cointegrating vectors is called the cointegrating rank.

An interpretation of cointegrated variables is that they share a common stochastic trend.

Given our notions of equilibrium in economics, we must conclude that the time paths of cointegrated variables are determined in part by how far we are from equilibrium. That is, if the variables wander from each other, there must be some way for them to get back together. This is the notion of error correction.

Granger Representation theorem. "Cointegration implies Error Correction Model (ECM)."

Cointegration is covered in any good econometrics textbook. If you need more depth, Johansen's Likelihood-Based Inference in Cointegrated Vector Autoregressive Models, Oxford University Press, 1995, is good. I do not recommend the original Engle and Granger paper (1987).

Two series are said to be (linearly) "cointegrated" if a (linear) combination of them is stationary. The practical effect in Finance is we deal with asset prices directly instead of asset returns.

For example, suppose I want to hold a market neutral investment in stock A (I think stock A will outperform the general market, but I have no view about the direction of the overall market). Traditionally, I buy 1,000,000 of stock A and short 1,000,000 times Beta of the Index. Beta is derived from the covariance of returns between stock A and the Index. Looking at things another way, I choose the portfolio of A and the Index that would have had minimum variance of return in the past (over the estimation interval I used for Beta, and subject to the constraint that the holding of stock A is $1,000,000).

A linear cointegration approach is to select the portfolio in the past that would have been most stationary. There are a variety of ways of defining this (just as there are a variety of ways of estimating Beta) but the simplest one is to select the portfolio with the minimum extreme profit or loss over the interval. Note that the criterion is based on P&L of the portfolio (price) not return (derivative of price).

The key difference is correlation is extremely sensitive to small time deviations, cointegration is not. Leads or lags in either price reaction or data measurement make correlations useless. For example, suppose you shifted the data in the problem above, so your stock quotes were one day earlier than you Index quotes. That would completely change the Beta, probably sending it near zero, but would have little effect on the cointegration analysis.

Economists need cointegration because they deal with bad data, and their theories incorporate lots of unpredictable leads and lags. Finance, in theory, deals with perfect data with no leads or lags. If you have really good data of execution prices, cointregation throws out your most valuable (in a money-making sense) information. If you can really execute, you don't care if there's only a few seconds in which to do so. But if you have bad data, either in the sense that the time is not well-determined or that you may not be able to execute, cointegration is much safer.

In a sense, people have been using cointegration for asset management as long as they have been computing historical pro forma strategy returns and looking at the entire chart, not just the mean and standard deviation (or other assumed-stationary parameters).

My feeling is cointegration is essential for risk management and hedging, but useless for trading and pricing. Correlation is easy and well-understood. You can use it for risk-management and hedging, but only if you backtest (which essentially checks the results against a co-integration approach) to find the appropriate adjustments and estimation techniques. Correlation is useful for trading and pricing (sorry Paul) but only if you allow stochastic covariance matrices.

More formally, if a vector of time series is I(d) but a linear combination is integrated to a lower order, the time series are said to be co-integrated.

Allen and Fildes

de. Econometric Forecasting http://www. lums2.lancs. ac. uk/MANSCI/Staff/EconometricForecasting. pdf

These are the arguments in favor of testing whether a series has a unit root:

(1) It gives information about the nature of the series that should be helpful in model specification, particularly whether to express the variable in levels or in differences.

(2) For two or more variables to be cointegrated each must possess a unit root (or more than one).

These are the arguments against testing:

(1) Unit root tests are fairly blunt tools. They have low power and often conclude that a unit root is present when in fact it is not. Therefore, the finding that a variable does not possess a unit root is a strong result. What is perhaps less well known is that many unit-root tests suffer from size distortions. The actual chance of rejecting the null hypothesis of a unit root, when it is true, is much higher than implied by the nominal significance level. These findings are based on 15 or more Monte Carlo studies, of which Schwert (1989) is the most influential (Stock 1994, p. 2777).

(2) The testing strategy needed is quite complex.

In practice, a nonseasonal economic variable rarely has more than a single unit root and is made stationary by taking first differences. Dickey and Fuller (1979) recognized that they could test for the presence of a unit root by regressing the first-differenced series on lagged values of the original series. If a unit root is present, the coefficient on the lagged values should not differ significantly from zero. They also developed the special tables of critical values needed for the test.

Since the publication of the original unit root test there has been an avalanche of modifications, alternatives, and comparisons. Banerjee, Dolado, Galbraith, and Hendry (1993, chapter 4) give details of the more popular methods. The standard test today is the augmented Dickey-Fuller test (ADF), in which lagged dependent variables are added to the regression. This is intended to improve the properties of the disturbances, which the test requires to be independent with constant variance, but adding too many lagged variables weakens an already low-powered test.

Two problems must be solved to perform an ADF unit-root test: How many lagged variables should be used? And should the series be modeled with a constant and deterministic trend which, if present, distort the test statistics? Taking the second problem first, the ADF-GLS test proposed by Elliott, Rothenberg, and Stock (1996) has a straightforward strategy that is easy to implement and uses the same tables of critical values as the regular ADF test.

First, estimate the coefficients of an ordinary trend regression but use generalized least squares rather than ordinary least squares. Form the detrended series, y d . given by y t d = y t - b 0 - b 1 t . where b 0 and b 1 are the coefficients just estimated. In the second stage, conduct a unit root test with the standard ADF approach with no constant and no deterministic trend but use y d instead of the original series.

To solve the problem of how many lagged variables to use, start with a fairly high lag order, for example, eight lags for annual, 16 for quarterly, and 24 for monthly data. Test successively shorter lags to find the length that gives the best compromise between keeping the power of the test up and keeping the desirable properties of the disturbances. Monte Carlo experiments reported by Stock (1994) and Elliott, Rothenberg and Stock (1996) favor the Schwartz BIC over a likelihood-ratio criterion but both increased the power of the unit-root test compared with using an arbitrarily fixed lag length. We suspect that this difference has little consequence in practice. Cheung and Chinn (1997) give an example of using the ADF-GLS test on US GNP.

Although the ADF-GLS test has so far been little used it does seem to have several advantages over competing unit-root tests:

(1) It has a simple strategy that avoids the need for sequential testing starting with the most general form of ADF equation (as described by Dolado, Jenkinson, and Sosvilla-Rivero (1990, p. 225)).

(2) It performs as well as or better than other unit-root tests. Monte Carlo studies show that its size distortion (the difference between actual and nominal significance levels) is almost as good as the ADF t-test (Elliott, Rothenberg & Stock 1996; Stock 1994) and much less than the Phillips-Perron Z test (Schwert 1989). Also, the power of the ADF-GLS statistic is often much greater than that of the ADF t-test, particularly in borderline situations.

Elliott et. al (1996) showed that there is no uniformly most powerful test for this problem and derived tests that were approximately most powerful in the sense that they have asymptotic power close to the envelope of most powerful tests for this problem.

where s k 2 is some simple function of k (this is not the variance, due to overlapping observations, to make sample size sufficiently large for large k . and to correct the bias in variance estimators)

note that this result is quite general, and stands under the simple hypothesis that e t is a sequence of zero mean independent random variables. Any significant deviation from 53 means that e t are not independent random variables. This result extends to the case where the e t are a martingale difference series with conditional heteroscedasticity though the variance s k 2 has to be adjusted a little.

The use of the VR statistic can be advantageous when testing against several interesting alternatives to the random walk model, most notably those hypotheses associated with mean reversion. In fact, a number of authors (e. g. Lo and Mackinlay (1989), Faust (1992) and Richardson and Smith (1991)) have found that the VR statistic has optimal power against such alternatives.

Note that VR ( k ) can be writen as.

Absolute Return Ratio Test

source: Groenendijky & Alabama. A Hybrid Joint Moment Ratio Test for Financial Time Series see [ ] If one augments the martingale assumption for financial asset prices with the condition that the martingale differences have constant (conditional) variance, it follows that the variance of asset returns is directly proportional to the holding period. This property has been used to construct formal testing procedures for the martingale hypothesis, known as variance ratio tests. Variance ratio tests are especially good at detecting linear dependence in the returns. While the variance ratio statistic describes one aspect of asset returns, the idea behind this statistic can be generalized to provide a more complete characterization of asset return data. We focus on using a combination of the variance ratio statistic and the first absolute moment ratio statistic.

The first absolute moment ratio statistic by itself is useful as a measure of linear dependence if no higher order moments than the variance exist.

In combination with the variance ratio statistic it can be used to disentangle linear dependence from other deviations of the standard assumption in finance of unconditionally normally distributed returns. In particular, the absolute moment ratio statistic provides information concerning the tail of the distribution and conditional heteroskedasticity.

By using lower order moments of asset returns in the construction of volatility ratios, e. g. absolute returns, one relaxes the conditions on the number of moments that need to exist for standard asymptotic distribution theory to apply.

We formally prove that our general testing methodology can in principle even be applied for return distributions that lie in the domain of attraction of a stable law (which includes the normal distribution as a special case). Stable laws, apart from the normal distribution, have infinite variance, such that our approach is applicable outside the finite-variance paradigm.

Since in empirical work there often exists considerable controversy about the precise nature of the asset return.

The first absolute moment has been used before as a measure of volatility,

Muller et al. observe a regularity in the absolute moment estimates which is not in line with the presumption of i. i.d. normal innovations; this regularity was labelled the scaling law. In this paper we consider the ratios of these absolute moment estimates, we obtain their statistical properties under various distributional assumptions, and we explain the observed regularity behind the `scaling law'. In particular, we show why the deviations observed by Muller et al. should not be carelessly interpreted as evidence against the efficient market hypothesis. Furthermore, we show that the absolute moment ratio statistics contain much more information than the scaling law. Especially, when the statistic is used in combination with the variance ratio statistic, most of the characteristic features of asset returns come to the fore. Specifically, we advocate the simultaneous use of volatility statistics based on first (absolute returns) and second order moments (variances).

In such a way we construct a test which is not only suited to detect linear dependence in asset returns, but also fat-tailedness and non-linear dependence, e. g. volatility clustering.

We analytically show why moment ratios based on absolute returns can be used to detect fat-tailedness and volatility clustering, while standard variance ratios convey no information in this respect.

Discriminating between the alternative phenomena is important, since they have different implications for portfolio selection and risk management.

Throughout the paper, we rely on a convenient graphical representation of the statistics: the moment ratio curves. The formal testing procedure we propose in this paper heavily builds on the bootstrap. By performing a non-parametric bootstrap based on the empirical returns, we construct uniform confidence intervals for the range of moment ratios considered.

Absolute returns exhibits the highest correlation (Rama Cont [ 4 ]).

[1] Alexander, C and Dimitriu, A. '' Cointegration-based trading strategies: A new approach to enhanced index tracking and statistical arbitrage ''. 2002. . Discussion Paper 2002-08, ISMA Centre Discussion Papers in Finance Series.

[2] Alexander, C, Giblin, I, and Weddington, W. '' Cointegration and asset allocation: A new active hedge fund strategy ''. 2002. . Discussion Paper 2003-08, ISMA Centre Discussion Papers in Finance Series.

[3] Chambers, M. J. '' Cointegration and Sampling Frequency ''. 2002. .

[4] Cont, R. '' Empirical properties of asset returns - stylized facts and statistical issues ''. QUANTITATIVE FINANCE, 2000. .

[5] Doornik, J. A and O'Brien, R. ''Numerically Stable Cointegration Analysis'' . 2001. .

[6] Engle, R and Granger, C. '' Cointegration and Error-Correction: Representation, Estimation and Testing ''. Econometrica, 55:251--276, 1987.

[7] Goetzmann, W, g. Gatev, E, and Rouwenhorst, K. G. '' Pairs Trading: Performance of a Relative Value Arbitrage Rule ''. Nov 1998. .

[8] Hasbrouck, J. '' Intraday Price Formation in US Equity Index Markets ''. 2002. .

[9] Herlemont, D. '' Croissance optimale ''. 2003. . Discussion papers.

[11] Murray, M. P. '' A drunk and her dog. An illustration of cointegration and error correction ''. The American Statistician, Vol. 48, No. 1, February 1994, p. 37-39. .

[12] Stock, J. H and Watson, M. ''Variable Trends in Economic Time Series'' . Journal of Economic Perspectives, 3(3):147--174, Summer 1988.

[13] Trapletti, A, Geyer, A, and Leisch, F. '' Forecasting exchange rates using cointegration models and intra-day data ''. Journal of Forecasting, 21:151--166, 2002. .

[14] Thompson, G. W. P. '' Optimal trading of an asset driven by a hidden Markov process in the presence of fixed transaction costs ''. 2002. .

The 1-2-3 Reversal pattern usually indicates the end of a trend and start of a new trend. It can be a very rewarding pattern to trade because it may position your entry early in a trend. The first indication that a trend is probably going to reverse is a larger than normal retracement. As you can see in the diagram below, price stops moving in the trend direction (#1) and moves in a countertrend direction. In a strong trend, price normally doesn't retrace much before resuming the trend. So a large retracement should be your first hint that the trend may be over.

The completion of the retracement marks the second point (#2). Now price has resumed in the direction of the trend. In order for a 1-2-3 Reversal pattern to be valid, price must make another turn prior to reaching point #1. At this point a trend reversal is looking likely since price could not sustain a move to the last low/high. This is the second hint that the trend has probably finished and a new trend is beginning. This latest turn marks point #3.

For entry we wait to see if price returns to the #2 level. If so, we enter when price "breaks" past the #2 level. For convenience, we could set pending stop orders just beyond the #2 level. Say about 5 pips beyond (more or less).

Exit is discretionary. My recommendation is to just use some common sense with regards to support/resistance levels for your exits (partial or whole). Another option is to take partial profits at 1:1 risk reward with #1 or #3 being used as stop loss. Since this method may signal the beginning of a new longterm trend, it is also recommended that you leave at least a small part of the entry to try and catch a long run. If you feel like taking more risk, then leave a greater portion (or whole position without taking any partial profits) to run.

Triple Screen Trading System - Part 2

Market Trends The stock market is generally thought to follow three trends. which market analysts have identified throughout history and can assume will continue in the future. These trends are as follows. the long-term trend lasting several years, the intermediate trend of several months and the minor trend that is generally thought to be anything less than several months.

Robert Rhea, one of the market's first technical analysts. labeled these trends as tides (long-term trends), waves (intermediate-term trends) and ripples (short-term trends). Trading in the direction of the market tide is generally the best strategy. Waves offer opportunities to get in or out of trades, and ripples should usually be ignored. While the trading environment has become more complicated since these simplified concepts were articulated in the first half of the 20th century, their fundamental basis remains true. Traders can continue to trade on the basis of tides, waves and ripples, but the time frames to which these illustrations apply should be refined.

Under the triple screen trading system, the time frame the trader wishes to target is labeled the intermediate time frame. The long-term time frame is one order of magnitude longer while the trader's short-term time frame is one order of magnitude shorter. If your comfort zone, or your intermediate time frame, calls for holding a position for several days or weeks, then you will concern yourself with the daily charts. Your long-term time frame will be one order of magnitude longer, and you will employ the weekly charts to begin your analysis. Your short-term time frame will be defined by the hourly charts.

If you are a day trader who holds a position for a matter of minutes or hours, you can employ the same principles. The intermediate time frame may be a ten-minute chart; an hourly chart corresponds to the long-term time frame, and a two-minute chart is the short-term time frame.

First Screen of the Triple Screen Trading System: Market Tide The triple screen trading system identifies the long-term chart, or the market tide, as the basis for making trading decision. Traders must begin by analyzing their long-term chart, which is one order of magnitude greater than the time frame that the trader plans to trade. If you would normally start by analyzing the daily charts, try to adapt your thinking to a time frame magnified by five, and embark on your trading analysis by examining the weekly charts instead.

Using trend-following indicators, you can then identify long-term trends. The long-term trend (market tide) is indicated by the slope of the weekly moving average convergence divergence (MACD) histogram, or the relationship between the two latest bars on the chart. When the slope of the MACD histogram is up, the bulls are in control, and the best trading decision is to enter into a long position. When the slope is down, the bears are in control, and you should be thinking about shorting.

Any trend-following indicator that the trader prefers can realistically be used as the first screen of the triple screen trading system. Traders have often used the directional system as the first screen; or even a less complex indicator such as the slope of a 13-week exponential moving average can be employed. Regardless of the trend-following indicator that you opt to start with, the principles are the same: ensure that you analyze the trend using the weekly charts first and then look for ticks in the daily charts that move in the same direction as the weekly trend.

Of crucial importance in employing the market tide is developing your ability to identify the changing of a trend. A single uptick or a downtick of the chart (as in the example above, a single uptick or a downtick of the weekly MACD histogram) would be your means of identifying a long-term trend change. When the indicator turns up below its center line, the best market tide buy signals are given. Cuando el indicador gira hacia abajo desde arriba de su línea central, se emiten las mejores señales de venta.

The model of seasons for illustrating market prices follows a concept developed by Martin Pring. Pring's model hails from a time when economic activity was based on agriculture: seeds were sown in spring, the harvest took place in summer and the fall was used to prepare for the cold spell in winter. In Pring's model, traders use these parallels by preparing to buy in spring, sell in summer, short stocks in the fall and cover short positions in the winter.

Pring's model is applicable in the use of technical indicators. Indicator "seasons" allow you to determine exactly where you are in the market cycle and to buy when prices are low and short when they go higher. The exact season for any indicator is defined by its slope and its position above or below the center line. When the MACD histogram rises from below its center line, it is spring. When it rises above its center line, it is summer. When it falls from above its center line, it is autumn. When it falls below its center line, it is winter. Spring is the season for trading long, and fall is the best season for selling short.

Whether you prefer to illustrate your first screen of the triple screen trading system by using the ocean metaphor or the analogy of the changing of the seasons, the underlying principles remain the same.

To learn about the second screen in the triple screen system, read Triple Screen Trading System - Part 3 . For an introduction to this system, go back to Triple Screen Trading System - Part 1 .

A stop-loss order, or stop order, is a type of advanced trade order that can be placed with most brokerage houses. The order. Read Full Answer >>

Fibonacci retracement is a very popular tool among technical traders and is based on the key numbers identified by mathematician. Read Full Answer >>

The doji candlestick is important enough that Steve Nison devotes an entire chapter to it in his definitive work on candlestick. Read Full Answer >>

The exhausted selling model is a pricing strategy used to identify and trade based off of the price floor of a security. Read Full Answer >>

Count analysis is a means of interpreting point and figure charts to measure vertical price movements. Analistas técnicos. Read Full Answer >>

The common assumptions made when doing a t-test include those regarding the scale of measurement, random sampling, normality. Read Full Answer >>

A debt ratio and profitability ratio used to determine how easily a company can pay interest on outstanding debt.

An account that can be found in the assets portion of a company's balance sheet. Goodwill can often arise when one company.

An index fund is a type of mutual fund with a portfolio constructed to match or track the components of a market index, such.

A derivative contract through which two parties exchange financial instruments. These instruments can be almost anything.

Learn what EBITDA is, watch a short video to learn more and with further reading we teach you how to calculate it using MS.

Money Management: The 2 Percent Rule

The 2 percent rule is a basic tenet of risk management (I prefer the terms "risk management" or "capital preservation" as they are more descriptive than "money management"). Even if the odds are stacked in your favor, it is inadvisable to risk a large portion of your capital on a single trade.

Larry Hite, in Jack Schwager's Market Wizards (1989) . mentions two lessons learned from a friend:

Never bet your lifestyle -- never risk a large chunk of your capital on a single trade; y

Always know what the worst possible outcome is.

Hite goes on describe his 1 percent rule which he applies to a wide range of markets. This has since been adapted by short-term equity traders as the 2 percent rule:

The 2 Percent Rule: Never risk more than 2 percent of your capital on any one stock.

This means that a run of 10 consecutive losses would only consume 20% of your capital. It does not mean that you need to trade 50 different stocks -- your capital at risk is normally far less than the purchase price of the stock.

Calculate 2 percent of your trading capital: your Capital at Risk

Deduct brokerage on the buy and sell to arrive at your Maximum Permissible Risk

Calculate your Risk per Share: Deduct your stop-loss from the buy price and add a provision for slippage (not all stops are executed at the actual limit). For a short trade, the procedure is reversed: deduct the buy price from the stop-loss before adding slippage.

The Maximum Number of Shares is then calculated by dividing your Maximum Permissible Risk by the Risk per Share.

Ejemplo

Imagine that your total share trading capital is $20,000 and your brokerage costs are fixed at $50 per trade.

Your Capital at Risk is: $20,000 * 2 percent = $400 per trade.

Deduct brokerage, on the buy and sell, and your Maximum Permissible Risk is: $400 - (2 * $50) = $300.

Calculate your Risk per Share: If a stock is priced at $10.00 and you want to place a stop-loss at $9.50, then your risk is 50 cents per share. Add slippage of say 25 cents and your Risk per Share increases to 75 cents per share.

The Maximum Number of Shares that you can buy is therefore:

$300 / $0.75 = 400 shares (at a cost of $4000)

Examen rápido

Your capital is $20,000 and brokerage is reduced to $20 per trade. How many shares of $10.00 can you buy if you place your stop loss at $9.25? Apply the 2 percent rule.

Hint: Remember to allow for brokerage, on the buy and sell, and slippage (of say 25 cents/share).

Answer: 360 shares (at a cost of $3600).

Capital at Risk: $20,000 * 2 percent = $400 Deduct brokerage: $400 - (2 * $20) = $360 Risk per Share = $10.00 - $9.25 + $0.25 slippage = $1.00 per share Maximum Number of Shares = $360 / $1 = 360 shares

Not all traders face the same success rate (or reliability as Van Tharp calls it in Trade Your Way to Financial Freedom ). Short-term traders normally achieve higher success rates, while long-term traders generally achieve greater risk-reward ratios.

Your success rate is the number of winning trades expressed as a percentage of your total number of trades:

Success rate = winning trades / (winning trades + losing trades) * 100%

Your risk-reward ratio is your expected gain compared to your capital at risk (it should really be called the reward/risk ratio because that is the way it is normally expressed). If your average gain (after deducting brokerage) on winning trades is $1000 and you have consistently risked $400 per trade (as in the earlier 2 percent rule example), then your risk-reward ratio would be 2.5 to 1 (i. e. $1000 / $400).

Risk-Reward ratio = average gain on winning trades / average capital at risk

If we have three traders:

Although your trading system may be profitable, if it is susceptible to large draw-downs, consider using a lower percentage of capital at risk (e. g. 1 percent).

In real life trading we are not faced with a perfect binomial distribution as in the above example:

gains are not all equal;

some losses are bigger than others -- stop losses occasionally fail when prices gap up/down;

probabilities vary; y

outcomes influence each other -- when stocks fall, they tend to fall together.

The biggest flaw in most risk management systems is that stock movements influence each other. Individual trades are not independent. Markets march in unison and individual stocks follow. Of course there are mavericks: stars that rise in a bear market or collapse in the middle of a bull market, but these are the exception. The majority follow like a flock of sheep.

Thomas Dorsey in Point & Figure Charting gives an example of the risks affecting a typical stock:

Market risk Sector risk Stock risk

The risk of the market moving against you is clearly the biggest single risk factor. How do we protect against this?

The 2 percent rule alone will not protect you if you are holding a large number of banking stocks during an asset bubble; insurance stocks during a natural disaster; or technology stocks during the Dotcom boom. We need a quick rule of thumb to measure our exposure to a particular industry or market.

Limit your exposure to specific industry sectors. Not all sectors are created equal, however. Industry groups in the (ICB or GICS) Raw Materials sector have fairly low correlation, and can be treated as separate sectors, while industry groups in most other sectors should be treated as a single unit.

We can see from the above chart that Chemicals and Containers & Packaging tend to move in unison and should possibly be treated as one industry sector, but other indexes shown are sufficiently independent to be treated separately.

As a rule of thumb, limit your Total Capital at Risk in any one industry sector to 3 times your (maximum) Capital at Risk per stock (e. g. 6% of your capital if you are using the 2 percent rule).

This does not mean that you are limited to holding 3 stocks in any one sector. You may buy a fourth stock when one of your initial 3 trades is no longer at risk (when you have moved the stop up above your breakeven point on the trade); and a fifth when you have covered your risk on another trade; y así.

Just be careful not to move your stops up too quickly. In your haste you may be stopped out too early -- before the trend gets under way.

I also suggest that you tighten your stops across all positions in a sector if protective stops are triggered on 3 straight trades in that sector (within a reasonable time period). By protective stops I mean a trailing stop designed to exit your position if the trend changes (e. g. a close below a long-term MA ). A reasonable time period may vary from a few days for short-term trades to several weeks for long-term trades.

You can limit our market risk in a similar fashion.

Limit your Total Capital at Risk in the market to between 5 and 10 times your (maximum) Capital at Risk per stock (e. g. 10% to 20% of your capital if you are using the 2 percent rule). Adjust this percentage to suit your own risk profile. Also, the shorter your time frame and the higher your Success Rate, the greater the percentage that you can comfortably risk.

It is also advisable to tighten your stops across all positions if protective stops are triggered on 5 straight trades within a reasonable time period. Protective stops do not have to be the original stops set on a trade. You may make an overall profit on the trade, but the stop must indicate a trend change.

A general rule for equity markets is to never risk more than 2 percent of your capital on any one stock. This rule may not be suitable for long-term traders who enjoy higher risk-reward ratios but lower success rates. The rule should also not be applied in isolation: your biggest risk is market risk where most stocks move in unison. To protect against this we should limit our capital at risk in any one sector and also our capital at risk in the entire market at any one time.

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Bulkowski’s 1-2-3 Trend Change

Written by and copyright © 2005-2016 by Thomas N. Bulkowski. Todos los derechos reservados. Disclaimer: You alone are responsible for your investment decisions. Ver Privacidad / Exención de responsabilidad para más información.

Not only does his method provide a consistent way to draw trendlines, but it helps determine when the trend has made a meaningful change in direction. Discovering when the trend changes and taking advantage of it is what trading is all about.

Alas, the method is not without flaw. You can use it on any time frame, but how much information you display on a chart may determine which trendline to draw, and that can dramatically change the trading landscape. Nevertheless, in tests I found that the method helps detect a trend change, so it adds value. Read my Trading Classic Chart Patterns book and the following for more information.

1-2-3 Trend Change For Downtrends

Select the timeframe for which you are interested in determining when a trend change has occurred or will occur. Draw a trendline from the highest high (Point C in the figure) to the lowest low ( A ) on the chart such that price does not cross the trendline until after the lowest low (point 1), then follow these steps.

Step 1: Find where price closes above the down-sloping trendline. This is shown in the chart as point 1 and a trendline pierce is the first indication of a trend change.

Step 2: Price tests a recent low. The recent low is at point A and the test is at point 2. Point 2 can be below point A but it must be clear that price is moving up, not continuing down.

Step 3: Price closes above a recent high. I show the high as point B and price completes the 1-2-3 trend change method when it rises above B at point 3. The high (point B ) should be between points A and 2.

In a study I conducted of this method, 73% (74 of 101 samples) of the time price climbed at least 20% from the low, confirming a trend change.

1-2-3 Trend Change Downtrend Example

The chart on the right shows an example of the trend change method applied to downward price trends. Point A is the highest high on the chart (on the left half, that is), point B is the lowest low. The trendline connecting the two does not cross prices until after point B. Point 1 is the trendline break. Point 2 is the retest and 3 is a close above the high between points 1 and 2 . Point 3 is where price changes trend.

1-2-3 Trend Change For Uptrends

The steps for upward price trends are similar to downward ones. Refer to the chart to the left.

Start by drawing a trendline from the lowest low (point C ) to the highest high ( A ) on the chart such that price does not cross the trendline until after the highest high (point 1). Then follow these steps.

Step 1: Find where price closes below an up-sloping trendline. This appears in the chart as point 1 and a trendline pierce is the first indication of a trend change.

Step 2: Price tests a recent high. The recent high is at point A and the test is at point 2. Point 2 can be above point A by a little but it must be clear that price is moving down, not continuing up and making new highs.

Step 3: Price closes below a recent low. I show the low as point B and price completes the 1-2-3 trend change method when it closes below B at point 3. The low ( B ) should be between peaks A and 2.

In a study of 67 samples, I found that 29 or 43% showed declines of at least 20%, representing a trend change.

1-2-3 Trend Change Uptrend Example

The chart on the right shows an example of the trend change method applied to upward price trends. Point B is the highest high on the chart, point A is the lowest low. The trendline connecting the two does not cross prices until after the highest high, point B. Point 1 is the trendline break. Point 2 is the retest, and 3 is a close below the lowest low between points 1 and 2 . Point 3 is where price changes trend.

1-2-3 Trend Change: Book References

Two of my books discuss the 1-2-3 trend change method.

You can find the information starting on page 28, "1-2-3 Trend Change Method."

The second book is Fundamental Analysis and Position Trading . It has coverage of "1-2-3 Trend Change for Downtrends" starting on page 168 and "1-2-3 Trend Change for Uptrends" beginning on page 170.

1-2-3-Formations and Ross Hooks

I'm hoping to set the ball rolling for a discussion of trading with 1-2-3-formations and Ross Hooks, after there's been some interest expressed in these methods recently in other threads.

I thought I'd start off with an example and chart, and now seems a nice time to do so, since I'm trading the EUR/$ at the moment on one of these set-ups.

In my next post, I'll give a link to an online introduction to 1-2-3's in "pdf" (Adobe) format which readers may download, save and print if they want to, and I'll try to give something approaching a "definition" of a Ross Hook without breaching Joe Ross's copyright, if I can.

But for the moment, let's talk about this chart. it's a EUR/USD 30-minute chart from today, and like all my charts, the times shown on it are CET (that's GMT + 1 hour).

The "points" of the 1-2-3-formation are shown in red. The idea is to enter into the downtrend established by the 1-2-3-formation (which itself marked the end of an uptrend, of course), by entering a short position when the price broke through the 2-point, as happened a couple of bars later. Alternatively, one can use Joe Ross's "Traders Trick Entry" (as I did) by entering the short position higher up on the same bar, in the hope that if the "entry signal" turned out to be a false one, one would be able anyway to cover the spread and exit without loss, or even possibly with a small profit. This is a bit of a gamble, but it worked well on this occasion.

The stop-loss for this trade would be placed typically 2 or 3 pips above the "1-point", which is fairly close, as you can see from the chart. One might want to use a different method of stop-placement if a "round number" were involved, especially on an instrument as liquid as this one, but that subject's for another day. The point here is that if prices go up past the "1-point" it invaldiates the trade entry and means that we've basically "got it wrong", so it's where we'd want to get out, simply because we have no reason for being there.

A couple of bars after entering this trade, there was a Ross Hook (shown in green), which was the first failure of a price-bar to make a lower high during the downtrend. The significance of this is that if prices had subsequently turned around and risen (which they didn't), the taking out of the Ross Hook would have been an entry for a long trade (which didn't arise). So in this case the Ross Hook was not relevant to the trade, and I'm showing it simply because it was conveniently there.

Key concept, widely misunderstood: the fact that the top of that bar constituted a Ross Hook was not defined until the bar following it had closed. (Until then, it might have been a reversal). A Ross Hook can arise only during a trend (this is really fundamental), and can be defined only by looking at the bar after it.

My aim with these trades is to close a third (or sometimes a half) of the position fairly quickly to cover the trading costs, and then to let the remaining two-thirds (or half) run, closing it either in one go or in two seperate chunks, depending on all sorts of factors which (as the saying goes) we can talk all about some other time. For the moment, let's just say that 1.3020 or 1.3021 would be a possible "final exit" on this trade, for the unambitious like me anyway, because one might think it would be an area of some expected support, as can be seen from the bottom of the price bar 7 bars before the entry of the trade.

These 1-2-3-formations and Ross Hooks can be traded on virtually any instrument and any time-scale. Personally I find 15-minute and 30-minute charts useful. I sometimes use 10-minute charts as well, if I feel like conentrating hard and haven't got other things to do at the same time. Those wanting to make frequent trades are naturally more inclined to use charts of lower periodicity, to increase their "trading opportunities". They also increase their variability and chances of accidents, quite a common reason for failure. (I offer the observation that it's easily possible, by using charts which are too fast for your money-management and specifically position-sizing, to get wiped out with a system that would have made steady profits on slower charts.) But now we are talking more about risk-patterns and money-management than the trading method itself.

I know from PM's etc. that several other people here are trading these set-ups, so let's hope we can get some interesting discussion going.

Joe Ross wrote an article for the May-June edition of Traders' magazine entitled " Trading Stochastic Crossovers with 1-2-3 top formations."

I found this article very helpful indeed and I trade these formations frequently using Joe's stochastic crossover technique.

Very easy and effective.

The thing about these 1-2-3 formations is that they are easy to spot in real time ( an absolute must ), they occur pretty frequently and for me at least it has been a pretty reliable pattern to trade.

Jan 25, 2005, 2:04pm

Joined May 2003

if I've got you right isn't there another on your chart with long entry on break of red line?

Jan 25, 2005, 2:17pm

Joined Jan 2004

roberto, this thread will turn out to be very popular.

I have gravitated towards these 1-2-3 patterns. They are easily identified in real-time. There is a definite stop-loss, which is generally a low risk entry.

I was going to start another thread regarding "many-names, same-pattern", which I may now leave till later, after seeing how this thread turns out.

__________________ # If the only tool you have is a hammer, you tend to see every problem as a nail - Abraham Maslow # There are 10 kinds of people in the world; those that understand binary, and those that dont. - Anon # Ed Seykotas Whipsaw Song http://www. youtube. com/watch? v=LiE1V. Wlxk8&index=10 # Defeat is temporary. Renunciar lo hace permanente. Luego

Jan 25, 2005, 2:17pm

Joined Aug 2004

Originally Posted by barjon

if I've got you right isn't there another on your chart with long entry on break of red line?

Absolutely; well spotted. (Too early in the morning for me to have been watching it form!).

These things are everywhere.

The entries are always easier to manage than the exits, and there are lots of different opinions about exits.

Some people set a small-ish fixed target and close the whole trade when it's hit. A friend of mine trades these things all day, every day, with a 10-point stop and a 5-point take-profit target on very fast charts and although the R:R ratio sounds strange (not that I really believe in them), she's been successful in 326 out of her last 400 trades, so it's certainly working for her. (Not my idea of fun trading, though, I must say).

Others (including me) do "partial closes" and try to let some proportion run for a long way, with a trailing stop. When I occasionally get lucky enough to have hit the start of a big trend (which can happen, of course), I even have the habit of trailing my stop on the "last part" at a slightly wider distance than normal. I have no real evidence that this is more profitable in the long run than a tighter trailing-stop.

Of course, all these considerations vary quite a bit depending on the instrument being traded and the method used to trade it.

Apr 7, 2007: 12:22 PM CST

Do you feel overwhelmed with opportunities when you complete an evening scan of your charts?

Adopt a simple quantification method to separate trade ideas into three categories for increased possibility of action, and decreased confusion.

This method assumes that you scan various charts either on the evenings or on the weekends, and are looking for key set-ups based on an individual trading system. This also assumes you find too many possibilities to narrow down into actionable trade ideas.

You will need to develop this idea as your own, but the guiding principles include ranking any chart patterns or trade set-ups into three categories:

Set-ups that you identify as triggering immediately, and you need to enter the trade the next day.

This might include pullbacks to key moving averages or support zones (in a trending stock), or rallies into resistance you identify that you want to enter a short trade. This also might be an indicator reading turning up out of oversold and indicating a direct buy signal ripe for the taking the next morning.

Set-ups you identify as forming and developing, and will likely trigger for entry within 2 – 5 dias.

This is when you see a neutral reading in an indicator on its pathway to oversold (or overbought) that will soon signal a buy (or sell) signal related to your system. It might also indicate a trend thrust (impulse) you missed, but want to enter when the stock retraces to a set zone where you desire to be a buyer, and you want to enter the trade WHEN this happens.

Tier 2 Ideas are deserving to be in your watchlist with entry zones listed, or conditions listed that – when triggered – will move up to Tier 1 Ideas to be entered.

These would be general market structure identification where you would like to keep a stock in your watchlist to grab your attention when it sets up a trade entry signal based on your system. These might include strong stocks in strong sectors in an uptrend that are just now consolidating in range that offer no discernable trading opportunity, but you like the previous price action or the core fundamentals of the stock you desire to trade.

Your goal with these is simply to continue scanning them until they give buy signals based on your system. Just because a stock has a great story or good fundamentals does not make it a trade candidate until it signals a set-up based on your system/strategies. You should give these the least attention in your scans, but not drop them from memory or your watchlist because – in the future – you will anticipate trading this stock when it conforms to your system or signals.

It is not enough to keep one watchlist and believe that you will capture all the opportunities you are seeking. It is frustrating to keep a great watchlist and be overwhelmed by the possibilities and rush yourself into trades when you should have been patient and selected the best candidates for immediate price performance.

Dividing your opportunities into (at least) three watchlists – ranked by immediacy of possible price action – can help you narrow down to the highest probability moves while allowing yourself opportunities to enter new trades when they trigger should your tier 1 ideas result in a stop (or loss). This also keeps you engaged in the market and analysis, and continues to sharpen your skills.

Your goal in trading is to simplify the process and cut down on the multitude of decisions, so that you identify and execute the highest probability trades according to the system you have developed for yourself.

TST Trading Combine ALL IN

Welcome To My Blog! If you're new here, you may want to see my free members training. GET MY DAY TRADING TIPS, TRICKS, and STRATEGIES! Thanks for visiting today! - Dave Knight

Monday: October 26th, 2015

Day 10 TST 50K Trading Combine: Crude Oil Trading

CLPORT Method: Trade #1-3 Short 4435 at 8:24AM CST. Stop Loss on Trade is 4449 and Ultimate Profit Target is 4P 4366. We ran 1P Profit Target 4318 on the trade so far.

Reason for TRADE … I need to get above 53,000 on my trading account … so I am looking for an ALL-IN kind of trade. I will either get my profit target at 4P or take a 1R stop loss on the trade. I have a profit of $1,100 before the day commenced. I am risking a little over 14 ticks time 3 contracts or 42 ticks vs 69 x 3 contracts or 207 ticks.

Normally, I would be at breakeven on this trade, but I am ALL-In on one trade opportunity today. I either want to win this trading combine or move back to the 30K TST Trading Combine. It is in the hands of God and the market now.

Crude Oil Futures Trading: 1P Profit Target Reached on Trade (this is a normal place for me to go to Breakeven, but I do not have the luxury of this decision on Day 10 of 10 trading days on the combine. I basically need $2K on one trade … therefore … I went with 3 contracts at looking for 68 to 69 ticks on each one – ALL-IN!

Crude Oil Futures Trading: Blowoff Volume arrives on what I call a HVS SKY RBV. What this means is … is the short more over … or have we simply arrived at the first buy stop gunning and running for today?

I have no idea … but we also ran 2P Profit Target 4401 on the trade.

Crude Oil Futures Trading Chart: Here is a good place to move the Protective Profit Stop to … a little above the swing high right there off the red arrow … but as I said I am ALL IN!

If this would be the funded account, then I would be right there on a Protective Profit Stop.

Obviously, I am wondering three things … 1 … can we get there … 2 … do we have enough energy to fall this far … and … 3 … how close will I get to the 4P Profit Target on the Trading Day today.

This is kind of reassuring with a possible FAKE OUT on the Trading Charts in Crude OIl Futures right here … will it? No tengo idea.

Well, it was a valiant effort but I didn’t make it … oh I was so close to ringing the bell on the 10th trading day … Oh well … like I said … the best trading combine for me is the $30K TST Trading Combine simply trading 1 contract to start and going for the $1,500 profit target.

I will be rollovering (if this is a word) to the 30K TST Trading Combine now.

That’s all folks.

Good Trading and God Bless,

David M. Knight TradeCraze

PD Day 9 and Day 10 I was simply going for the 3K gain target. This is not normally how I trade. I was up $2K after 8 trading days in the TST Combine. I could have done better overall, specifically the very first trading day loss. With that being said, I am fine with going to ring the bell and going ALL IN on the last 2 trading days knowing it was either pass the combine or rollover to the 30K TST Trading Combine.

P. S.S. If the last two days weren’t all in kind of days … I would have finished up about 2,500 overall, but still short of the 3,000 profit target by $500 … another reason I went for it knowing my average gain is $400 overall roughly speaking … in other words … I knew I needed some help from the market to make it.

If you got value from this post, please take a second to comment below and share your thoughts as well as share the love with your friends. unesdoc. unesco. org unesdoc. unesco. org

Gracias por su respuesta. I don't know mt4 code at all. I add %$ on MT4's fibo to display price while I draw fibo manaully. So I asked for last request.

This MTF indicator is very good. is there any manual or guide how to set?

Thanks for your kind help. Thomas c

Wow, that's cool, I didn't know you can do that. Gracias. I tried that, and saw you can add manually those (%$) by right-clicking on the chart that has the indicator active (but not on the indicator itself, just in an empty spot) -> choose Objects List, then from the list select Fibo (not the checkbox, the written line), then you click Edit button and you have the Fibonacci where you can add the (%$) and finally click on O. K. Close etc.

About the manual, I don't have it. however, I can guess some of it: Fibo_Mode: 0 - no Fibonacci lines (Not good because won't show the target), 1 - Fibonacci Retracement (That's the default and what I use: enter at 100% and exit at target 161.8% (yellow lines), both of which are also shown in blue), 2 - Fibonacci Expansion (If you want this then it shows entry in blue only [no yellow FE], and exit FE 161.8 in yellow and blue.). If you don't see the exit line then click on the upper or lower part of the white price column on the most right of your chart and drag down or up depending until you see the second blue dotted line. To return to the way it was - do the same in the opposite direction until the prices "pop" into place.

Enable Target - 0 - no entry and target shown, 1 - (default) show entry and target (exit) in blue both with a blue dotted line and a blue price on the price column on the right of the current chart.

Alert: False - no alert, True - yes Alert.

Update: It looks like there may be a bug that's not showing the blue entry and target correctly or at all, sometimes. I didn't write the original indicator so I'm not sure how to fix it. To make sure you do the right thing - it's better to just enter where the 2 solid blue lines meet when the direction is down (in direction of red line)(sell short), which is also the yellow 100% level in Fib_Mode=1, or if the direction is up (in direction of green)(buy long) then enter where the yellow lines meet (also 100% in Fib_mode=1). In both cases exit at the 161.8 line(Fib_mode=1) or FE 161.8 (Fib_mode=2).

Comentario

A picture is worth a 1,000 words: Buy long example (when yellow+green solid lines) Sell short example (when blue+red solid lines).

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Enable Target - 0 - no entry and target shown, 1 - (default) show entry and target (exit) in blue both with a blue dotted line and a blue price on the price column on the right of the current chart.

Alert: False - no alert, True - yes Alert.

You are so kind. Muchas muchas gracias. Thomas C

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You are so kind. Muchas muchas gracias. Thomas C

Aw, that's O. K, you're very welcome.

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A picture is worth a 1,000 words: Buy long example (when yellow+green solid lines) Sell short example (when blue+red solid lines).

You are great! Gracias de nuevo.

Best regards, Thomas C

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You are great! Gracias de nuevo.

Best regards, Thomas C

No problem, you are welcome.

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Empirical Study of the 1-2-3 Trend Indicator: Paper | vtad

Admittedly this was above my head, so I focused on the conclusions. Am I right that the probability of trading this pattern successfully aren't so good? (e. g. reaching target profit?) If so, I wouldn't be too surprised, since most indicators I've tested weren't helpful. Also, wonder if trading it the "wrong" way would be profitable (i. e. going short when you should be long and taking profit on the other mirror side). Gracias.

Comentario

Am I right that the probability of trading this pattern successfully aren't so good?

I am sorry, but I do not see in the Paper any results of a Backtest(?) The Problem is, that we have no possability to backtest the 1-2-3 strategy, especially in short term. In the daily time frame, i made a lot backtest with my arms and eyes and what I see is not a Rocket, but stables results. The good point is, that no Indicator is necessary. the stops are very clear, and who tells my, that I should catch the trade only on 1 or 3? Reasons enough to follow the 1-2-3 pattern. I hope you can understand me One more paper: Automatic One Two Three | vtad Automatic 1-2-3.pdf

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Oh, O. K. thank you for your explanation, I'm happy it is successful after all. (Thanks also for the papers).

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Seems like a well defined interesting system

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Re: Where can I get a copy of the BPS 1-2-3 Pattern Indicator

Could someone add arrows into 1-2-3 Fibonacci strategy ?

Would be so nice get an arrows for long/short based on Fibonacci pattern.

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Trader Vic Returns!

To thousands of futures and stock traders, Victor Sperandeo, futures trader and author of Trader Vic: Methods of a Wall Street Master and Trader Vic II: Principles of Professional Speculation . two of the most influential books on trading, is known simply as Trader Vic.

For a generation of futures traders, Victor Sperandeo was a trader’s trader, being on the ground floor as options trading was born in the United States, as well as being a pioneer in the trading of the S&P 500 futures. A number of Sperandeo’s trading set-ups – from his 1-2-3 trend reversal to his ever-popular 2B reversals – are now standard parts of the professional trader’s toolkit.

Since his Wall Street Master days, Sperandeo has focused largely on developing his S&P Diversified Trends Indicator (DTI), a system for trading commodities based not on the price action of individual commodities, but on building a core portfolio based on the price behavior of a host of commodities. The result, according to Sperandeo in his most recent book, Trader Vic on Commodities . as well as in this interview we conducted with him in March, has been a consistent above-benchmark return – with less than a third of the volatility.

How does Sperandeo’s Diversified Trend Indicator works and what does it tell us about the price behavior of commodities and financial futures? We’ll find that out as well as Sperandeo’s thoughts on system trading versus discretionary trading, methods for day-trading the S&P futures and his general thoughts on how to get started trading futures. In Part One, we focus on Sperandeo, commodities and the DTI. In Part Two. we talk more specifically about how traders can use these insights – as well as some basic rules – when trading individual futures contracts.

Victor Sperandeo is a principal of Enhanced Alpha Management. We spoke with him by telephone in the first half of March while the bull market in commodities was still in full swing.

Penn: Trader Vic, welcome to the Big Saturday Interview. Tell me what is different about the trader I am speaking with now and the trader thousands of aspiring speculators came to know through your books, Methods of a Wall Street Master and Principles of Professional Speculation .

Sperandeo: In the days of the methods books, in the 1970s and the 1980s, traders like me were purely skills based. We used to come in and take our positions, and you’re either right or wrong.

There is no core return from that kind of style. You have to create the, if you will, returns from pure skill.

Sperandeo: The difference in what I’m doing now is that it is more of a concept or strategy that is more portfolio-directed. It uses a core, let’s say a portfolio concept of deriving returns. And then, in some cases, I enhance those returns with trading.

“The portfolio concept is what I really do today. I created a concept that flows off of a core rate of return.”

Penn: What do you mean by a portfolio concept?

Sperandeo: Let’s say you had a traditional mix of stocks and bonds, 60/40 maybe, or even, let’s say 60/35 and 5% T-bills. You wouldn’t have to do anything to that, and you would still make a return.

You would get a return on the stocks depending on the environment at the time. And the bonds would give you the coupon. And you have a core return. If you choose to pick some stocks that are better than others, then you get alpha (i. e. above market returns). And the S&P 500 would be your benchmark.

The portfolio concept is what I really do today because I’m not as young as I used to be. So I, basically, created a concept that flows off of a core rate of return. And then, in the case of my money management, I try to enhance the core returns.

So a big part of my returns are given to me instead of me having to earn every single dime of them. And that’s really the difference. I won’t call myself an old man yet, but it’s an older man’s strategy.

Penn: How does this work with commodities? You talk about the role of cyclicality in your book. Is commodities cyclicality where you derive your core returns from now?

Sperandeo: If you look at any charts, basically, what you’ll see, predominantly speaking, is an up and down cycle. It’s fundamentally built into what they are, commodities, by nature. Regardless of what may occur for certain periods, they will always go up and they will always go down.

I’ll just make one example. Corn, which traded in 1930 at 80 a bushel, today is 5.60 a bushel, depending on which contract. And the return on corn over the period is 2-3-plus percent compounded.

Now if you started to look at corn in 1950, you would – 1960, 1970 I should say, just to take the last 38 years, you’d find that corn now, basically, has a high of $5 and a low of $1.50. And basically it traded at $2.50 a bushel about 85% of the time each year. So within a year, it’s going to trade at $2.50 a bushel. It has for the last 38 years, go back 40 if you like. What does that say? Corn goes up and corn goes down.

Penn: And this is true across the board? And what you base your trading on?

Sperandeo: All of the commodities have that scenario. You can’t get away from the cyclicality. That’s why it is a long/short strategy, which is the trading methodology, and the S&P DTI to take advantage of the nature of those commodities and the interest rates. In the DTI there are no stocks because stocks tend to be secular, and commodities are cyclical.

Penn: Could you talk a little more about what the S&P DTI is actually measuring then?

Sperandeo: It doesn’t measure price – it measures trends. That’s an interesting twist on things. Most indices measure prices. If the prices are up the index is higher. If prices are down, it’s lower. This does not do that. This measures the extent and duration of trends. The greater the trend, up or down, the longer it goes up or down and the more returns are shown from the indicator.

If it doesn’t go up or down, if it goes across the page, i. e. is stable, it doesn’t have returns. It may lose in those environments. The point is that this measures trends.

“The S&P DTI is a very balanced combination of commodities and financial futures. Remember: anything that goes up and down goes in there.”

Penn: What does the S&P DTI consist of? You said no stocks…

Sperandeo: It’s a very balanced combination of commodities and financial futures – except stocks. It has currencies in it, which are a function of short-term interest rates, and other things, but primarily short-term interest rates. It has bonds in it, which basically are a function of interest rates that go up and down. Remember: anything that goes up and down goes in there. And anything that does not go up and down, generally speaking, is not in there.

So that’s why no stocks. The combination of the two different asset classes, if you will, financial futures and commodities are mixed 50/50. And the reason they are mixed 50/50 is to give a certain stability to, let’s call it the portfolio, for the moment. They are not correlated. One part of the portfolio is making money, the other one is not necessarily losing money. It could be making money but, generally, it makes less than it did the year before.

The S&P DTI is designed to be consistent, not to make large returns. It may make large returns, but it isn’t designed that way. It’s designed for consistency within 12 months.

Penn: Can you elaborate?

Sperandeo: Let’s make believe oil was the whole DTI for this example, and oil went from $110 a barrel to $220 a barrel. Well, the DTI would double, right? So if oil did that in a straight line, if oil increased by 100% the DTI would reflect that. It would be up 100%. So the more oil goes up, the greater the returns are reflected in the S&P DTI.

If oil went up only 50 cents from $10, or 5 percent, well the DTI might actually break even, or lose. And if it went down it might get, in this example, it would get flat. And since there’s no movement, it can’t get long and it can’t get short. Energy does not go short in the DTI, so that’s a bad example, but you get the point.

Penn: So to the DTI as a whole, movement is key, regardless of direction.

Sperandeo: The point is, if something is not moving, if things are not volatile, if things are not going up and down, well, then the DTI is going to reflect that. There are no trends. And if something has a trend, and goes in a straight line up or down, and the DTI reflects that, then there is more money. So it measures the aggregate of trends, but not prices.

Let’s take wheat. Let’s say wheat goes from $10 a bushel – it’s a little more than that, but just for this example – and it goes back to $2 in a pretty straight line. When I say “straight line”, I mean a pretty steady, solid movement. Well, wheat declined 80% and the DTI, if wheat was all of DTI, the DTI would make 80%.

The Goldman Sachs Commodity Index would say if you held only wheat, it would lose 80%. So it doesn’t have anything to do with prices because we go long and short. So going down a lot is a good thing, okay? Or going up a lot is a good thing for anybody that’s a holder of the DTI.

Penn: How are the commodities within the S&P DTI weighted?

Sperandeo: The weightings of the commodities are based on production. And again, since it’s all 50% of the pie, it’s basically based on half of what the estimate of production is.

Let me dwell on this to make it clear. There are two major industries that did this work far more extensively than we can do it. And that is the Goldman Sachs Commodity Index and the Dow Jones AIG Commodity Index.

They measured the production of commodities to which ones have more weights than others. What we did when we constructed this is we said, look these two major firms know what they’re doing. We’ll go kind of in the middle of the two. This is not scientific. It’s a back of the envelope concept. And we went in the middle of the two major long-holding commodity industries.

On the other side of the pie, the currency side of the pie, what we did was we took GDP of each of those countries, for example, the U. S. represented the greatest GDP so it got the greatest at 15 percent. Now, again, these are not scientifically derived. They are designed logically to give more weight to the dollars and to this bigger GDP than the euro, which was second with the yen third. And then, the British pound, and so on.

Penn: You talked earlier of the DTI not being designed to make a lot of money. Instead, you have used the term “alpha consistency” as a superior goal. What is alpha consistency and why is its pursuit worthwhile for traders?

Sperandeo: Most commodity-oriented methods are trying to make a lot of money. And, like I say, the DTI is not built that way. It can make a decent amount of money – whatever you want to define that as. But it is not structured to make a lot of money. It is not leveraged, for example. It does things that most commodity programs don’t do. For example, it rebalances monthly, and it takes away from the winners and gives to the losers.

“Commodities that go down are not going to go bankrupt. Corn can’t go bankrupt, so if it goes down, it’s going to come back up and vice versa.”

Penn: How does that work?

Sperandeo: It takes away from the fact that if something is very, very strong and in an uptrend, we capture the profits of that monthly. And, therefore, what are we doing? We are going after consistency. You know that you can make the statement that at some point whatever goes up is going to come down. It’s not going to be taken over. Commodities that go down are not going to go bankrupt. Corn can’t go bankrupt, so if it goes down, it’s going to come back up and vice versa.

That’s what we try to capture, taking incremental profits away from the winners and giving it to the rest of the pie. And in doing that we roll our volatility, okay? That’s another principle. That’s actually one of the main principles, to keep the volatility low, is to not allow it to go up. The Goldman Sachs Commodity Index, for example, has approximately a 20 volatility. The DTI has a 6 volatility.

Sperandeo: One-third, right. Now the reason that it does is because it balances the sector weightings and has the financial sector in there, and because it takes away from the profits of the winners and gives it to the things that are down that are ready to come up. And it rebalances that pie, keeps the weightings the same and, therefore, you get this very low volatility, relatively speaking. It’s a low volatility instrument that is gearing itself to make consistent returns.

Click here to read the second part of our conversation with “Trader Vic”. Read what he has to say about the value of trading systems, how to choose which futures to trade, and what it takes today to successfully day-trade the S&P futures market.

The 1-2-3 Tunnel Method

Finally, A Simple Trading Method that helps You Spot High Probability Market Reversal Set Ups in Three Simple Steps

Introducing: The 1-2-3 Tunnel Method

What you will learn in this series:

What is the 1-2-3 Pattern and how to quickly spot it. (They are on every chart and on every time frame.)

Where can you find the Highest Probability 1-2-3 Patterns?

How to determine Minimum Price Targets

Variations in 1-2-3 Set-ups to increase your profits.

1-2-3 Patterns in Impulsive and Corrective Elliott Waves

How to distinguish between Impulsive and Corrective Waves

Technical Indicators that can be useful

Entry and Exit Strategies

If you have not yet subscribed to our Inner Circle Newsletter now would be a good time. Future installments of the 1-2-3 Tunnel Method will come by way of the newsletter. Please Access the Lesson 1 Sneak Peek below. All lessons are Online with no need to download them.

You may ask WHY I am doing it this way instead of just putting a Report in a pdf or Word document. It is because, this way, I can make improvements, additions and clarifications along the way. In fact, I welcome your comments and suggestions. If I can clarify some points for you it will also benefit others that follow.

Join the 1-2-3 Tunnel Method Inner Circle and automatically receive further training

STOCATA

I combine a number of techniques to follow-up the S&P500 broad market index with the menu item "S&P500 Analysis " for a daily chart, a weekly chart and a monthly chart. Here you will also find the used chart template and MetaStock formulas. You can follow during the trading day the S&P500 in real time with the SPY Exchange Traded Fund.

In the "Technical Analysis" Menu item, under sub-menu YouTube Videos you can find all existing training videos.

SATS Experts (Stocks Automatic Trading System)

STOCATA presents an expert trading system called "BBS Band Break " System. Trading was never so easy. Linking BBS to a chart simply tells you when to buy and when to sell. Detailed information can be found under the menu item "Expert Systems".

Basic Technical Analysis

The basic technical analysis menu brings you to basic and special technical analysis techniques as used by myself. You will find information about: basic charting techniques, chart patterns. Indicadores. candlestick charts. Elliott waves and proprietary indicators. En otros encontrarás información sobre el dinero y la gestión de riesgos y finalmente en los videos de YouTube encontrarás mis videos de aprendizaje sobre análisis técnicos, la manera fácil de comenzar a aprender análisis técnicos.

Stocata Store

Thanks for using the "Stocata Store" with access to my own TradersLibrary corner. Thank you for your support by ordering through this store.

Trading Specials

In Trading Specials I will keep mostly articles about trading techniques or my answers to questions that I received. It is separated in long term trading. swing trading. day trading. FOREX trading. Técnicas especiales. My Spanish articles and Interviews. Watch it as it grows, you will see a lot of very interesting articles.

NinjaTrader® charts NinjaTrader® charts and NinjaScript language courtesy of NINJATRADER LLC.

MetaStock® charts MetaStock® charts and used formula language courtesy of Equis International.

Emini Methods

They have some meaning: 12 is the first abundant number and 18 is the second one. See also the last daily e-mini trading results updates from today and yesterday tweeted by me; they feature 12 and 18 (hint - the number of trades taken on those days).

Eso es todo. No more and not more chocolate today either. Or I might get in trouble with the law ;) pic. twitter. com/DUCpgmgBbB

— emini_guy (@emini_guy) March 7, 2016 When volatility is good I may take quite a few trades, meaning more than 10 and I like to finish with an abundant number of trades: 12, 18, 20, 24. My record number, probably mentioned somewhere on this blog, is 30, if I recall it correctly, which is yet another abundant number, the 5th one.

See Wikipedia for more about the concept of abundant numbers, or check past posts on this blog as I talked a bit about abundant numbers before. It's a neat concept.

But an even neater concept is that of perfect numbers .

These are the numbers whose sum of proper divisors equals the number itself. Number 6 is the first perfect number as 1+2+3=6 and 1,2,3 are all proper divisors of six. The abundant numbers have this sum of divisors greater than the number itself, so 1+2+3+4+6 (all proper divisors of 12) add up to 16, which is greater than 12, thus 12 is an abundant number.

Perfect numbers are much rarer than abundant ones: the second one is 28 and then we have 496, all relatively small, but the next one is nearly 10000; 8128, to be precise. They were all known to the ancient Greeks. Only 49 perfect numbers are known at this point and the last of them was reported to have been discovered only a few weeks ago (January 2016). All of them end with 6 or 8 and are related to other cool numbers. There are probably no odd perfect numbers. Again, see Wikipedia for more, if interested.

Speaking of 28, it features prominently in this article . And this post has been brought to you courtesy of KING, an excellent e-mini futures trading course that makes scoring abundant numbers of trades a day easier than any other trading course out there.

KING is expensive at $1400.

Not only is it priced more affordably than most e-mini futures trading courses of this kind on the market, not only does it come with more evidence than most such courses out there . but it also contains George IV, an objective mechanical trading system . that performs very well, and today is another proof of that.

Today, this system scored 2 full winners, to the tune of 6 points in ES and 60 points in YM and is up 210 points in the latter market, on top of winning past two years.

These 210 points translate into $2100 in profits with only two paltry YM contracts, sans brokerage commissions (ca $60 in this case with 6 trades), which every e-mini retail day trader should be able to trade with if they are serious about trading in the first place.

Y. KING is still $1400. How is it not a fair deal?

As I just said on Twitter, you gotta be either a moron or a sleazy competitor slash loser.

@emini_guy So anyone who thinks that I charge too much for KING, which includes George IV, is a moron. Or a sleazy competitor/loser.

— emini_guy (@emini_guy) February 8, 2016 I have yet to start talking in earnest about those, but I eventually will and then you will see what kind of sorry bunch of pathetic losers those specimens are. This piece was merely a hint.

They spend more time posting garbage on trading forums than normal people spend on sleep. They think that's how you become a trading authority or something.

You become an authority on something only if you are good at it, first and foremost, and not because you have given webinars on a trading forum for losers and morons or have written a book or two; in this business people writing books are more likely to be marketers than genuine trading experts. Same with those giving webinars. That's all marketing, as transparent as it gets.

Results, or it didn't happen!

Quiz 2 - Questions - Chapters 1,2,3 - Question 1 1. Adam.

Este es el final de la vista previa. Regístrese para acceder al resto del documento.

Unformatted text preview: Question 1 1. Adam Smith recorded in 1776 that the "two greatest and most important" events in the history of mankind were the Answer 1. beginning of the slave trade and the Portuguese sea route around Africa to Asia. 2. discovery of American and the beginning of the slave trade. 3. discovery of America and the Portuguese sea route around Africa to Asia. 4. discovery of America and the birth of mercantilism. 5. birth of mercantilism and the Portuguese sea route around Africa to Asia. 2 points Question 2 1. Spain justified her claim to land in the New World through all of the following except Answer 1. believing that their culture was superior to the Indians. 2. a missionary zeal. 3. a decree from the Pope. 4. a war against Britain. 5. violence. 2 points Question 3 1. In 1542 Spain promulgated the New Laws, which Answer 1. forbade Catholic priests from speaking out against Spanish policy. 2. forbade Indian slavery. 3. replaced the outdated Old Laws. 4. forbade African slavery. 5. divided the New World between the Spanish and Portuguese. 2 points Question 4 1. The Black Legend described Answer 1. English pirates along the African coast. 2. Portugal as a vast trading empire. 3. Indians as savages. 4 Spain as an uniquely brutal colonizer. 5. the Aztec's view of Corts. 2 points Question 5 1. Far more important to most Indian societies than freedom as personal independence were all of the following except Answer 1. secure rights to owning land. 2. the well-being of one's community. 3. the security of one's community. 4. kinship ties. 5. the ability to follow one's spiritual values. 2 points Question 6 1. Which statement about the Indians of North America is false? Answer 1. The idea of private property was foreign to Indians. 2. Indians were very diverse. 3. Indians lacked genuine religion. 4. Many Indian societies were matrilineal. 5. Indians did not covet wealth and material goods as the Europeans did. 2 points Question 7 1. Portuguese trading posts along the western coast of Africa were called factories because Answer 1. that is how the Africans translated trading post. 2. the slave traders called their system a labor factory. 3. the African slaves built factories along the coast to manufacture guns. 4. the trading posts made the goods there in Africa in makeshift factories. 5. the merchants were known as factors. 2 points Question 8 1. New France was characterized by Answer 1 its lack of devastating epidemics. 2. a Protestant missionary zeal to convert the Indians. 3. severe conflict between French settlers and the Indians. 4. enduring alliances with the Indians. 5. a well-defined line between Indian society and French society. View Full Document

Detalles

1. 2. 3. Trade

Trading with Mashreq Securities is as simple as 1. 2. 3. Simply get an Investor Number, Open a Cash Account (optional), Get a Trading Account and Client ID and you are ready to go.

1. Setting Up An Investor Number

The Investor Number (IN) is a unique number given to you as an investor. It identifies your account at the Clearing and Depository Settlement (CDS) with the market, which holds all investor shares. The IN is used to transfer shares to and from your account each time you buy or sell them. When you open an account with a broker you need to provide your IN so that future transactions in your account can automatically be settled immediately after the trade is done. A separate Investor number is needed for the DFM and the ADX.

2. Setting Up a Cash Account With Mashreq or using the Funds account

Mashreq Securities offers you two options:

1- Opening a cash account with Mashreq: A cash account is a special Nil Balance account that would be used for the settlement of trade transaction i. e. the debits and credits of funds. You can establish either a Current or a Savings account.

2- Using the Funds account: You may transfer or credit funds into a Fund Account in Mashreq to be able to trade without opening a personal cash account in Mashreq. You may start trading once the amount transferred or deposited is reflected in the account and assigned to you.

Please send us a copy of the transfer or deposit slip either by fax to +971 4 273 4265 or by email to info@mashreqsecurities. com with the following information:

Name of depositor / sender Mashreq Securities Client ID or Trading account

Date of deposit / transfer Amount

3. Setting Up a Trading Account/Client ID

The final step before you start your trading is to establish a Trading Account/Client ID. The trading Account, is an account with your broker, Mashreq Securities, that is linked to the market(s) & the Mashreq Cash Account, allowing client to trade in the market(s). The client ID is a 1 to 5 digit ID number that works as a username for online access to E-Trade and as an identification number when you are conducting your trades on the phone

Comercio.

There are three options to trade with Mashreq Securities:

By phone: Orders can be placed by calling the brokers thru the phone on 04-363 2222 – & choosing option 1 (after language selection)

Online: Orders can be placed by surfing our online service “E-Trade”, thus opening the way to wider options such as live market watch, client portfolio & order placement. The Website can be accessed on: https://etrade. mashreqbank. com

In Person . Orders can be placed at the counter in the market by filling the order placement forms each time a trade is required. This facility is only available at our Dubai Financial Market office & restricted to the Dubai Market shares only.

Documentation Required for the Investor Number

Formulario de aplicación

Investor signature

Client authorization for Investor number collection

Rules & Reglamentos; Note : Mobile number has to be mentioned.

Passport copy with Valid residence visa (Verified & stamped by Mashreq Securities in original); Note : if a U. A.E. National then family book is also required.

In case of a representative . a copy of the Power Of Attorney authenticated by a notary public in addition to the agent’s passport copy.

In case of Minor Investors (below21) whose guardians are not the fathers: a copy of the custody docs should be authenticated by a notary public along with a copy of the guardian passport.

Documentation required for a Trading Account

Mashreq Securities Trading Account Opening Application

Passport copy

Second ID copy (driving license or labor card), to be verified by any authorized staff

Mashreq Cash Account number (optional - current, savings or corporate account)

Investor number – DFM &/or ADX

Mashreq Securities Trading Account Opening Application

Passport copy

Khulasat al Qaid

Mashreq Cash Account number (optional - current, savings or corporate account)

Investor number – DFM &/or ADX

For both Expatriates and UAE Nationals, if using a Joint Mashreq Cash Account linked to an individual Mashreq Securities account a "No Objection Letter" should be provided.

Steam Trading Cards added to five more games, including FTL and 1. 2. 3. KICK IT!

Valve’s new trading card system’s still in beta but they’ve added support for five new games, expanding the number of games running the new tech to 21. The beta group has also expanded, allowing 280,000 Steam users play around with the new system.

The new games in the beta are FTL: Faster Than Light, 1. 2. 3. KICK IT! (Drop That Beat Like an Ugly Baby), Strike Suit Infinity, Zach Zero, and Tower Wars. What this means for players in the beta is that there are new cards to collect, new badges to craft, and new rewards to be earned.

The way the system works is that as you play the games you’ll occasionally find dropped cards. These cards, once you have a full set, can be crafted into a badge that you can then display on your profile page - showing how good you are at a certain game. Plus, whenever you craft a new badge you get rewards, things like backgrounds for your profile page, or emoticons that you can use in Steam chat.

The kicker lies in the fact that you can only find half of the available cards while playing through the games. You’ll need to trade with other users to amass the full set: you’re going to have to get social if you want to earn those rewards.

Error de servidor en la aplicación '/'.

Error en tiempo de ejecución

Descripción: Se produjo un error de aplicación en el servidor. La configuración de error personalizado actual para esta aplicación evita que los detalles del error de aplicación se vean de forma remota (por razones de seguridad). Sin embargo, podría ser visto por los navegadores que se ejecutan en la máquina del servidor local.

Details: To enable the details of this specific error message to be viewable on remote machines, please create a <customErrors> tag within a "web. config" configuration file located in the root directory of the current web application. This <customErrors> tag should then have its "mode" attribute set to "Off".

Notes: The current error page you are seeing can be replaced by a custom error page by modifying the "defaultRedirect" attribute of the application's <customErrors> configuration tag to point to a custom error page URL.

Automated Forex Trading – Testing, Testing, 1, 2, 3

An important step in the development of an automated forex trading strategy (trading robot or EA) is the testing phase. Testing should involve back-testing as well as forward-testing and be performed as accurately and extensively as possible. No amount of testing can absolutely assure future results, so the idea is to be as sure as possible! An important step in the development of an automated forex trading strategy (trading robot or EA) is the testing phase. Testing should involve back-testing as well as forward-testing and be performed as accurately and extensively as possible. No amount of testing can absolutely assure future results, so the idea is to be as sure as possible!

Why Test? The answer seems obvious … so that you can be reasonably sure of what you’ll get from your automated trading strategy in future. Testing means you can see how your strategy has reacted in the past to different market conditions. You can gauge whether the strategy has worked against different currency pairs or different time frames. You can test variations of the strategy to see what works best overall, and what should be avoided. Testing a strategy can give you confidence to keep using the strategy in future, if the past results have been profitable and consistent.

How do you test? To back-test a trading strategy, you first need to obtain some historical data. The historical data contains information about price levels in the past, such as open, high, low and close information. You can get historical data for daily intervals (this is the easiest to get), where each record contains open, high, low, and close prices for each trading day. More detailed data can also be obtained for shorter intervals such as hourly, 5 minute or even 1 minute intervals. Generally, the shorter the time frame, the more accurate you can make your back-testing.

The first place to look for historical data is your broker. Many brokers offer free data downloads if you have a live account open with them, and the data is usually of quite good quality. Your broker’s historical data will also most likely be the same data that is used to draw the charts that you trade off, so it’s easy to look back through your charts and visually check how your strategy plays out.

There are other sources of data too, some are free, some involve a cost. It’s a good idea to obtain good quality data from a number of different sources for your back-testing. Data can vary, so it’s good to be able to test your strategy on the different data sources to see if it holds up. Dukascopy (http://www. dukascopy. com) is a good source of data, and you might also try Gain Capital (http://ratedata. gaincapital. com/)

To actually perform the back-testing, you’ll need a software program which processes the historical data and executes your trading strategy using that data. Trades aren’t actually executed of course, the execution is just emulated within the software. Based on your strategy, the program can keep track of when the trades would have been taken, how profitable they were, how many winners compared to losers you had, and many other statistics related to the performance of your strategy.

The most accessible software program to do this is Metatrader 4 (MT4). It has a built-in strategy tester and you don’t even need to download any historical data first – it will do it for you automatically. The downside to MT4 is that you first need to write an EA which implements your trading strategy. Writing an EA involves writing a computer program in the MQL4 language – the scripting language that MT4 understands. So, you’ll need to be able to program in MQL4 or get a programmer to do it for you if you want to go down this route.

If you like to get your hands dirty in computer code, you can also just write a program to back-test the strategy using the historical data. There is usually a library available for your favorite language which contains the indicators and other statistics you may need to test the strategy, such as EMAs, SMAs, MACDs, RSIs and so on. For instance, there is a freely available library called “profitpy” for the Python programming language which allows you to build a strategy tester.

For non-programmers, check out http://www. thinkingstuff. com. Their system allows you to develop and back-test strategies using point-and-click technology. What this means is that you don’t have to write any programming code, you just use your mouse to select options and the Thinking Stuff software builds the back-testing code for you.

Other related sites for strategy testing include: http://forextester. com/ and http://forexsb. com/

Testing Pitfalls Back-testing and getting good results doesn’t necessarily mean that you have a good automated trading strategy. There could be flaws in your back-testing procedure or data which is affecting your results. Some common back-testing problems include:

Optimizing (or curve-fitting) the strategy too much. If you tweak and re-tweak your trading strategy to give the best results possible using the data that you have available, then you run the risk of tailoring it too closely to that data. If there are too many parameters or filters involved to make the strategy work, then you may have problems in getting that strategy to give satisfactory results in the future. Sometimes you’re better off NOT optimizing so much – give the strategy a little room to breathe, make it a little simpler or more flexible. A lightly curve-fitted strategy is likely to give better results in the future.

The data isn’t detailed enough. If you have 15 minute historical data and you’re testing a strategy that works on the 15 minute chart, then the accuracy of back-testing is going to be quite limited. For instance, if in one 15 minute period (one 15 minute bar) price shoots up and reaches a point that would have hit your target and it also reaches down to a place where it would have taken out your stop loss, how do you determine whether your target was hit first or your stop was hit first? The answer is, you can’t. Without going down to a lower time frame or even tick data, there is no way from your historical data that you can tell whether price went up first or down first. You only have open, high, low and close information. So, if you’re data is limited in detail, your back-testing program should take the worst case scenario in this example and assume that the stop was hit first.

Data is bad quality. Some free data sources are terrible quality. There are gaps in the pricing (from the close of one bar to the opening of the next bar), there are incorrect prices, and sometimes there is just no data where there should be some! Try to obtain decent quality data and when in doubt, try to obtain data from a number of sources and get the best results possible across all sources.

Forward-Testing All of the above has dealt with back-testing, but forward-testing is also important. Forward-testing an automated trading strategy involves running the trading robot in a live (or demo) trading account and monitoring the results over a period of time. You may be surprised that something that works really well when back-tested, does not perform very well when run on live data. This can be because of the curve-fitting problem mentioned above, or because you’re striking market conditions that haven’t been tested in the past. Forward-testing can also uncover other problems in your back-testing that you weren’t aware of, so it’s essential to forward test, preferably on a demo account before moving to a live account.

Once you’ve back-tested your strategy on a good sample of historical data and you’ve forward-tested it too, you can be confident that your future (or at least, near future) results will be fairly similar to the results you’ve had to date. Never just let a trading robot loose though – always monitor what it’s doing because markets can be unpredictable you want to be ready to pull the plug should something go wrong.

Descargo de responsabilidad: Trading forex en margen conlleva un alto nivel de riesgo, y puede no ser adecuado para todos los inversores. El alto grado de apalancamiento puede trabajar en su contra, así como para usted. Antes de decidir invertir en divisas debe considerar cuidadosamente sus objetivos de inversión, nivel de experiencia y apetito de riesgo. Existe la posibilidad de que usted podría sostener una pérdida de parte o la totalidad de su inversión inicial y por lo tanto no debe invertir dinero que no puede permitirse perder. Usted debe ser consciente de todos los riesgos asociados con el comercio de divisas y buscar asesoramiento de un asesor financiero independiente si tiene alguna duda.

Make Money in the Forex Market using this Advanced, Proven Trading System for Experienced Traders: SUPER BUNDLE PACK 1: Includes Trading SYSTEMS 1, 2, 3, 4, 5, 6, 7, 8, 9, 10 Kindle Edition

This eBook is the SUPER BUNDLE PACK # 1 of the "Make Money in the Forex Market using this Advanced, Proven Trading System for Experienced Traders" serie. It includes Trading Systems # 1, 2, 3, 4, 5, 6, 7, 8, 9, 10.

Save your hard earned money (which could be better used for trading funds!) by buying Trading Systems # 1, 2, 3, 4, 5, 6, 7, 8, 9, 10 as a SUPER Bundle, instead of buying them individually. (It is almost a savings of 40%!)

This education eBook was compiled and written specifically for experienced and advanced veteran Forex traders. Before reading this eBook, you should already have a Live Forex trading account, basic knowledge of technical analysis, and basic knowledge of risk management techniques.

I have compiled and written this eBook in a fast paced, brief format so that there should be no confusion on how to use and implement these manual trading systems. The indicator parameters and settings of all the trading systems are calculated precisely and should be followed rigidly.

Think of this eBook as an instructional manual that help guides you on your successful trading journey and career. The manual trading systems in this eBook can be added into your existing arsenal of trading systems that you are already using.

Read more Read less

Word Wise: Enabled

Enhanced Typesetting: Enabled

Due to its large file size, this book may take longer to download

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Day Trading: Become A Big Profit Trader: Trading For A Living - Trading Strategies, Stock Trading & Options Trading (Penny Stocks, ETF, Binary Options, Covered Calls, Options, Stock Trading, Forex)

Forex Trading Strategies: Forex Price Action Trading Strategies (Forex Trading Success Book 3)

"I Show You How To Trade Forex With Zero Indicators!"

Jerry (Chicago, IL) Commodity Trading Advisor

From: Jerry in Chicago, Commodity Trading Advisor Tuesday 9:36 a. m.

Hi, my name is Jerry and I’m a Commodity Trading Advisor with a Series 3 and Series 34 license from Chicago. Over the past 4 or 5 years I have provided invaluable training and coaching to 500+ forex traders just like yourself from all over the world.

I teach them how to trade forex with my simple renko strategy for forex renko charts. I have finally developed a renko trading system which allows YOU to utilize my simple strategy and to “ Trade Forex With Zero Indicators! “.

Yes, I said ZERO INDICATORS! After many years of helping frustrated currency traders I soon discovered many of these traders fail because of 2 reasons:

Forex traders lack a simple trading method which gives them a profitable edge.

They lack the personal discipline to exploit their profitable edge in the markets.

Do you think you have the discipline to learn my renko strategy and execute it over and over for profits? If so, my renko trading method may be exactly what you are looking for. Look at the clean and simple picture below. This is a picture of one of my renko charts.

How does my renko strategy make forex trading easier for YOU . Sencillo. I personally SHOW you how to identify a specific “buy” setup and a specific “sell” setup using my renko charts. Zero additional indicators! Just pure price action based on renko bars. I will teach you my proprietary renko bar formation patterns for both a buy and sell trade setup. These include both red and green forex renko bars. I wish it was as easy as just assuming every green box is a buy signal and every red box is a sell signal.

But this is not the case, sorry. You will only experience many price whipsaws following such an assumption. My renko strategy solves this problem!

I personally show and teach you a very specific combination of BOTH red and green forex renko bars for BOTH a buy signal and a sell signal. Just click the BUY NOW button below and as soon as you make payment you will receive an INSTANT DOWNLOAD!

Or just keep reading and I will tell you more about my Forex Renko Charts Trading System below.

¿Estas listo para empezar? First take a look at what one my clients in Australia had to say about my strategy in his own words. I simply took a screenshot of his testimony and posted it here for you to read:

Why Absolutely ANYONE Can Follow My Strategy

Perhaps you’re new to forex trading or maybe you’re an experienced trader with many years under your belt. Well it doesn’t matter in the end because my forex renko strategy is so simple to follow that anyone can do it . Have a look at these two pictures:

Chart #1 - Typical Candlestick Chart

Chart #2 - Renko Chart

Now which one do you think would be easier to trade? Both charts show exactly the same information. So tell me, where should you enter and exit a trade on Chart #1?

My Renko trading system teaches you very simple yet specific setups for both buy trades and sell trades. The setup uses a combination of both red and green renko bars. You can use this strategy with ANY currency trading pair, ANY time frame, ANY time of the day.

Now, check out the following chart:

Candlestick Chart using MACD indicator

Looking at the chart above, notice how the MACD indicator crossovers (noted in the yellow circles) happens only AFTER a big jump or drop in price. So if you were to rely on this for a trade entry, you’d miss the big move in price. ¿Porqué es eso? Because it’s a LAGGING INDICATOR!

STOP USING LAGGING INDICATORS!

How does my renko strategy make trading forex easier and more effective for you? ¡Sencillo! I teach you the exact buy setups and sell setups using ONLY renko charts. ZERO INDICATORS + ZERO GUESSING = MORE WINNING TRADES!

It will take you 15 minutes to read my full color manual and another 15 minutes to download & install a renko trading platform (if your current broker does not support renko charts). So, do you have 30 minutes to learn my Forex Renko Trading System?

My personal simple yet highly effective renko buy and sell setups.

My ideal renko settings for Scalping, Swing, and Position setups.

My Trade Exit strategies for all three types of trading styles.

and much more!

Refund policy: There are no refunds due to this being a digital product. Sorry, but I consider my product too valuable to give away for free and it wouldn’t be fair to my hundreds of other satisfied customers. If you can not accept this policy, please do not purchase my product. By purchasing my product you are accepting my refund policy.

DISCLAIMER: CFTC RULE 4:41

RESULTADOS HIPOTÉTICOS DEL RENDIMIENTO TIENEN MUCHAS LIMITACIONES INHERENTES, ALGUNAS DE LAS QUE SE DESCRIBEN ABAJO. NO SE HACE NINGUNA REPRESENTACIÓN QUE CUALQUIER CUENTA TENDRÁ O SERÁ PROBABLE A LOGRAR BENEFICIOS O PÉRDIDAS SIMILARES A LOS MOSTRADOS. DE HECHO, HAY DIFERENCIAS FRECUENTEMENTE SHARP ENTRE LOS RESULTADOS HYPOTHETICAL DEL RENDIMIENTO Y LOS RESULTADOS REALES SUBSEQUENTEMENTE LOGRADOS POR CUALQUIER PROGRAMA PARTICULAR DE TRADING. UNA DE LAS LIMITACIONES DE LOS RESULTADOS DE RENDIMIENTO HIPOTÉTICO ES QUE ESTÁN GENERALMENTE PREPARADOS CON EL BENEFICIO DE HINDSIGHT. IN ADDITION, HYPOTHETICAL TRADING DOES NOT INVOLVE FINANCIAL RISK, AND NO HYPOTHETICAL TRADING RECORD CAN COMPLETELY ACCOUNT FOR THE IMPACT OF FINANCIAL RISK IN ACTUAL TRADING. POR EJEMPLO, LA CAPACIDAD DE RESOLVER PÉRDIDAS O ADHERIR A UN PROGRAMA DE COMERCIO PARTICULAR A PESAR DE LAS PÉRDIDAS COMERCIALES SON PUNTOS MATERIALES QUE TAMBIÉN PUEDEN AFECTAR DE MANERA ADECUADA LOS RESULTADOS DE NEGOCIACIÓN REAL. EXISTE UNOS OTROS FACTORES RELACIONADOS CON LOS MERCADOS EN GENERAL O CON LA IMPLEMENTACIÓN DE CUALQUIER PROGRAMA DE COMERCIO ESPECÍFICO QUE NO PUEDA SER COMPLETAMENTE CONSIDERADO PARA LA PREPARACIÓN DE LOS RESULTADOS DE RENDIMIENTO HIPOTÉTICO Y TODOS LOS QUE PUEDEN AFECTAR DE FORMA ADVERSA LOS RESULTADOS DE NEGOCIACIÓN ACTUAL.

Trade System

The Trade System allows players to trade Prime Blueprints. Prime Parts, Mods. Platinum. Void Keys. alternate Arcane Helmets. Kubrow Imprints, and Special Weapons at the Clan Dojo's Trading Post, or at a specified trading relay (Maroo's Bazaar). There is a minimum Mastery requirement of Rank 2 in order to trade, and the number of available trade transactions increases by one each Mastery Rank. Up to five items can be traded per transaction and a trade tax is commissioned to complete the trade. The Trading Post can be found in the Place Decoration tab if you are an Architect in your Clan.

Players can also trade on Earth at Maroo's Bazaar.

*Note* When trading weapons, weapon parts and Warframe parts, a player can only trade that weapon or frame if it is Prime. or has special status, like Prisma or Syndicate. The only current exception to the Prime Warframe rule is Nezha.

Another Note* Only prime parts that drop as parts can be traded, prime parts that are crafted from blueprints cannot.

Trades Per Day Edit

The Trading Post as it appears in-game.

The number of trades that can be made per day is the same as the player's Mastery Rank. with exception to Founders. who get an additional two trades per day. The trade limit is refreshed daily at GMT 00:00 and is not affected by the amount of items exchanged in each transaction. Furthermore, ranking up will provide an additional trade until the next refresh.

Tax Edit

1) Special Weapons must be unused, without any Affinity. Forma or Orokin Catalysts to be tradeable. 2) Players cannot trade the initial amount of platinum that all accounts start off with. This is to prevent players from creating new accounts to farm platinum. Players cannot trade platinum that has been gifted to them as well. 3) Nezha is currently the only non-prime Warframe whose parts can be traded, and uses the same tax per part.

Trading Terminology Edit

People who use the Trade chat have their own acronyms to summarize their offers. Below is a short list of the most commonly used acronyms in Trade chat. A more comprehensive guide can be found here.

Start a Discussion Discussions about Trade System

It's a shame that it won't allow players to trade normal frame parts I think it'd be a positive improvement for them to allow that, keep. 2016-02-16T17:24:22Z

Still waiting on an actual marketplace type setting where you can put items up on while you're offline. For 2 reasons, #1 to stabilize and k. 2016-02-16T18:04:55Z

WTT or WTB In need of Rhino Prime BP, HELMET, Chasis. OFFERING - NOVA PRIME BP or NOVA PRIME HELMET Or VOLT PRIME BP OR SOMA PRIME 2016-02-11T02:22:45Z

The EU Emissions Trading System (EU ETS)

Questions and Answers on the revised EU Emissions Trading System (December 2008)

What is the aim of emissions trading?

The aim of the EU Emissions Trading System (EU ETS) is to help EU Member States achieve their commitments to limit or reduce greenhouse gas emissions in a cost-effective way. Allowing participating companies to buy or sell emission allowances means that emission cuts can be achieved at least cost.

The EU ETS is the cornerstone of the EU's strategy for fighting climate change. It is the first international trading system for CO 2 emissions in the world and has been in operation since 2005. As of I January 2008 it applies not only to the 27 EU Member States, but also to the other three members of the European Economic Area – Norway, Iceland and Liechtenstein. It currently covers over 10,000 installations in the energy and industrial sectors which are collectively responsible for close to half of the EU's emissions of CO 2 and 40% of its total greenhouse gas emissions. An amendment to the EU ETS Directive agreed in July 2008 will bring the aviation sector into the system from 2012.

How does emissions trading work?

The EU ETS is a 'cap and trade' system, that is to say it caps the overall level of emissions allowed but, within that limit, allows participants in the system to buy and sell allowances as they require. These allowances are the common trading 'currency' at the heart of the system. One allowance gives the holder the right to emit one tonne of CO 2 or the equivalent amount of another greenhouse gas. The cap on the total number of allowances creates scarcity in the market.

In the first and second trading period under the scheme, Member States had to draw up national allocation plans (NAPs) which determine their total level of ETS emissions and how many emission allowances each installation in their country receives. At the end of each year installations must surrender allowances equivalent to their emissions. Companies that keep their emissions below the level of their allowances can sell their excess allowances. Those facing difficulty in keeping their emissions in line with their allowances have a choice between taking measures to reduce their own emissions – such as investing in more efficient technology or using less carbon-intensive energy sources – or buying the extra allowances they need on the market, or a combination of the two. Such choices are likely to be determined by relative costs. In this way, emissions are reduced wherever it is most cost-effective to do so.

How long has the EU ETS been operating?

The EU ETS was launched on 1 January 2005. The first trading period ran for three years to the end of 2007 and was a 'learning by doing' phase to prepare for the crucial second trading period. The second trading period began on 1 January 2008 and runs for five years until the end of 2012. The importance of the second trading period stems from the fact that it coincides with the first commitment period of the Kyoto Protocol, during which the EU and other industrialised countries must meet their targets to limit or reduce greenhouse gas emissions. For the second trading period EU ETS emissions have been capped at around 6.5% below 2005 levels to help ensure that the EU as a whole, and Member States individually, deliver on their Kyoto commitments.

What are the main lessons learned from experience so far?

The EU ETS has put a price on carbon and proved that trading in greenhouse gas emissions works. The first trading period successfully established the free trading of emission allowances across the EU, put in place the necessary infrastructure and developed a dynamic carbon market. The environmental benefit of the first phase may be limited due to excessive allocation of allowances in some Member States and some sectors, due mainly to a reliance on emission projections before verified emissions data became available under the EU ETS. When the publication of verified emissions data for 2005 highlighted this “over-allocation”, the market reacted as would be expected by lowering the market price of allowances. The availability of verified emissions data has allowed the Commission to ensure that the cap on national allocations under the second phase is set at a level that results in real emission reductions.

Besides underlining the need for verified data, experience so far has shown that greater harmonisation within the EU ETS is imperative to ensure that the EU achieves its emissions reductions objectives at least cost and with minimal competitive distortions. The need for more harmonisation is clearest with respect to how the cap on overall emission allowances is set.

The first two trading periods also show that widely differing national methods for allocating allowances to installations threaten fair competition in the internal market. Furthermore, greater harmonisation, clarification and refinement are needed with respect to the scope of the system, the access to credits from emission-reduction projects outside the EU, the conditions for linking the EU ETS to emissions trading systems elsewhere and the monitoring, verification and reporting requirements.

What are the main changes to the EU ETS and as of when will they apply?

The agreed design changes will apply as of the third trading period, i. e. January 2013. While preparatory work will be initiated immediately, the applicable rules will not change until January 2013 to ensure that regulatory stability is maintained.

The EU ETS in the third period will be a more efficient, more harmonised and fairer system.

Increased efficiency is achieved by means of a longer trading period (8 years instead of 5 years), a robust and annually declining emissions cap (21% reduction in 2020 compared to 2005) and a substantial increase in the amount of auctioning (from less than 4% in phase 2 to more than half in phase 3).

More harmonisation has been agreed in many areas, including with respect to the cap-setting (an EU-wide cap instead of the national caps in phases 1 and 2) and the rules for transitional free allocation.

The fairness of the system has been substantially increased by the move towards EU-wide free allocation rules for industrial installations and by the introduction of a redistribution mechanism that entitles new Member States to auction more allowances.

How does the final text compare to the initial Commission proposal?

The climate and energy targets agreed by the 2007 Spring European Council have been maintained and the overall architecture of the Commission's proposal on the EU ETS remains intact. That is to say that there will be one EU-wide cap on the number of emission allowances and this cap will decrease annually along a linear trend line, which will continue beyond the end of the third trading period (2013-2020). The main difference as compared to the proposal is that auctioning of allowances will be phased in more slowly.

What are the main changes compared to the Commission's proposal?

In summary, the main changes that have been made to the proposal are as follows:

Certain Member States are allowed an optional and temporary derogation from the rule that no allowances are to be allocated free of charge to electricity generators as of 2013. This option to derogate is available to Member States which fulfil certain conditions related to the interconnectivity of their electricity grid, share of a single fossil fuel in electricity production, and GDP/capita in relation to the EU-27 average. In addition, the amount of free allowances that a Member State can allocate to power plants is limited to 70% of carbon dioxide emissions of relevant plants in phase 1 and declines in the years thereafter. Furthermore free allocation in phase 3 can only be given to power plants that are operational or under construction no later than end 2008. See reply to question 15 below.

There will be more details in the Directive on the criteria to be used to determine the sectors or sub-sectors deemed to be exposed to a significant risk of carbon leakage . and an earlier date of publication of the Commission's list of such sectors (31 December 2009). Moreover, subject to review when a satisfactory international agreement is reached, installations in all exposed industries will receive 100% free allowances to the extent that they use the most efficient technology. The free allocation to industry is limited to the share of these industries' emissions in total emissions in 2005 to 2007. The total number of allowances allocated for free to installations in industry sectors will decline annually in line with the decline of the emissions cap.

Member States may also compensate certain installations for CO 2 costs passed on in electricity prices if the CO 2 costs might otherwise expose them to the risk of carbon leakage. The Commission has undertaken to modify the Community guidelines on state aid for environmental protection in this respect. See reply to question 15 below.

The level of auctioning of allowances for non-exposed industry will increase in a linear manner as proposed by the Commission, but rather than reaching 100% by 2020 it will reach 70%, with a view to reaching 100% by 2027.

As foreseen in the Commission's proposal, 10% of the allowances for auctioning will be redistributed from Member States with high per capita income to those with low per capita income in order to strengthen the financial capacity of the latter to invest in climate friendly technologies. A provision has been added for another redistributive mechanism of 2% of auctioned allowances to take into account Member States which in 2005 had achieved a reduction of at least 20% in greenhouse gas emissions compared with the reference year set by the Kyoto Protocol.

The share of auctioning revenues that Member States are recommended to use to fight and adapt to climate change mainly within the EU, but also in developing countries, is raised from 20% to 50%.

The text provides for a top-up to the proposed permitted level of use of JI/CDM credits in the 20% scenario for existing operators that received the lowest budgets to import and use such credits in relation to allocations and access to credits in the period 2008-2012. New sectors, new entrants in the periods 2013-2020 and 2008-2012 will also be able to use credits. The total amount of credits that may be used will, however, not exceed 50% of the reduction between 2008 and 2020. Based on a stricter emissions reduction in the context of a satisfactory international agreement, the Commission could allow additional access to CERs and ERUs for operators in the Community scheme. See reply to question 20 below.

The proceeds from auctioning 300 million allowances from the new entrants reserve will be used to support up to 12 carbon capture and storage demonstration projects and projects demonstrating innovative renewable energy technologies. A number of conditions are attached to this financing mechanism. See reply to question 30 below.

The possibility to opt-out small combustion installations provided they are subject to equivalent measures has been extended to cover all small installations irrespective of activity, the emission threshold has been raised from 10,000 to 25,000 tonnes of CO 2 per year, and the capacity threshold that combustion installations have to fulfil in addition has been raised from 25MW to 35MW. With these increased thresholds, the share of covered emissions that would potentially be excluded from the emissions trading system becomes significant, and consequently a provision has been added to allow for a corresponding reduction of the EU-wide cap on allowances.

Will there still be national allocation plans (NAPs)?

No. In their NAPs for the first (2005-2007) and the second (2008-2012) trading periods, Member States determined the total quantity of allowances to be issued – the cap – and how these would be allocated to the installations concerned. This approach has generated significant differences in allocation rules, creating an incentive for each Member State to favour its own industry, and has led to great complexity.

As from the third trading period, there will be a single EU-wide cap and allowances will be allocated on the basis of harmonised rules. National allocation plans will therefore not be needed any more.

How will the emission cap in phase 3 be determined?

The rules for calculating the EU-wide cap are as follows:

From 2013, the total number of allowances will decrease annually in a linear manner. The starting point of this line is the average total quantity of allowances (phase 2 cap) to be issued by Member States for the 2008-12 period, adjusted to reflect the broadened scope of the system from 2013 as well as any small installations that Member States have chosen to exclude. The linear factor by which the annual amount shall decrease is 1.74% in relation to the phase 2 cap.

The starting point for determining the linear factor of 1.74% is the 20% overall reduction of greenhouse gases compared to 1990, which is equivalent to a 14% reduction compared to 2005. However, a larger reduction is required of the EU ETS because it is cheaper to reduce emissions in the ETS sectors. The division that minimises overall reduction cost amounts to:

a 21% reduction in EU ETS sector emissions compared to 2005 by 2020;

a reduction of around 10% compared to 2005 for the sectors that are not covered by the EU ETS.

The 21% reduction in 2020 results in an ETS cap in 2020 of a maximum of 1720 million allowances and implies an average phase 3 cap (2013 to 2020) of some 1846 million allowances and a reduction of 11% compared to the phase 2 cap.

All absolute figures indicated correspond to the coverage at the start of the second trading period and therefore don't take account of aviation, which will be added in 2012, and other sectors that will be added in phase 3.

The final figures for the annual emission caps in phase 3 will be determined and published by the Commission by 30 September 2010.

How will the emission cap beyond phase 3 be determined?

The linear factor of 1.74% used to determine the phase 3 cap will continue to apply beyond the end of the trading period in 2020 and will determine the cap for the fourth trading period (2021 to 2028) and beyond. It may be revised by 2025 at the latest. In fact, significant emission reductions of 60%-80% compared to 1990 will be necessary by 2050 to reach the strategic objective of limiting the global average temperature increase to not more than 2°C above pre-industrial levels.

An EU-wide cap on emission allowances will be determined for each individual year. Will this reduce flexibility for the installations concerned?

No, flexibility for installations will not be reduced at all. In any year, the allowances to be auctioned and distributed have to be issued by the competent authorities by 28 February. The last date for operators to surrender allowances is 30 April of the year following the year in which the emissions took place. So operators receive allowances for the current year before they have to surrender allowances to cover their emissions for the previous year. Allowances remain valid throughout the trading period and any surplus allowances can now be "banked" for use in subsequent trading periods. In this respect nothing will change.

The system will remain based on trading periods, but the third trading period will last eight years, from 2013 to 2020, as opposed to five years for the second phase from 2008 to 2012.

For the second trading period Member States generally decided to allocate equal total quantities of allowances for each year. The linear decrease each year from 2013 will correspond better to expected emissions trends over the period.

What are the tentative annual ETS cap figures for the period 2013 to 2020?

The tentative annual cap figures are as follows:

These figures are based on the scope of the ETS as applicable in phase 2 (2008 to 2012), and the Commission's decisions on the national allocation plans for phase 2, amounting to 2083 million tonnes. These figures will be adjusted for several reasons. Firstly, adjustment will be made to take into account the extensions of the scope in phase 2, provided that Member States substantiate and verify their emissions accruing from these extensions. Secondly, adjustment will be made with respect to further extensions of the scope of the ETS in the third trading period. Thirdly, any opt-out of small installations will lead to a corresponding reduction of the cap. Fourthly, the figures do not take account of the inclusion of aviation, nor of emissions from Norway, Iceland and Liechtenstein.

Will allowances still be allocated for free?

Sí. Industrial installations will receive transitional free allocation. And in those Member States that are eligible for the optional derogation, power plants may, if the Member State so decides, also receive free allowances. It is estimated that at least half of the available allowances as of 2013 will be auctioned.

While the great majority of allowances has been allocated free of charge to installations in the first and second trading periods, the Commission proposed that auctioning of allowances should become the basic principle for allocation. This is because auctioning best ensures the efficiency, transparency and simplicity of the system and creates the greatest incentive for investments in a low-carbon economy. It best complies with the “polluter pays principle” and avoids giving windfall profits to certain sectors that have passed on the notional cost of allowances to their customers despite receiving them for free.

How will allowances be handed out for free?

By 31 December 2010, the Commission will adopt EU-wide rules, which will be developed under a committee procedure (“Comitology”). These rules will fully harmonise allocations and thus all firms across the EU with the same or similar activities will be subject to the same rules. The rules will ensure as far as possible that the allocation promotes carbon-efficient technologies. The adopted rules provide that to the extent feasible, allocations are to be based on so-called benchmarks, e. g. a number of allowances per quantity of historical output. Such rules reward operators that have taken early action to reduce greenhouse gases, better reflect the polluter pays principle and give stronger incentives to reduce emissions, as allocations would no longer depend on historical emissions. All allocations are to be determined before the start of the third trading period and no ex-post adjustments will be allowed.

Which installations will receive free allocations and which will not? How will negative impacts on competitiveness be avoided?

Taking into account their ability to pass on the increased cost of emission allowances, full auctioning is the rule from 2013 onwards for electricity generators. However, Member States who fulfil certain conditions relating to their interconnectivity or their share of fossil fuels in electricity production and GDP per capita in relation to the EU-27 average, have the option to temporarily deviate from this rule with respect to existing power plants. The auctioning rate in 2013 is to be at least 30% in relation to emissions in the first period and has to increase progressively to 100% no later than 2020. If the option is applied, the Member State has to undertake to invest in improving and upgrading of the infrastructure, in clean technologies and in diversification of their energy mix and sources of supply for an amount to the extent possible equal to the market value of the free allocation.

In other sectors, allocations for free will be phased out progressively from 2013, with Member States agreeing to start at 20% auctioning in 2013, increasing to 70% auctioning in 2020 with a view to reaching 100% in 2027. However, an exception will be made for installations in sectors that are found to be exposed to a significant risk of 'carbon leakage'. This risk could occur if the EU ETS increased production costs so much that companies decided to relocate production to areas outside the EU that are not subject to comparable emission constraints. The Commission will determine the sectors concerned by 31 December 2009. To do this, the Commission will assess inter alia whether the direct and indirect additional production costs induced by the implementation of the ETS Directive as a proportion of gross value added exceed 5% and whether the total value of its exports and imports divided by the total value of its turnover and imports exceeds 10%. If the result for either of these criteria exceeds 30%, the sector would also be considered to be exposed to a significant risk of carbon leakage. Installations in these sectors would receive 100% of their share in the annually declining total quantity of allowances for free. The share of these industries' emissions is determined in relation to total ETS emissions in 2005 to 2007.

CO 2 costs passed on in electricity prices could also expose certain installations to the risk of carbon leakage. In order to avoid such risk, Member States may grant a compensation with respect to such costs. In the absence of an international agreement on climate change, the Commission has undertaken to modify the Community guidelines on state aid for environmental protection in this respect.

Under an international agreement which ensures that competitors in other parts of the world bear a comparable cost, the risk of carbon leakage may well be negligible. Therefore, by 30 June 2010, the Commission will carry out an in-depth assessment of the situation of energy-intensive industry and the risk of carbon leakage, in the light of the outcome of the international negotiations and also taking into account any binding sectoral agreements that may have been concluded. The report will be accompanied by any proposals considered appropriate. These could potentially include maintaining or adjusting the proportion of allowances received free of charge to industrial installations that are particularly exposed to global competition or including importers of the products concerned in the ETS.

Who will organise the auctions and how will they be carried out?

Member States will be responsible for ensuring that the allowances given to them are auctioned. Each Member State has to decide whether it wants to develop its own auctioning infrastructure and platform or whether it wants to cooperate with other Member States to develop regional or EU-wide solutions. The distribution of the auctioning rights to Member States is largely based on emissions in phase 1 of the EU ETS, but a part of the rights will be redistributed from richer Member States to poorer ones to take account of the lower GDP per head and higher prospects for growth and emissions among the latter. It is still the case that 10% of the rights to auction allowances will be redistributed from Member States with high per capita income to those with low per capita income in order to strengthen the financial capacity of the latter to invest in climate friendly technologies. However, a provision has been added for another redistributive mechanism of 2% to take into account Member States which in 2005 had achieved a reduction of at least 20% in greenhouse gas emissions compared with the reference year set by the Kyoto Protocol. Nine Member States benefit from this provision.

Any auctioning must respect the rules of the internal market and must therefore be open to any potential buyer under non-discriminatory conditions. By 30 June 2010, the Commission will adopt a Regulation (through the comitology procedure) that will provide the appropriate rules and conditions for ensuring efficient, coordinated auctions without disturbing the allowance market.

How many allowances will each Member State auction and how is this amount determined?

All allowances which are not allocated free of charge will be auctioned. A total of 88% of allowances to be auctioned by each Member State is distributed on the basis of the Member State's share of historic emissions under the EU ETS. For purposes of solidarity and growth, 12% of the total quantity is distributed in a way that takes into account GDP per capita and the achievements under the Kyoto-Protocol.

Which sectors and gases are covered as of 2013?

The ETS covers installations performing specified activities. Since the start it has covered, above certain capacity thresholds, power stations and other combustion plants, oil refineries, coke ovens, iron and steel plants and factories making cement, glass, lime, bricks, ceramics, pulp, paper and board. As for greenhouse gases, it currently only covers carbon dioxide emissions, with the exception of the Netherlands, which has opted in emissions from nitrous oxide.

As from 2013, the scope of the ETS will be extended to also include other sectors and greenhouse gases. CO 2 emissions from petrochemicals, ammonia and aluminium will be included, as will N2O emissions from the production of nitric, adipic and glyocalic acid production and perfluorocarbons from the aluminium sector. The capture, transport and geological storage of all greenhouse gas emissions will also be covered. These sectors will receive allowances free of charge according to EU-wide rules, in the same way as other industrial sectors already covered.

As of 2012, aviation will also be included in the EU ETS.

Will small installations be excluded from the scope?

A large number of installations emitting relatively low amounts of CO 2 are currently covered by the ETS and concerns have been raised over the cost-effectiveness of their inclusion. As from 2013, Member States will be allowed to remove these installations from the ETS under certain conditions. The installations concerned are those whose reported emissions were lower than 25 000 tonnes of CO 2 equivalent in each of the 3 years preceding the year of application. For combustion installations, an additional capacity threshold of 35MW applies. In addition Member States are given the possibility to exclude installations operated by hospitals. The installations may be excluded from the ETS only if they will be covered by measures that will achieve an equivalent contribution to emission reductions.

How many emission credits from third countries will be allowed?

For the second trading period, Member States allowed their operators to use significant quantities of credits generated by emission-saving projects undertaken in third countries to cover part of their emissions in the same way as they use ETS allowances. The revised Directive extends the rights to use these credits for the third trading period and allows a limited additional quantity to be used in such a way that the overall use of credits is limited to 50% of the EU-wide reductions over the period 2008-2020. For existing installations, and excluding new sectors within the scope, this will represent a total level of access of approximately 1.6 billion credits over the period 2008-2020. In practice, this means that existing operators will be able to use credits up to a minimum of 11% of their allocation during the period 2008-2012, while a top-up is foreseen for operators with the lowest sum of free allocation and allowed use of credits in the 2008-2012 period. New sectors and new entrants in the third trading period will have a guaranteed minimum access of 4.5% of their verified emissions during the period 2013-2020. For the aviation sector, the minimum access will be 1.5%. The precise percentages will be determined through comitology.

These projects must be officially recognised under the Kyoto Protocol’s Joint Implementation (JI) mechanism (covering projects carried out in countries with an emissions reduction target under the Protocol) or Clean Development Mechanism (CDM) (for projects undertaken in developing countries). Credits from JI projects are known as Emission Reduction Units (ERUs) while those from CDM projects are called Certified Emission Reductions (CERs).

On the quality side only credits from project types eligible for use in the EU trading scheme during the period 2008-2012 will be accepted in the period 2013-2020. Furthermore, from 1 January 2013 measures may be applied to restrict the use of specific credits from project types. Such a quality control mechanism is needed to assure the environmental and economic integrity of future project types.

To create greater flexibility, and in the absence of an international agreement being concluded by 31 December 2009, credits could be used in accordance with agreements concluded with third countries. The use of these credits should however not increase the overall number beyond 50% of the required reductions. Such agreements would not be required for new projects that started from 2013 onwards in Least Developed Countries.

Based on a stricter emissions reduction in the context of a satisfactory international agreement . additional access to credits could be allowed, as well as the use of additional types of project credits or other mechanisms created under the international agreement. However, once an international agreement has been reached, from January 2013 onwards only credits from projects in third countries that have ratified the agreement or from additional types of project approved by the Commission will be eligible for use in the Community scheme.

Will it be possible to use credits from carbon ‘sinks’ like forests?

No. Before making its proposal, the Commission analysed the possibility of allowing credits from certain types of land use, land-use change and forestry (‘LULUCF’) projects which absorb carbon from the atmosphere. It concluded that doing so could undermine the environmental integrity of the EU ETS, for the following reasons:

LULUCF projects cannot physically deliver permanent emissions reductions. Insufficient solutions have been developed to deal with the uncertainties, non-permanence of carbon storage and potential emissions 'leakage' problems arising from such projects. The temporary and reversible nature of such activities would pose considerable risks in a company-based trading system and impose great liability risks on Member States.

The inclusion of LULUCF projects in the ETS would require a quality of monitoring and reporting comparable to the monitoring and reporting of emissions from installations currently covered by the system. This is not available at present and is likely to incur costs which would substantially reduce the attractiveness of including such projects.

The simplicity, transparency and predictability of the ETS would be considerably reduced. Moreover, the sheer quantity of potential credits entering the system could undermine the functioning of the carbon market unless their role were limited, in which case their potential benefits would become marginal.

The Commission, the Council and the European Parliament believe that global deforestation can be better addressed through other instruments. For example, using part of the proceeds from auctioning allowances in the EU ETS could generate additional means to invest in LULUCF activities both inside and outside the EU, and may provide a model for future expansion. In this respect the Commission has proposed to set up the Global Forest Carbon Mechanism that would be a performance-based system for financing reductions in deforestation levels in developing countries.

Besides those already mentioned, are there other credits that could be used in the revised ETS?

Sí. Projects in EU Member States which reduce greenhouse gas emissions not covered by the ETS could issue credits. These Community projects would need to be managed according to common EU provisions set up by the Commission in order to be tradable throughout the system. Such provisions would be adopted only for projects that cannot be realised through inclusion in the ETS. The provisions will seek to ensure that credits from Community projects do not result in double-counting of emission reductions nor impede other policy measures to reduce emissions not covered by the ETS, and that they are based on simple, easily administered rules.

Are there measures in place to ensure that the price of allowances won't fall sharply during the third trading period?

A stable and predictable regulatory framework is vital for market stability. The revised Directive makes the regulatory framework as predictable as possible in order to boost stability and rule out policy-induced volatility. Important elements in this respect are the determination of the cap on emissions in the Directive well in advance of the start of the trading period, a linear reduction factor for the cap on emissions which continues to apply also beyond 2020 and the extension of the trading period from 5 to 8 years. The sharp fall in the allowance price during the first trading period was due to over-allocation of allowances which could not be “banked” for use in the second trading period. For the second and subsequent trading periods, Member States are obliged to allow the banking of allowances from one period to the next and therefore the end of one trading period is not expected to have any impact on the price.

A new provision will apply as of 2013 in case of excessive price fluctuations in the allowance market. If, for more than six consecutive months, the allowance price is more than three times the average price of allowances during the two preceding years on the European market, the Commission will convene a meeting with Member States. If it is found that the price evolution does not correspond to market fundamentals, the Commission may either allow Member States to bring forward the auctioning of a part of the quantity to be auctioned, or allow them to auction up to 25% of the remaining allowances in the new entrant reserve.

The price of allowances is determined by supply and demand and reflects fundamental factors like economic growth, fuel prices, rainfall and wind (availability of renewable energy) and temperature (demand for heating and cooling) etc. A degree of uncertainty is inevitable for such factors. The markets, however, allow participants to hedge the risks that may result from changes in allowances prices.

Are there any provisions for linking the EU ETS to other emissions trading systems?

Sí. One of the key means to reduce emissions more cost-effectively is to enhance and further develop the global carbon market. The Commission sees the EU ETS as an important building block for the development of a global network of emission trading systems. Linking other national or regional cap-and-trade emissions trading systems to the EU ETS can create a bigger market, potentially lowering the aggregate cost of reducing greenhouse gas emissions. The increased liquidity and reduced price volatility that this would entail would improve the functioning of markets for emission allowances. This may lead to a global network of trading systems in which participants, including legal entities, can buy emission allowances to fulfil their respective reduction commitments.

The EU is keen to work with the new US Administration to build a transatlantic and indeed global carbon market to act as the motor of a concerted international push to combat climate change.

While the original Directive allows for linking the EU ETS with other industrialised countries that have ratified the Kyoto Protocol, the new rules allow for linking with any country or administrative entity (such as a state or group of states under a federal system) which has established a compatible mandatory cap-and-trade system whose design elements would not undermine the environmental integrity of the EU ETS. Where such systems cap absolute emissions, there would be mutual recognition of allowances issued by them and the EU ETS.

What is a Community registry and how does it work?

Registries are standardised electronic databases ensuring the accurate accounting of the issuance, holding, transfer and cancellation of emission allowances. As a signatory to the Kyoto Protocol in its own right, the Community is also obliged to maintain a registry. This is the Community Registry, which is distinct from the registries of Member States. Allowances issued from 1 January 2013 onwards will be held in the Community registry instead of in national registries.

Will there be any changes to monitoring, reporting and verification requirements?

The Commission will adopt a new Regulation (through the comitology procedure) by 31 December 2011 governing the monitoring and reporting of emissions from the activities listed in Annex I of the Directive. A separate Regulation on the verification of emission reports and the accreditation of verifiers should specify conditions for accreditation, mutual recognition and cancellation of accreditation for verifiers, and for supervision and peer review as appropriate.

What provision will be made for new entrants into the market?

Five percent of the total quantity of allowances will be put into a reserve for new installations or airlines that enter the system after 2013 (“new entrants”). The allocations from this reserve should mirror the allocations to corresponding existing installations.

A part of the new entrant reserve, amounting to 300 million allowances, will be made available to support the investments in up to 12 demonstration projects using the carbon capture and storage technology and demonstration projects using innovative renewable energy technologies. There should be a fair geographical distribution of the projects.

En principio, las asignaciones que queden en la reserva se distribuirán a los Estados miembros para su subasta. The distribution key shall take into account the level to which installations in Member States have benefited from this reserve.

What has been agreed with respect to the financing of the 12 carbon capture and storage demonstration projects requested by a previous European Council?

The European Parliament's Environment Committee tabled an amendment to the EU ETS Directive requiring allowances in the new entrant reserve to be set aside in order to co-finance up to 12 demonstration projects as requested by the European Council in spring 2007. This amendment has later been extended to include also innovative renewable energy technologies that are not commercially viable yet. Projects shall be selected on the basis of objective and transparent criteria that include requirements for knowledge sharing. Support shall be given from the proceeds of these allowances via Member States and shall be complementary to substantial co-financing by the operator of the installation. No project shall receive support via this mechanism that exceeds 15% of the total number of allowances (i. e. 45 million allowances) available for this purpose. The Member State may choose to co-finance the project as well, but will in any case transfer the market value of the attributed allowances to the operator, who will not receive any allowances.

A total of 300 million allowances will therefore be set aside until 2015 for this purpose.

What is the role of an international agreement and its potential impact on EU ETS?

When an international agreement is reached, the Commission shall submit a report to the European Parliament and the Council assessing the nature of the measures agreed upon in the international agreement and their implications, in particular with respect to the risk of carbon leakage. On the basis of this report, the Commission shall then adopt a legislative proposal amending the present Directive as appropriate.

For the effects on the use of credits from Joint Implementation and Clean Development Mechanism projects, please see the reply to question 20.

¿Cuáles son los siguientes pasos?

Member States have to bring into force the legal instruments necessary to comply with certain provisions of the revised Directive by 31 December 2009. This concerns the collection of duly substantiated and verified emissions data from installations that will only be covered by the EU ETS as from 2013, and the national lists of installations and the allocation to each one. For the remaining provisions, the national laws, regulations and administrative provisions only have to be ready by 31 December 2012.

The Commission has already started the work on implementation. For example, the collection and analysis of data for use in relation to carbon leakage is ongoing (list of sectors due end 2009). Work is also ongoing to prepare the Regulation on timing, administration and other aspects of auctioning (due by June 2010), the harmonised allocation rules (due end 2010) and the two Regulations on monitoring and reporting of emissions and verification of emissions and accreditation of verifiers (due end 2011).

Forex Carry Trading Strategy

The carry trade, which involves going long a high-yielding currency against a low-yielding one is very popular among long term currency traders. Hoy en día, llevar a los comerciantes les encanta las cruces de yenes debido a la tasa de interés muy bajo JPY, por ejemplo, el GBP / JPY o NZD / JPY pares de divisas cruzadas. Carry trades suelen celebrarse durante varios meses o incluso años. Currently, when holding a long position in the GPB/JPY pair, forex brokers will pay out over $23 a day per 100,000 units in interest.

Ahora, cuando usted piensa en la construcción de un comercio de llevar, no debe pensar en los mismos términos que usted piensa normalmente cuando el comercio de divisas. Usted tiene que utilizar un apalancamiento mucho menor, y usted tiene que ser mucho más conservador ya que está planeando mantener el comercio por un período de tiempo más largo. A carry trade can be an amazing opportunity to generate very good passive income. Similar a una inversión inmobiliaria.

Daily rollover interest debit/credit Formula

Number of lots (Units) x (base currency interest rate - quote currency interest rate) / 365 days per year x current base currency rate = daily rollover interest debit/credit

GBP/JPY Carry Trade Example

Because UK has 5.25% rate, and Japan has 0.25% rate, this cross is very attractive for carry traders looking for buy opportunities only since they want to earn daily interest on the open position. Preferred timeframe's to make trading decisions are daily and weekly charts because they are looking to keep the trade for a longer time period. Realmente no tiene sentido estudiar un gráfico de 5 minutos para tomar un carry trade.

Una estrategia muy simple es la media móvil cruzar, mirando al ejemplo anterior, sólo vamos mucho tiempo cuando el 5EMA cruza el 200SMA desde abajo (hasta la tendencia), pero no tomamos los intercambios cuando el 5EMA cruza el 200SMA desde arriba ) Porque la estrategia de carry trade se centraría sólo en operaciones con interés positivo: en el caso del GBP / JPY, operaciones largas.

When you are long GBP/JPY, most forex brokers will pay out over $23 a day per 100,000 units in interest which is paid on a daily basis. If for example, you keep the trade for 200 days, this would bring an amazing $4600* interest credited to your account not including the pips you lose or gain.

* The above calculation is an example only and is to be used for educational and informative purposes only since the amount actually debited or credited to your account will vary depending on the forex broker. La mayoría de los corredores muestran los cargos por intereses de rollover diarios en su plataforma de negociación en línea.

Carry Trade Strategy

Identify a pair like GPB/JPY with a high interest differential

Apply Technical Analysis and create a rule-based trading strategy using longer term timeframe's only

Only long the currency bearing the higher interest rate: in the case of the GBP/JPY, long trades

Keep an eye on the interest rate differential because it can vary over time

Another strategy is to open inversely correlated positions that are both interest-positive. This way, any losses in one currency's price would be (roughly) offset by gains in the other, while both earned interest. This is the idea behind a balanced basket of interest-earning currencies.

Interesting Carry Trade Pairs

All pairs that include the Yen due to the very low JPY interest rate.(date 02/15/2013)

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Trade Routes

Introducción Editar

The CBT5 introduced an innovative trading system to the world of ArcheAge. The fundamental aims of this economic system were two: first, that the production and trade of rare goods be driven by teamwork and player interaction, and second, that piracy should also be a constant threat and viable strategy in the world of Ark. The current incarnation of the system has achieved both of these aims, creating a dynamic, vibrant, and dangerous player-driven economy that has become a centerpiece of the gameplay.

A simple explanation of the trade system breaks it down into three steps. A player first crafts a trade pack using raw materials or goods harvested from the game world, then carries that pack across the game world before depositing it for a profit at a target destination. The transportation process is not without its dangers, however, as trade packs reduce a player's movement speed and make him vulnerable to other players who may steal his goods. If a player is killed by a bandit or pirate, the trade pack is dropped and may be captured by the criminal, who may then deposit it themself and usurp the profits.

Successive patches have added additional innovations and polish to initial design. Trade routes, trade boxes, and other refinements have undergone several iterations, and more are expected throughout open beta testing.

Overview Edit

The trading system is based on several factors. Like making the goods and transporting them, but also factors such as climate zones and the open PvP in ArcheAge have to be considered.

First and foremost, you have to work together as a group or Expeditionary Force (guild), so that you can master the first trade route successfully. Also it is very important to have already gathered sufficient experience in crafting.

But how does a trade route run exactly? At the beginning, of course, only one specific product is available for making, called a regional specialty, later you can make more exclusive goods using specific crafting stations in the area of origin of the goods. Since you obviously can not get rich with the transport of a piece, you should work to eventually produce all the goods charges. This pack of goods doesn't fit naturally into the inventory of a player, it has to be carried on the players back (like a pack of wood) or in a suitable container of a transport ship, tractor etc.

You need materials from a variety of professions for each of these specialties. The dealer itself is then responsible to the station for processing these materials into a package. The trading profession is enhanced as all other professions through production and exchange and has 10,000 value corresponding to each LP benefits such as reduced consumption or increased crafting speed.

Types of Commodities Edit

There are now 3 different type's of commodity: common, uncommon and rare goods. For the production of a transport box always needed a so-called trade certificate. This is to be purchased for 50 silver at each crafting dealer. These 50 silver set as the basal metabolic rate for each trade box.

About the different type of Trading Goods:

Common Goods:From these products, there are two possible boxes of goods per region.

Example: Strawberry Jam=This box requires 100 strawberries, you can get through the acquisition and cultivation of about 35 strawberry seeds (70 silver from the NPC). Alternatively you can purchase the strawberries at the auction house.

Uncommon Goods:From these products, there is one box of goods per region.

Example: Salt Redder Cart=This box requires 3 sturdy vines, an unusual material that can be obtained in the harvesting of grapes or the lumber of vines. We also need 5 bark of a cypress tree. This can be obtained with a relatively high probability when cutting or felling of all trees in the category "Cypress Family". As always, you have an alternative to buy them from the auction house.

Rare Goods (Specialties):From these products, there is one box of goods per region.

Example: Willow Thistle Cargo=1. 1x willow wood=Willow is a rare wood, which can be obtained by cutting down willow trees. An exact drop rate is not known, but you should already have to make something to get ran there. 2. 3x light goose feathers=Light goose feathers obtained occasionally during shearing of geese. 3. 30x iron bar=Iron bars obtained by the smelting of iron ore, which in this case, the ordinary material.

Once you have made one or more transport boxes, it starts and the "caravan of merchants" can go out. Now you have the opportunity to deliver this box to various points in the world. The profit is usually determined by the distance to which you carry the box. You also have to consider whether you want to have Gold Coins rather, with which you can buy stuff from the NPC's, auction house, other players or whether it should be the coveted antique gold coins (called Gilda Stars) with which you can buy items on the Mirage Island (Trade Island), soulbound items such as house plans, furnitures, other blueprints, mounts, costumes.

Trader As A Profession Edit

"Trader" is one of the 21 currently available in-game Professions. Leveling this profession is being performed the same way as any other, by use of LP (labor power points).

You gain skill by:

-Manufacture of commercial boxes

-Delivery of commercial boxes

-Trading in the Auction House (per goods sold)

Trade Skill Level Producing Goods Delivering Goods AH-Trading

As you see, it pays out to level up the trading profession. The less LP you need, the greater your routes can be, and your profit will be higher as well.

The Profit Edit

In order to make the highest profit, you should go with this system. Therefore you should consider several factors:

1. Box Amount The more boxes you take with you, the greater the income will be. Also, it's advised to do trade runs in a group so that you could protect each other easier should someone attempt to steal your trade packages. You should also take advantage of merchant ships and tractors which allow you to carry more packages.

2. Distance The saying "Time is money" is especially true in this game. Even if there is more gold to be made by taking a package further, the risk of being attacked is higher as well.

3. Bandits Risk When someone uses the safe zones to go to the desired location, the risk of being attacked is zero. But, the income will be low as a result. If someone dares to go to the other continent or the middle of the sea, the risk of getting attacked by pirates and enemy players is pretty high, and the further you go with the package, the greater the risk. Thats why its advised to take someone with you, and let this person go and scout the area in front of you for pirates and enemy ships.

4. Cost of the Materials What good is the most beautiful little box, especially when the rare materials added to the time or the budget. The more experienced a character in gathering, farming, the higher is the probability to obtain the rare and coveted specialty materials. Also more free time and regularly checking the auction house can help obtain materials cheaper.

5. Coin Type Also a criteria, the decision whether to dare a major investment to fulfill the dream of owning a home or a tractor or better invested in other materials.

6. Mercenaries It will definitely be in the game, mercenary guilds that can be hired for a certain fee to accompany you on your journey. Are you still sure you can trust these people? Check if the players have a good reputation and above all a good skill in PvP. A good soldiers can always pay off when the gold receivables are not too large. Actually mercenaries are recommended only when a sufficiently large amount of goods planned to be carried. So if you are playing in a trade-EF, you try early in the game to form an alliance with a mercenary guild.

You must now set up your own expense, do not worry, after a few "trial runs" you have to bow out safely and know where you can deliver your goods with the best profit.

Transportation of the Trading Goods Edit

This chapter will deal mainly with the various transportation options for the trade boxes.

The number of slots available for trade boxes for different transformation methods:

+1 means a trading pack on your back

On Foot: The first trade routes you will probably have to cover on foot, at least partially. You will quickly realize how much you are being slowed down with this pack, by carrying a pack it prevents your character from running, so your need to walk. With the Sprint skill at least you can (as long as the mana is enough) run some short distances with increased speed. Thus it's advised to use a Donkey mount or a vehicle for faster transportation.

Public Transport: With public transportation, you are able to travel faster through the continent. If you catch the exact routes, then you can finish in a good time for your trade run. The Airships and Carriages will definitely come in handy and you will use them very often before you obtain carts or ships.

The Donkey: Just get this beast of burden, when you have completed the second trade route quest line. Alternatively, you can buy the Donkey on Mirage Island for 5x Delphi Stars. The Donkey rides with a ground speed of 4.0 m/s, even with a load on his back, other mounts get slowed down while there is a trading pack on them. At level 20 the Donkey gets another important skill for transportation, the "Carrot on a Stick". With the donkey trade routes should go faster, inland.

The Farm Carts: The tractor is a true multi-purpose tool for the player. Not only that you can water the plants and thus grow faster, it has up to 6 cargo slots (depending on the vehicle type) and can be used for transporting packs. The driver itself can also carry a pack on his back while driving. Other players may hop on top of the vehicle and ride with you, even with packs on them.

The Merchant Ship: The Merchant Ship is a relatively fast ship, with which one can express his trading goods over the sea. It can accommodate 20 trading packs, has 2 cannons, which provides some defense, and a radar for monitoring of marine activities and has a skill for quick turns.

You can buy the blueprint for on Mirage Island or wait for a bargain at the auction house. In addition, you still need 300x Wood Planks, 300x Processed Fabrics and 300x Iron Ores, so that you can build the ship on your own dock. A lot of coordination and nautical skill is required to safely steer the ship in the (partially hostile) port. Also a good crew is important for bringing the trading goods safely across the seas.

The Telescope (Radar) Edit

An experienced trader can build a telescope with a skill of 10,000. When using, all ships within a 1km radius are revealed on the minimap. This allows the player to coordinate as a trading officer of a large trade fleet, if not enough tractors are available at unloading the ships, plan your trade routes a bit better.

Old Trading Spreadsheet Edit

Sadly only for gold, but resources and gilda stars are awarded instead of 2 gold and are rounded down

Click to enlarge, tooltip specifies area

Trading Spreadsheet Edit

ArcheAge Trade Pack Gold, Resources, and Gilda Star Values

This Spreadsheet is the most up to date spreadsheet with all of the current trade routes

Conclusion Edit

1-2-3 pattern

yes! the best part is, it always give a false signal and i use it on opposite ways and use few indicator to confirm that signal is false

that indicator give 90% of false signal each time.

Thats indeed a funny and unusual way to use this indicator. but as long as the pips keep coming in. who cares

Would you mind share some more information on the system and its performance. how you traded it and for how long. Demo or live account.

Will be appreciated.

Options are usually known as a possibility to invest with rather low capital, in hopes of increase or decrease in stock value. Additionally, options make it possible to minimize your risks. An option gives the owner the Right (but not an obligation) to buy (call) or to sell (put) a certain financial asset (such as stocks) within a specified time frame at a pre-specified price. I’ll repeat, in case of options there’s NO OBLIGATION to make the agreed trade (whether to buy or sell), but. sigue leyendo

Comments (1) / Link to this topic - http://www. learning-to-invest. com/ Introduction-to-stock-options--10.html

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If you were stranded on a desert island and somehow had access to the internet, a computer, and electricity, and you could only have one Forex trading educational article to read, this would be the article you would want to have…

A simple fact of Forex trading is that it is a game of probabilities, those traders who learn to view and think about trade setups in terms of risk to reward, are the ones who usually end up making consistent money in the Forex market. There is something to be said for developing your discretionary trading skills, as having a sharpened sense for spotting well defined trade setups at the right place and time is definitely a necessary ingredient to successful trading. However, it is possible to make consistent money even if your discretionary trade setup identification skills are not fully matured yet. Risk to reward setups are what give all traders an equal chance at making consistent money, a thorough understanding of risk to reward and how to view trade setups in terms of possible risk to possible reward, is the closest thing to the “holy grail” of trading, and is one of the most important pieces of the puzzle to consistently profitable trading, second only to having the proper amount of self-discipline and emotional control.

• Drawing risk / reward levels

The first thing that all traders should do upon spotting a price action setup, or any trade setup, is calculate the risk they will have to take on in order to give the setup a realistic chance at working out. Traders often make one or two mistakes when it comes to determining risk; they either define the reward first, which is a mistake born out of greed, or they put a stop loss on the setup that is much too close to the entry to give the trade a chance at working out.

When learning to think in probabilities and to view the market in terms of risk to reward, it is necessary to calculate the risk on a trade setup first, then you can calculate the reward as a multiple of the amount you have at risk. By concentrating on the risk first, instead of the reward, you are making yourself more aware of the risk involved on each trade setup, instead of becoming fixated on how big of a reward you might make, as many traders do. This will also turn you into a “risk manager”, rather than a “trader”, the best traders in the world know that consistent trading profits come as a result of managing risk effectively, so consider yourself a manager of risk from now on.

The next thing to do after you have identified a high-quality trade setup and marked the risk level on your chart, is to mark the reward levels as multiples of your risk. You want to draw a line at 1 times your risk, 2 times your risk, and 3 times your risk. These are the reward levels you will mainly concern yourself with, should you choose to employ a trailing stop you can use these 1, 2, and 3 times risk levels to begin the trailing process, see the section on “trailing stops” below for more.

Examples of how to draw risk / reward levels:

First, we identify a high-quality price action trading setup, in the chart below we are looking at the 1hr chart of the EURUSD from this week. A quality 1hr pin bar sell signal formed at a confluent intra-day resistance level and in the direction of the bearish momentum on the daily chart.

Next, we mark our risk level for this setup, in this case the risk is the distance from the low to the high of the pin bar, so we place a stop loss at 1.3656, one pip above the high, the entry is a break of the low, so 1.3611 is our entry level, one pip below the low. The total risk distance for this setup is 45 pips, we will figure 1$ per pip for the examples in this article, so our risk is $45, not 45 pips. Since you can trade various numbers of lots per pip, your actual risk is not calculated in pips, but in dollars, many traders make this mistake. Remember; always calculate your risk and reward in dollars, not in pips, only use pips to mark the risk and reward levels on your charts. (we expanded on this in this in our forex money management article here )

Now we can use this measure of 45 pips to mark our 1, 2, and 3 times risk multiples. Since our risk (R) is $45, our 1R multiple is $45, or 2R multiple is $90, and our 3R multiple is $135. Since our stop loss distance is 45 pips, we subtract the 1, 2, and 3 multiples of 45 from our entry point of 1.3611; we then get the levels marked on the chart below. This setup obviously worked out quite nicely as all three risk multiples got hit, for a reward of 1 to 3. It is worth noting that trade setups on the smaller time frames are more likely to hit larger risk multiples since your stop loss will usually be tighter than it will be on a higher time frame. The trade is now set up, time to let the market get to work.

In the chart below we are looking the daily Silver market, we can see a quality pin bar fakey combo setup formed with the dominant bullish market momentum. We first marked our risk distance which was 1.13; we then multiply our risk (1.13) by 1, 2 and 3, to get our (R) risk multiple levels. We can see them drawn in on the chart below and also that this setup easily brought traders a risk / reward of 1 to 3 before forming another very nice pin bar strategy that sent prices lower. This example also figured 1$ per pip, or per smallest incremental price movement on silver, this results in $113 risked.

If you decide that you want to try and let a particular trade setup run, you might want to employ a trailing stop strategy with the aid of risk / reward levels. The best way to do this is to mark your risk and reward levels just as described above, but instead of actually entering an order for your reward levels, you leave the trade open, meaning you don’t have a set exit at your pre-defined reward levels. Instead, once the market moves in your favor, you use your pre-defined reward levels to trail your stop loss to, thus leaving the trade open and giving yourself a shot at greater profits, while still locking in some profit and lessening risk.

A common technique to use when trailing stops to risk / reward levels is to trail the stop up to your entry level when the trade is up 1 times or 2 times your risk. You can also trail your stop 50% closer to your entry once you are up 1 times risk if you want to leave the trade more “breathing” room. Many traders will simply keep their stop 1R multiple away, meaning if you are up 1 to 2, you trail your stop up to lock on 1 times your risk, if the market than moves 1 to 3 you trail your stop up to lock in 2 times your risk. This is a solid trailing technique because you are securing profits while at the same time leaving the trade open for a possibility at it running further in your favor. This technique is best used in strong trends. Many traders make the mistake when trailing stops of not properly locking in profits, there is nothing worse than letting a winning trade come all the way back to your entry point because you didn’t lock in 1 or 2 times your risk.

The daily AUDUSD chart below shows an inside bar setup that occurred back in mid-September of this year when the AUDUSD was in the midst of an uptrend. In this example you could have moved your stop to break-even once you were up $108 or 1 times your risk, once you got up 2 times risk you could have locked in 1 times your risk or $108. It looks like the market hit 0.9600 or 3R and then pulled back into 2R, however it came about 1 pip shy of 3R on its first attempt, so you would not have moved your stop up until it cleared 3R a couple days later. At this point you would have 2R or $216 locked in, at this point you could either let the trade run past 3R or move your stop up to lock in 3R or $324. If you moved up to lock in 3R right away you would have got stopped out at 3R by the pin bar on September 5th, had you not locked in 3R you could have eventually made 4 or 5R.

• How risk / reward can make you a consistently profitable forex trader

Ideally, we want to look for trade setups with a risk / reward of at least 1 to 2, by getting a risk / reward of 1 to 2 on every trade setup, we can lose on well over 50% of our trades and STILL make money. This is why risk / reward is the “holy grail” of trading; if you execute it properly you can make consistent money over a period of time. However, many traders mess it up or limit its power by meddling in their trades once they are live, usually this means they take less than a 1 to 2 profit, and then enter another trade that is lower-probability, and maybe take a loss. Once you start this game of meddling with your trades and interfering with the power of risk reward scenarios, you really put limits on what you can achieve as a forex trader.

To play with the numbers a bit let’s discuss a scenario where you lose on 65% of your trades, but your risk to reward on every trade is 1 to 2. So, out of 100 trades you lose on 65 of them and win on 35 of them, let’s say you risk $100 per trade. This means you lost 65 x $100 = $6500, but since you made 2 times your risk on your winners you made 35 x $200 = $7000. So, after 100 trades you have a profit of $500, this is even after you lost on 65% of your trades! This is an example of the power of risk / reward setups, the trick is that it takes time to play out, most traders do not have the discipline to execute 100 trades flawlessly with a risk / reward of 1 to 2 and suffer through 65 losses and only 35 winners.

The lesson to be learned from this article is that you can make still money in the forex markets even if you lose far more trades than you win . IF you understand and properly implement risk to reward scenarios on every single trade you take. You must combine this knowledge of risk to reward with a plethora of self discipline, you must understand that you cannot waver or second guess yourself, if you are trading a solid trading strategy like price action combined with risk reward knowledge and self-discipline, you have the potential to be an unstoppable trader. To learn more about price action trading and risk to reward, check out some of the other cool parts of my website and my price action trading course .

Nial, thanks, as always, a great article. I have a comment and would be happy to hear your view on this.

Surely 2R is better than 1R.

At the same time, we need to be clear that if our TP level is further away (to get a higher R), then the probability of hitting the TP gets smaller!

Expectancy of a trading system = % winning trades * avg $ gain of the winning trade – % losing trades * avg $ loss of a losing trade.

When we increase the R ratio, we are increasing the avg $ gain of the winning trade vs. a $ loss of a loser, which is great, but we are also decreasing the percentage of winners, which is natural consequence of having the TP level further away. Question is where the optimum lies.

I guess it will depend on individual trader psychology, the market situation, as well as a given setup.

Thanks again and all the best.

Very plainly stated, the advantages of r/r. To calculate the risk first and use that to multiply reward makes all the sense of a prudent plan. I greatly appreciate the detail of the content you provide freely and on such a wide variety of issues. Tempted to sing-up for the price action course however, I am still digesting the free content. Thank-you very much please know that your information is first rate and so worth the time. Awesome Nial Great stuff

Thanks so much for your willingness to share your wealth of knowledge, and for being such a fabulous teacher. I have watched almost all of your free videos and read most of your articles numerous times in the past week. Now I am making money way faster than I lost my initial 50% of my first mini account. This article was the most valuable of them all to me.

Many, many thanks. I will see you in the member’s section shortly ;)

Hi Nial, I am a beginner in trading with a target to become the jack of the trade. As my initial effort, i extensively googled for information on how to trade and what is the logic and strategy behind success. I got lots of manuals and articles from many people which made me feel that i am trying to climb the Mt. Everest. But, When i came across your article i realized that trading isn’t a herculean task. I could feel the confidence within me filling. Believe me, I am kind of addicted to your articles that i read the same articles over and over because each time i read them i can see a smile of confidence on my face. Anyway, i still do have a number of queries. I will be registering to your full course on how to trade very soon. So, do expect a mail from me. )

Very good article Nial, do you think is better to set a trailing stop = stop loss or little bit more and don’t set any take profit, or set always a take profit at 1:3??

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Advertencia de alto riesgo: Forex, futuros y opciones de comercio tiene grandes recompensas potenciales, pero también grandes riesgos potenciales. El alto grado de apalancamiento puede trabajar en su contra, así como para usted. Debe ser consciente de los riesgos de invertir en forex, futuros y opciones y estar dispuesto a aceptarlos para negociar en estos mercados. El comercio de divisas implica un riesgo sustancial de pérdida y no es adecuado para todos los inversores. Por favor, no negocie con dinero prestado o dinero que no puede permitirse perder. Cualquier opinión, noticias, investigación, análisis, precios u otra información contenida en este sitio web se proporciona como comentario general del mercado y no constituye asesoramiento de inversión. No asumiremos ninguna responsabilidad por cualquier pérdida o daño, incluyendo, sin limitación, cualquier pérdida de beneficio, que pueda surgir directa o indirectamente del uso o dependencia de dicha información. Recuerde que el desempeño anterior de cualquier sistema o metodología comercial no es necesariamente indicativo de resultados futuros.

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“I had spent hundreds of dollars on classes and courses regarding Forex and they all left me even more confused than before I arrived. It’s almost like they don’t know how to simplify it all so that every-day folks can understand.

I found Brett’s site howtocopytradeforex. com and his affordable ebook. I figured with his 100% money back guarantee I had nothing to lose. With it being ebook I purchased it and got it in an instant, no waiting for shipping! After just a first few sentences I knew he spoke my language, no nonsense, no expert talk that readers like me wouldn’t understand, just plain, simple, and straight to the point. Love it!”

SOBRE NOSOTROS

Brett Cooper - Owner

I help current and future forex traders to learn the safest ways to find and choose forex copy signal providers that have the best chance of making a profit.

I have been studying financial strategies since I was 18 years old to try and make a better life myself and my family.

Over the years I have studied and tried all sorts of different ways to make my money work harder.

Since discovering Copy Trading I have worked hard to find the best way to use this new alternative method of Forex Trading.

Asif Imtaiz - Financial Analyst

Asif has worked as a professional trader since 2005, and later he managed trading operations for one of the largest foreign exchange strategy developers in Europe.

As a financial writer, he has written hundreds of financial analysis, reports, and articles. He has covered varied subjects on stocks (equities), Forex, binary options, and cryptocurrencies over the years for syndicated publications and blogs including reviews, market commentary, and periodic analysis.

He currently trades his own funds based on a proprietary system that combines global macro and "naked" technical analysis. He also regularly contributes his analysis on the global economy to several portals and works as a consultant to a handful of brokers.

7 Things you need to know before you start being a Copy Trading Forex Trader:

1. How do the signal providers make their Money. In most cases they get their commission even if the trade looses.

2. Know who you are following. Always read reviews and ask questions of your signal provider.

3. You Need to Know about Forex Trading - Keep educating your self, never stop the more you know the better your chance of winning are.

4. Not all Copy Trading Platforms are the same.

5. Understand why and how your traders are making their decisions. This again comes back to education.

6. Read between the lines. This is where having a good set of criteria can help.

7. You can't just set it and forget it. You need to keep an eye on them and make sure they stick to their trading plan.

For more information on what you need to know about Copy Trading check out this great Article.

Our Copy Trading Starter Kit is FREE

The FREE DOWNLOAD will help get you started in the world of Forex Copy Trading. This is a great place to start for anyone wanting to get an understanding of what copy trading is and how you can benefit.

In the Starter Kit you will receive: - Our pamphlet explaining Forex and Forex Copy Trading. - Plus video Tutorials on getting started with 3 of the main Copy Trading sites.

- eToro. com - myfxbook. com - zulutrade. com

Crack Spread

The CRACK spread study is a futures transaction that parallels the process of refining Light Crude Oil (CL) into petroleum products, such as Heating Oil (HO) and Unleaded Gas (HU). Since the refining process involves “cracking” crude oil into its major components, the spread is referred to as a crack. Two of the major oil products produced in refineries are heating oil and unleaded gasoline. Therefore, the CRACK spread only involves crude oil (CL), unleaded gasoline (HU), and heating oil (HO).

The basic calculation is a simple one that is made somewhat more complicated because the quantities are given in different units. These units for crude oil (CL), unleaded gasoline (HU), and heating oil (HO) must be converted to the divisor unit. For example, CL is quoted in dollars per barrel, but HO and HU are both quoted in dollars per gallon – HO and HU must be converted to gallons, this is done by multiplying their prices by 42 (1 barrel = 42 gallons).

The price of each leg of the spread is then multiplied by the number of contracts for each leg (the default number of contracts for Crack Spreads is a 1-2-3 ratio). The cost of the crude oil is subtracted from the cost of the products, and the result is divided by the number of contracts of crude oil. This results in the following expression:

& # 8211; %CL * 3 + %HU * 2 * 42 + %HO * 1 * 42

Interpretación

The CRACK study is similar to the CRUSH spread used for soybean. The combined value of heating oil and unleaded gasoline must exceed the crude oil price by more than the refining production costs. The most common ratio for the CRACK spread is 1-2-3. Three barrels of crude will produce two barrels of unleaded gasoline, and one barrel of heating oil. However, you are allowed to use other ratios when calculating the spread.

The CRACK spread results may be affected by the seasons. For instance, during the summer months, unleaded gasoline (HU) is in greater demand than heating oil (HO). During the winter months, the demand will shift to heating oil.

If a spread was too narrow to produce a refining profit, you could assume product prices would have to rise to catch up to crude oil prices. Therefore, you would favor heating oil and gasoline contracts over crude oil.

On the other hand, if there is a large spread between product and crude prices, you could assume refiners would push production and selling of unleaded gasoline and heating oil to take advantage of the profit. This increase in selling would tend to push product prices lower. Therefore, you would favor the crude oil over heating oil and gasoline.

Content Source: FutureSource

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Este material se transmite como una solicitud para entrar en una transacción de derivados.

This material has been prepared by a Daniels Trading broker who provides research market commentary and trade recommendations as part of his or her solicitation for accounts and solicitation for trades; however, Daniels Trading does not maintain a research department as defined in CFTC Rule 1.71. Daniels Trading, sus principales, corredores y empleados pueden operar en derivados para sus propias cuentas o para las cuentas de otros. Debido a diversos factores (como la tolerancia al riesgo, los requisitos de margen, los objetivos comerciales, las estrategias a corto plazo y las estrategias a largo plazo, el análisis técnico y fundamental del mercado y otros factores), dicha negociación puede dar lugar a la iniciación o la liquidación de posiciones distintas de O contraria a las opiniones y recomendaciones contenidas en ellas.

El desempeño pasado no es necesariamente indicativo del desempeño futuro. El riesgo de pérdida en contratos de futuros o opciones de productos básicos puede ser sustancial y, por lo tanto, los inversionistas deben comprender los riesgos involucrados en la toma de posiciones apalancadas y deben asumir la responsabilidad de los riesgos asociados con dichas inversiones y sus resultados.

Debe considerar cuidadosamente si tal negociación es adecuada para usted a la luz de sus circunstancias y recursos financieros. You should read the "risk disclosure" webpage accessed at www. DanielsTrading. com at the bottom of the homepage. Daniels Trading no está afiliado ni respalda ningún sistema comercial, boletín u otro servicio similar. Daniels Trading no garantiza ni verifica las reclamaciones de rendimiento hechas por dichos sistemas o servicios.

Sell Your Games

Selling Your Games and Consoles Just Got Easy

Sell your old video games, used consoles and classic Nintendo collections to DKOldies and find out how easy, reliable, and fun it is! You can print out our list below or contact us for a free quote. We buy any amount! We can pay you by check, PayPal, or if you want 20% more, we can issue you DK store credit! Free Shipping label or Credit when you sell over $50 worth!

How to Sell Your Games

Check out our price list below. If you have items on that list only, print out this page and mail them in. Write a note on how you would like to be paid (Check, Paypal, or Trade) with your contact information and upon your items being checked in and tested, you will usually be paid in 1 business day!

Ship to: DKOldies - Sell Your Games 80 Village Square Honey Brook, PA 19344

If you have more items than what is listed and want a quote or if you have any questions at all, please Email us at SellYourGames@DKOldies. com or call us 610-273-3703 Mon-Fri 9am to 4pm ET.

Below is a list of our most desired games and systems. Cash values listed are for cartridge only and we will buy any amounts that you have.

DKOldies Price List Updated: 3/15/16

Nintendo NES

NES Console w/ cords

*All items are expected to be in overall salable condition with little to no damage and North American (NTSC) products. Repaired items will get full credit. Unrepairable items get no credit or partial credit if parts can be salvaged. Disc games without original cases are reduced by 25%. You must include an invoice or packing slip with your contact information and how you would like to be paid. All transactions are final, we do not return damaged games or systems. Prices are updated daily. Non-current printed invoices are good for 7 days from the new updated list date. If packages contain an outdated price list or no price list then the current list will apply.

If You Have Even More Games To Sell Please email for a quote to SellYourGames@DKOldies. com Or Call us at 610-273-3703 Mon-Fri 8:30 AM to 3:30 PM EST

( ▲. ▼ indicate when prices rise or lower from the previous week. No arrow means the price has remained the same. Price changes happen every Tuesday.)

Testimonials: "DK Oldies Rules! DK Oldies is an Amazing! Online Video Game Company that pays more Cash for your Trade Ins then any Other Video Game Store that I know. Their prices are comparable with selling yourself on Amazon or eBay, but without all the hassle and fees. Highly recommend this video game store!" - Mike Birt Santa Ana, US "Great service indeed. Whether trade-ins and rare NES items. I am very pleased with my purchases from DkOldies. com. I am very thrilled at the fact that I can trade-in manuals for games and the store credit is added extra. I was able to receive up to $40 store credit for the amount of games that I traded in. They took good care of my requestes supremely well. I look forward to doing great business with DKOldies. com." - Stephen Decambre Fort Pierce, US

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Top 6 Advantages Of Trading With A Tight Stop Loss

There are many arguments for and against trading with a tight stop loss when trading, but forget what you have read or learnt about having a tight stop loss (for now at least), ok?

Just because you read somewhere in the internet someone saying that trading with a tight stop loss is bad does not means you shouldn’t do it.

Como dice el dicho:

There’s are two sides to a coin

Therefore, trading with a tight stop loss has its advantages. But to do that, you really need to understand a few things to be able to trade with a tight stop loss and here they are:

the timing of when you buy or sell and the price that you buy or sell at is really important.

This means that you need to have a trading system that allows you to do that and one such trading system is the trendline trading system.

What this means is that you have to buy just when the the market is about to head up or you need to sell just when the market is about to fall.

This means you really need to have a really good grasp and understanding of price action trading (my price action trading course is free click that link to check it out) especially reversal candlesticks .

For me, there are 7 advantages of having a tight stop loss and here they are:

#1: Improves Your Risk:Reward Ratio

In forex trading, the amount of risk you take is dependent on the length or the size of the stop loss distance, measure in pips.

For example, you risk 50 pips in a EURSUSD trade and your take profit target is 150 pips. This means your risk to reward ratio is 1:3, which simply means that should the trade turn out profitable, you will make 3 times more profit than what you risked for that trade.

If the trade is profitable, you will make $1,500. If you lose, you will lose $500 (This is for trading 1 standard contract).

Now, what if you only risked 10 pips ($100) and made 150 pips profit ($1500)? That means you have improved your risk:reward, instead of 1:3, now it 1:15!

This means that your profit is 15 times more than what you risked…

This is the first advantage of having a tight stop loss when trading.

#2: You Can Trade Large Contracts

Having a tight stop loss means you are now able to trade large contracts. ¿Cómo? Well, remember the example given above? Lets continue with that:

Lets assume that you have a $20,000 forex trading account. And you want to trade 1 standard contract So if you risk 50 pips ($500), then that is 2.5% of your trading account you are risking.

Now lets also assume that the 2.5% risk is the maximum trading risk that you use for any trade you place.

Now, you decide to use a 10 pips stop loss instead of 50 pips stop loss. This means you are risking $100.

$100 risk is 0.5% risk of your trading account. Your need 5 of 0.5% risk to make a total of 2.5% trading risk, right? ¿Así que qué significa eso?

It means you can trade 5 standard contracts based on a 10 pips stop loss and still risk 2.5% of your forex trading account of $20,000.

You understand what I’m saying here? Well, if you are beginner forex trader, this may be a bit difficult to digest but don’t worry, you will understand as time goes on.

if you traded 1 standard contract risking 50 pips or $500 (which is 2.5%) of your trading account and if you made 150 pips, that would equate to $1500. All you will get is ONLY $1500.

if you traded 5 standard contracts, risking 10 pips for those 5 contracts, you still risk $500 (which is 2.5%) of your account(risk does not increase at all) and you made 150 pips. Guess what your profits would be? $7,500.

This is the second most important advantage of having a tight stop loss.

#3: Minimize Your Trading Loss

Tight stop loss also means you minimize your trading loss. In the previous example above, if you risk 10 pips, that’s only 0.5% of your trading account.

Now, lets say instead of you trading 5 lots, you only trade 1 lot at 10 pips stop loss. If you loose, you are only going to loose $100. If you traded 5 lots/contracts, you would loose $500.

So you can see here that, having a tight stop loss can minimize your trading loss, which means you do not risk a lot of your trading account in each trade.

#4: If You Are Right, You Make Profit Quickly

How good is to enter a trade and just a few seconds or minutes after you enter a trade, the trade starts to turn profitable very quickly?

Well, if you want to use tight stop loss in forex trading, it is important to be able to really get into a trade at the right time. Your trade entry price/point is most critical because that really determines if your going to profit quickly or not.

Now, lets assume that as soon as you sold EURUSD, one minute later, the price started to fall very quickly. You only had 10 pips stop loss. ¿Adivina qué? You are already having floating profits.

You really don’t have to wait for market to fluctuate back and forth before you actually start to make a profit.

#5: If You Are Wrong, You Loose Quickly

Now, nobody will think of having a trade loose very quickly as an advantage…

But you see, what you fail to see is that if you place a tight stop loss and the market does not behave as expected and you get stopped out with a 10 pips loss (0.5% of your account) that is really good because now you can focus on getting another trade or look for another trade setup.

Remember, tight stop loss makes your risk:reward better.

#6: Allows You To Apply Pyramid Trading To Increase Your Profits

If you are to apply pyramid trading strategy to increase your trading profits, having a tight stop loss allows this to happen.

One main reason is due to the fact that your stop loss distance is very tight therefore it doesn’t take long for your trade to be profitable if you get your direction and trade entry timing right and therefore having a trade already in profit and a safe distance away from the entry price can allow you to take additional trades along the way using that same price trend move.

WHAT NOT TO DO

Do not trade with a tight stop loss when you are trying to recover from a losing streak. The fear of losing another trade again will only make you trade badly and placing a tight stop loss will not help you at all, its going to make it worse…its an emotional roller coaster, believe me.

Do not trade with a tight stop loss when a major news is about to be released, you’ll get stopped out like your mum killing the fly on the kitchen table.

Do not trade with a tight stop loss if you do not have a trading system that allows you to do that.

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