Monthly Archives: June 2013

What is the best trading time frame for you? Financial trading, whether it is futures, stocks, options, currencies, exchange traded funds (ETFs) or any other instrument, is a highly competitive environment. You will compete against a broad scale of opponents. This includes individual traders, investment companies, hedge funds and banks. Needless to say that the playing field is not leveled. Not everyone can effort to spend millions each year on infrastructure alone for example. Understanding this should bring you to the conclusion that not every market style is suited for every market participant.Finding the best trading time frame will be very subjective. There will be trading time frames better suited for each market participant and some they should avoid. When a retail investor tries to get into High Frequency Trading (HFT) for example the odds are already skewed heavily against him. The time until his orders are reaching the broker via the internet already is a factor to consider. The data might also take a couple of seconds to travel from the exchange to the trader’s computer. This can easily add up to several seconds. This is a huge difference in the world of high frequency algorithmic trading, where major players are dealing with milliseconds. What can a retail trader do? To make money in this highly competitive field of trading is possible even for the retail traders, but the time horizon should be thought trough carefully. In general I would say that the smaller the time frame and the more trades you execute, the more likely there will be disadvantages working against you. Consider a trading system based on a four hour chart for example. It might take two trades a week and [...]

The benefits of custom programming If you recall the process of learning a foreign language, it takes minutes to learn the first words, but many hours to speak it fluently and probably years until it becomes almost native. “Achievement”, states Malcom Gladwell in his bestselling book “Outliers”, “is talent plus preparation”¹ and while we strongly believe that to learn a programming language is possible for everyone, it is a time consuming process nonetheless. In studies looking at excellence and mastery “the idea that excellence at performing a complex task requires a critical minimum level of practice surfaces again and again […]. In fact, researchers have settled on what they believe is the magic number for true expertise: ten thousand hours.“² While it might not be necessary to have this level of expertise to develop a trading system based on your ideas, the amount of time needed in case you start from scratch with learning the language will still be substantial. In case you work with an expert, not only do you get access to this kind of expertise, but you can also put this time to use in other endeavors (more research or even better time with family and friends) and you will have the results much quicker. Most of the time in the end you will not only save time, but money as an expert can help you avoiding costly programming errors or help you in avoiding common fallacies and traps with optimizations for example. In case you already know the programming language to some extent or have done some coding for yourself, you know that something that looked like a couple of hours work can easily turn into taking days and weeks [...]