Aloysius Chan's Blog

Type of alogrithmic strategies Data trading: economic data. Market making: earn spread. Coorelation: compare with other market. Arbitrage: profit from disparities. Trend following: pullbacks, moving average or breakouts. Mean reversion: go against trend. Gamma trending: generate income on the excess cost. Type or orders Risk price: bid price. Stop loss order: risk management. Market order: standard order. No worse than price: stop or limit. Two-way price: both bid and offer price. TWAP: time-weighted average price. Iceberg orders: limit order in wholsesale. Dark pool: wholsesale matching. The players Banks. Coporations and hedgers. Hedge funds. Discretionary/macro funds. CTAs (Commodity Trading Advisors), systematic and model funds. Real money. High-frequency trading (HFT). Central banks. Policies is a major driver. Moral suasion for currency preference. FX intervention on currency too high or low. Diversification: hold or protect own currencies. Retail traders. Groupings USA The dolla...

Emotions in trading Hope: I sure hope this goes up right after I buy it. Fear: I can’t take another loss; I’ll sit this one out. Greed: I’m making so much money, I’m going to double my position. Despair: This trading system doesn’t work; I keep losing money. Cognitive bias Loss aversion: The tendency for people to have a strong preference for avoiding losses over acquiring gains. Sunk costs effect: The tendency to treat money that already has been committed or spent as more valuable than money that may be spent in the future. Disposition effect: The tendency for people to lock in gains and ride losses. Outcome bias: The tendency to judge a decision by its outcome rather than by the quality of the decision at the time it was made. Recency bias: The tendency to weigh recent data or experience more than earlier data or experience. Anchoring: The tendency to rely too heavily, or anchor, on readily available information. Bandwagon effect: The tendency to believe things because many other pe...

Basics Learn goal setting and focus. Develop skills instead of money. Versatile to market changes. Identify your risk level. Execute trades immediately. Let market do the talking. Develop a system in trading. Being objective. Recognise true information and act on it. Unsuccessful trader Lack of skills. Limiting beliefs. Lack of self-discipline. General The market is always right. There is no beginning and ending price in the market. The market is an unstructured environment, it can go all direction. Reasons are unrelevant in the market. Strong Mentality Complete disciplined trading approach. Release yourself from the negative trading emotions. Memories are stored as charged energy. Building a framework Understand your behaviour. Learn to manage your conscious. Monitor relationship with your environment. Psychology of price movement What kind of price action will sustain the buyers' beliefs that thay can make more money?: When are sellers likely to come into the market in force? Whe...

Common mistakes Overly lured to the its benefits. Not creating rules. Ignored responsibilities. Addicition to random rewards. Avoid boom buster. Winner Loser Boomer Buster Stay consistent Know the risk. Understanding yourself What are the objectives? What sre the skills? What is a carefree state of mind? What is objectivity? What does it mean to make yourself available? What Is the "now moment'?   Truth about skills Anything can happen. You don't need to know what is going to happen next in order to make money. There is a random distribution between wins and losses for any given set of variables that define an edge. An edge is nothing more than an indication of a higher probability of one thing happening over another. Every moment in the market is unique. Beliefs They manage our perception and interpretation of environmental information in a way that is consistent with what we believe. They create our expectations. Keep in mind that an expectation is a belief projected int...

Important fundamentals Nonfarm payroll. Gross domestic product (GDP). Trade balance. Treasury international capital (TIC).  Producer price index (PPI). Consumer price index (CPI). News headlines to take note of "Dollar" & "surge". "Dollar" & "plummet". "Dollar" & "plunge". Sentimental indicators U.S. dollar index (DXY). Commitments of traders (COT). Chicago Mercantile Exchange (CME). International Monetary Market (IMM). Speculative Sentiment Index (SSI). Daily Sentiment Index (DSI). Technical analysis EMA (current) = EMA(previous) + SmoothingFactor × (Price − EMA[previous]) SmoothingFactor = 2 ÷ (1 + n) Pivot point for current = high(previous) + low(previous) + close(previous) ÷ 3 Momentum = price(current) − price(x periods ago) RSI = 100 − (100 ÷ [1 + RS]) Initial RS = (total gains ÷ n) ÷ (total losses ÷ n) Subsequent RS = ([previous average gain × (n − 1]) + current gain) ÷ n/([previous average loss × (n− 1]) + c...

Splitting 1000 pips into 4 parts of 250 pips each. Splitting 100 pips into 4 parts of 25 pips each. Spitting 10 pips into 4 parts of 2.5 pips each. It should be used with fundamentals.

Reversal Almost same length candle Dark cloud cover (bearish candle with higher high and full body). Bullish candle followed by bearish. Pattern piercing (bullish candle with lower low and full body). Bearish candle followed by bullish. Stars Evening star (and hang man and hammer). Morning star (and inverted hammer). Shooting star. Doji star. Bullish tri-star. Bearish tri-star. Rickshaw man (long legged doji). Harami The shadow can exceed mother's length Bearish mother with bullish baby near the lower body. Bullish engulfing. Tweezer bottom. Bullish mother with bearish baby near the upper body. Bearish engulfing. Tweezer top. Crows Upside gap two crows. Two crows. Counterattack line. The close met at the same place. Bearish counterattack line: bullish candle then bearish candle. Bullish meeting line. Bullish counterattack line: bearish candle then bullish candle. Bearish meeting line. 3 middle range candles 3 white soldiers. 3 advancing white soldier. Advance block. Stalled pattern...