All About Binary Options Trading According to Mark Tencaten & Team

Many people attribute binary options trading as a betting of sorts because a trader has to trade only between two variables; the rise or the fall of a certain market or Forex. For some, however, this is an easy way of trading and often yields in substantial profits for traders. But no matter how simple it may look like, binary options trading is not for beginners and definitely will not work for people with zero experience with index trading. This is where Mark Tencaten and his team of professional market analysis experts come into the picture.

Mark’s team created an effective strategy to significantly win in binary options trading. By instituting a combination of variable trading timeframes and using market alerts that help traders put in the right trades, create a high probability of winning. The market alerts are basically predictions of whether a particular market or Forex is rising or falling for a given period. When the prediction of a market or Forex is to fall for a certain period, trading in that direction will result in a win if the market indeed falls within that certain period. These predictions are based on expert analysis of market experts around the world. To maximize profits, the team also trades on different foreign exchanges as another strategy. So within the day, there will be more than 10 trades per day getting traders the most out of the usual trading results.

An interview with Mark Tencaten gave us an overview of how he managed to win with binary options trading and what his ideas regarding its future in the index trading world.

We asked about his views on the current issues surrounding binary options trading and how to deal with the fake traders. His views circles around regulations. Binary Options is a legitimate trading and there is a small number of companies that engage unacceptable practices that somehow affects the image of the industry negatively. He pointed to some operations in Israel that lures people into engaging with certain brokers, getting their money and eventually leaving. These kinds of practices do not necessarily reflect the reality about binary options trading.

“I am a little bit appalled knowing that a small number of illegal companies that lured people into investing in binary made a huge negative connotation to the industry. I think the problem here was more on the regulation pertaining to the operation of these fake companies rather than the industry as a whole. Otherwise, if we single out binary options, then it is better that we also include other markets trading,” Tencaten wrote in an email.

He reiterated that binary options trading is not for newbies. Skills are needed to win in this and it would also require a self-assessment of the level of risk the traders can trade. Additionally, the market alerts are there as a guide but cannot be solely depended upon. Traders, especially the self-managed ones, should be able to learn and know how the commodities they are trading on behave within the market and at a given period.

Lastly, a good exit strategy will shield a trader from losing so much. Normally, trades can start at the minimum of 10% of the value the traders’ total daily trading money. This limit serves as a safeguard during the trading day and also guarantees of multiple trades within the day. They should also mind the Stop Loss – Stop Profit percentages as this will help them with automatically end trading once the set percentages are met.

In the end, the success of traders in binary options really depend on several factors. But if you get yourself abreast of the techniques and keep yourself connected with people such as Mark’s team, you will get to have more edge over everyone else.

George Foerstel is a Human Resource officer for a large company. He has worked for several companies and has gained a vast amount of information regarding personalities in different industries and other subjects. He resides in New York, New York presently and focuses on sharing his knowledge with other people through writing.

How To Create Peace In Your Trading Mind

In a world that is dominated by trauma and fears of impending disasters you can be forgiven for thinking that the world is coming to an end. If you are a trader, you will only be too aware how the erratic intra day swings create havoc in your brain. If you knew how to create peace in your trading mind, your life would be much more enjoyable and your trading would improve too.

I hardly need to convince anyone of the truth of this who has traded for some time. I have worked with many professional traders over the years helping them to calm their over active trading minds and will share some techniques with you that work without fail.

Let’s first look at the three main reasons why you have failed to create peace in your trading mind. There are other issues too.

In this article I am going to deal with the things you can most easily fix, if you choose to. If you address these three issues you will give your overworked trading mind a heart start:

You worry about external events

Your environment is toxic

You lack the tools, or don’t apply techniques to create inner peace

When your inner world is in chaos you cannot produce calm in the outer world.

While you keep reacting to outside events, you are at best delaying positive change. When you live and work in a toxic environment your brain stops functioning as it should.

I could write books on why the world is in a state. You probably could too. The media is full of opinions, judgements, most of it negative. Focusing on the why’s will not help you become a better trader, a better entrepreneur, or simply have a more satisfying life.

Why? Because you have no influence on what goes on outside of your own brain.

Universal law states that you get what you focus on. While you focus on everything that’s wrong with the world, your trading, Donald Trump, or Hilary Clinton, you attract more reasons why you are helpless.

Accept that you cannot change the world.It’s the very first thing you can do to calm your overworked trading mind.

It isn’t your job to change the world. Your job is only to change yourself.

When you change yourself you also change the world.

Maybe this realisation will unburden your trading mind somewhat. It will reduce the worry a little bit.However, we are only dealing with one aspect of the issue:

In many years of working with professional traders I discovered that the effects from hours in front of the computer are very tough on the brain. The brain and the computer emit different frequencies which are incompatible with each other. Your brain will spend most of its time compensating for the mismatch in energy. This leaves you tired and drained.

When you neutralise the effect from EMF, (electro magnetic fields) from computers and other wi-fi equipment your brain can relax a little.

One great way of doing this is with guided meditation.

Make sure that your space is cleared regularly of negativity. Buildings have cell memory, just like people.

Ensure that your environment has clean energy and the meridians in the earth are clear.

Geopathic stress is a toxic energy that plagues all larger cities today. It is a direct by-product of EMF. These toxic energies, which are underground, in water cavities, running water and hollowed out areas, like under ground tunnels from mining activities and subways, cause major stress on the earth s mantle and on our bodies and minds. Geoipathic stress is easily cleared.

If you only implement these simple strategies you will find your creativity increases and inner harmony returns.

Most people think that they are victims of their circumstances, simply because they do not know how the universe works. They are unaware of how modern living is wreaking havoc with our bodies and our brains.

Next time you think that you are a bad trader, or you feel overwhelmed by life look at your environment first.

Ask yourself if you are using a guided meditation daily to calm your trading mind. The odds are that you are just living life in reaction mode. Isn’t it time that stopped and you started bringing peace and serenity back into your life?

Mercedes Oestermann van Essen is a trading psychology coach and success coach. She has traded her own account for 15 years and coaches professional traders and entrepreneurs internationally. She teaches how to create harmony through the understanding and application of the spiritual laws of the universe in our working and personal lives.

Her unique guided meditation techniques increase cognitive awareness. Her Holistic Feng Shui tools bring harmony to toxic environments. Many traders, and entrepreneurs alike have benefited from Mercedes’ innovative approach to better trading and holistic success.

Mercedes Oestermann van Essen is the author of “The Buddhist Trader” and other books on behavioural finance, trading psychology and Holistic Feng Shui.

All About Share Market Trading

What are shares?

It’s a means to own a company.

The definition of ‘Securities’ as per the Securities Contracts Regulation Act (SCRA), 1956, includes instruments such as shares, bonds, stocks or other marketable securities of similar nature in or of any incorporate company or body corporate, government securities, derivatives of securities, units of collective investment scheme, interest and rights in securities, security receipt or any other instruments so declared by the Central Government.

What is Share Trading?

Shares trading refer to buying and selling of company shares – or any derivative products based on company stock – with the motive of profit earning.

Prerequisites for Share Trading

• We need to have DP(DEPOSITORY PARTICIPANT) account.

• We need to have a Trading account

• And of course money

How Trading Happens?

Companies get themselves listed on popular stock exchanges like NSE, BSE

Interested traders using terminal provided by their brokers trade on those shares.

Online Trading participants

• Investor- Participates through website of brokerage using internet and computer.

• Brokers- they contact each other through trading terminals and they also find who is interested to buy or sell shares.

• Stock exchange- It facilitates transactions through its servers. Most dominant stock exchange in India are NSE and BSE

• Registrar of Company-It is a government body that maintains records of all shareholders and updates database changes whenever ownership changes.

• Depositories- It includes depository participants which stores shares in electronic format.

• SEBI (Securities Exchange Board of India)- SEBI is a government body which regulates financial markets and looks into Investor complaints against companies.

Kinds of Trading

Intraday trading

Delivery based trading

Intraday Trading

Intraday trading includes buying and selling of stocks within the same trading day. The stocks purchased in this kind of trading, are not purchased with an intention to invest, but for the purpose of earning profits by analysing the movement of stock indices.

Deliver based Trading

Delivery based trading means buying shares and holding them for certain period of time is called delivery based trading.

In this method you have to place your buying request through your broker and pay for the current price of the stock. Once your request is executed the stocks that you have bought are deposited to your DP account. In this process you have to pay the full amount of the stock price. Once the stocks are deposited to your account you can then sell the stocks or hold them for as long as you want.

The delivery based trading at the cash segment is the simplest way of trading and the risk is comparatively lower.

The biggest advantage of delivery based trading is that you do not have any time limit for selling the stocks. But the disadvantage of delivery based trading is that you have to pay for full price of the stock and the brokerage is higher than other forms of investments.

One Daytrading System, Five Versions, Possible (Dramatic) Improvements

In today’s article I would like to introduce an interesting thing on which I have spent quite some time. It’s about a few simple comparisons which I believe will interest common day traders. I will indicate new possibilities on how to grasp day trading.

So, what is this about? As I have already mentioned several times in the last few months, Market Internals can be used to improve overall performance of your automated trading systems. But can it also be used by discretionary day traders?

Generally speaking, the impact of the application of Market Internals (MI) on day trading can be absolutely essential and it can really bring an “unfair” advantage against those who have never heard about MI before. One trading system can be developed into numerous versions by only integrating different possibilities of MI – and without even modifying the original system itself; without even touching it! As needed, we can, with the help of MI, improve practically anything in our system – from average profit per trade, to success rate percentage or drawdown and quality of equity.

Let’s take a look at a simple trading system which I have traded discretionarily for years – the TNG method (Touch-And-Go). It is about a simple bounce from EMA 34. The system which I have used to test possibilities of MI for day traders is based on the TNG method and I have tested it in a completely automated way. This automated version of the system based on TNG allowed me to test possibilities of MI for day traders much faster, more accurately and in a simpler way. I was quite surprised how one system can bring an immense number of versions without the need to interfere with the system itself in any way!

So, as promised, let’s have a look on a few demonstrations.

First of all, the basic version of the system provides a very decent equity (the TNG idea is still very powerful and universal), to my taste, with only one pattern it generates far too many trades which is taking its toll on an average profit per trade (in basic system 51 USD). A reasonable decrease of number of trades, decrease of drawdown to half (original variant of the system has a maximum DD 3500 USD), increase of average trade and possibly a slightly better equity – those would certainly be pleasant “bonuses”. The good news is that all this is possible with the application of MI. What I wanted to demonstrate is the variability which the application of MI in a single system can bring – without touching the original system itself, without changing anything.

For example, one of my own MI techniques based on MI moving average managed to reduce radically the amount of trades, dramatically reduce drawdown, and adequately increase the amount of trades. And also considerably change the character of equity.

My next technique with the application of my personal MI Bollinger Band application, for change reduced the system by approximately 20% of the worse trades and contributed to an overall considerable improvement. The equity stayed the same, but it is slightly smoother, the parameters of the system improved, 20% of trades disappeared (among them some of the worst ones) – and all that without touching the original system whatsoever.

I have gained a similar reduction and similar improvement with another technique as well; a very simple one based on strong MI values.

What could be very interesting is the possible combination of both previous techniques – I believe that in such case all results would further improve.

The last demonstration comes from a different MI area, identification of optimal MI volatility and allowing the system to trade only such trades.

What could be very interesting here is to isolate the most optimal MI volatility and subsequently to apply one of the previous techniques (MI moving average or MI Bollinger) on it. All these are certainly impulses for further improvement. It is fascinating how one technique can dramatically and fundamentally influence a day trading system without the need to interfere with it.

And what is truly significant: A lot of the most important changes occurred on the level of statistics. I am not going to itemize all of them as there would really be many of them. Basically the most fundamental ones are:

– It was revealed that any parameter can be improved with one of the MI techniques; it was possible to decrease drawdown by half(!),

– What was particularly impressive – MI can be great in helping to manage the number of contracts: i.e. for example to add a contract in an especially strong situation, confirmed by Market Internals,

– MI can, in certain applications, truly help to exit the trade when the sentiment on the market dramatically changes, i.e. even before the basic stop-loss and in this way dramatically improves results,

– It is possible to dramatically increase a not very impressive avg. trade of the original system through a few MI techniques (the weakest link of the original variant of the system completely vanished).

Personally, I am continuously impressed by the possibilities of MI, especially when used in an innovative and creative way. I am surprised how few day traders are aware of this technique or how few actually use it.

MI are truly a unique technique which can have exceptional impact on your trading if used in a right innovative and creative way. Then MI are literally becoming an “unfair” advantage.

Happy Trading!

How To Thrive In Your Trading Career

Let’s face it: Most traders if they are lucky manage to survive, very few thrive. In fact, I am certain most traders don’t even know what thriving means.

To thrive in your trading career is about much more than making it to the end of the trading day. I am not even talking about the money you may or may not be making. That will happen automatically when you learn to self actualize instead to react.

If you can make this quantum leap from reacting to self actualising your entire trading life will change for the better.

We are reactionary creatures by default

By this I mean that your brain has been trained to react by default. Impulse reactions drive the markets after a big news event like NFP, or the FOMC meetings.

There are trading bots which take advantage of these trading patterns which exaggerate the moves in the markets, but that is another story for another day.

The point I want you to get is this:

Your trading mind operates on reactionary auto pilot.

This is not in your interest because your mind is like an untrained monkey. The untrained mind is all over the place and thinks in dualistic terms. Good or bad and right or wrong. This thinking puts immense strain on your entire body. It causes stress and anxiety.

Such emotions fuel dualistic thinking and reactionary behaviour

In order to thrive in your trading career your have to learn techniques to distance yourself from your emotions.

There are only two ways in which you can do this:

Learn about yourself, how your brain works and how the universe works and learn how to apply this knowledge in your trading life. You will soon discover that most of your thoughts are actually meaningless.

When you learn to stay out of reaction you have a chance to thrive in your trading because your brain has spare capacity it now can use to, you guessed correctly design strategies that work for you.

This is what self actualization is all about:

When you have the spare capacity in your mind to allow new information in you will expand. You become more mindful because you are open to seeing new things about yourself, about the world the markets and so on which you had never seen before.

Imagine how the ability to stay out of reaction to anything you experience will set you free. Imagine how much better you feel. More energy fuels creativity and vision. You need both to thrive in your trading career and in your life in general.

Isn’t it time that you started to thrive today?

Mercedes Oestermann van Essen is a thought leader in the field of trading psychology. She is the author of “The Buddhist Trader” and other books on personal development.

I Still Haven’t Started With Live Trading Yet, Because I Am Afraid to “Click”

Relatively often, I find myself in situations where beginning traders are telling me that they have done all the necessary work such as backtesting and profitable papertrading, but they still can’t find the courage to click “live”. Therefore I will try to summarize a few pieces of advice and tips in today’s article.

First of all, I would like to repeat that this advice is only for those who really underwent the necessary preparation work, i.e. they have done backtests to verify functionality of their system and have done papertrading for some time and were able to trade profitably for a couple of months (alternatively they have done only papertrading, i.e. without backtests, but in that case for a longer period of time and more precisely). Without these basic steps, the beginner doesn’t show a diligent and serious enough approach to trading and they absolutely shouldn’t click “live”, because they aren’t ready enough!

As long as the beginner fulfills the requirements above, then, based on my experience, there are three types of fear to “click”, which I will try to describe more closely.

Fear no.1: I am afraid to lose money

I think that in connection with trading, this is one of the most common and most natural types of fear. Nobody wants to lose money and, for the vast majority of beginners, the concept of occasional loss that is part of a long-term profitable trading, is difficult to take in. Up until now, we were used to getting some kind of reward for every activity – in trading, this type of thinking is failing and it is even getting worse because of the factor that after a few hours, days, or even months of activity the outcome can be loss. This is why the fear of loss of money is completely natural and not always wrong. This fear has its positive side, because it helps conscientious individuals and it is pushing them towards better preparation and to make an effort to not underestimate anything.

And thus, it is important to realize if this is the fear that is stopping us to “click”. If the answer is ‘yes’, then it is important to openly confess to yourself if possible loss per trade represents a considerable amount (i.e. amount that we aren’t willing to lose, because in our normal life it represents a lot of money) or if it is an amount that doesn’t mean anything significant and a factual loss of such amount won’t be a major problem.

If we are talking about the first option, i.e. situation when possible loss from trading is unbearably high and it represents a lot of money, the advice is rather simple: Either you are undercapitalized, or you risk per trade more than what we are willing to lose and bear. In such case it is necessary to increase the account or move to a cheaper market (with lower volatility), alternatively lower timeframe – to achieve decrease of our stop-loss to a level that won’t be as painful. Or alternatively to do both (i.e. slightly increase the account and through a change of market or timeframe decrease the risk per trade).

If it is the second option, then the fear of loss of money probably isn’t the real problem. Maybe you are just telling yourself that this is the main problem and that the fear of loss of money has the biggest influence on you – but it can be just a conscious belief, which is far from what is happening in your subconscious. Then the real cause can be one of the other types of fears.

Fear no.2: I am afraid to fail, I am afraid I am not good enough

This type of fear is more serious, because it is connected to subconscious models resulting from failures and lack of success in the past (which lead to lower self-confidence).

In the past if we suffered some substantial failure (even deeper, in our childhood) which could negatively influence us, or if we failed in something essential (effort to sustain a business, effort to make a significant change, etc.), our self-confidence can be considerably broken and our subconscious can slow us down from any other effort in order to protect us from another possible disappointment.

The advice here is substantially more difficult and if there is a deeper problem, it can be helpful to consult this with a professional psychologist who can help to find and eliminate such subconscious blocks and fears.

Personally, I have tried various types of meditation and other alternative ways for similar types of subconscious fears, but I respect that not everyone is willing to try them.

Yet I think that the best way is simply to click and live through the possible first loss in the market – to see that there is nothing horrible about it!

Broadly speaking, there are only two possibilities to “force” yourself into this first click.

The first one is to plan and prepare everything in advance. The better and more detailed planning of our first click, the higher the probability of its realization.

First of all, set yourself a target that for example next week (don’t postpone it too much) at a particular day and time you do that first click. For example, you can say that it will be on Wednesday, which is for some reason the calmest day for you and that it will be between 4 and 6pm, the period you have done your training on. But, ideally, you will do that first click in the first 30 minutes after the market opens and you definitely take the first trade according to plan as soon as it occurs.

Afterwards, for the rest of the week, visualize that “Wednesday” (or you can choose any other day) before you go to sleep. Imagine that the day has come, imagine in detail how you sit in front of the computer and you patiently wait for a trade according to plan and when it comes, you click on the mouse without any hesitation. Experience and envision your feelings (it doesn’t matter what feelings you have, don’t think about them too much), imagine both possible scenarios – that the first trade will be both loss and gain. The day before your set date, stop thinking about anything and when that day comes, just calmly do what you have visualised a few days ago. You will see that it isn’t as bad as it seemed – once this first experience is behind you, the other ones will surely be simpler and you will slowly get used to it!

The second option sounds a bit crazy, but it works as well. Now go to your computer (or at the earliest possible moment). Open the chart and click BUY or SELL (completely blindley, it is absolutely insignificant if you buy or sell), count calmly to 3 – and then close your position. And it is done. Your first trade is behind you; you clicked. Nothing terrible has happened, you are alive and healthy, you survived, and it wasn’t difficult at all! So why so much fuss about it? It was a piece of cake! Done; now you just have to repeat it based on your signals according to your trading plan, and you are where you want to be. There is no need to make it complicated.

Fear no.3: I am afraid of change

The last type of fear may sound a bit strange, but it also has its own reason and explanation.

The human brain doesn’t like change. The human brain prefers the past (which it likes to idealize), it declines to its deep-rooted stereotypes (this is why most of the people like to run on “autopilot”) and it refuses any kind of change. Just try to imagine how you would react if your boss arrives to your workplace tomorrow and exchanges people amongst departments and also changes their job descriptions from last week.

Trading is a change – a significant change. It can mean anything (a successful future isn’t guaranteed) and whatever outcome will be, it can sound terrifying. If we lose, it can be an unpleasant change to worse; if we succeed, at present we think that it will be great to start a new dream life – but in reality we can’t really imagine actual steps towards such a considerable life change, because in that current moment such a big change is rather dramatic for our brain! And so, our brain can subconsciously sabotage us to keep us as long as possible in our current comfort of apparent certainty that at least we know what tomorrow will bring. The brain loves its certainties (even the bad ones and horrible ones – for many people unsuccessful and depressing relationships are still better than none at all, and rubbish and hated jobs are still a better solution than to take a risk, leave a job and search for a new one) and subconsciously it can block many of our efforts to change. For example, it can constantly block our efforts to click “live”, which could be understood as a first step towards possible change.

So, what to do in such a case? Simply initiate in our life as many small changes as possible, which slightly “derail” our routine stereotypes and help us gain more self-confidence to click.

Choose a different, new route to work from tomorrow on.

Do something you have wanted to do for some time now, or do something crazy this weekend, like bungee jumping, go-carts, etc.

Try a meal you have never tried before and go to a restaurant you have never been to before.

Do something, anything, that changes your usual rhythm and stereotype for a couple of days or weeks. It is necessary to train your brain for changes, to teach it new flexibility. Then it should be considerably easier to click, because once your brain gets used to a repeated disruption of stereotypes, it will be much better prepared for a change – and so for your first click.

What Drives Your Trading? The Need To Avoid Losses, Or The Desire To Win?

Yesterday I had an interesting consultation with one of my long standing professional trading clients: He observed that his desire to win was oftentimes superseded by the desire not to lose. He said whenever he traded like that he would lose money.

I was delighted that my client had made this profound observation about his deeper emotions. These kinds of insights, when they come to you without being prompted, are the domain of an emotionally trained brain that has learned to go deeper beyond the intellectual part of the brain into the hidden subconscious terrain.

Your trading decisions are made with the intellectual part of your brain which resides in the neo cortex:

Yet 95% of all your thinking feeling and actions are automatic. They reside in the amygdala, which runs the survival instincts and every part of the business that keeps you functioning on a daily basis as a human being. Without the amygdala you could not operate the way you do. I believe that you can already see how this system has hidden value conflicts readily built into the operating mechanics of your brain.

Imagine you had to consciously think how to move every limb in your body, which muscle to engage and limb to use to wash your hair, operate the buy and sell button on your trading account, and how to do all those routine tasks you do every day without giving them another thought.

The amygdala ensures your survival and it does so on auto pilot, which is great.

The problem is that you are making your trading decisions with the 5% of your conscious intellectual brain, while your actions are driven by the 95% of your subconscious brain.

Your body is the final feed back outpost: When you notice feeling uneasy, stressed or hesitant you are observing the final warning signs that you are not in sync with your desired outcome. Your feeling tone is the last feedback, sign before the road comes to an end. There is a barrier beyond there is no further to travel on that road. You must either turn back, or face the consequences of walking beyond the barrier.

The secret is to align the subconscious part of your brain with the conscious part of your brain. When the subconscious and conscious parts of your brain are aligned you are congruent with your desires and intentions. Change can happen now.

Guided meditation is a very effective tool that allows you to access the deeper levels of your subconscious mind.

When you learn to notice whenever your trading decisions arise from survival needs versus the desire to make a winning trade you start thinking like a winning trader

Mercedes Oestermann van Essen is a thought leader in the field of trading psychology. She is the author of “The Buddhist Trader” and other books on trading psychology and personal development.

Her unique guided meditations for traders increase cognitive awareness and improve trading.

Carry Trading: What Is It and How to Profit From It?

This article will describe this long term trading strategy used mostly by institutional investors. We will be highlighting rewards and risks in a simple way to make it possible for you to use it as well.

With carry trading, you can make or lose money even if the price of a currency pair remains static for a long time. It will also help you understand the reasons behind some of the market’s moves, especially during volatile and risk-off periods.

What is carry trading?

Even though it is possible to have carry trades in a variety of financial instruments and investments, the basic premise is the same.

Positive carry trading occurs when someone borrows an asset with low interest rates to finance the investment in an asset with a higher return. For example, borrowing money at 2% and then investing the funds in an asset that pays 5%. This is easily done in the Forex market because currencies are traded in pairs, so a positive carry trade is obtained when a trader buys (“carries”) a high interest rate currency (for example, AUD) and sells a low interest rate one (such as JPY).

Negative carry trades, as expected, are the opposite of positive carriers strategy. This situation happens when the yield of holding an asset isn’t sufficient to cover its financing costs. For example, shorting AUD/JPY.

So how does this type of trading work in Forex?

Because you’re holding positions overnight, interest much be debited/credited when the contracts are swapped, depending on the interest rate differential between the two currencies, and whether you’re long or short. You always “receive” interest on the currency you own, and “pay” on the currency you sell. Then the differential is debited/credited on the account.

If the currency you bought had a higher interest rate than the other one in the pair, that’s a positive carry. The opposite would be the negative carry.

How to make profit with this financial instrument?

The best potential carry trades are obviously the ones where there is a big interest rate differential between the two currencies, but that alone is not enough. For a trade to be profitable, your position should at least maintain its value over time. However, in some cases, if the interest rate differential is very big it may be possible to make money even if the market moves slightly against your position.

Remember this type of trade does not yield good profit in a very short run. Instead, the trade yields good profit with a long term strategy.

Reducing Drawdown by Almost 70% in 7 Minutes

In today’s article, I will show you, step by step, how effective work with Market Internals can lead to drawdown reduction by up to 70%, taking just seven minutes of work (on a regular PC – using a laptop would take a little more time). So, let’s get to it.

In this example, we will work with an extremely simple idea, which is to buy EMD.D (15-minute chart), when the first bar closes above yesterday’s close (i.e. breakout at 8:45 Exchange time or rather at 15:45 local time for me in Spain).

This simple idea doesn’t look bad at all; it seems like it has a decent potential – although there is still a long way to go in order to reach a completed, successful system.

There is definitely a need to decrease the number of trades, filter out “the bad ones”, increase average profit per trade and, what is most important, to substantially reduce the drawdown. It isn’t even important to present complete statistics – the first look at equity already shows what we are talking about. And how do we accomplish such an improvement? That is exactly the task for Market Internals!

First of all, I have put the above code in my Market Internals smart code and I have prepared a special chart/workspace for such purpose.

This MI smart code contains a few of my own MI conditions (it took me 6 months to put all of them together) and now I let TradeStation run all these conditions and let it find the one that is the most suitable one. To avoid the danger of over-optimization right from the beginning, we need to apply this process on 70% of In-Sample data and we keep the remaining 30% as Out-Of-Sample data.

Now we run optimization, which will take around 2 minutes on an average PC (around 6 minutes on a laptop).

As soon as optimization finishes, I arrange the In-Sample data by using the fitness function. In this case, it was a TS Index.

Now it is time to choose only one from the TOP solutions. Most of the time there is more than one usable solution. One that we can find roughly in the top 5-10 of the best outcomes (this isn’t a classical optimization of systems, but moreso a search for the most suitable switches – i.e. Market Internals conditions – there is quite a lot of these conditions in smart code, therefore more than one can work really well). In this case, the solution I like the most this time came up in row number two. Therefore I will choose this solution and I have a look at the In-Sample data.

The outcome looks great, so I will verify it in the Out-Of-Sample data.

Everything looks fine here as well, so I’ll quickly check the overall equity.

A look at the overall equity tells me that OOS isn’t much too different from IS. This means that everything is perfectly fine. Of course, I could carry out some more robustness testing, etc. – but that is up to each and every trader individually.

The whole procedure took me less than 7 minutes – and I am done.

Below are the results AFTER I applied the MI condition.

Drawdown improved by 69%, NP/DD ratio improved 120%, AVG Trade improvement was 65% – what else can you wish for after just 7 minutes of work?

This is just another demonstration of the application and power of Market Internals.