Designing Trading Plans and Rules Learn Forex ForexTraders

The importance of backtesting and sticking to a strategy

Hi all,
I just wanted to share my trading experience with you so far, and maybe help some people who may be in the situation as I am. I started trading about 2-3 months ago. I started with baby pips, opened a demo account, and got cocky a couple weeks into it and made a live account with $100, and every other week or so put $20 extra in. (thank God I didn’t put it more than that). Today, my account stands at around $68, with a total P/L of -$131.76. I have been really uncomfortable losing money, even if it’s not a lot, and that uncomfortableness forced me to realize my mistake.
I thought I could half ass a strategy and be a winner in forex, and the market humbled me extremely quickly. I actually didn’t have a strategy at all. It was a lazy mix of a bunch of different typical strategies I saw on YouTube. I also let my emotions get into trades, after a losing trade I would get back in the market in the opposite direction to try and make up for my loss. All bad, I know. I was too cocky.
Just like anything difficult in life, you cannot half ass forex. I spent all of Friday testing an EXTREMELY simple strategy on 4 major pairs, and out of 93 total trades over the last 6 months, the win rate of my strategy is 73%. From now on, I vow to ONLY make a trade when my strategy presents itself. Moral of the story is, if you think you can half ass forex, you better wake up right now. Find a strategy, backtest it, and only trade said strategy. Have some discipline.
Here is my extremely simple, backtested strategy with a 73% win rate that I got from The Trading Channel on YouTube:
Indicators: 200 EMA
Requirements: 2 wicks IN A ROW that TOUCH the 200 EMA, that have candle bodies that both close above or below the 200 EMA. If both candles close above the 200 EMA, go long. If both candles close below the 200 EMA go short. Stay extremely strict with the rules of the strategy.
Here are the pairs that I have tested this strategy on over the past 6 months, that total a 73% win rate:
-GBP/USD: 18/27 winning trades (67%)
-NZD/USD: 15/27 winning trades (71%)
-EUUSD: 15/20 winning trades (75%)
-EUGBP: 20/25 winning trades (80%)
All backtesting was done on the H1 chart. I tried on the daily and H4 charts but the frequency just wasn’t enough. In the video that I got this strategy from he was trying to highlight the importance of the frequency of your strategy. Even if it may have a really high winning percentage, if it only happens once a year it’s not a good strategy.
Also on a side note, I’ve seen a lot of conflicting opinions on whether or not the US election will effect USD pairs, do you guys think the election will mess with my strategy this upcoming week, or should I just trade my strategy and pay not attention to the results of the election?
Thanks for reading, and happy trading
Sincerely, u/emopatriot
submitted by emopatriot to Forex [link] [comments]

Former investment bank FX trader: some thoughts

Former investment bank FX trader: some thoughts
Hi guys,
I have been using reddit for years in my personal life (not trading!) and wanted to give something back in an area where i am an expert.
I worked at an investment bank for seven years and joined them as a graduate FX trader so have lots of professional experience, by which i mean I was trained and paid by a big institution to trade on their behalf. This is very different to being a full-time home trader, although that is not to discredit those guys, who can accumulate a good amount of experience/wisdom through self learning.
When I get time I'm going to write a mid-length posts on each topic for you guys along the lines of how i was trained. I guess there would be 15-20 topics in total so about 50-60 posts. Feel free to comment or ask questions.
The first topic is Risk Management and we'll cover it in three parts
Part I
  • Why it matters
  • Position sizing
  • Kelly
  • Using stops sensibly
  • Picking a clear level

Why it matters

The first rule of making money through trading is to ensure you do not lose money. Look at any serious hedge fund’s website and they’ll talk about their first priority being “preservation of investor capital.”
You have to keep it before you grow it.
Strangely, if you look at retail trading websites, for every one article on risk management there are probably fifty on trade selection. This is completely the wrong way around.
The great news is that this stuff is pretty simple and process-driven. Anyone can learn and follow best practices.
Seriously, avoiding mistakes is one of the most important things: there's not some holy grail system for finding winning trades, rather a routine and fairly boring set of processes that ensure that you are profitable, despite having plenty of losing trades alongside the winners.

Capital and position sizing

The first thing you have to know is how much capital you are working with. Let’s say you have $100,000 deposited. This is your maximum trading capital. Your trading capital is not the leveraged amount. It is the amount of money you have deposited and can withdraw or lose.
Position sizing is what ensures that a losing streak does not take you out of the market.
A rule of thumb is that one should risk no more than 2% of one’s account balance on an individual trade and no more than 8% of one’s account balance on a specific theme. We’ll look at why that’s a rule of thumb later. For now let’s just accept those numbers and look at examples.
So we have $100,000 in our account. And we wish to buy EURUSD. We should therefore not be risking more than 2% which $2,000.
We look at a technical chart and decide to leave a stop below the monthly low, which is 55 pips below market. We’ll come back to this in a bit. So what should our position size be?
We go to the calculator page, select Position Size and enter our details. There are many such calculators online - just google "Pip calculator".
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https://preview.redd.it/y38zb666e5h51.jpg?width=1200&format=pjpg&auto=webp&s=26e4fe569dc5c1f43ce4c746230c49b138691d14
So the appropriate size is a buy position of 363,636 EURUSD. If it reaches our stop level we know we’ll lose precisely $2,000 or 2% of our capital.
You should be using this calculator (or something similar) on every single trade so that you know your risk.
Now imagine that we have similar bets on EURJPY and EURGBP, which have also broken above moving averages. Clearly this EUR-momentum is a theme. If it works all three bets are likely to pay off. But if it goes wrong we are likely to lose on all three at once. We are going to look at this concept of correlation in more detail later.
The total amount of risk in our portfolio - if all of the trades on this EUR-momentum theme were to hit their stops - should not exceed $8,000 or 8% of total capital. This allows us to go big on themes we like without going bust when the theme does not work.
As we’ll see later, many traders only win on 40-60% of trades. So you have to accept losing trades will be common and ensure you size trades so they cannot ruin you.
Similarly, like poker players, we should risk more on trades we feel confident about and less on trades that seem less compelling. However, this should always be subject to overall position sizing constraints.
For example before you put on each trade you might rate the strength of your conviction in the trade and allocate a position size accordingly:
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https://preview.redd.it/q2ea6rgae5h51.png?width=1200&format=png&auto=webp&s=4332cb8d0bbbc3d8db972c1f28e8189105393e5b
To keep yourself disciplined you should try to ensure that no more than one in twenty trades are graded exceptional and allocated 5% of account balance risk. It really should be a rare moment when all the stars align for you.
Notice that the nice thing about dealing in percentages is that it scales. Say you start out with $100,000 but end the year up 50% at $150,000. Now a 1% bet will risk $1,500 rather than $1,000. That makes sense as your capital has grown.
It is extremely common for retail accounts to blow-up by making only 4-5 losing trades because they are leveraged at 50:1 and have taken on far too large a position, relative to their account balance.
Consider that GBPUSD tends to move 1% each day. If you have an account balance of $10k then it would be crazy to take a position of $500k (50:1 leveraged). A 1% move on $500k is $5k.
Two perfectly regular down days in a row — or a single day’s move of 2% — and you will receive a margin call from the broker, have the account closed out, and have lost all your money.
Do not let this happen to you. Use position sizing discipline to protect yourself.
​

Kelly Criterion

If you’re wondering - why “about 2%” per trade? - that’s a fair question. Why not 0.5% or 10% or any other number?
The Kelly Criterion is a formula that was adapted for use in casinos. If you know the odds of winning and the expected pay-off, it tells you how much you should bet in each round.
This is harder than it sounds. Let’s say you could bet on a weighted coin flip, where it lands on heads 60% of the time and tails 40% of the time. The payout is $2 per $1 bet.
Well, absolutely you should bet. The odds are in your favour. But if you have, say, $100 it is less obvious how much you should bet to avoid ruin.
Say you bet $50, the odds that it could land on tails twice in a row are 16%. You could easily be out after the first two flips.
Equally, betting $1 is not going to maximise your advantage. The odds are 60/40 in your favour so only betting $1 is likely too conservative. The Kelly Criterion is a formula that produces the long-run optimal bet size, given the odds.
Applying the formula to forex trading looks like this:
Position size % = Winning trade % - ( (1- Winning trade %) / Risk-reward ratio
If you have recorded hundreds of trades in your journal - see next chapter - you can calculate what this outputs for you specifically.
If you don't have hundreds of trades then let’s assume some realistic defaults of Winning trade % being 30% and Risk-reward ratio being 3. The 3 implies your TP is 3x the distance of your stop from entry e.g. 300 pips take profit and 100 pips stop loss.
So that’s 0.3 - (1 - 0.3) / 3 = 6.6%.
Hold on a second. 6.6% of your account probably feels like a LOT to risk per trade.This is the main observation people have on Kelly: whilst it may optimise the long-run results it doesn’t take into account the pain of drawdowns. It is better thought of as the rational maximum limit. You needn’t go right up to the limit!
With a 30% winning trade ratio, the odds of you losing on four trades in a row is nearly one in four. That would result in a drawdown of nearly a quarter of your starting account balance. Could you really stomach that and put on the fifth trade, cool as ice? Most of us could not.
Accordingly people tend to reduce the bet size. For example, let’s say you know you would feel emotionally affected by losing 25% of your account.
Well, the simplest way is to divide the Kelly output by four. You have effectively hidden 75% of your account balance from Kelly and it is now optimised to avoid a total wipeout of just the 25% it can see.
This gives 6.6% / 4 = 1.65%. Of course different trading approaches and different risk appetites will provide different optimal bet sizes but as a rule of thumb something between 1-2% is appropriate for the style and risk appetite of most retail traders.
Incidentally be very wary of systems or traders who claim high winning trade % like 80%. Invariably these don’t pass a basic sense-check:
  • How many live trades have you done? Often they’ll have done only a handful of real trades and the rest are simulated backtests, which are overfitted. The model will soon die.
  • What is your risk-reward ratio on each trade? If you have a take profit $3 away and a stop loss $100 away, of course most trades will be winners. You will not be making money, however! In general most traders should trade smaller position sizes and less frequently than they do. If you are going to bias one way or the other, far better to start off too small.

How to use stop losses sensibly

Stop losses have a bad reputation amongst the retail community but are absolutely essential to risk management. No serious discretionary trader can operate without them.
A stop loss is a resting order, left with the broker, to automatically close your position if it reaches a certain price. For a recap on the various order types visit this chapter.
The valid concern with stop losses is that disreputable brokers look for a concentration of stops and then, when the market is close, whipsaw the price through the stop levels so that the clients ‘stop out’ and sell to the broker at a low rate before the market naturally comes back higher. This is referred to as ‘stop hunting’.
This would be extremely immoral behaviour and the way to guard against it is to use a highly reputable top-tier broker in a well regulated region such as the UK.
Why are stop losses so important? Well, there is no other way to manage risk with certainty.
You should always have a pre-determined stop loss before you put on a trade. Not having one is a recipe for disaster: you will find yourself emotionally attached to the trade as it goes against you and it will be extremely hard to cut the loss. This is a well known behavioural bias that we’ll explore in a later chapter.
Learning to take a loss and move on rationally is a key lesson for new traders.
A common mistake is to think of the market as a personal nemesis. The market, of course, is totally impersonal; it doesn’t care whether you make money or not.
Bruce Kovner, founder of the hedge fund Caxton Associates
There is an old saying amongst bank traders which is “losers average losers”.
It is tempting, having bought EURUSD and seeing it go lower, to buy more. Your average price will improve if you keep buying as it goes lower. If it was cheap before it must be a bargain now, right? Wrong.
Where does that end? Always have a pre-determined cut-off point which limits your risk. A level where you know the reason for the trade was proved ‘wrong’ ... and stick to it strictly. If you trade using discretion, use stops.

Picking a clear level

Where you leave your stop loss is key.
Typically traders will leave them at big technical levels such as recent highs or lows. For example if EURUSD is trading at 1.1250 and the recent month’s low is 1.1205 then leaving it just below at 1.1200 seems sensible.
​
If you were going long, just below the double bottom support zone seems like a sensible area to leave a stop
You want to give it a bit of breathing room as we know support zones often get challenged before the price rallies. This is because lots of traders identify the same zones. You won’t be the only one selling around 1.1200.
The “weak hands” who leave their sell stop order at exactly the level are likely to get taken out as the market tests the support. Those who leave it ten or fifteen pips below the level have more breathing room and will survive a quick test of the level before a resumed run-up.
Your timeframe and trading style clearly play a part. Here’s a candlestick chart (one candle is one day) for GBPUSD.
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https://preview.redd.it/moyngdy4f5h51.png?width=1200&format=png&auto=webp&s=91af88da00dd3a09e202880d8029b0ddf04fb802
If you are putting on a trend-following trade you expect to hold for weeks then you need to have a stop loss that can withstand the daily noise. Look at the downtrend on the chart. There were plenty of days in which the price rallied 60 pips or more during the wider downtrend.
So having a really tight stop of, say, 25 pips that gets chopped up in noisy short-term moves is not going to work for this kind of trade. You need to use a wider stop and take a smaller position size, determined by the stop level.
There are several tools you can use to help you estimate what is a safe distance and we’ll look at those in the next section.
There are of course exceptions. For example, if you are doing range-break style trading you might have a really tight stop, set just below the previous range high.
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https://preview.redd.it/ygy0tko7f5h51.png?width=1200&format=png&auto=webp&s=34af49da61c911befdc0db26af66f6c313556c81
Clearly then where you set stops will depend on your trading style as well as your holding horizons and the volatility of each instrument.
Here are some guidelines that can help:
  1. Use technical analysis to pick important levels (support, resistance, previous high/lows, moving averages etc.) as these provide clear exit and entry points on a trade.
  2. Ensure that the stop gives your trade enough room to breathe and reflects your timeframe and typical volatility of each pair. See next section.
  3. Always pick your stop level first. Then use a calculator to determine the appropriate lot size for the position, based on the % of your account balance you wish to risk on the trade.
So far we have talked about price-based stops. There is another sort which is more of a fundamental stop, used alongside - not instead of - price stops. If either breaks you’re out.
For example if you stop understanding why a product is going up or down and your fundamental thesis has been confirmed wrong, get out. For example, if you are long because you think the central bank is turning hawkish and AUDUSD is going to play catch up with rates … then you hear dovish noises from the central bank and the bond yields retrace lower and back in line with the currency - close your AUDUSD position. You already know your thesis was wrong. No need to give away more money to the market.

Coming up in part II

EDIT: part II here
Letting stops breathe
When to change a stop
Entering and exiting winning positions
Risk:reward ratios
Risk-adjusted returns

Coming up in part III

Squeezes and other risks
Market positioning
Bet correlation
Crap trades, timeouts and monthly limits
​
***
Disclaimer:This content is not investment advice and you should not place any reliance on it. The views expressed are the author's own and should not be attributed to any other person, including their employer.
submitted by getmrmarket to Forex [link] [comments]

[Strategies] Here is My Trading Approach, Thought Process and Execution

Hello everyone. I've noticed a lot of us here are quite secretive about how we trade, especially when we comment on a fellow trader's post. We're quick to tell them what they're doing isn't the "right way" and they should go to babypips or YouTube. There's plenty of strategies we say but never really tell them what is working for us. There's a few others that are open to share their experience and thought processes when considering a valid trade. I have been quite open myself. But I'm always met with the same "well I see what you did is quite solid but what lead you to deem this trade valid for you? "
The answer is quite simple, I have a few things that I consider which are easy rules to follow. I realized that the simpler you make it, the easier it is for you to trade and move on with your day.
I highlight a few "valid" zones and go about my day. I've got an app that alerts me when price enters the zone on my watchlist. This is because I don't just rely on forex trading money, I doubt it would be wise to unless you're trading a 80% win rate strategy. Sometimes opportunities are there and we exploit them accordingly but sometimes we are either distracted by life issues and decide to not go into the markets stressed out or opportunities just aren't there or they are but your golden rules aren't quite met.
My rules are pretty simple, one of the prime golden rules is, "the risk is supposed to be very minimal to the reward I want to yield from that specific trade". i.e I can risk -50 pips for a +150 and more pips gain. My usual target starts at 1:2 but my most satisfying trade would be a 1:3 and above. This way I can lose 6/10 trades and still be profitable.
I make sure to keep my charts clean and simple so to understand what price does without the interference of indicators all over my charts. Not to say if you use indicators for confluence is a complete no-no. Each trader has their own style and I would be a narcissistic asshole if I assumed my way is superior than anybody else's.
NB: I'm doing this for anybody who has a vague or no idea of supply and demand. Everything here has made me profitable or at least break even but doesn't guarantee the same for you. This is just a scratch on the surface so do all you can for due diligence when it comes to understanding this topic with more depth and clear comprehension.
Supply and Demand valid zones properties; what to me makes me think "oh this zone has the potential to make me money, let me put it on my watchlist"? Mind when I say watchlist, not trade it. These are different in this sense.
👉With any zone, you're supposed to watch how price enters the zone, if there's a strong push in the opposite direction or whatever price action you're observing...only then does the zone becomes valid. YOU TRADE THE REACTION, NOT THE EXPECTATION Some setups just fail and that's okay because you didn't gamble. ✍
!!!IMPORTANT SUBJECT TO LEARN BEFORE YOU START SUPPLY AND DEMAND!!!
FTR. Failure to Return.(Please read on these if you haven't. They are extremely important in SnD). Mostly occur after an impulse move from a turning point. See attached examples: RBR(rally base rally)/DBD(drop base drop). They comprise of an initial move to a certain direction, a single candle in the opposite direction and followed by 2 or more strong candles in the initial direction. The opposite candle is your FTR(This is your zone) The first time price comes back(FTB) to a zone with an FTR has high possibilities to be a strong zone.
How to identify high quality zones according to my approach:
  1. Engulfing zones; This is a personal favorite. For less errors I identify the best opportunities using the daily and 4H chart.
On the example given, I chose the GBPNZD trade idea I shared here a month ago I believe. A double bottom is easily identified, with the final push well defined Bullish Engulfing candle. To further solidify it are the strong wicks to show strong rejection and failure to close lower than the left shoulder. How we draw our zone is highlight the whole candle just before the Engulfing Candle. That's your zone. After drawing it, you also pay attention to the price that is right where the engulfing starts. You then set a price alert on your preferred app because usually price won't get there immediately. This is the second most important part of trading, PATIENCE. If you can be disciplined enough to not leave a limit order, or place a market order just because you trust your analysis...you've won half the battle because we're not market predictors, we're students. And we trade the reaction.
On the given example, price had already reached the zone of interest. Price action observed was, there was a rejection that drove it out of the zone, this is the reaction we want. Soon as price returns(retests)...this is your time to fill or kill moment, going to a 4H or 1H to make minimum risk trades. (See GBPNZD Example 1&2)
  1. Liquidity Run; This approach looks very similar to the Engulfing zones. The difference is, price makes a few rejections on a higher timeframe level(Resistance or support). This gives the novice trader an idea that we've established a strong support or resistance, leading to them either selling or buying given the opportunity. Price then breaks that level trapping the support and resistance trader. At this point, breakout traders have stop orders below or above these levels to anticipate a breakout at major levels with stops just below the levels. Now that the market has enough traders trapped, it goes for the stop losses above or below support and resistance levels after taking them out, price comes back into the level to take out breakout traders' stop losses. This is where it has gathered enough liquidity to move it's desired direction.
The given example on the NZDJPY shows a strong level established twice. With the Bearish Engulfing movement, price leaves a supply zone...that's where we come in. We go to smaller timeframes for a well defined entry with our stops above the recent High targeting the next demand zone.
The second screenshot illustrates how high the reward of this approach is as well. Due diligence is required for this kind of approach because it's not uncommon but usually easily misinterpreted, which is why it's important it's on higher timeframes.
You can back test and establish your own rules on this but the RSI in this case was used for confluence. It showed a strong divergence which made it an even easier trade to take.
...and last but definitely not least,
  1. Double Bottom/Top. (I've used double bottoms on examples because these are the only trades I shared here so we'll talk about double bottoms. Same but opposite rules apply on double tops).
The first most important rule here is when you look to your left, price should have made a Low, High and a Lower Low. This way, the last leg(shoulder) should be lower than the first. Some call this "Hidden Zones". When drawing the zones, the top border of the zone is supposed to be on the tip of the Low and covering the Lower Low. **The top border is usually the entry point.
On the first given example I shared this week, NZDCAD. After identifying the structure, you start to look for zones that could further verify the structure for confluence. Since this was identified on the 4H, when you zoom out to the daily chart...there's a very well defined demand zone (RBR). By now you should know how strong these kind of zones are especially if found on higher timeframes. That will now be your kill zone. You'll draw another zone within the bigger zone, if price doesn't close below it...you've got a trade. You'll put your stop losses outside the initial zone to avoid wicks(liquidity runs/stop hunts)
On the second image you'll see how price closed within the zone and rallied upwards towards your targets.
The second example is CHFJPY; although looking lower, there isn't a rally base rally that further solidifies our bias...price still respected the zone. Sometimes we just aren't going to get perfect setups but it is up to us to make calculated risks. In this case, risk is very minimal considering the potential profit.
The third example (EURNZD) was featured because sometimes you just can't always get perfect price action within your desired zone. Which is why it's important to wait for price to close before actually taking a trade. Even if you entered prematurely and were taken out of the trade, the rules are still respected hence a re entry would still yield you more than what you would have lost although revenge trading is wrong.
I hope you guys learnt something new and understand the thought process that leads to deciding which setups to trade from prepared supply and demand trade ideas. It's important to do your own research and back testing that matches your own trading style. I'm more of a swing trader hence I find my zones using the Daily and 4H chart. Keeping it simple and trading the reaction to your watched zone is the most important part about trading any strategy.
Important Note: The trade ideas on this post are trades shared on this sub ever since my being active only because I don't want to share ideas that I may have carefully picked to make my trading approach a blind pick from the millions on the internet. All these were shared here.
Here's a link to the trade ideas analyzed for this post specifically
Questions are welcome on the comments section. Thank you for reading till here.
submitted by SupplyAndDemandGuy to Forex [link] [comments]

ATO Australian tax treatment for options trades 🇦🇺

I am posting this as I hope it will help other Australian options traders trading in US options with their tax treatment for ATO (Australian Tax Office) purposes. The ATO provides very little guidance on tax treatment for options trading and I had to do a lot of digging to get to this point. I welcome any feedback on this post.

The Deloitte Report from 2011

My initial research led me to this comprehensive Deloitte report from 2011 which is hosted on the ASX website. I've been through this document about 20 times and although it's a great report to understand how different scenarios apply, it's still really hard to find out what's changed since 2011.
I am mainly relating myself to the scenario of being an individual and non-sole trader (no business set up) for my trading. I think this will apply to many others here too. According to that document, there isn't much guidance on what happens when you're an options premium seller and close positions before they expire.
Note that the ATO sometimes uses the term "ETO" (Exchange Traded Option) to discuss what we're talking about here with options trading.
Also note: The ATO discusses the separate Capital Gains Tax ("CGT") events that occur in each scenario in some of their documents. A CGT event will then determine what tax treatment gets applied if you don't know much about capital gains in Australia.

ATO Request for Advice

Since the Deloitte report didn't answer my questions, I eventually ended up contacting the ATO with a request for advice and tried to explain my scenario: I'm an Australian resident for tax purposes, I'm trading with tastyworks in $USD, I'm primarily a premium seller and I don't have it set up with any business/company/trust etc. In effect, I have a rough idea that I'm looking at capital gains tax but I wanted to fully understand how it worked.
Initially the ATO respondent didn't understand what I was talking about when I said that I was selling a position first and buying it to close. According to the laws, there is no example of this given anywhere because it is always assumed in ATO examples that you buy a position and sell it. Why? I have no idea.
I sent a follow up request with even more detail to the ATO. I think (hope) they understood what I meant now after explaining what an options premium seller is!

Currency Gains/Losses

First, I have to consider translating my $USD to Australian dollars. How do we treat that?
FX Translation
If the premium from selling the options contract is received in $USD, do I convert it to $AUD on that day it is received?
ATO response:
Subsection 960-50(6), Item 5 of the Income Tax Assessment Act 1997 (ITAA 1997) states the amount should be translated at the time of the transaction or event for the purposes of the Capital Gains Tax provisions. For the purpose of granting an option to an entity, the time of the event is when you grant the option (subsection 104-20(2) ITAA 1997).
This is a very detailed response which even refers to the level of which section in the law it is coming from. I now know that I need to translate my trades from $USD to $AUD according to the RBA's translation rates for every single trade.
But what about gains or losses on translation?
There is one major rule that overrides FX gains and losses after digging deeper. The ATO has a "$250k balance election". This will probably apply to a lot of people trading in balances below $250k a lot of the FX rules don't apply. It states:
However, the $250,000 balance election broadly enables you to disregard certain foreign currency gains and losses on certain foreign currency denominated bank accounts and credit card accounts (called qualifying forex accounts) with balances below a specified limit.
Therefore, I'm all good disregarding FX gains and losses! I just need to ensure I translate my trades on the day they occurred. It's a bit of extra admin to do unfortunately, but it is what it is.

Credit Trades

This is the scenario where we SELL a position first, collect premium, and close the position by making an opposite BUY order. Selling a naked PUT, for example.
What happens when you open the position? ATO Response:
The option is grantedCGT event D2 happens when a taxpayer grants an option. The time of the event is when the option is granted. The capital gain or loss arising is the difference between the capital proceeds and the expenditure incurred to grant the option.
This seems straight forward. We collect premium and record a capital gain.
What happens when you close the position? ATO Response:
Closing out an optionThe establishment of an ETO contract is referred to as opening a position (ASX Explanatory Booklet 'Understanding Options Trading'). A person who writes (sells) a call or put option may close out their position by taking (buying) an identical call or put option in the same series. This is referred to as the close-out of an option or the closing-out of an opening position.
CGT event C2 happens when a taxpayer's ownership of an intangible CGT asset ends. Paragraph 104-25(1)(a) of the ITAA 1997 provides that ownership of an intangible CGT asset ends by cancellation, surrender, or release or similar means.
CGT event C2 therefore happens to a taxpayer when their position under an ETO is closed out where the close-out results in the cancellation, release or discharge of the ETO.
Under subsection 104-25(3) of the ITAA 1997 you make a capital gain from CGT event C2 if the capital proceeds from the ending are more than the assets cost base. You make a capital loss if those capital proceeds are less than the assets reduced cost base.
Both CGT events (being D2 upon granting the option and C2 upon adopting the close out position) must be accounted for if applicable to a situation.
My take on this is that the BUY position that cancels out your SELL position will most often simply realise a capital loss (the entire portion of your BUY position). In effect, it 'cancels out' your original premium sold, but it's not recorded that way, it's recorded as two separate CGT events - your capital gain from CGT event D2 (SELL position), then, your capital loss from CGT event C2 (BUY position) is also recorded. In effect, they net each other out, but you don't record them as a 'netted out' number - you record them separately.
From what I understand, if you were trading as a sole tradecompany then you would record them as a netted out capital gain or loss, because the trades would be classified as trading stock but not in our case here as an individual person trading options. The example I've written below should hopefully make that clearer.
EXAMPLE:
Trade on 1 July 2020: Open position
Trade on 15 July 2020: Close position
We can see from this simple example that even though you made a gain on those trades, you still have to record the transactions separately, as first a gain, then as a loss. Note that it is not just a matter of netting off the value of the net profit collected and converting the profit to $AUD because the exchange rate will be different on the date of the opening trade and on the date of the closing trade we have to record them separately.
​
What if you don't close the position and the options are exercised? ATO Response:
The option is granted and then the option is exercisedUnder subsection 104-40(5) of the Income Tax Assessment Act 1997 (ITAA 1997) the capital gain or loss from the CGT event D2 is disregarded if the option is exercised. Subsection 134-1(1), item 1, of the ITAA 1997 refers to the consequences for the grantor of the exercise of the option.
Where the option binds the grantor to dispose of a CGT asset section 116-65 of the ITAA 1997 applies to the transaction.
Subsection 116-65(2) of the ITAA 1997 provides that the capital proceeds from the grant or disposal of the shares (CGT asset) include any payment received for granting the option. The disposal of the shares is a CGT event A1 which occurs under subsection 104-10(3) of the ITAA 1997 when the contract for disposal is entered into.
You would still make a capital gain at the happening of the CGT event D2 in the year the event occurs (the time the option is granted). That capital gain is disregarded when the option is exercised. Where the option is exercised in the subsequent tax year, the CGT event D2 gain is disregarded at that point. An amendment may be necessary to remove the gain previously included in taxable income for the year in which the CGT event D2 occurred.
This scenario is pretty unlikely - for me personally I never hold positions to expiration, but it is nice to know what happens with the tax treatment if it ultimately does come to that.

Debit Trades

What about the scenario when you want to BUY some options first, then SELL that position and close it later? Buying a CALL, for example. This case is what the ATO originally thought my request was about before I clarified with them. They stated:
When you buy an ETO, you acquire an asset (the ETO) for the amount paid for it (that is, the premium) plus any additional costs such as brokerage fees and the Australian Clearing House (ACH) fee. These costs together form the cost base of the ETO (section 109-5 of the ITAA 1997). On the close out of the position, you make a capital gain or loss equal to the difference between the cost base of the ETO and the amount received on its expiry or termination (subsection 104-25(3) of the ITAA 1997). The capital gain or loss is calculated on each parcel of options.
So it seems it is far easier to record debit trades for tax purposes. It is easier for the tax office to see that you open a position by buying it, and close it by selling it. And in that case you net off the total after selling it. This is very similar to a trading shares and the CGT treatment is in effect very similar (the main difference is that it is not coming under CGT event A1 because there is no asset to dispose of, like in a shares or property trade).

Other ATO Info (FYI)

The ATO also referred me to the following documents. They relate to some 'decisions' that they made from super funds but the same principles apply to individuals they said.
The ATO’s Interpretative Decision in relation to the tax treatment of premiums payable and receivable for exchange traded options can be found on the links below. Please note that the interpretative decisions below are in relation to self-managed superannuation funds but the same principles would apply in your situation [as an individual taxpayer, not as a super fund].
Premiums Receivable: ATO ID 2009/110

Some tips

submitted by cheese-mate-chen-c to options [link] [comments]

Former investment bank FX trader: Risk management part II

Former investment bank FX trader: Risk management part II
Firstly, thanks for the overwhelming comments and feedback. Genuinely really appreciated. I am pleased 500+ of you find it useful.
If you didn't read the first post you can do so here: risk management part I. You'll need to do so in order to make sense of the topic.
As ever please comment/reply below with questions or feedback and I'll do my best to get back to you.
Part II
  • Letting stops breathe
  • When to change a stop
  • Entering and exiting winning positions
  • Risk:reward ratios
  • Risk-adjusted returns

Letting stops breathe

We talked earlier about giving a position enough room to breathe so it is not stopped out in day-to-day noise.
Let’s consider the chart below and imagine you had a trailing stop. It would be super painful to miss out on the wider move just because you left a stop that was too tight.
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Imagine being long and stopped out on a meaningless retracement ... ouch!
One simple technique is simply to look at your chosen chart - let’s say daily bars. And then look at previous trends and use the measuring tool. Those generally look something like this and then you just click and drag to measure.
For example if we wanted to bet on a downtrend on the chart above we might look at the biggest retracement on the previous uptrend. That max drawdown was about 100 pips or just under 1%. So you’d want your stop to be able to withstand at least that.
If market conditions have changed - for example if CVIX has risen - and daily ranges are now higher you should incorporate that. If you know a big event is coming up you might think about that, too. The human brain is a remarkable tool and the power of the eye-ball method is not to be dismissed. This is how most discretionary traders do it.
There are also more analytical approaches.
Some look at the Average True Range (ATR). This attempts to capture the volatility of a pair, typically averaged over a number of sessions. It looks at three separate measures and takes the largest reading. Think of this as a moving average of how much a pair moves.
For example, below shows the daily move in EURUSD was around 60 pips before spiking to 140 pips in March. Conditions were clearly far more volatile in March. Accordingly, you would need to leave your stop further away in March and take a correspondingly smaller position size.
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ATR is available on pretty much all charting systems
Professional traders tend to use standard deviation as a measure of volatility instead of ATR. There are advantages and disadvantages to both. Averages are useful but can be misleading when regimes switch (see above chart).
Once you have chosen a measure of volatility, stop distance can then be back-tested and optimised. For example does 2x ATR work best or 5x ATR for a given style and time horizon?
Discretionary traders may still eye-ball the ATR or standard deviation to get a feeling for how it has changed over time and what ‘normal’ feels like for a chosen study period - daily, weekly, monthly etc.
​

Reasons to change a stop

As a general rule you should be disciplined and not change your stops. Remember - losers average losers. This is really hard at first and we’re going to look at that in more detail later.
There are some good reasons to modify stops but they are rare.
One reason is if another risk management process demands you stop trading and close positions. We’ll look at this later. In that case just close out your positions at market and take the loss/gains as they are.
Another is event risk. If you have some big upcoming data like Non Farm Payrolls that you know can move the market +/- 150 pips and you have no edge going into the release then many traders will take off or scale down their positions. They’ll go back into the positions when the data is out and the market has quietened down after fifteen minutes or so. This is a matter of some debate - many traders consider it a coin toss and argue you win some and lose some and it all averages out.
Trailing stops can also be used to ‘lock in’ profits. We looked at those before. As the trade moves in your favour (say up if you are long) the stop loss ratchets with it. This means you may well end up ‘stopping out’ at a profit - as per the below example.
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The mighty trailing stop loss order
It is perfectly reasonable to have your stop loss move in the direction of PNL. This is not exposing you to more risk than you originally were comfortable with. It is taking less and less risk as the trade moves in your favour. Trend-followers in particular love trailing stops.
One final question traders ask is what they should do if they get stopped out but still like the trade. Should they try the same trade again a day later for the same reasons? Nope. Look for a different trade rather than getting emotionally wed to the original idea.
Let’s say a particular stock looked cheap based on valuation metrics yesterday, you bought, it went down and you got stopped out. Well, it is going to look even better on those same metrics today. Maybe the market just doesn’t respect value at the moment and is driven by momentum. Wait it out.
Otherwise, why even have a stop in the first place?

Entering and exiting winning positions

Take profits are the opposite of stop losses. They are also resting orders, left with the broker, to automatically close your position if it reaches a certain price.
Imagine I’m long EURUSD at 1.1250. If it hits a previous high of 1.1400 (150 pips higher) I will leave a sell order to take profit and close the position.
The rookie mistake on take profits is to take profit too early. One should start from the assumption that you will win on no more than half of your trades. Therefore you will need to ensure that you win more on the ones that work than you lose on those that don’t.
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Sad to say but incredibly common: retail traders often take profits way too early
This is going to be the exact opposite of what your emotions want you to do. We are going to look at that in the Psychology of Trading chapter.
Remember: let winners run. Just like stops you need to know in advance the level where you will close out at a profit. Then let the trade happen. Don’t override yourself and let emotions force you to take a small profit. A classic mistake to avoid.
The trader puts on a trade and it almost stops out before rebounding. As soon as it is slightly in the money they spook and cut out, instead of letting it run to their original take profit. Do not do this.

Entering positions with limit orders

That covers exiting a position but how about getting into one?
Take profits can also be left speculatively to enter a position. Sometimes referred to as “bids” (buy orders) or “offers” (sell orders). Imagine the price is 1.1250 and the recent low is 1.1205.
You might wish to leave a bid around 1.2010 to enter a long position, if the market reaches that price. This way you don’t need to sit at the computer and wait.
Again, typically traders will use tech analysis to identify attractive levels. Again - other traders will cluster with your orders. Just like the stop loss we need to bake that in.
So this time if we know everyone is going to buy around the recent low of 1.1205 we might leave the take profit bit a little bit above there at 1.1210 to ensure it gets done. Sure it costs 5 more pips but how mad would you be if the low was 1.1207 and then it rallied a hundred points and you didn’t have the trade on?!
There are two more methods that traders often use for entering a position.
Scaling in is one such technique. Let’s imagine that you think we are in a long-term bulltrend for AUDUSD but experiencing a brief retracement. You want to take a total position of 500,000 AUD and don’t have a strong view on the current price action.
You might therefore leave a series of five bids of 100,000. As the price moves lower each one gets hit. The nice thing about scaling in is it reduces pressure on you to pick the perfect level. Of course the risk is that not all your orders get hit before the price moves higher and you have to trade at-market.
Pyramiding is the second technique. Pyramiding is for take profits what a trailing stop loss is to regular stops. It is especially common for momentum traders.
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Pyramiding into a position means buying more as it goes in your favour
Again let’s imagine we’re bullish AUDUSD and want to take a position of 500,000 AUD.
Here we add 100,000 when our first signal is reached. Then we add subsequent clips of 100,000 when the trade moves in our favour. We are waiting for confirmation that the move is correct.
Obviously this is quite nice as we humans love trading when it goes in our direction. However, the drawback is obvious: we haven’t had the full amount of risk on from the start of the trend.
You can see the attractions and drawbacks of both approaches. It is best to experiment and choose techniques that work for your own personal psychology as these will be the easiest for you to stick with and build a disciplined process around.

Risk:reward and win ratios

Be extremely skeptical of people who claim to win on 80% of trades. Most traders will win on roughly 50% of trades and lose on 50% of trades. This is why risk management is so important!
Once you start keeping a trading journal you’ll be able to see how the win/loss ratio looks for you. Until then, assume you’re typical and that every other trade will lose money.
If that is the case then you need to be sure you make more on the wins than you lose on the losses. You can see the effect of this below.
​
A combination of win % and risk:reward ratio determine if you are profitable
A typical rule of thumb is that a ratio of 1:3 works well for most traders.
That is, if you are prepared to risk 100 pips on your stop you should be setting a take profit at a level that would return you 300 pips.
One needn’t be religious about these numbers - 11 pips and 28 pips would be perfectly fine - but they are a guideline.
Again - you should still use technical analysis to find meaningful chart levels for both the stop and take profit. Don’t just blindly take your stop distance and do 3x the pips on the other side as your take profit. Use the ratio to set approximate targets and then look for a relevant resistance or support level in that kind of region.

Risk-adjusted returns

Not all returns are equal. Suppose you are examining the track record of two traders. Now, both have produced a return of 14% over the year. Not bad!
The first trader, however, made hundreds of small bets throughout the year and his cumulative PNL looked like the left image below.
The second trader made just one bet — he sold CADJPY at the start of the year — and his PNL looked like the right image below with lots of large drawdowns and volatility.
Would you rather have the first trading record or the second?
If you were investing money and betting on who would do well next year which would you choose? Of course all sensible people would choose the first trader. Yet if you look only at returns one cannot distinguish between the two. Both are up 14% at that point in time. This is where the Sharpe ratio helps .
A high Sharpe ratio indicates that a portfolio has better risk-adjusted performance. One cannot sensibly compare returns without considering the risk taken to earn that return.
If I can earn 80% of the return of another investor at only 50% of the risk then a rational investor should simply leverage me at 2x and enjoy 160% of the return at the same level of risk.
This is very important in the context of Execution Advisor algorithms (EAs) that are popular in the retail community. You must evaluate historic performance by its risk-adjusted return — not just the nominal return. Incidentally look at the Sharpe ratio of ones that have been live for a year or more ...
Otherwise an EA developer could produce two EAs: the first simply buys at 1000:1 leverage on January 1st ; and the second sells in the same manner. At the end of the year, one of them will be discarded and the other will look incredible. Its risk-adjusted return, however, would be abysmal and the odds of repeated success are similarly poor.

Sharpe ratio

The Sharpe ratio works like this:
  • It takes the average returns of your strategy;
  • It deducts from these the risk-free rate of return i.e. the rate anyone could have got by investing in US government bonds with very little risk;
  • It then divides this total return by its own volatility - the more smooth the return the higher and better the Sharpe, the more volatile the lower and worse the Sharpe.
For example, say the return last year was 15% with a volatility of 10% and US bonds are trading at 2%. That gives (15-2)/10 or a Sharpe ratio of 1.3. As a rule of thumb a Sharpe ratio of above 0.5 would be considered decent for a discretionary retail trader. Above 1 is excellent.
You don’t really need to know how to calculate Sharpe ratios. Good trading software will do this for you. It will either be available in the system by default or you can add a plug-in.

VAR

VAR is another useful measure to help with drawdowns. It stands for Value at Risk. Normally people will use 99% VAR (conservative) or 95% VAR (aggressive). Let’s say you’re long EURUSD and using 95% VAR. The system will look at the historic movement of EURUSD. It might spit out a number of -1.2%.
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A 5% VAR of -1.2% tells you you should expect to lose 1.2% on 5% of days, whilst 95% of days should be better than that
This means it is expected that on 5 days out of 100 (hence the 95%) the portfolio will lose 1.2% or more. This can help you manage your capital by taking appropriately sized positions. Typically you would look at VAR across your portfolio of trades rather than trade by trade.
Sharpe ratios and VAR don’t give you the whole picture, though. Legendary fund manager, Howard Marks of Oaktree, notes that, while tools like VAR and Sharpe ratios are helpful and absolutely necessary, the best investors will also overlay their own judgment.
Investors can calculate risk metrics like VaR and Sharpe ratios (we use them at Oaktree; they’re the best tools we have), but they shouldn’t put too much faith in them. The bottom line for me is that risk management should be the responsibility of every participant in the investment process, applying experience, judgment and knowledge of the underlying investments.Howard Marks of Oaktree Capital
What he’s saying is don’t misplace your common sense. Do use these tools as they are helpful. However, you cannot fully rely on them. Both assume a normal distribution of returns. Whereas in real life you get “black swans” - events that should supposedly happen only once every thousand years but which actually seem to happen fairly often.
These outlier events are often referred to as “tail risk”. Don’t make the mistake of saying “well, the model said…” - overlay what the model is telling you with your own common sense and good judgment.

Coming up in part III

Available here
Squeezes and other risks
Market positioning
Bet correlation
Crap trades, timeouts and monthly limits
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***
Disclaimer:This content is not investment advice and you should not place any reliance on it. The views expressed are the author's own and should not be attributed to any other person, including their employer.
submitted by getmrmarket to Forex [link] [comments]

Some trading wisdom, tools and information I picked up along the way that helped me be a better trader. Maybe it can help you too.

Its a bit lengthy and I tried to condense it as much as I can. So take everything at a high level as each subject is has a lot more depth but fundamentally if you distill it down its just taking simple things and applying your experience using them to add nuance and better deploy them.
There are exceptions to everything that you will learn with experience or have already learned. If you know something extra or something to add to it to implement it better or more accurately. Then great! However, my intention of this post is just a high level overview. Trading can be far too nuanced to go into in this post and would take forever to type up every exception (not to mention the traders individual personality). If you take the general information as a starting point, hopefully you will learn the edge cases long the way and learn how to use the more effectively if you end up using them. I apologize in advice for any errors or typos.
Introduction After reflecting on my fun (cough) trading journey that was more akin to rolling around on broken glass and wondering if brown glass will help me predict market direction better than green glass. Buying a $100 indicator at 2 am when I was acting a fool, looking at it and going at and going "This is a piece of lagging crap, I miss out on a large part of the fundamental move and never using it for even one trade". All while struggling with massive over trading and bad habits because I would get bored watching a single well placed trade on fold for the day. Also, I wanted to get rich quick.
On top all of that I had a terminal Stage 4 case of FOMO on every time the price would move up and then down then back up. Just think about all those extra pips I could have trading both directions as it moves across the chart! I can just sell right when it goes down, then buy right before it goes up again. Its so easy right? Well, turns out it was not as easy as I thought and I lost a fair chunk of change and hit my head against the wall a lot until it clicked. Which is how I came up with a mixed bag of things that I now call "Trade the Trade" which helped support how I wanted to trade so I can still trade intra day price action like a rabid money without throwing away all my bananas.
Why Make This Post? - Core Topic of Discussion I wish to share a concept I came up with that helped me become a reliable trader. Support the weakness of how I like to trade. Also, explaining what I do helps reinforce my understanding of the information I share as I have to put words to it and not just use internalized processes. I came up with a method that helped me get my head straight when trading intra day.
I call it "Trade the Trade" as I am making mini trades inside of a trade setup I make from analysis on a higher timeframe that would take multiple days to unfold or longer. I will share information, principles, techniques I used and learned from others I talked to on the internet (mixed bag of folks from armatures to professionals, and random internet people) that helped me form a trading style that worked for me. Even people who are not good at trading can say something that might make it click in your head so I would absorbed all the information I could get.I will share the details of how I approach the methodology and the tools in my trading belt that I picked up by filtering through many tools, indicators strategies and witchcraft. Hopefully you read something that ends up helping you be a better trader. I learned a lot from people who make community posts so I wanted to give back now that I got my ducks in a row.
General Trading Advice If your struggling finding your own trading style, fixing weakness's in it, getting started, being reliably profitable or have no framework to build yourself higher with, hopefully you can use the below advice to help provide some direction or clarity to moving forward to be a better trader.
  1. KEEP IT SIMPLE. Do not throw a million things on your chart from the get go or over analyzing what the market is doing while trying to learn the basics. Tons of stuff on your chart can actually slow your learning by distracting your focus on all your bells and whistles and not the price action.
  2. PRICE ACTION. Learn how to read price action. Not just the common formations, but larger groups of bars that form the market structure. Those formations carry more weight the higher the time frame they form on. If struggle to understand what is going on or what your looking at, move to a higher time frame.
  3. INDICATORS. If you do use them you should try to understand how every indicator you use calculates its values. Many indicators are lagging indicators, understanding how it calculates the values can help you learn how to identify the market structure before the indicator would trigger a signal . This will help you understand why the signal is a lagged signal. If you understand that you can easily learn to look at the price action right before the signal and learn to watch for that price action on top of it almost trigging a signal so you can get in at a better position and assume less downside risk. I recommend using no more than 1-2 indicators for simplicity, but your free to use as many as you think you think you need or works for your strategy/trading style.
  4. PSYCOLOGY. First, FOMO is real, don't feed the beast. When you trade you should always have an entry and exit. If you miss your entry do not chase it, wait for a new entry. At its core trading is gambling and your looking for an edge against the house (the other market participants). With that in mind, treat as such. Do not risk more than you can afford to lose. If you are afraid to lose it will negatively effect your trade decisions. Finally, be honest with your self and bad trading happens. No one is going to play trade cop and keep you in line, that's your job.
  5. TRADE DECISION MARKING: Before you enter any trade you should have an entry and exit area. As you learn price action you will get better entries and better exits. Use a larger zone and stop loss at the start while learning. Then you can tighten it up as you gain experience. If you do not have a area you wish to exit, or you are entering because "the markets looking like its gonna go up". Do not enter the trade. Have a reason for everything you do, if you cannot logically explain why then you probably should not be doing it.
  6. ROBOTS/ALGOS: Loved by some, hated by many who lost it all to one, and surrounded by scams on the internet. If you make your own, find a legit one that works and paid for it or lost it all on a crappy one, more power to ya. I do not use robots because I do not like having a robot in control of my money. There is too many edge cases for me to be ok with it.However, the best piece of advice about algos was that the guy had a algo/robot for each market condition (trending/ranging) and would make personalized versions of each for currency pairs as each one has its own personality and can make the same type of movement along side another currency pair but the price action can look way different or the move can be lagged or leading. So whenever he does his own analysis and he sees a trend, he turns the trend trading robot on. If the trend stops, and it starts to range he turns the range trading robot on. He uses robots to trade the market types that he is bad at trading. For example, I suck at trend trading because I just suck at sitting on my hands and letting my trade do its thing.

Trade the Trade - The Methodology

Base Principles These are the base principles I use behind "Trade the Trade". Its called that because you are technically trading inside your larger high time frame trade as it hopefully goes as you have analyzed with the trade setup. It allows you to scratch that intraday trading itch, while not being blind to the bigger market at play. It can help make sense of why the price respects, rejects or flat out ignores support/resistance/pivots.
  1. Trade Setup: Find a trade setup using high level time frames (daily, 4hr, or 1hr time frames). The trade setup will be used as a base for starting to figure out a bias for the markets direction for that day.
  2. Indicator Data: Check any indicators you use (I use Stochastic RSI and Relative Vigor Index) for any useful information on higher timeframes.
  3. Support Resistance: See if any support/resistance/pivot points are in currently being tested/resisted by the price. Also check for any that are within reach so they might become in play through out the day throughout the day (which can influence your bias at least until the price reaches it if it was already moving that direction from previous days/weeks price action).
  4. Currency Strength/Weakness: I use the TradeVision currency strength/weakness dashboard to see if the strength/weakness supports the narrative of my trade and as an early indicator when to keep a closer eye for signs of the price reversing.Without the tool, the same concept can be someone accomplished with fundamentals and checking for higher level trends and checking cross currency pairs for trends as well to indicate strength/weakness, ranging (and where it is in that range) or try to get some general bias from a higher level chart that may help you out. However, it wont help you intra day unless your monitoring the currency's index or a bunch of charts related to the currency.
  5. Watch For Trading Opportunities: Personally I make a mental short list and alerts on TradingView of currency pairs that are close to key levels and so I get a notification if it reaches there so I can check it out. I am not against trading both directions, I just try to trade my bias before the market tries to commit to a direction. Then if I get out of that trade I will scalp against the trend of the day and hold trades longer that are with it.Then when you see a opportunity assume the directional bias you made up earlier (unless the market solidly confirms with price action the direction while waiting for an entry) by trying to look for additional confirmation via indicators, price action on support/resistances etc on the low level time frame or higher level ones like hourly/4hr as the day goes on when the price reaches key areas or makes new market structures to get a good spot to enter a trade in the direction of your bias.Then enter your trade and use the market structures to determine how much of a stop you need. Once your in the trade just monitor it and watch the price action/indicators/tools you use to see if its at risk of going against you. If you really believe the market wont reach your TP and looks like its going to turn against you, then close the trade. Don't just hold on to it for principle and let it draw down on principle or the hope it does not hit your stop loss.
  6. Trade Duration Hold your trades as long or little as you want that fits your personality and trading style/trade analysis. Personally I do not hold trades past the end of the day (I do in some cases when a strong trend folds) and I do not hold trades over the weekends. My TP targets are always places I think it can reach within the day. Typically I try to be flat before I sleep and trade intra day price movements only. Just depends on the higher level outlook, I have to get in at really good prices for me to want to hold a trade and it has to be going strong. Then I will set a slightly aggressive stop on it before I leave. I do know several people that swing trade and hold trades for a long period of time. That is just not a trading style that works for me.
Enhance Your Success Rate Below is information I picked up over the years that helped me enhance my success rate with not only guessing intra day market bias (even if it has not broken into the trend for the day yet (aka pre London open when the end of Asia likes to act funny sometimes), but also with trading price action intra day.
People always say "When you enter a trade have an entry and exits. I am of the belief that most people do not have problem with the entry, its the exit. They either hold too long, or don't hold long enough. With the below tools, drawings, or instruments, hopefully you can increase your individual probability of a successful trade.
**P.S.*\* Your mileage will vary depending on your ability to correctly draw, implement and interpret the below items. They take time and practice to implement with a high degree of proficiency. If you have any questions about how to do that with anything listed, comment below and I will reply as I can. I don't want to answer the same question a million times in a pm.
Tools and Methods Used This is just a high level overview of what I use. Each one of the actions I could go way more in-depth on but I would be here for a week typing something up of I did that. So take the information as a base level understanding of how I use the method or tool. There is always nuance and edge cases that you learn from experience.
Conclusion
I use the above tools/indicators/resources/philosophy's to trade intra day price action that sometimes ends up as noise in the grand scheme of the markets movement.use that method until the price action for the day proves the bias assumption wrong. Also you can couple that with things like Stoch RSI + Relative Vigor Index to find divergences which can increase the probability of your targeted guesses.
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Trade Example from Yesterday This is an example of a trade I took today and why I took it. I used the following core areas to make my trade decision.
It may seem like a lot of stuff to process on the fly while trying to figure out live price action but, for the fundamental bias for a pair should already baked in your mindset for any currency pair you trade. For the currency strength/weakness I stare at the dashboard 12-15 hours a day so I am always trying to keep a pulse on what's going or shifts so that's not really a factor when I want to enter as I would not look to enter if I felt the market was shifting against me. Then the higher timeframe analysis had already happened when I woke up, so it was a game of "Stare at the 5 min chart until the price does something interesting"
Trade Example: Today , I went long EUUSD long bias when I first looked at the chart after waking up around 9-10pm Eastern. Fortunately, the first large drop had already happened so I had a easy baseline price movement to work with. I then used tool for currency strength/weakness monitoring, Pivot Points, and bearish divergence detected using Stochastic RSI and Relative Vigor Index.
I first noticed Bearish Divergence on the 1hr time frame using the Stochastic RSI and got confirmation intra day on the 5 min time frame with the Relative Vigor Index. I ended up buying the second mini dip around midnight Eastern because it was already dancing along the pivot point that the price had been dancing along since the big drop below the pivot point and dipped below it and then shortly closed back above it. I put a stop loss below the first large dip. With a TP goal of the middle point pivot line
Then I waited for confirmation or invalidation of my trade. I ended up getting confirmation with Bearish Divergence from the second large dip so I tightened up my stop to below that smaller drip and waited for the London open. Not only was it not a lower low, I could see the divergence with the Relative Vigor Index.
It then ran into London and kept going with tons of momentum. Blew past my TP target so I let it run to see where the momentum stopped. Ended up TP'ing at the Pivot Point support/resistance above the middle pivot line.
Random Note: The Asian session has its own unique price action characteristics that happen regularly enough that you can easily trade them when they happen with high degrees of success. It takes time to learn them all and confidently trade them as its happening. If you trade Asia you should learn to recognize them as they can fake you out if you do not understand what's going on.
​
TL;DR At the end of the day there is no magic solution that just works. You have to find out what works for you and then what people say works for them. Test it out and see if it works for you or if you can adapt it to work for you. If it does not work or your just not interested then ignore it.
At the end of the day, you have to use your brain to make correct trading decisions. Blindly following indicators may work sometimes in certain market conditions, but trading with information you don't understand can burn you just as easily as help you. Its like playing with fire. So, get out there and grind it out. It will either click or it wont. Not everyone has the mindset or is capable of changing to be a successful trader. Trading is gambling, you do all this work to get a edge on the house. Trading without the edge or an edge you understand how to use will only leave your broker happy in the end.
submitted by marcusrider to Forex [link] [comments]

Biweekly Trading Update #3: Trading without Indicators

Over the weekend my trading strategy changed drastically. At first I decided to let indicators completely rule my trading strategy; however, I quickly ran into issues with that ideology. My trading turned into gambling, and could easily be replicated by a simple program. To combat this issue I pushed back-testing indicators from the prior weekend to after I solidify my technical, sentimental, and fundamental analysis. I started learning Naked Forex, order flow analysis, and price action analysis over the weekend, and have started practicing them during the weekday. Although my win percentage is fairly low, I found that my analysis is getting stronger with each trade I take.
My first trade was on the 30 min EUUSD chart. I saw that the market was entering an ascending triangle and started to expect a bullish breakout. I looked at the market sentiment on fxdaily, and saw that most of the market was bearish. I assumed that the bearish presence in the market were the retail traders, and assumed that the market would move in the opposite direction of their expectations. I used order flow analysis to find the momentum and projection of the market, and ended up placing a buy stop in order to catch the market on the expected breakout. One thing I did not factor was multiple time frame analysis. I did not see that the market had entered a channel, and that I placed a trade when it had hit the resistance level. The price reached my buy stop, but proceeded to drop until it hit my stop loss.
As I went back to analyze my technical analysis, I found that I misread the order flow. I also realized that there were many parts of technical analysis that I didn't factor in, such as multiple time frame analysis, major support/resistance levels, and Fibonacci levels. I also decided to take more precaution when looking at the market sentiment, and try back-testing that data before basing another trade off of it.
Although this trade was a loser, I still learned a great deal from it, and feel like I benefited more than my previous trades. The chart analysis was tough to begin, but progressively got easier as I looked for more and more trades. For the time being I decided to stick with the EUUSD, and exclusively look for repeating market behavior and reactions in order to strengthen my market sense and improve my technical analysis before I start back-testing and using indicators. I also have started to pay more attention to candlestick patterns and their link to trend behavior.
Overall I believe that improving my technical analysis is a step in the right direction for my trading journey. I finally feel like i'm trading with my own mind rather than being overly reliant on the indicators on my chart.
submitted by Aman-1127 to Forex [link] [comments]

[FOR HIRE] An Experienced Financial Markets Trader Will Teach You How To Be Profitable and Consistent

Hi there. I've been trading the financial markets for over seven years profitably and consistently. I focus on forex primarily but my trading approach / technique works under all financial markets.
With the high percentage(+/-98%) of struggling novice traders in the markets and the amount of patience, mental drain and worst of all equity loss, the foreign exchange markets is better and much quicker to grasp with the right mentor or skilled trader on your side.
I have taught, and will teach you individually for optimum performance. I will help you develop an edge over the markets over time. My trading approach is simple, the rules are easy to adhere to and the terminology used isn't too complicated all based under the rules of supply and demand. I will share my analysis and watchlist everyday, weekly and monthly market outlook. All this for $25/month
My Reddit history says all about my portfolio for reference. Please don't hesitate to contact me so I can help you become part of the top 2%. Payment would be through PayPal for interested individuals.
Regards, SnD
submitted by SupplyAndDemandGuy to forhire [link] [comments]

How To Start Trading Forex Reddit

How To Start Trading Forex Reddit

How to trade Forex and be profitable

Hello and thank you for being here again!
In this article I want to show you how I structure my operations by trading in the currency market. If it can give you ideas or help you in your process, the objective of this post will be more than fulfilled. I will try to be as clear and direct as possible. I'll go point by point:
Index
  • 1. How to trade
  • 2. Intraday or swing trading in Forex?
  • 3. Automatic or Manual Forex Trading
  • 4. Is analysis the key to Forex trading?
  • 5. Learn to create robust trading strategies
  • 6. Best Forex Trading Strategies
    • 6.1. Trading strategies with very simple entry and exit criteria
    • 6.2. Systems with a not very high number of operations or trades
    • 6.3. Strategies with a controlled return/risk
  • 7. Establish connection and disconnection rules for your systems
  • 8. Diversify in Forex
  • 9. What currencies to trade on Forex
  • 10. Why invest (only) in Forex
  • 11. Steps to trade
  • 12. How to start as a professional trader (without knowing how to program)
>>>Start trading with Plus500: open a free account

1. How to trade the Forex Market

Focusing on the basics and keeping it simple. Let me explain, you don't have to rely on hyper-complex strategies, use the software that PETA it and put it on the server next to your broker ... you don't have to be the best programmer, much less get dirty on the graphics of your platform to win money in Forex.
You need systems. The systems work. Results-oriented companies and work methods are systems-based. You should start applying and creating systems because they will allow you:
  • Know what you can expect (return and risk) in results.
  • Measure what you do .
  • Know when what you are applying is stopping working.
Yes, that sitting in front of the computer, looking and saying "I think EUR / USD is going to rise" is the most common thing, but the normal thing here is to lose money. You need winning strategies to start the fight.

2. Intraday or swing trading in Forex?

This question is an interesting question and I make a small indent if you are just starting out. Swing trading are operations that usually last several days and when we talk about intraday or day trading we refer to operations that are closed on the same day.
Well, which one then? Like everything in life, it depends (we are). You have to learn that there is no “best for all”. In my case I combine both operations because I dedicate myself full time to this, but if you are just starting out or are one of the people who get stressed out with trading, I recommend that you focus on swing trading.
As you consolidate here you can start to scale and seek to diversify by doing intraday. But again, this is just something that I recommend based on my own experience and from people I have known over the years.

3. Automatic or Manual Forex Trading

Not all automated Forex trading systems are a panacea, nor are all discretionary or manual systems bad. Stop looking at it like that, we're only talking about execution. This is precisely why I am opting for automated execution. We could talk at length about this and if you find it interesting I can dedicate an article just to it. But think that automation is just how strategy is carried out. Whether this is a winner or a loser is the basis of everything.
Automating a losing strategy does not make it a winner, it is only about applying strategies that are profitable and ensuring that they are executed in the best way (in manual we always cheat alone).

4. Is analysis the key to Forex trading?

Many people think that technical analysis is the key to beating the market and defend it to the last consequences. The same happens with those who think that the only way to make money in the foreign exchange market is through fundamental analysis.
So what really works? What really works and you can check. What good is it if you tell me that this or the other is the best method if you haven't even sat down to draw numbers. Many times it is not with what, but how. That is, they can be different valid methods if they are done well. But for this you need statistics of what you are doing.
>>>Recommended Forex Broker: Plus500 - Visit official website<<<

5. Learn to create robust trading strategies

Let's first see what a robust trading strategy is all about. As traders, we know what has happened in the past, but we don't know what will happen in the market tomorrow. That is why we need systems that are well adapted to changing market circumstances.
How can we know systems adapt well to alterations in the spread, prices ...? Simulating those alterations, something like simulating those conditions and seeing how they behave. There are different tests for this such as: Walk Forward test, Montecarlo, and Multimarket.
These tests give us an idea of ​​how robust our created trading system is and give us a reference. Be careful, I said reference, not absolute truth. Then we will test them, our goal is to leave as little space as possible to chance.

6. Best Forex Trading Strategies

You may be wondering how you are going to manage to create profitable strategies and start with all this. Calm down, there are tools for this, but the important thing here is that you know that the strategies that tend to be more stable over time and give better results are:

6.1. Trading strategies with very simple entry and exit criteria

The opposite of what you may have been told. The simpler our Forex trading systems are, the more likely they will continue to work overtime. I have seen this myself and I know it first hand.
Also, which is more likely to stop working, a system based on six indicators or a system based on one or two? That six indicators continue to give results for years and years is not easy. Instead, only one or two are more so. Still, trading systems should always be supervised.

6.2. Systems with a not very high number of operations or trades

Sometimes when we become obsessed with being in the market constantly making gazillions of trades, we are giving our broker money and taking it out of our pocket. More is not better in trading, better is better. This is about getting the most money with the least risk, not giving it to your broker.

6.3. Strategies with a controlled return/risk

You see a strategy, you look at its profit in the last months and years and you are already thinking about connecting it. Error, always look at the return associated with the drawdown. The drawdown of your system is, in short, the maximum consecutive drop it has had. Because it is important? Because if that fall has occurred in the past, it can happen again (and bigger, believe me). Now you may be thinking, what if this happens to me?
Next, I will explain it to you, but first an example of a system that meets all these characteristics (so you can see that it is simpler than it seems:
https://preview.redd.it/cozy880jl9v51.jpg?width=1024&format=pjpg&auto=webp&s=8e14a68538372be8e7ae109d86cd7d132d60fa07
Here more statistics:
https://preview.redd.it/hh5m7saml9v51.jpg?width=997&format=pjpg&auto=webp&s=f1597e3b05350d6fca1ea68ef18004f4340e6a1a

7. Establish connection and disconnection rules for your systems

All methods of trading sound great. The problem is when they start to lose. Some tell you that you have to continue, that the system is the system… But what if the system is stopping working? After all, we live in a changing world and our money is not infinite.
The reality is that many people do not know how to determine when the system is failing or when this happens because they are applying it incorrectly. If you execute the strategies in an automated way you are already saving this, then what you need is a rule to deactivate your strategies at a certain point. To do this, it is enough to monitor them with platforms such as Bluefox or Myfxbook to know what the performance of each is.

8. Diversify in Forex

If we deactivate a Rubén strategy, we stop trading. Not if you activate another that has been doing it well. It is not about you running a Forex trading system or two, it is about having different systems: the best in real and a demo base created that you can include in your real account when you deactivate one because their performance has dropped.
You can diversify by you I frame (temporality time) on assets (currencies) or types of systems (trend, mean reversion ...).
The objective of diversifying is to seek a more stable return, many people do for this is to introduce many systems without more, if you do this you will achieve the opposite, you will be increasing the risk.

9. What currencies to trade on Forex

I recommend that you focus on the majors or major currency pairs, especially if your broker has a high spread, as it is usually lower on these. One of the advantages of automating is that you can scale your trading and do it in different currencies, diversifying as I said before. These are the assets that I have traded in recent months:
https://preview.redd.it/4myzmwlxl9v51.png?width=800&format=png&auto=webp&s=7635d085d2b434e3d3da0420937c245b6cd21339
It starts with being profitable with a few (one or three assets) and as you evolve you can grow your portfolio.

10. Why invest (only) in Forex

I will not be the one to tell you that you should invest in Forex and not in another market. Each one belongs to his father and mother and has its good and not so good things. Of course, one thing is clear, wherever you do it, remember the power of specialization. There are traders who focus on one or two assets and they are profitable. In the end, that's what it's all about, isn't it?
This operation can be extrapolated to different assets such as raw materials, indices and cryptocurrencies. Yes, cryptocurrencies too. In fact, my operations are mainly based on currencies and cryptocurrencies (85% in the first group and 15% in the second). But I have to say that cryptocurrency trading has given me a pleasant surprise this year.
Again, if you are starting, do not do it with many assets or you will saturate yourself. Start step by step and diversify as you evolve. Jack of all trades, master of none.

11. Steps to trade Forex Reddit

If you've gotten this far, it may not be entirely clear to you how the hell I trade, then I'm going to summarize it in steps:
  1. I create statistically profitable trading strategies and verify through tests that they are robust.
  2. I put them on a demo account to make sure they work perfectly.
  3. Once they meet the requirements that I demand of them, I pass them to real.
  4. In real account, I manage my systems connecting and disconnecting them according to their performance (always under objective criteria).

12. How to start trading Forex Reddit as a professional trader (without knowing how to program)

But Rubén, I haven't studied computer science and I'm not particularly good at math. Don't worry if you don't know how to program, it is possible to do all this using tools that will do it for you. For years I have programmed my own systems myself and that's fine, but now I'm concentrating on managing them and getting the most out of them. Do not think that this is the robot that will make you earn millions of euros while you drink the gin and tonic on the beach.
We will read soon with new posts about trading, Forex, cryptocurrencies, platforms ...
Good luck!
To start trading, open an account on Plus500, one of the leading Forex brokers: Click Here
submitted by kayakero to makemoneyforexreddit [link] [comments]

My Trading Systems- How I trade.

How to analyse which stock to buy? You could use something simple like Moving Average Crossover or your system could be something very complex.
I generally use 5-7 setups when I trade.
The reason is, a lot of times I get false signals on one setup, but when I compare it with the Macro, when 3/5 systems give buy signal, I buy.
When 3/5 systems give me a sell signal, I sell. DISCLAIMER- I only trade in stocks, so some setups may not be available in Forex.
  1. Price Action Trading.
I believe that price action alone is the single greatest system. The more indicators you use, the more messy your chart gets. For me, less is more.
I usually start buy drawing Support and Resistance zones /areas, the immediate zones and long term zones.
Then I plot Fibonacci Points. I love Fibs. This alone is enough to trade.
  1. Heikin Ashi + Stochastic RSI.
The Heikin Ashi candlestick reduces noise and gives good signals. The rules are simple, if there are two continuous green closed candles, it's a buy signal and vice versa.
I usually add Stochastic RSI to improve the success rate, but the number of signals reduce.
  1. Volume.
Volume precedes price. Volume can tell a lot of things about the strength of a trend. I also use a VMA, volume moving average.
I find out if the trend is backed by a volume or not. I look for divergences too.
  1. Divergence.
There are two types of divergences, simple and hidden. I use RSI and/or MACD to find divergence. It's very reliable.
The drawback is that divergence works better in higher time frame.
I usually use 1D chart to plot divergence. Another thing, A divergence doesn't mean that the trend will change immediately.
  1. Delivery % Analysis.
This isn't available for Forex. There's a whole type of analysis on this. It has nothing to do with charts. It's based on numbers.
I like to add numbers along with charts to improve my success rate.
There are a common scenarios and 4 hidden scenarios in this analysis.
  1. Index Correlation.
If the index goes up 2% and the stock is correlated, and it goes up 4%, I can conclude using backtested data that the stock is dependent on the index.
If the index falls a bit, the stock will also fall, much more than the index.
Then there are stocks that have no correlation with the index, or inversely correlated.
  1. Option Chain.
This is probably not available for Forex, I am still learning it. This is a VERY reliable system.
Mastering this will help with get 80-90% accuracy. It's pretty tough.
A single view can give you an entire picture of support and resistance zones and what's happening. Are new positions being created or hedged?
Other Setups.
  1. Moving Averages- 20 & 200 day EMA or the EMA channel.
  2. Sector Performance.
  3. Bollinger Bands using channel.
I can talk deeply about all the systems with examples. But I've just tried to mention everything in brief.
-Vikrant C.
submitted by Vikrantc2003 to Daytrading [link] [comments]

API Only Broker

edit to add: Thanks /joeledg for the suggestion on LightSpeed, I looked into them more deeply and have engaged with Robert Morse over on Elite Trader. They do tick off all the boxes (except the last, but that's really last on my list and not important) below. Please ignore the total misinformation (what really is the point of that??) you'll find in the responses below.
https://www.lightspeed.com/automated-trading/
I ignored them before because of lack of API focus, but just found they support colo/cross connect as well as everything else on the list. So that is pretty savvy.
It's possible the retail API trader is too small of a market to focus on exclusively, but that doesn't stop with providing them good service anyways. I still think there's an opportunity there with the right prioritization and engineering team, but that's a different discussion.
--
Looking for a broker, ideally API Only. (Competitive with IB!)
Some ideal features -
Add your ideas, fellow algotraders.
submitted by blazespinnaker to algotrading [link] [comments]

I've been thinking a lot about my own trading and have come to some harsh conclusions. It's time we discuss some hard truths about technical analysis, mechanical trading, and psychology I think many of us don't want to accept.

I've had a rough week and it sounds like I'm not the only one. This week has wiped out my gains since July 1st, and I'm finding myself ever-so-slightly in the hole this month so far. I've made money every other month I've traded, so I'm not writing myself off as a failure, but nevertheless, I've done some digging to try and figure out what I'm struggling with. I hope the following observations about my own trading resonate with some of you and can help us all become better traders.
First off: Fundamental/technical analysis. Since I started with forex a few years ago, I've put 100% of my time and effort into studying technicals. I think many traders, myself included, are drawn to technical analysis because we fall into the trap of thinking "If I just figure out what combination of indicators/chart patterns/algorithms work for me, trading will be smooth sailing." Being able to take a formulaic approach is incredibly appealing because it's much easier to simply check off a list of criteria than it is to interpret more nuanced information. For me, I found success drawing supply and demand zones, using Bollinger Bands to visualize market structure, and confirming reversal patterns with stochastics to trade from one zone to the next. I even studied the math behind those indicators to make sure I fully understood how they worked so I could identify their limitations, and for the most part, the strategy made money. Nevertheless, if I had a dollar for every time I take what I think is a perfect setup, then the market takes me on a wacky-ass ride of unexpected "crazy bullshit" that stops me out, I wouldn't be trading for a living. After some introspection, my conclusion is that those moments are not "crazy bullshit", but rather are the results of factors that fall outside of the (actually very narrow) scope of technical analysis. This has been hard to accept, as I previously learned technical analysis was perfectly viable as a sole perspective. I was taught that the market can be predicted based on analyzing past behavior. It seems obvious now, but when I think about it, no combination of chart patterns or indicators can predict next week's unemployment figures, interest rates, or what announcements (or blunders) world leaders are going to make on the global stage. Technicals work, but they only work when the market is reacting to fundamental factors, and as soon as a new fundamental change comes along, every bit of technical analysis used until that point becomes obsolete. What I'm trying to say is, at the very least, I need to be able to understand when, why, and how the game is going to change if my technicals are going to serve me. As such, I need to stop shirking fundamental analysis. It's time I start paying attention to that economic calendar and put in the effort to learn what each event means and how to interpret the results to figure out how the market will react. It's simply not as easy as looking at the technicals. It should be obvious that there's no magic formula to trading, but many of us try hard to avoid coming to terms with the fact that there's a lot more to "analysis" than just price action, risk management, and indicators.
The problem is we as traders want trading to be easy. It's a career that society glorifies, and even if we tell ourselves we know it's not a get-rich-quick scheme, we still want to "figure it out" so we can spend a few hours a week scribbling on our charts and making simple black and white decisions while we kick back and "live comfortably". And so we try to trick ourselves into thinking it is easy by endlessly parroting mantras like "Risk management is all that matters" and "Trading is 100% psychology" and "All you need to do is find the strategy that works for you and stick to it." The first two are certainly pieces of the puzzle, but there's so much more to the big picture.
The last mantra isn't even remotely true, and brings me to my second point, which thankfully is something I figured out early in my career, but it's too related to the previous topic to not mention: Mechanical strategies. The sentiment that you need to clearly define a precise, detailed strategy and always stick to it is another lie to make trading seem simpler than it really is. Even when I was just starting to demo trade, I was finding trades that would tick all the boxes outlined by my strategy, but my gut would hesitate. Long after I identified that problem, I also began to notice that I'd be forcing myself to hold onto trades, even if they were not moving as fast or far as I initially thought they would. Once I decided to leave room for my own instinct and discretion, I became much more successful. It's important to understand your strategy is a set of rules you yourself made up. If your strategy does not line up with your own professional opinion of the situation based on your personal experiences and observations, you need to find out why. Yes, you absolutely should draw on your past experiences and be consistent in how you examine the market, how much you risk, and what tools you use, but give yourself enough credit to form your own opinions. The market is not consistent. Do not expect to succeed by applying one cookie-cutter set of rules to different currencies, at different times, during different events. Long-term success in any other line of work is dependent on critical thinking and the ability to adapt to an ever-changing world, and forex is no different. It's not simple, it's not easy, and you will have to make difficult decisions.
This wound up being longer than I anticipated, so thanks for reading. I'm eager to hear everyone's thoughts on these topics, so please share them.
submitted by TheFOREXplorer to Forex [link] [comments]

Elliott Waves Series Part 2 - The Broad Concept

Elliott Waves Series Part 2 - The Broad ConceptYou can find Part 1 here: https://www.reddit.com/Forex/comments/hieuyw/introduction_to_elliott_wave_theory_overview_of/
The primary value that the Wave Principle (from here on out, abbreviated to WP) confers on market analysts is the ability to provide context for market behaviour. Having context is incredibly important. To put it simply, the WP can be thought of as a compass. Whenever you feel lost looking at a chart (ANY chart, ANY market!), the WP will help get you back on track.
Clearing Up Some Misconceptions About Elliott Wave Theory:
​
  1. R.N. Elliott first discovered the WP in the 1930s using charts of the stock market. Many misinformed people believe that the WP works “best” on stocks and has been adapted for use in other markets. This is simply false. To be clear - Elliott discovered the WP. He did not invent the WP. The WP is based on human social nature and therefore it cannot be invented. It has always existed. What Elliott did was to start codifying rules and guidelines around how human social nature can be charted. Ultimately, Elliott’s objective was to be able to predict future human behaviour using the historical record. The expression of human social nature generates forms and patterns. As these forms and patterns repetitive, they have enormous predictive value.
​
  1. Another major misconception around the WP is that it requires a lot of discretionary analysis, and more often than not, analysts shoehorn price action to fit the Elliott Wave model. In fact, the WP has very clear rules (these rules are inviolate under any circumstance) and guidelines (these guidelines should be adhered to almost 100% of the time). While there is a discretionary element involved in counting waves, properly trained wave analysts will ultimately arrive at a consensus because following the rules and guidelines narrows the possible wave counts very quickly. Very often Wave analysts will have 2 counts at hand in terms of where they think the market is presently situated. These counts are known as the preferred count and the alternative count. These counts are validated and invalidated using price levels derived from Elliott’s rules and guidelines. The most dissent I expect from two educated Wave analysts is that one analyst’s preferred count could be the other’s alternative count. This dissent quickly resolves itself as the price action develops and validates or invalidates one count or the other. This dissent usually occurs based on wave patterns of one higher degree. It is very rare that I have seen dissent on immediate market movements.
​
  1. I didn’t know this was a major misconception, but someone brought this up in my first post, “I stated that Elliott Theory has better success when working in consolidations or extreme ranging markets.” This is completely false. The WP doesn’t work better or worse regardless of the market or the market conditions. That would be like saying that breathing air only works occasionally. The WP is NOT a strategy, it is the definitive model for charting human herding behaviour. Human behaviour does not show up only in periods of consolidation or range-bound markets. The markets are themselves driven by human behaviour, therefore the WP is always equally applicable. From a trading perspective, the WP is perfectly suited to capturing trends.
​
  1. Well, what about news events? What about supply and demand theory? What about fundamentals?! Doesn’t any of this stuff matter?? In short, the answer is no. I have previously stated that I am a macro-based investor. This is certainly true. Much of the research I consume has to do with market fundamentals and global-macro analysis. This research helps me form a view that I can overlay with the WP. From a trading perspective, when it comes to actually pulling triggers and taking positions, my decisions are always guided first and foremost by the WP. Here is a fantastic quotation from Bob Prechter on this topic, “Sometimes the market appears to reflect outside conditions and events, but at other times it is entirely detached from what most people assume are causal conditions. The reason is that the market has a law of its own. It is not propelled by the external causality to which one becomes accustomed in the everyday experiences of life. The path of prices is not a product of news. Nor is the market the cyclically rhythmic machine that some declare it to be. Its movement reflects a repetition of forms that is independent both of presumed causal events and of periodicity.”
The Bottom Line:
Elliott Wave Theory is the best forecasting tool in existence. It has determined that the market’s progression unfolds in waves. Waves can be thought of as patterns that carry the market in a direction. There are a fixed number of the different kinds of patterns these waves can take. If you really boil this down to its essence, successfully applying the WP is as simple as identifying what kind of wave the market is currently in.
I will end this now. The next part will deal with the overriding wave structure that the market is in, the different kinds of waves we will see, and why this wave structure exists in the first place.
submitted by ParallaxFX to Forex [link] [comments]

How to avoid a forex scam

Forex Trading – Is It Legitimate?

Forex (Foreign Exchange) is not a scam and certainly can be a credible and legitimate way of making money. However, whenever there are large sums of money involved, the shadier elements of society are never lagging. There are plenty of nefarious brokers that target novices, experienced traders and everyone else in between.
Forex scams are unfortunately common. At Broker Complaint Registry we have seen many forex, binary options and CFD scams emerge. Here are a couple of things to look out for whether you are an experienced trader or a complete novice.

Regulated Forex Broker?

The very first step to take to avoid becoming a victim of a Forex scam is to make sure you open an account with a regulated broker. There are many dominions that regulate Forex trading including the FCA in the UK, ASIC in Australia, and the CFTC and the NFA in the United States. Do not solely rely what is on the broker’s website. Check them out online and make sure they are regulated. It is simple to place a regulation on a website so use the resources available to you such as https://register.fca.org.uk/. Be sure to call the forex broker and find out who they are and what they do. Do not get pressured into opening an account unless you are 100% at ease.
However, merely checking to see whether the broker is regulated is not enough. There are numerous regulatory agencies such as CySEC that do not apply strict enough oversight and fail to implement harsh penalties for any brokers that violate their rules.

Guaranteed ROI

Any broker that guarantees a return on investment (ROI) is a surefire scam. For example, a “broker” may be approached to invest your money with an organization that will trade on your behalf and promise yearly or monthly returns for as long as you keep investing with them. Many of these con artists promise 40-50 % of your invested capital guaranteed PER MONTH. These “returns” are absolutely unsustainable and almost always involve other investors continuing to add money to the pot. This is called a Ponzi scheme. Remember Bernie Madoff anyone?
Forex trading is risky and while there are plenty of individuals who can consistently earn money trading, no one will say it is a guarantee.

Fund Withdrawal

If the forex broker or account manager tries to prevent you from withdrawing your funds or your return on investment, then you know that it is a forex scam. There is absolutely no reason that it should take anymore than a few business days for your money to be returned. Even some regulated brokers have refused to allow their clientele to withdraw. Take OTCapital as an example. They are regulated by ASIC, but Broker Complaint Registry has dealt with numerous individuals that have been unable to withdraw their funds.
What to Do if You Have Been Scammed
If you have fallen victim to a cryptocurrency scam, send a complaint to at [[email protected]](mailto:[email protected]), and we will do our very best to get into contact with you as soon as we can to initiate your funds recovery process.
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How I trade.

How to analyse which stock to buy? You could use something simple like Moving Average Crossover or your system could be something very complex.
I generally use 5-7 setups when I trade.
The reason is, a lot of times I get false signals on one setup, but when I compare it with the Macro, when 3/5 systems give buy signal, I buy.
When 3/5 systems give me a sell signal, I sell. DISCLAIMER- I only trade in stocks, so some setups may not be available in Forex.
  1. Price Action Trading.
I believe that price action alone is the single greatest system. The more indicators you use, the more messy your chart gets. For me, less is more.
I usually start buy drawing Support and Resistance zones /areas, the immediate zones and long term zones.
Then I plot Fibonacci Points. I love Fibs. This alone is enough to trade.
  1. Heikin Ashi + Stochastic RSI.
The Heikin Ashi candlestick reduces noise and gives good signals. The rules are simple, if there are two continuous green closed candles, it's a buy signal and vice versa.
I usually add Stochastic RSI to improve the success rate, but the number of signals reduce.
  1. Volume.
Volume precedes price. Volume can tell a lot of things about the strength of a trend. I also use a VMA, volume moving average.
I find out if the trend is backed by a volume or not. I look for divergences too.
  1. Divergence.
There are two types of divergences, simple and hidden. I use RSI and/or MACD to find divergence. It's very reliable.
The drawback is that divergence works better in higher time frame.
I usually use 1D chart to plot divergence. Another thing, A divergence doesn't mean that the trend will change immediately.
  1. Delivery % Analysis.
This isn't available for Forex. There's a whole type of analysis on this. It has nothing to do with charts. It's based on numbers.
I like to add numbers along with charts to improve my success rate.
There are a common scenarios and 4 hidden scenarios in this analysis.
  1. Index Correlation.
If the index goes up 2% and the stock is correlated, and it goes up 4%, I can conclude using backtested data that the stock is dependent on the index.
If the index falls a bit, the stock will also fall, much more than the index.
Then there are stocks that have no correlation with the index, or inversely correlated.
  1. Option Chain.
This is probably not available for Forex, I am still learning it. This is a VERY reliable system.
Mastering this will help with get 80-90% accuracy. It's pretty tough.
A single view can give you an entire picture of support and resistance zones and what's happening. Are new positions being created or hedged?
Other Setups.
  1. Moving Averages- 20 & 200 day EMA or the EMA channel.
  2. Sector Performance.
  3. Bollinger Bands using channel.
I can talk deeply about all the systems with examples. But I've just tried to mention everything in brief.
submitted by Vikrantc2003 to StockMarket [link] [comments]

My Trading Systems - How I trade.

How to analyse which stock to buy? You could use something simple like Moving Average Crossover or your system could be something very complex.
I generally use 5-7 setups when I trade.
The reason is, a lot of times I get false signals on one setup, but when I compare it with the Macro, when 3/5 systems give buy signal, I buy.
When 3/5 systems give me a sell signal, I sell. DISCLAIMER- I only trade in stocks, so some setups may not be available in Forex.
  1. Price Action Trading.
I believe that price action alone is the single greatest system. The more indicators you use, the more messy your chart gets. For me, less is more.
I usually start buy drawing Support and Resistance zones /areas, the immediate zones and long term zones.
Then I plot Fibonacci Points. I love Fibs. This alone is enough to trade.
  1. Heikin Ashi + Stochastic RSI.
The Heikin Ashi candlestick reduces noise and gives good signals. The rules are simple, if there are two continuous green closed candles, it's a buy signal and vice versa.
I usually add Stochastic RSI to improve the success rate, but the number of signals reduce.
  1. Volume.
Volume precedes price. Volume can tell a lot of things about the strength of a trend. I also use a VMA, volume moving average.
I find out if the trend is backed by a volume or not. I look for divergences too.
  1. Divergence.
There are two types of divergences, simple and hidden. I use RSI and/or MACD to find divergence. It's very reliable.
The drawback is that divergence works better in higher time frame.
I usually use 1D chart to plot divergence. Another thing, A divergence doesn't mean that the trend will change immediately.
  1. Delivery % Analysis.
This isn't available for Forex. There's a whole type of analysis on this. It has nothing to do with charts. It's based on numbers.
I like to add numbers along with charts to improve my success rate.
There are a common scenarios and 4 hidden scenarios in this analysis.
  1. Index Correlation.
If the index goes up 2% and the stock is correlated, and it goes up 4%, I can conclude using backtested data that the stock is dependent on the index.
If the index falls a bit, the stock will also fall, much more than the index.
Then there are stocks that have no correlation with the index, or inversely correlated.
  1. Option Chain.
This is probably not available for Forex, I am still learning it. This is a VERY reliable system.
Mastering this will help with get 80-90% accuracy. It's pretty tough.
A single view can give you an entire picture of support and resistance zones and what's happening. Are new positions being created or hedged?
Other Setups.
  1. Moving Averages- 20 & 200 day EMA or the EMA channel.
  2. Sector Performance.
  3. Bollinger Bands using channel.
I can talk deeply about all the systems with examples. But I've just tried to mention everything in brief.
submitted by Vikrantc2003 to IndianStockMarket [link] [comments]

No, the British did not steal $45 trillion from India

This is an updated copy of the version on BadHistory. I plan to update it in accordance with the feedback I got.
I'd like to thank two people who will remain anonymous for helping me greatly with this post (you know who you are)
Three years ago a festschrift for Binay Bhushan Chaudhuri was published by Shubhra Chakrabarti, a history teacher at the University of Delhi and Utsa Patnaik, a Marxist economist who taught at JNU until 2010.
One of the essays in the festschirt by Utsa Patnaik was an attempt to quantify the "drain" undergone by India during British Rule. Her conclusion? Britain robbed India of $45 trillion (or £9.2 trillion) during their 200 or so years of rule. This figure was immensely popular, and got republished in several major news outlets (here, here, here, here (they get the number wrong) and more recently here), got a mention from the Minister of External Affairs & returns 29,100 results on Google. There's also plenty of references to it here on Reddit.
Patnaik is not the first to calculate such a figure. Angus Maddison thought it was £100 million, Simon Digby said £1 billion, Javier Estaban said £40 million see Roy (2019). The huge range of figures should set off some alarm bells.
So how did Patnaik calculate this (shockingly large) figure? Well, even though I don't have access to the festschrift, she conveniently has written an article detailing her methodology here. Let's have a look.
How exactly did the British manage to diddle us and drain our wealth’ ? was the question that Basudev Chatterjee (later editor of a volume in the Towards Freedom project) had posed to me 50 years ago when we were fellow-students abroad.
This is begging the question.
After decades of research I find that using India’s commodity export surplus as the measure and applying an interest rate of 5%, the total drain from 1765 to 1938, compounded up to 2016, comes to £9.2 trillion; since $4.86 exchanged for £1 those days, this sum equals about $45 trillion.
This is completely meaningless. To understand why it's meaningless consider India's annual coconut exports. These are almost certainly a surplus but the surplus in trade is countered by the other country buying the product (indeed, by definition, trade surpluses contribute to the GDP of a nation which hardly plays into intuitive conceptualisations of drain).
Furthermore, Dewey (2019) critiques the 5% interest rate.
She [Patnaik] consistently adopts statistical assumptions (such as compound interest at a rate of 5% per annum over centuries) that exaggerate the magnitude of the drain
Moving on:
The exact mechanism of drain, or transfers from India to Britain was quite simple.
Convenient.
Drain theory possessed the political merit of being easily grasped by a nation of peasants. [...] No other idea could arouse people than the thought that they were being taxed so that others in far off lands might live in comfort. [...] It was, therefore, inevitable that the drain theory became the main staple of nationalist political agitation during the Gandhian era.
- Chandra et al. (1989)
The key factor was Britain’s control over our taxation revenues combined with control over India’s financial gold and forex earnings from its booming commodity export surplus with the world. Simply put, Britain used locally raised rupee tax revenues to pay for its net import of goods, a highly abnormal use of budgetary funds not seen in any sovereign country.
The issue with figures like these is they all make certain methodological assumptions that are impossible to prove. From Roy in Frankema et al. (2019):
the "drain theory" of Indian poverty cannot be tested with evidence, for several reasons. First, it rests on the counterfactual that any money saved on account of factor payments abroad would translate into domestic investment, which can never be proved. Second, it rests on "the primitive notion that all payments to foreigners are "drain"", that is, on the assumption that these payments did not contribute to domestic national income to the equivalent extent (Kumar 1985, 384; see also Chaudhuri 1968). Again, this cannot be tested. [...] Fourth, while British officers serving India did receive salaries that were many times that of the average income in India, a paper using cross-country data shows that colonies with better paid officers were governed better (Jones 2013).
Indeed, drain theory rests on some very weak foundations. This, in of itself, should be enough to dismiss any of the other figures that get thrown out. Nonetheless, I felt it would be a useful exercise to continue exploring Patnaik's take on drain theory.
The East India Company from 1765 onwards allocated every year up to one-third of Indian budgetary revenues net of collection costs, to buy a large volume of goods for direct import into Britain, far in excess of that country’s own needs.
So what's going on here? Well Roy (2019) explains it better:
Colonial India ran an export surplus, which, together with foreign investment, was used to pay for services purchased from Britain. These payments included interest on public debt, salaries, and pensions paid to government offcers who had come from Britain, salaries of managers and engineers, guaranteed profts paid to railway companies, and repatriated business profts. How do we know that any of these payments involved paying too much? The answer is we do not.
So what was really happening is the government was paying its workers for services (as well as guaranteeing profits - to promote investment - something the GoI does today Dalal (2019), and promoting business in India), and those workers were remitting some of that money to Britain. This is hardly a drain (unless, of course, Indian diaspora around the world today are "draining" it). In some cases, the remittances would take the form of goods (as described) see Chaudhuri (1983):
It is obvious that these debit items were financed through the export surplus on merchandise account, and later, when railway construction started on a large scale in India, through capital import. Until 1833 the East India Company followed a cumbersome method in remitting the annual home charges. This was to purchase export commodities in India out of revenue, which were then shipped to London and the proceeds from their sale handed over to the home treasury.
While Roy's earlier point argues better paid officers governed better, it is honestly impossible to say what part of the repatriated export surplus was a drain, and what was not. However calling all of it a drain is definitely misguided.
It's worth noting that Patnaik seems to make no attempt to quantify the benefits of the Raj either, Dewey (2019)'s 2nd criticism:
she [Patnaik] consistently ignores research that would tend to cut the economic impact of the drain down to size, such as the work on the sources of investment during the industrial revolution (which shows that industrialisation was financed by the ploughed-back profits of industrialists) or the costs of empire school (which stresses the high price of imperial defence)
​
Since tropical goods were highly prized in other cold temperate countries which could never produce them, in effect these free goods represented international purchasing power for Britain which kept a part for its own use and re-exported the balance to other countries in Europe and North America against import of food grains, iron and other goods in which it was deficient.
Re-exports necessarily adds value to goods when the goods are processed and when the goods are transported. The country with the largest navy at the time would presumably be in very good stead to do the latter.
The British historians Phyllis Deane and WA Cole presented an incorrect estimate of Britain’s 18th-19th century trade volume, by leaving out re-exports completely. I found that by 1800 Britain’s total trade was 62% higher than their estimate, on applying the correct definition of trade including re-exports, that is used by the United Nations and by all other international organisations.
While interesting, and certainly expected for such an old book, re-exporting necessarily adds value to goods.
When the Crown took over from the Company, from 1861 a clever system was developed under which all of India’s financial gold and forex earnings from its fast-rising commodity export surplus with the world, was intercepted and appropriated by Britain. As before up to a third of India’s rising budgetary revenues was not spent domestically but was set aside as ‘expenditure abroad’.
So, what does this mean? Britain appropriated all of India's earnings, and then spent a third of it aboard? Not exactly. She is describing home charges see Roy (2019) again:
Some of the expenditures on defense and administration were made in sterling and went out of the country. This payment by the government was known as the Home Charges. For example, interest payment on loans raised to finance construction of railways and irrigation works, pensions paid to retired officers, and purchase of stores, were payments in sterling. [...] almost all money that the government paid abroad corresponded to the purchase of a service from abroad. [...] The balance of payments system that emerged after 1800 was based on standard business principles. India bought something and paid for it. State revenues were used to pay for wages of people hired abroad, pay for interest on loans raised abroad, and repatriation of profits on foreign investments coming into India. These were legitimate market transactions.
Indeed, if paying for what you buy is drain, then several billions of us are drained every day.
The Secretary of State for India in Council, based in London, invited foreign importers to deposit with him the payment (in gold, sterling and their own currencies) for their net imports from India, and these gold and forex payments disappeared into the yawning maw of the SoS’s account in the Bank of England.
It should be noted that India having two heads was beneficial, and encouraged investment per Roy (2019):
The fact that the India Office in London managed a part of the monetary system made India creditworthy, stabilized its currency, and encouraged foreign savers to put money into railways and private enterprise in India. Current research on the history of public debt shows that stable and large colonies found it easier to borrow abroad than independent economies because the investors trusted the guarantee of the colonist powers.
​
Against India’s net foreign earnings he issued bills, termed Council bills (CBs), to an equivalent rupee value. The rate (between gold-linked sterling and silver rupee) at which the bills were issued, was carefully adjusted to the last farthing, so that foreigners would never find it more profitable to ship financial gold as payment directly to Indians, compared to using the CB route. Foreign importers then sent the CBs by post or by telegraph to the export houses in India, that via the exchange banks were paid out of the budgeted provision of sums under ‘expenditure abroad’, and the exporters in turn paid the producers (peasants and artisans) from whom they sourced the goods.
Sunderland (2013) argues CBs had two main roles (and neither were part of a grand plot to keep gold out of India):
Council bills had two roles. They firstly promoted trade by handing the IO some control of the rate of exchange and allowing the exchange banks to remit funds to India and to hedge currency transaction risks. They also enabled the Indian government to transfer cash to England for the payment of its UK commitments.
​
The United Nations (1962) historical data for 1900 to 1960, show that for three decades up to 1928 (and very likely earlier too) India posted the second highest merchandise export surplus in the world, with USA in the first position. Not only were Indians deprived of every bit of the enormous international purchasing power they had earned over 175 years, even its rupee equivalent was not issued to them since not even the colonial government was credited with any part of India’s net gold and forex earnings against which it could issue rupees. The sleight-of-hand employed, namely ‘paying’ producers out of their own taxes, made India’s export surplus unrequited and constituted a tax-financed drain to the metropolis, as had been correctly pointed out by those highly insightful classical writers, Dadabhai Naoroji and RCDutt.
It doesn't appear that others appreciate their insight Roy (2019):
K. N. Chaudhuri rightly calls such practice ‘confused’ economics ‘coloured by political feelings’.
​
Surplus budgets to effect such heavy tax-financed transfers had a severe employment–reducing and income-deflating effect: mass consumption was squeezed in order to release export goods. Per capita annual foodgrains absorption in British India declined from 210 kg. during the period 1904-09, to 157 kg. during 1937-41, and to only 137 kg by 1946.
Dewey (1978) points out reliability issues with Indian agriculutural statistics, however this calorie decline persists to this day. Some of it is attributed to less food being consumed at home Smith (2015), a lower infectious disease burden Duh & Spears (2016) and diversified diets Vankatesh et al. (2016).
If even a part of its enormous foreign earnings had been credited to it and not entirely siphoned off, India could have imported modern technology to build up an industrial structure as Japan was doing.
This is, unfortunately, impossible to prove. Had the British not arrived in India, there is no clear indication that India would've united (this is arguably more plausible than the given counterfactual1). Had the British not arrived in India, there is no clear indication India would not have been nuked in WW2, much like Japan. Had the British not arrived in India, there is no clear indication India would not have been invaded by lizard people, much like Japan. The list continues eternally.
Nevertheless, I will charitably examine the given counterfactual anyway. Did pre-colonial India have industrial potential? The answer is a resounding no.
From Gupta (1980):
This article starts from the premise that while economic categories - the extent of commodity production, wage labour, monetarisation of the economy, etc - should be the basis for any analysis of the production relations of pre-British India, it is the nature of class struggles arising out of particular class alignments that finally gives the decisive twist to social change. Arguing on this premise, and analysing the available evidence, this article concludes that there was little potential for industrial revolution before the British arrived in India because, whatever might have been the character of economic categories of that period, the class relations had not sufficiently matured to develop productive forces and the required class struggle for a 'revolution' to take place.
A view echoed in Raychaudhuri (1983):
Yet all of this did not amount to an economic situation comparable to that of western Europe on the eve of the industrial revolution. Her technology - in agriculture as well as manufacturers - had by and large been stagnant for centuries. [...] The weakness of the Indian economy in the mid-eighteenth century, as compared to pre-industrial Europe was not simply a matter of technology and commercial and industrial organization. No scientific or geographical revolution formed part of the eighteenth-century Indian's historical experience. [...] Spontaneous movement towards industrialisation is unlikely in such a situation.
So now we've established India did not have industrial potential, was India similar to Japan just before the Meiji era? The answer, yet again, unsurprisingly, is no. Japan's economic situation was not comparable to India's, which allowed for Japan to finance its revolution. From Yasuba (1986):
All in all, the Japanese standard of living may not have been much below the English standard of living before industrialization, and both of them may have been considerably higher than the Indian standard of living. We can no longer say that Japan started from a pathetically low economic level and achieved a rapid or even "miraculous" economic growth. Japan's per capita income was almost as high as in Western Europe before industrialization, and it was possible for Japan to produce surplus in the Meiji Period to finance private and public capital formation.
The circumstances that led to Meiji Japan were extremely unique. See Tomlinson (1985):
Most modern comparisons between India and Japan, written by either Indianists or Japanese specialists, stress instead that industrial growth in Meiji Japan was the product of unique features that were not reproducible elsewhere. [...] it is undoubtably true that Japan's progress to industrialization has been unique and unrepeatable
So there you have it. Unsubstantiated statistical assumptions, calling any number you can a drain & assuming a counterfactual for no good reason gets you this $45 trillion number. Hopefully that's enough to bury it in the ground.
1. Several authors have affirmed that Indian identity is a colonial artefact. For example see Rajan 1969:
Perhaps the single greatest and most enduring impact of British rule over India is that it created an Indian nation, in the modern political sense. After centuries of rule by different dynasties overparts of the Indian sub-continent, and after about 100 years of British rule, Indians ceased to be merely Bengalis, Maharashtrians,or Tamils, linguistically and culturally.
or see Bryant 2000:
But then, it would be anachronistic to condemn eighteenth-century Indians, who served the British, as collaborators, when the notion of 'democratic' nationalism or of an Indian 'nation' did not then exist. [...] Indians who fought for them, differed from the Europeans in having a primary attachment to a non-belligerent religion, family and local chief, which was stronger than any identity they might have with a more remote prince or 'nation'.

Bibliography

Chakrabarti, Shubra & Patnaik, Utsa (2018). Agrarian and other histories: Essays for Binay Bhushan Chaudhuri. Colombia University Press
Hickel, Jason (2018). How the British stole $45 trillion from India. The Guardian
Bhuyan, Aroonim & Sharma, Krishan (2019). The Great Loot: How the British stole $45 trillion from India. Indiapost
Monbiot, George (2020). English Landowners have stolen our rights. It is time to reclaim them. The Guardian
Tsjeng, Zing (2020). How Britain Stole $45 trillion from India with trains | Empires of Dirt. Vice
Chaudhury, Dipanjan (2019). British looted $45 trillion from India in today’s value: Jaishankar. The Economic Times
Roy, Tirthankar (2019). How British rule changed India's economy: The Paradox of the Raj. Palgrave Macmillan
Patnaik, Utsa (2018). How the British impoverished India. Hindustan Times
Tuovila, Alicia (2019). Expenditure method. Investopedia
Dewey, Clive (2019). Changing the guard: The dissolution of the nationalist–Marxist orthodoxy in the agrarian and agricultural history of India. The Indian Economic & Social History Review
Chandra, Bipan et al. (1989). India's Struggle for Independence, 1857-1947. Penguin Books
Frankema, Ewout & Booth, Anne (2019). Fiscal Capacity and the Colonial State in Asia and Africa, c. 1850-1960. Cambridge University Press
Dalal, Sucheta (2019). IL&FS Controversy: Centre is Paying Up on Sovereign Guarantees to ADB, KfW for Group's Loan. TheWire
Chaudhuri, K.N. (1983). X - Foreign Trade and Balance of Payments (1757–1947). Cambridge University Press
Sunderland, David (2013). Financing the Raj: The City of London and Colonial India, 1858-1940. Boydell Press
Dewey, Clive (1978). Patwari and Chaukidar: Subordinate officials and the reliability of India’s agricultural statistics. Athlone Press
Smith, Lisa (2015). The great Indian calorie debate: Explaining rising undernourishment during India’s rapid economic growth. Food Policy
Duh, Josephine & Spears, Dean (2016). Health and Hunger: Disease, Energy Needs, and the Indian Calorie Consumption Puzzle. The Economic Journal
Vankatesh, P. et al. (2016). Relationship between Food Production and Consumption Diversity in India – Empirical Evidences from Cross Section Analysis. Agricultural Economics Research Review
Gupta, Shaibal (1980). Potential of Industrial Revolution in Pre-British India. Economic and Political Weekly
Raychaudhuri, Tapan (1983). I - The mid-eighteenth-century background. Cambridge University Press
Yasuba, Yasukichi (1986). Standard of Living in Japan Before Industrialization: From what Level did Japan Begin? A Comment. The Journal of Economic History
Tomblinson, B.R. (1985). Writing History Sideways: Lessons for Indian Economic Historians from Meiji Japan. Cambridge University Press
Rajan, M.S. (1969). The Impact of British Rule in India. Journal of Contemporary History
Bryant, G.J. (2000). Indigenous Mercenaries in the Service of European Imperialists: The Case of the Sepoys in the Early British Indian Army, 1750-1800. War in History
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