Forex Neural Networks 1

Arrgghhh long time no write my blog log... today i want to write somethin i have to learn.
Yes.. its all about my forex still.. on my boree of my life, but i want to did something usefull for me and you, readers of course.. :D

Now i have think and i want to learn about Neural Networks Spot, Forex Forecasting... for now on, I dont know WTF this Syatem. I grab this articles from MQ4 dot com. it will separated on 4 Post by meh. latter.. edit this... blablabla


Introduction

During the last several years we observe the explosion of interest towards neural networks, successfully used in different spheres - business, medicine, technology, geology, physics. Neural networks are widely used in spheres that require forecasting, classification and management. Such an impressive success is determined by several reasons:

* Wide possibilities. Neural networks are a very powerful modelling tool, allowing the reproduction of immensely complicated relations. In particular, neural networks are nonlinear by nature. Over a period of many years linear modelling was the main method of modelling in the majority of spheres, because optimization procedures for it are well developed. In tasks, where linear approximation is not enough, linear models operate poorly. Besides, neural networks overcome "the curse of dimensionality", which does not allow modelling linear relations in case of a large number of variables.
* Easy usage. Neural networks learn by examples. The user of a neural network collates representative data and then starts the algorithm of training, which automatically accepts the data structure. Of course the user should have a set of heuristic knowledge about the way of selecting and preparing data, of choosing the appropriate network architecture and interpreting results. However, the knowledge level, needed for a successful use of neural networks, is much lower, than that needed in traditional statistics methods.

Neural networks are attractive from the point of view intuition, because they are based on the primitive biological model of nervous systems. In future, the development of such neuro-biological models can lead to the creation of really intelligent computers. [1]

Forecasting financial time series is a primary member of any investment activity. The whole idea of investment - investing money now with the purpose of getting profit in future - is based on the idea of forecasting future. Accordingly, forecasting financial time series lies at the root of the investment industry - all stock exchanges and over-the-counter (OTC) markets.

It is known, that 99% of all trades are speculative, i.e. are aimed not at a real trade turnover, but at taking profit using the scheme "buy cheap - sell dear". They are all based on the forecasts of price movements by a trade participants. What is important - forecasts of the trade participants are contrary to each other. So the amount of speculative operations characterizes the difference in the forecasts of the market participants, i. e. actually - the unpredictability of financial time series.

This most important feature of market time series underlie the theory of the "efficient" market, described in the thesis of L. Bachelier in 1900. According to this thesis, an investor can rely only on the average market profitability, assessed by indexes, like Dow Jones or S&P500 for New-York Exchange. Any speculative profit is of random nature and is like gambling (there is something attractive in it, isn't there?). The reason for the unpredictable nature of market curves is the same, as why money rarely lies on the ground in public places: too many people wishing to take it.

Naturally, the theory of an efficient market is not supported by the market participants (which are looking for the money lying about). Many of them think that, despite the seeming stochasticity, all time series are full of hidden regularities, i.e. are predictable, at least partially. The founder of a wave analysis R. Elliot tried to find such hidden empirical regularities in his articles in the 30s.

In the 80s this point of view was unexpectedly supported in the newly appeared theory of dynamic chaos. This theory is based on the contraposition of the chaotic state and stochasticity (randomness). Chaotic series only seem random, but as a deterministic dynamic process they allow short-term forecasting. The sphere of probable forecasting is restricted in time by the horizon of forecasting, but this can be enough for getting real profit from forecasting (Chorafas, 1994). And those, who use the best mathematics methods of extracting regularities from noisy chaotic series, can expect large profits - at the expense of less equipped fellows.

The last decade was characterised by a persistent growth of the popularity of technical analysis - a set of empirical rules, based on different indicators of the market behaviour. The technical analysis focuses on the individual behaviour of this financial instrument, apart from other securities. But technical analysis is very subjective and works inefficiently on the right edge of a chart - exactly where we need the forecast of a price direction. That is why more popularity is gained by the neuro-network analysis, because, as opposed to the technical one, it does not set any restrictions on the type of the entry information. This may be indicators of the given indicator series, as well as the information about the behaviour of other market instruments. Not in vain neural networks are widely used by institutional investors (for example large pension capital funds), working with large portfolios, placing great importance on the correlation between different markets.

Pure neuro-network modelling is based only on data, not using any antecedent arguments. This is its strong and week point at the same time. The available data may be insufficient for training, dimensionality of potential entries may be too large.

That is why for a good forecast one should use neuropackages with large functionality.


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Lesson 4. What is a Forex deal?

The investor's goal in Forex trading is to profit from foreign currency movements.

More than 95% of all Forex trading performed today is for speculative purpose (e.g. profit from currency movement). The rest belongs to hedging (managing business exposures to various currencies) and other activities.

Forex trades (trading onboard internet platforms) are non-delivery trades: currencies are not physically traded, but rather there are currency contracts which are agreed upon and performed. Both parties to such contracts (the trader and the trading platform) undertake to fulfill their obligation: one side undertakes to sell the amount specified, and the other undertakes to buy it. As mentioned, over 95% of the market activity is for speculative purposes, so there is no intention on either side ti actually perform the contract (the physical delivery of the currencies). Thus, the contract ends by offsetting it against an opposite position, resulting in the profit and loss og the parties involved.
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My Final Month in Fxopen Competition

Now, May 2nd, 2008..

This is my Final report for detailedStatement result of the Ending day in my journey at FXOpen competition..
Not Bad i think ... still don't know yet, how about the other competitor DetailedStatement result.. :(
Who The Winner Is...?? in 2-3 Days it will come.. just wait and see.

My Trading Resume Of This Month :

INITIAL Balance (free margin) = 5.000 USD
CLOSED Balance (Final margin) = 21.304 USD
Consecutive WIN = 13 times
Consecutive LOSE = 1 times

PROFIT TRADE = 326.08 % / Month

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My Middle Month in Fxopen Competition

Now, April 21st, 2008..

This is my report for detailstatement result of the day by day in my journey at FXOpen competition..
I think this is good enough ... but i don't know yet, how about the other competitor detailstatement result.. :(

Feel so bad... I losted 4K on the first week of this month... NFP suck... :((
If i did not lose, may be my account balance was $20K right now. :D

Link My Detailstatement below...

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My 1st Day in Fxopen Competition

Today on April, 2nd 2008 is my first day trading on FxOpen Competetion,.. the last day i has losted my all margin in my long day trade... and now i 'm back for trade in Fx, even this is just only use on demo account... but the prize is good enough..

The FXOpen/TalkGold Trader’s competition is a great chance for the novice trader to start trading in the FOREX market and win some valuable prizes as well. Experienced traders can use the competition to improve trading skills, try different strategies or even test Expert Advisors in a competitive environment.

Winner will receive real money of course.. :))

• 1st place $1000
• 2nd place $500
• 3rd place $300

Hopes,.. i will be the winner on this competetion..

This is my trading strategy, i will follow my indicators which i have use :

1. Super SR
2. GMAC
3. SHI Channel True
4. Standart MACD
5. X Stochastic
6. Fractals
7. ForexFactory Fundamental

All that indicators has modified by me...
than i renamed as BUFFY 2008 V.1 indicator By Praetorian, and for the future this will be born as my EA Robot Trading System.. just wait for me.. absolutly.. FREE... why people sell good EA for.

If have my own EA i will not sell it, i will give you free as long as you make me flatered hahahaha, eh sorry ... but i will sell my services as your Consultant on Advice and maintenance of Our System Robot Trading for all of my customers.

Take alook, this is my DetailStatment on Runing for my 1st day in GBP/JPY of course still in my manual trade... ! :)

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