Six most widespread mistakes at Forex trading systems

Many investment ideas are based on erroneous, logically unreasonable conclusions. Being guided by simple common sense and logic, the participant of the Forex market can save many precious time and forces. We shall result the list of six most widespread mistakes, to avoid which completely not difficultly.

1. Try to avoid the Forex trading indicators submitting on two different signals on the same data, for the first time, when the new data are included in calculation, and again when the same data are issued from a sliding window of the data, exposed to processing. Forex trading indicators like Stochastic oscillators, rates of changes of the price, momentum-indicators and even simple sliding average (especially fast and sensitive) submit signals twice, in particular, when in a sliding window are included or the data strongly distinguished from other data drop out of it, participating in calculation. It is obvious, that the real Forex market cannot react to the moving of a sliding window undertaken by the analyst forward. Any Forex trading indicator which is taking place in strong dependence on the last data, brings an element of random errors in research. The system elected by the Forex trader should reflect last tendencies of the Forex market successfully.

2. Pay attention to the structural changes occuring in the Forex market with current of years. Now bargains much more than financial tools, than several decades ago, that results in impossibility of correct comparison of parameters of such Forex trading indicators, as a revolution of the tenders. The similar data should be statistically normalized, that in most cases does not occur. Instead of working with absolute values of Forex trading indicators, try to use various relations. We advise you to use a parameter of a deviation of the Forex trading indicator from a trend: divide the Forex trading indicator on its own sliding average. In most cases similar updatings allow to normalize the Forex trading indicator so, that it behaves more stably during the long periods of time.

3. After the big price changes try to not work with dollar. So, day time change of an index of Dow - Johnes on 100 pips became the usual phenomenon after 1997, however ten more years earlier, till 1987, similar day time movement of the price could seem improbable. Comparison of a level of the momentum Forex trading indicator (usually determined as the current price of closing in a minus the price of closing 2 candles earlier) now with its level the last years would appear, thus, a serious mistake. Today, when in absolute expression price levels of an index have essentially risen, the momentum Forex trading indicators expressed in pips or in money, reach appreciablly big heights and fall much below, than before.

4. Do not complicate calculations. The model consisting of many parts, using various types of the data or some computing methods, uneasily, and at times also are impossible to understand. Not having understood in essence of the Forex trading indicator, the Forex trader cannot be quite confident it so, at the moment of stress, confusion, doubts cannot implicitly submit to its signals. The optimization which has been carried out with a plenty of changeable parameters, will deprive model of its practical value. Excessively complex also it is superfluous the optimized methods, as a rule, badly function in real time.

5. Do not think, that experience - your best teacher. Experience - the knowledge received too late; the person gets it not earlier, than desirable will escape. To study on own experience it is useful not always. By practical consideration the Forex trader receives a material not only not systematized, but sometimes and frankly casual, hardly probable giving in to judgement. At absence of a theoretical basis research of the trade made in real time, will be complicated by the unpredictable events unmatched by opinions, instant unreasonable jumps of the prices. Personal predilections of the Forex trader, his emotional condition will inevitably affect perception{recognition} of a material also. Notice: even if experience teaches, training will last indefinitely. To the Forex trader who has wished together with the Forex market to go through all its numerous phases, long years will be necessary. So, experience - not the best assistant in data gathering and development of system. Besides the mistakes accomplished during real trade and investment, cost, as a rule, the big money. To simulate functioning the Forex trading indicator on the basis of the historical data much less difficult and it is dangerous, than slowly and with the big losses to receive real experience.

6. Do not leave in research " black holes ". The Forex trader should be confident that results of his analysis are suitable for any situations. Backtesting the Forex trading indicator, he has no right to bypass the side extreme circumstances. Painful uncertainty and, as consequence, emotional failure - result of work with the Forex trading indicator which has been not designed for adverse conditions in the Forex market. The Forex trader should know, that the chosen trading system, in spite of on any financial storms, will allow to make of the decision quickly and effectively.

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