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Egwig
2009.06.20 18:15
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TheEconomist
2009.06.20 19:25
@Vangrosh: I always had to embed my own drawdown calculus, as the green line is updated only when a trade is closed. And if you make a hedge system that closes only in profit, the green line will always go up. And I always wanted to see equity displayed during backtest, because the green line is unreliable. |
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bredin
2009.06.21 08:00
isnt the real question after opening a long pos and a short pos of equal lots "what will my MARGIN look like"? in mt4 my available margin will be the balance minus the cost to open the two trades minus the lossy position plus the positive position, as i see it the margin in mt5 will be my balance only since I now have no position in the market. do i have this right? |
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migmof
2009.06.21 11:45
vangrosh wrote >>
migmof, that is the BEST explaination I have read that shows the difference between a position-based platform like NinjaTrader or MT5 and an order-based platform like MT4. What I've been trying to explain over and over is that opening a hedge "Fixes your current loss" so that you can just keep trading and deal with that hedge when the price comes back, and as you say you can then close the order when the price hits the first order, or even just a few more pips to cover the spead and then you will have zero losses on that first trade. In MT5 that first trade will be a "REALISED" loss as you put it. As soon as you open an opposing position in MT5- well, the way I am speaking is wrong and this is what people need to realize with position-based systems- you can't open an opposing position. For example, I just tried this in NinjaTrader. I had a Buy position at a loss so I clicked on the "Sell" button, and what do I get? An exit order and no open position. My Buy was closed at a loss. I would have to click on "Sell" again to open a new position. From what I've been learning about other platforms that allow trading of more than Forex, like stocks and futures, the position based system is standard. I've read so many posts from stock and futurers traders who can't wrap their head's around the way MT4's order-based system works. They argue and say you can't possibly have two open opposing orders, that opening one would just close the first. They also keep saying that Forex brokers are misleading nubees with MT4 because there is no such thing as a "Stop Loss" and "Take Profit" for an order or position, eg a "Buy" order is a market order and if you want a SL and a TP then you place those as two additional orders. I'm not sure I'm getting this exactly right, but they are very concered that Forex traders that use MT4 or other platforms that can have the SL and TP "attached" to the order are not understanding the way trading has been done for decades. I'm beginning to understand this now and that MT4 is doing stuff for us that hides the real details of what is going on and I want to understand the traditional way trading as been done for so long. But as others have said, Forex is a very different market and is made to be traded up and down, and multible opposing order capabiliy is a good thing that will be gone with MT5. Another thing I remember reading from a lot of these guys when talking about hedging in Forex is that they think it is some type of a scam by brokers to allow this and to allow to close positions out of order. Positions MUST be FIFO as they say- but MT4 is ORDERS not positions I tell them. They seem to think order-based is some type of accounting scam to mislead nubees and take their money. OH WELL.... I'm new at all this but I don't see what is WRONG with MT4's system and I don't see why we can't have both types of systems to choose from.
Does anyone know why the other markets can't be traded like we can in Forex with MT4? Is it just because of the NFA rules, or is it the nature of the other markets, like why is FIFO a rule in the first place? Were we doing something others think was unethical or something because retail Forex has not had some of these NFA rules up until now? Were we getting away with some kind of unfair advantage or was it the brokers?
Now please I hope my questions quickly will all answered, as I am dire in need to be relieved of mind my confusion.
Hi Vangosh, It seems that you are little bit confused. :) Let me try to clarify for you. MT4 is position based whereas MT5 or Ninja Trader is Order based. That's why in MT4 we can have both long and short POSITIONS opened at same time and we can set stoploss and takeprofit for each POSITION. In MT5 or ORDER based trading platform, you indeed need 2 new orders to control your existing open trade, one for stoploss and one for takeprofit. But the platform usually allows both orders linked, or in their technical terms, OCO orders, (ie One Cancel anOther). For example, you have an Long trade open for EUR/USD at 1.4000, to control your stoploss and takeprofit, you need to create two LIMIT orders, one for stoploss at 1.3900 and one for takeprofit at 1.4100. And then you link them up using OCO feature. So if your takeprofit order is hit first and your trade is closed, it will AUTOMATICALLy Cancel the pending Stoploss order and vice versa if your stoploss order is hit first. Your concern about hedging is baseless. In stock market, it is true that all orders are usually FIFO based. And it is usually Long only ie you can only BLSH (Buy Low Sell High). Short Selling in stock market (either Covered Short selling means you borrow stocks from someone owns the stocks or Naked Short Selling is getting lots of scrutiny these days, such as reintroducing uptick rules and complete ban of naked short selling in some countries like Australia. ) However, these days, even in stock market, hedging stocks using CFDs (Contract For Differences) is gettting very popular. Many large brokers such as banks are promoting it... In short, hedging is not a SCAM. It is perfectly legal. Only in US, NFA recently introduced a ruling that bans hedging and it has caused lots of distruption to forex brokers. Originially, it was to be enforced in mid May but now deplayed to mid July because many broker's software can not handle it. (For details, read CurrencyTrader June edition) I know some MT4 brokers are already enforcing it, eg IBFX. But believe me, they are doing their best to bypass this restirction. Recently, IBFX introduced a special edition of MT4 platform --MultiTrader4. See details here. http://www.ibfx.com/company/newsmedia/pressrelease/2009/09_05.aspx, so people can hedge using 2 accounts. Unforuntaly, it is for manual traders only. No EA can be attached to it. Why are they doing this ? because they are losing customers. People are fleeing US and moving their accounts to UK and other countries where there is no hedging restrictions. I hope you are now less confused than you are before :) Cheers, MIGMOF |
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n8937g
2009.06.21 16:42
migmof wrote >>
Hi Vangosh, It seems that you are little bit confused. :) Let me try to clarify for you. MT4 is position based whereas MT5 or Ninja Trader is Order based. That's why in MT4 we can have both long and short POSITIONS opened at same time and we can set stoploss and takeprofit for each POSITION. In MT5 or ORDER based trading platform, you indeed need 2 new orders to control your existing open trade, one for stoploss and one for takeprofit. But the platform usually allows both orders linked, or in their technical terms, OCO orders, (ie One Cancel anOther). For example, you have an Long trade open for EUR/USD at 1.4000, to control your stoploss and takeprofit, you need to create two LIMIT orders, one for stoploss at 1.3900 and one for takeprofit at 1.4100. And then you link them up using OCO feature. So if your takeprofit order is hit first and your trade is closed, it will AUTOMATICALLy Cancel the pending Stoploss order and vice versa if your stoploss order is hit first. Your concern about hedging is baseless. In stock market, it is true that all orders are usually FIFO based. And it is usually Long only ie you can only BLSH (Buy Low Sell High). Short Selling in stock market (either Covered Short selling means you borrow stocks from someone owns the stocks or Naked Short Selling is getting lots of scrutiny these days, such as reintroducing uptick rules and complete ban of naked short selling in some countries like Australia. ) However, these days, even in stock market, hedging stocks using CFDs (Contract For Differences) is gettting very popular. Many large brokers such as banks are promoting it... In short, hedging is not a SCAM. It is perfectly legal. Only in US, NFA recently introduced a ruling that bans hedging and it has caused lots of distruption to forex brokers. Originially, it was to be enforced in mid May but now deplayed to mid July because many broker's software can not handle it. (For details, read CurrencyTrader June edition) I know some MT4 brokers are already enforcing it, eg IBFX. But believe me, they are doing their best to bypass this restirction. Recently, IBFX introduced a special edition of MT4 platform --MultiTrader4. See details here. http://www.ibfx.com/company/newsmedia/pressrelease/2009/09_05.aspx, so people can hedge using 2 accounts. Unforuntaly, it is for manual traders only. No EA can be attached to it. Why are they doing this ? because they are losing customers. People are fleeing US and moving their accounts to UK and other countries where there is no hedging restrictions. I hope you are now less confused than you are before :) Cheers, MIGMOF MigMof...I'm afraid you don't get it....I want to have a buy and a sell open at the same time.... I don't want them to cancel... That is the way I MAKE PROFIT... I also don't have any interest in giving this up to have stocks available on MetaTrader...,I and many others, will look for another platform to trade currency if MT5 isn't changed or if MT4 is retired. The fact that so many traders are moving from US NFA (not FXDD) brokers who are not allowing this (hedging) is proof many traders want it. Metatder will hear the same whooosh leaving sound when MT5 hits.... |
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migmof
2009.06.22 09:31
MigMof...I'm afraid you don't get it....I want to have a buy and a sell open at the same time.... I don't want them to cancel... That is the way I MAKE PROFIT... I also don't have any interest in giving this up to have stocks available on MetaTrader...,I and many others, will look for another platform to trade currency if MT5 isn't changed or if MT4 is retired. The fact that so many traders are moving from US NFA (not FXDD) brokers who are not allowing this (hedging) is proof many traders want it. Metatder will hear the same whooosh leaving sound when MT5 hits.... N8937g, please read ALL my comments carefully, We are on the same side... I have always been critical to MQ's decision to expand their core business from Forex to every tradeable financial instruments available (bit exaggerated) by sacrificing some beauty of the MT4 such as position based order management along hedging capability. Nevertheless, I remain optimistic because I strongly believe the market is ruled by supply and demand. The success of MT4/MQL4 is because of us (traders/programmers/end users). if MT5 is not something that majority of people want, it will lack of support from the community and will doom to be failed just like Microsoft's infamous Windows Me and Vista... |
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TheEconomist
2009.06.22 12:04
To me, the most important thing to see is the multiple asset backtester. If it won't have it, I'm really out of options, and, so far I didn't hear anything from MetaQuotes about this...
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migmof
2009.06.22 17:47
TheEconomist wrote >>
To me, the most important thing to see is the multiple asset backtester. If it won't have it, I'm really out of options, and, so far I didn't hear anything from MetaQuotes about this... Don't hold your breath! If they didn't mention it at preview on 26/05, the chance of having it in the beta/first release is very unlikely. I know many coders cry for this feature... BTW, why do u call "multi asset" instead of "multi currency"? Do you intend to backtest GOLD, OIL, Stocks along FX concurrently?? |
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TheEconomist
2009.06.22 20:17
migmof wrote >>
Don't hold your breath! If they didn't mention it at preview on 26/05, the chance of having it in the beta/first release is very unlikely. I know many coders cry for this feature... BTW, why do u call "multi asset" instead of "multi currency"? Do you intend to backtest GOLD, OIL, Stocks along FX concurrently?? Yup, you're right. I wanna backtest FX pairs side by side with other FX pairs, also with futures and options. Same for the other classes. I would even ask myself why they enlarged the asset base without doing something to the backtester. Also, even testing on "EUR/USD" might be called multicurrency (because it's two currencies in the pair), and, after all, we play with "forex products" rather than currencies themselves. Multiple asset backtesting would be like jumping from Eagle Nest to Wolfenstein 3d . I give it already a black ball for lack of tick-to-tick history, and I'm quite neutral to the lack of hedging - although many traders give to it another black ball to this. Events might be the bell to save it, but it would be too less for two years of waiting... |
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vangrosh
2009.06.23 10:53
TheEconomist wrote >>
@Vangrosh: I always had to embed my own drawdown calculus, as the green line is updated only when a trade is closed. And if you make a hedge system that closes only in profit, the green line will always go up. And I always wanted to see equity displayed during backtest, because the green line is unreliable. I understand your points and what you would like to see with the backtester. But it does work the way it is supposed to in the current version. If you mean the equity line is not reliable for your needs or your system, or that you would just like certain features enhanced and improved that's fine, but if you're saying that it does not work right as in broken, buggy or for some reason was designed to be purposely decepting- (some of your comments sounded like you thought MT4 had some purposely deceptive features) then I would say that's not accurate. So I'm still not clear about some of your comments, because they do not reflect my experience with MT4. About your comment of a hedge system- the green line would not always go up, because the fundamentel idea of any hedge system I've ever seen is the ability to stop loss on a losing trade by opening a 'hedge' trade and then continue to trade as normal and creating new hedges as needed. Hedges are only closed once the price has come back in favor of any particular hedge. Thus most of your closed trades will be normal trades that have reached TP. So in the backtester you would see many trades being closed in profit, but most of the time, by the very nature of hedging itself, you will see a lower, negative equity line at each close, because of the fact that you will always have at least one, but most likely many hedges still open. It can take days, weeks or months to close just one hedge depending on the pair and the market. So most hedging systems always maintain a contstant drawdown. The only time the green equity line would 'go up' as you said and be equal to the balance line in a hedging system is if/when your are able to close the last remaining hedge pair (the hedge trade and the matching parent trade) in profit and there are no more open trades. As far has the graph in the backtester, it's seems you would like it to work in real time like an indicator. That would be very good and more reliable. Maybe in MT5? For now you could write a proper balance/equity curve indicator and use it during backtesting, but I would think something so basic would have already been created and availible. |