Tuesday, 23 August 2011

I am having a hard time juggling my tasks as I have about a dozen things to do in Automated Trading. But that's not what I want to write about in my blog today. Instead, I would refer you to a book which I am reading called "Fibonacci Analysis" by Constance Brown. My blog will be relatively short today as I would like to finish reading the book.

This topic is interesting, to me, not because of the Fibonacci Analysis by itself, but because of the author's own intrincacies on how it should be applied in the trading room. The challenge for me is how the Fibonacci Analysis (as shown by the author) could be designed and implemented as an Automated Trading tool.

After reading the first few chapters, my initial thought on design is that the initial range of the Fib analysis has to be identified correctly as it is crucial to the rest of the analysis (according to the author). However, it appears that the range is rather subjective (for example, while most practitioners would use the highest high as a starting point, the author may use the second highest high based on her judgments). As a designer, my goal is to translate the author's judgements into a specification that can be easily implemented as an algorithm.

Ok, time to hit the books and finish reading what I started (hopefully by tomorrow).

Let me fill you in on some of the other things which I am doing; programming an indicator (MT4) based on candlestick and testing it; programming a custom indicator for a colleague; running a portfolio of Expert Advisors (EAs) on my live accounts; trialling a new signal service provider for two weeks; reading several books on Tradestation, candlesticks, and Fibonacci by different authors; and ordered 2 books from Amazon on how to build a robust EA and MIDAS analysis.

For my next blog, I will try to design a specification on the Fibonacci Analysis.


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