Introduction
Trading activity can be divided into two relatively independent parts. The first part named Trading System (TS) analyzes the current situation, decides to enter the market, defines the type of position (buy/sell) and the moment to exit the market. The amount of funds used in each contract is defined by the second part called Money Management System. In this article, we try to analyze some MM techniques depending on their parameter changes. Simulation method is selected for analysis. However, in some cases analytical decision results are also considered. Analysis tools are MT4 trading terminal and Excel. Libraries providing pseudorandom number generation (PRNG) [1], statistical functions [2] and modules for transferring data from MT4 to Excel [3] are additionally used.
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| binary free indicator |
It is assumed that any trading activity (TA) has some degree of uncertainty. In other words, TA parameters are known with some precision and can never be precisely defined. The technique of "random betting" can serve as a good and, perhaps, the simplest example of this type of TA. Using this strategy, a trader randomly (for example, by tossing a coin) determines whether the rate of one currency will increase or decrease by a certain number of points relative to another. Presumably, the generation of coin rates is unrelated to the outcome of tossing a coin. Therefore, we have a TA, where the outcomes of the contract are not related to each other . Also, we are unable to determine the outcome of the next coin toss, as well as predict whether it will match the direction of the coin in the future. All we know is that the match will happen about 50 out of 100 times if enough are tried. Many traders believe that their business is different from this. Perhaps, they are right but first we will look at this particular case. Then, we will analyze the behavior and performance of the system, where more than 50 cases out of 100 can be predicted.
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