Optimization in E-Currency Trading

E-currency trading optimization makes use of historical forex currency trading data to test the effects of slight changes in the forex indicator or strategy criteria. The goal of optimizing forex is to uncover the most profitable or optimal setting for a particular indicator or price pattern traded in the currency market. Here is an example: Suppose that we want to trade a moving average strategy on Coffee futures, we might arbitrarily pick the 18-period moving average and design a strategy around it. Or, we could test all the moving averages between1 and 50 and pick the most profitable. This latter process is known as optimization in e-currency Trading.

It has been a topic of a debate as to whether optimization in e-forex trading is a valid process or not. There are quite strong opinions on each side of the debate. The main issue is that the results of a historical test are not valid as we know that the currency market never repeats the thing twice. The market prices never exactly move in the future as they have in the past or predicted. It is said that optimizing forex is a useless process that simply gives the data which is irrelevant in the future. The anti-optimization argument goes on to say that if the trading method has been exactly “fitted” to the historical data, it stands to reason that the technique will not work in the future because future data has no relation to past data.

The traders who oppose optimization in e-currency go for soft trading techniques such as the Gann techniques, the Market Profile or other generally intuitive approaches to forex trading. However, these traders also make use of historical testing to check whether the trading methods being used by them had worked in the past or not. These forex trading methods are then black-tested by looking at historical charts and estimating where and under which conditions they would have made a trade. It is not tough to curve-fit the Elliott Wave theory and Gann techniques to historical data, but very difficult to trade them in real time.

The Commodity Traders Consumer Report, the Hulbert Digest or other trading and investing rating services gives no better ranking to optimization in e-currency techniques as compared to an average trading strategy. Most of those who argue in favor of e-currency trading optimization do realize that there is a risk of optimizing. However, just because optimizing forex is a risk does not mean that you should not give a try and not go for optimizing forex techniques at all. You just have to keep in mind that there are risks involved and be careful.

All investments in forex trading market are bought and sold based on some type of historical data most of the times. So, in order to take full benefit of optimization in e-forex trading, we must check the past record before making any investment in the currency trading market. You should see how the fund’s investments have performed over the last few years, or the history of the fund.

Optimization in E-Currency Trading is a tool that helps you in enhancing your knowledge of each currency trading strategy along with your knowledge about what works in different types of e-currency trading markets—and give you confidence that even if your trading gets tough, you will know what to expect.