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03. Aug
2017

The Trading Platform as a Competitive Disruptor

Geschrieben von: agenatrader

The Hidden Cost of Outmoded Thinking and Old Technologies

Non-professional traders and investors collectively comprise one of the largest driving forces in a market’s day-to-day volume. They may not possess the largest capital resources on an individual basis, but on average they provide a significant portion of the daily liquidity necessary for markets to function.

More commonly referred to as “retail traders,” this collective of non-professionals encompass a wide and diverse demographic range. Although some retail traders have more market experience and knowledge than others, we can assume that each trader is something of a “professional,” if not in trading, then in some other craft or discipline.

And here is where the problems start–with two general limitations that significantly impede trading potential and progress.

AgenaTrader Trading Software

 
 

Many traders are “professionals” in their own individual fields, but cannot transfer their professional approach to trading.

Another term for this is domain dependence. Whether a market participant is an artisan, entrepreneur, corporate executive, or specialized professional such as a doctor or lawyer, they often tend not to transfer their professional approach and expectations to their trading activities.

This lack of transference is evident in their approaches and investments toward trading technologies. Though most of these traders in their individual fields would not tolerate anything less than up-to-date technologies (e.g. software, apps, and other technologies), they nevertheless choose not to research or invest in trading technologies that would upgrade their market competitiveness.

This is often a serious problem, as competitiveness in the financial markets are defined by technological change. Therefore, most retail traders who understand this in their own “domain” tend not to see this is the trading domain, where such a perspective is crucial, as trading often involves humungous levels of asymmetrical risk.

It’s a common human trait to prefer status quo certainty over change, even if that certainty has brought only consistent unfavorability over the long term.

Let’s take an analogy. Professional race car driving is a high-risk profession. Regardless of how skilled a driver is, that driver would never race an older car whose performance would not match those of newer cars with enhanced functionalities. Although a driver is confident in his or her skill, the type of race car still counts as a factor that can make a significant difference.

Common sense? If so, unfortunately most retail traders can’t make this same analogy. Lots of money is spent on “trading education”–courses, seminars, trading rooms, schools–all of which have value but none of which address the critical topic of technology. No matter how educated or experienced a trader can be, a trading dashboard with charts, order entry windows, and a fast internet connection is simply mt enough to compete with the technologies that institutional traders use on a daily basis.

Trading technology has disrupted the financial markets.

Those who do not adapt to technological evolutions in the financial world will be rendered uncompetitive by those who do. This technological weakening of capacity, this transformation of strength to vulnerability as a byproduct of progress–such a condition will affect all traders regardless of their current knowledge and skills.

A dawn of a new era, this is the unforgiving reality of the digital age.

  • Optimal trading skill + optimal technology = high competitiveness
  • Optimal skill + sub-optimal technology = reduced competitiveness
  • Sub-optimal skill + optimal technology = reduced competitiveness
  • Sub-optimal skill + sub-optimal technology = low-to-no competitiveness

 It’s time to reconsider platform technology as a hidden factor of trading productivity and success.

 

The advantage of semi-automated platforms

The Agena Trader platform is the first that provides smart-technology accessibility to the retail trader, giving the retail trader a radical advantage over other non-institutional traders and a competitive edge with professionals.

To illustrate this advantage, let’s take a look at one critical component that defines the capabilities and efficiencies of the average retail trading crowd: the Depth of Market interface, or DOM.

Semi-automation vs DOM

The DOM allows traders to see the bid and ask volumes at different price level. In addition to this main function, DOM also allows traders to place a variety of order types, all of which can be placed with a one-click convenience.

The main benefit here is that traders can closely focus on the markets they are trading; narrowing their vision all the way down to the level of microsecond order flow fluctuations. The only limitation is that traders can’t effectively focus on more than a few DOM’s at once.

How semi-automation separates competitive traders from obsolete traders

DOM Interface

Productivity: 1 DOM = 1 DOM

Time Efficiency: Several minutes or hours to manually focus on and monitor each market

Execution: Seconds to minutes per market.

 

Semiautomated Interface

Productivity: 1 Semi-Automated interface = x DOMs (as many markets as you need to include)

Time Efficiency: Microseconds to analyze and monitor each market.

Execution: Seconds for 10+ markets.

The difference is clear. Semi-automation monitors, without fail or error, multiple markets simultaneously, increasing your tradeable markets while significantly reducing your time from what would be hours to seconds. It relieves the trader of a large portion of the analysis and decision-making responsibilities which are prone to latency and human error.

Regardless of the skills and experience a trader has, semi-automation interface will either optimize a trader (if s/he uses it) or will make that trader highly uncompetitive against those who do. This is simply the consequence of using old and outmoded machines in a perpetually-evolving digital world.

In short, semi-automation has rendered the DOM an obsolete technology.

To learn more about semi-automation, check out this infographic.

With semi-automation as a key feature to a “smart” platform, it exists amidst an ecosystem of larger “smart” functions

The full power of semi-automation efficiency in unleashed when a trader can trade multiple global asset classes and markets simultaneously–stocks, futures, equity and futures options, foreign exchange, CFD’s, and cryptocurrencies.

In addition to the basic “givens”–namely, fast execution, charting, and indicators–Agena Trader provides a host of other functionalities to optimize its semi-automation features. 

The bottom line: Agena Trader functionalities increase traders’ profit potential by making them more efficient, more capable, and less error-prone

In a blind survey conducted among Agena Trader users, of which 65% had more than 5 years of trading experience with multiple platforms, 75% of the traders mentioned increased profitability using Agena’s semi-automation features. Among those trader, 90% attested to increased efficiency in their trading.

The only traders who did not notice a difference were those who had 0 – 4 years of trading experience; in short, beginning traders who were inexperienced in trading live markets.

The cost of losing consistently…is free

Most professionals would never settle for technology that would either make their performance sub-standard or cause them to consistently operate at a loss. Such an idea would seem absurd by common sense standards.

But take those same professionals out of their individual domains and into the financial markets, and their logic would suddenly get reversed. Most retail traders will opt for a free platform, even if such a platform were to make them uncompetitive, or even worse, a consistent loser in the markets. What’s happening here?

In such a case, there are two flawed assumptions: the first being that trading is a matter of internalized skill, that a trader can compete regardless of the technology s/he is using. In this digital age, where technology is an integrative aspect of human thought, function, habit, and overall productivity, such an assumption places a person in the pre-digital era. It doesn’t work.

The second assumption is that super technologies are not affordable. This is clearly untrue, as Agena Trader’s pricing is competitive with most platforms that lack smart-tool capabilities. To learn more about Agena Trader, visit our page.

In today’s digital markets, there are only disruptors and the disrupted.

Which one will you be?

 

Author: Karl Montevirgen

 

Disclaimer:

Exchange transactions are associated with significant risks. Those who trade on the financial and commodity markets must familiarize themselves with these risks. Possible analyses, techniques and methods presented here are not an invitation to trade on the financial and commodity markets. They serve only for illustration, further education, and information purposes, and do not constitute investment advice or personal recommendations in any way. They are intended only to facilitate the customer’s investment decision, and do not replace the advice of an investor or specific investment advice. The customer trades completely at his or her own risk.

 

 

03. Aug
2017

Smart traders read the secrets of the chart

Geschrieben von: agenatrader

Getagged in: TRADERS´ briefing , Forex , Events , Basics , Aktien

The legendary Charles Dow and successful traders like Jesse Livermore knew how to read the markets by observing the behavior of its participants. You too can learn how they did it.

Reading the “secret” of the charts isn’t much of a secret at all. In fact, Charles Dow wrote it all down in his Dow Theory on stock price movements, it’s main point being that markets run in trends and that it’s a good idea to follow those trends. Though this may sound simple, it isn’t that easy to do as it brings up some very tricky questions. What would be the optimal point in a market movement to open a position; and why? And considering other traders’ reactions, which points in a trending market hold the most favorable profit potential?

Before we address these questions, let’s step back and cover Dow’s basic theory of trends.

Take a look at image 1.

Pic. 1. Up- and downtrend

Image 1: In the top section, an illustration of an uptrend, the red circle identifies the continuance of an existing trend. The continuing progressions and regressions with increasing highs (2) and lows (3) keep the trend running. The section below illustrates the same situation, but for a downtrend with decreasing lows (2) and highs (3).

  • An uptrend exists if you can see a sequence of higher highs (P2) and higher lows (P3).

  • Respectively, downtrend exists if there is a sequence of lower lows (P2) and lower highs (P3).

A trend consists of two main parts: movements and corrections:

  • Movements go in the direction of the trend.

  • Corrections go in the opposite direction of the trend.

And the end of a trend occurs when its most recent P3 gets violated by a counter movement.

There are plenty of software applications that accurately identify strong trending movements and their corrections. But they often fail when it comes to skillful trade execution. Empirical studies have shown that the overall hit rate for a large majority of trend following software hovers around 50%, its poor trade management capabilities unable to produce sustainable long-term profits.

Given these stats, what can you do to noticeably improve your personal hit rate when it comes to trading trends? Cranking up the frequency of trades might not be a good solution. After all you want quality trades, not just a larger quantity of trades.

What if you were able to accurately identify on the chart the high-probability areas where other traders might want to buy your position at an even higher price? What if you can identify whether there are even other traders in the market willing to take your trades? To trade successfully, you always have to keep in mind other market participants: who is willing to buy your current long position, and who is willing to sell your current short position.

Fortunately, by viewing a chart in the way Charles Dow did, you can read beyond the prices to get to the actual “intentions” of other traders in the market.

How to trade trends

To trade trends successfully, you must first understand how a trend functions–namely, what generates it and how market participants play a role in shaping it.

For instance, an uptrend for a stock begins when demand is greater than the current supply. Buyers are willing to pay higher prices to own it. This causes a stock’s price to rise as continuous bidding takes place at higher price levels.

Picture 2 illustrates this process, in which the formation of an uptrend takes place in three distinct price runs.

  1. A period of increasing prices followed by…

  2. A period of decreasing prices, followed again by…

  3. A period of increasing prices.Pic. 2. Trend formation

Image 2: The letters UT in the upper part of the graphic illustrate the point of the trend formation. The initial movements 1, 2 and 3 in the grey boxes stand for the prior uptrend forming phases. The boxes R and P represent the trend components regression and progression. Below you see the same situation but for a downtrend (DT).

 
 

In the top image where it says UT (for Uptrend), notice the price movements designated R for regression and P for progression. When the progression (P) exceeds the regression (R) segment you have confirmation of a trend. You can then open a new long position. In the future, you can expect a rotation of these two–R and P–components.

Progression and regression

You will notice that within R and P are sub-trends (or what some call micro-trends). These sub-trends are easier to see in smaller timeframes. However, if you are interested in trading a breakout of the correction (the regression period) or simply trading the major progression, you will want to watch out for the moment where the major trend continues breaks out of its corrective/regressive period.

Intentions of other market participants

Once you can clearly identify the trend formation, it is now time to consider the intentions of the other market participants who play a role in shaping the outcome of this trend.

  1. Trend-trader. They trade a trend from the beginning until the end. They open a (first) position with the initial formation of the trend. Further on you will likely find their orders for additional positions, pyramiding at every P2. The active stop can be anticipated at the current P3.

  2. Progression-trader. They trade into the direction of the primary trend and open a position when the correction has finished. Their goal is it to trade the progression of the primary trend.

  3. Regression-trader. They trade the counter direction of the primary trend and open a position if the progression trend got broken by a countertrend.

All three types of traders trade according to the same trend formation principles. The difference between them happens to be a) their point of entry,and in the case of regression traders, b) trend direction.

Unveil the secrets of the chart

To find a profitable trade you will need an advantage in the market. And knowing who will buy and sell your position and at what points they will buy and sell can be a tremendous advantage. All of the traders involved leave traces with their orders on a chart. Understanding other traders’ intention can help you plan your trade accordingly. The traces left by other traders will help you figure out the critical points in a chart, knowledge which can help unveil their plans to your advantage. All you have to do is put the informational pieces together and identify the highest-probability opportunities.

 

Please register to our free Webinar on the September 12, to learn more about the secrets of Dow Theory. 

 

Author: Educational partner of AgenaTrader and trader Mike Seidl (www.investorschule.de/en)

 

07. Jul
2017

Geht den Märkten die Luft aus?

Geschrieben von: agenatrader

Getagged in: Aktien

Der S&P 500 Index ist ja dafür bekannt, dass so ziemlich die ganze Börsenwelt auf ihn schaut. Nicht nur, weil viele Trader den ES wegen seiner hohen Liquitität als Future handeln, sondern viel mehr, weil er die 500 schwergewichtigsten Unternehmen der USA beherbergt. Da der S&P 500 Index einen Großteils des Aktien-Marktvolumes wiederspiegelt ist er der eigentliche Pace maker der Märkte.

Seit dem Crash 2008 ist der ES, bis auf ein paar kleine Unterbrechungen im permanenten Aufwärtstrieb.

Ich möchte heute eine kleine Analyse aus LocationPoint-Technischer Sicht geben, wo ich mich aus dem Monat, über die Woche in den Tag schwinge. Die Notwendigkeit Märkte aus übergeordneten Zeiteinheiten in untergeordnete Zeiteinheiten zu analysieren, ist im LPT unerlässlich.

Betrachtet man das Monat, so erkennt man anhand des ClimacticDistance-Indicators, dass sich das Monat  in einer Climactic-Phase befindet. Anhand von historischen Überschreitungen der roten Schwellpunkt-Linien nach oben, sieht man (2007, 2010, 2011, 2014), dass die Märkte danach früher oder später in eine Korrekturphase oder in eine extreme Downphase eingetaucht sind.

Auffällig ist im Monatschart, dass der Juni ein Short Reversal-Pattern anhand eines SingleBar-Retracement ausgebildet hat.

 
 

Abb. 1 – ES 1 Month chart

 
 

Schaut man sich das Wochen-Chart an erkennt man , dass sich vor 2 Wochen hier ebenfalls ein Single-Bar Retracement Umkehr-Pattern (Pfeil) in die Short-Richtung ausgebildet hat.

 
 

Abb. 2 – ES 1 week chart

 
 

Im Tages-Chart bewegt sich der Markt im Moment in die Seite. Achtet man jedoch genauer auf die einzelnen Kerzenformationen, so sieht man eine Vielzahl von Single- und DoubleBar-Retracements die in die Short-Richtung weisen. Dieser Umstand birgt wiederum die Message, dass das große Geld hier die Märkte untertags mal in die Trendrichtung ziehen hat lassen, dann aber die Tagesperformance bzw. die Vortagesgewinne wieder zunichte gemacht hat und den S&P500 mit viel Energie in Shortrichtung geschoben hat.

 
 

Abb. 2 – ES 1 day chart

 
 

Aufgrund der sich in beiden Richtungen schnell öffnenten BollingerBänder auf Monatsbasis, erkennt man auch, dass sich der Markt in eine sehr schnelle Bewegung in den Climactic-Bereich geschwungen hat, was möglicherweise mit einer allseits bekannten Euphorie-Phase am Ende eines Trends gleichgesetzt werden kann.

Aus dem LocationPoint Ansatz heraus haben sich in den letzten Tagen unterschiedliche Setups ergeben (JoJo, Stairway, Trampoline und heute der erste TwentyTrain – alle rot eingekreist), die in die Short-Richtung weisen. Das einzige Stairway-Pattern vom 27. und 28. Juni (grüner Kreis) trübt das klare Bild ein bißchen.

Der gestrige  (6. Juli) TwentyTrain nach dem vorausgehenden Trampoline-Signal vom 3. Juli dürfte hier mal den Weg in eine Korrektur auf Monats-Chartbasis ebnen.

Die erste Korrektur birgt  ein Rückschlagpotential bis 2370, welches in weiterer Folge bis 2180 weiterlaufen  dürfte.

Aufgrund der Tatsache, dass der Markt eine Climactic-Phase durchlebt und sich wieder an LocationPoints annähern wird/muss, kann daraus sogar viel mehr als nur eine Korrektur werden.

Anhand dessen was sich in Welt derzeit so tut (Nordkorea, Russland,…) könnte hier der Markt möglicherweise schon mehr wissen bzw. sich auf etwas vorbereiten. Hinzuzufügen ist, dass der ‚Markt‘ nicht ein paar Kerzen im Monats-Chart sind, sondern er besteht aus den Leuten in den großen Finanzzentren dieser Welt, die mit Riesenkapital dafür verantwortlich sind, dass die Candles so aussehen, wie sie in den Charts dargestellt werden.

 

Geschrieben von Gilbert Kreuzthaler - Gründer und CEO von AgenaTrader.

 

 

HINWEIS:
Börsengeschäfte sind mit erheblichen Risiken verbunden. Wer an den Finanz- und Rohstoffmärkten handelt, muss sich vorher selbstständig mit den Risiken vertraut machen. Eventuell dargestellte Analysen, Techniken und Methoden stellen keine Aufforderung zum Handel an den Finanz- und Rohstoffmärkten dar. Diese dienen ausschließlich der Veranschaulichung und Weiterbildung und Informationszweck und stellen keine Anlageberatung oder sonstige individuelle Empfehlung dar. Sie sollen lediglich eine selbstständige Anlageentscheidung des Kunden erleichtern und ersetzen nicht eine anleger- und anlagegerechte Beratung. Der Kunde handelt gleichwohl auf eigenes Risiko und auf eigene Gefahr.

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