DOCSLIB.ORG

Investing As a Business

Total Page：16

File Type：pdf, Size：1020Kb

Download full-text PDF Read full-text
Investing As a Business Investing as a Business An Interactive Qualifying Project Report Submitted to the Faculty of WORCESTER POLYTECHNIC INSTITUTE In partial fulfillment of the requirements for the Degree of Bachelor of Science By ________________________ Gabriel McCormick ________________________ Devin Kehler Date: March 11, 2012 Approved: ___________________________ Hossein Hakim, Advisor Table of Contents List of Figures ................................................................................................................................ vi List of Tables ................................................................................................................................ vii 1. Introduction ................................................................................................................................. 1 1.1 Project Description ................................................................................................................ 2 2. Background ................................................................................................................................. 3 2.1 Common Forex Terms .......................................................................................................... 7 2.1.1 Pip ................................................................................................................................... 7 2.1.2 Leverage ......................................................................................................................... 7 2.1.3 Lot Size ........................................................................................................................... 8 2.1.4 Bid Price ......................................................................................................................... 9 2.1.5 Ask Price......................................................................................................................... 9 2.1.6 Spread ............................................................................................................................. 9 2.1.7 Short/Long .................................................................................................................... 10 2.1.8 Currency Pair ................................................................................................................ 10 2.1.9 Margin Call ................................................................................................................... 11 2.1.10 Stop Loss .................................................................................................................... 11 2.1.11 Take Profit .................................................................................................................. 11 2.1.12 Currency pairs............................................................................................................. 12 3. Methodology ............................................................................................................................. 13 [ii] 4. Execution .................................................................................................................................. 14 4.1 Choosing a Broker ............................................................................................................... 14 4.2 Technical Indicators ............................................................................................................ 18 4.2.1 Trend Lines ................................................................................................................... 19 4.2.2 Pivot Points/Camarilla Pivots ....................................................................................... 20 4.2.3 Moving Average Convergence/Divergence ................................................................. 23 4.2.4 Bollinger Bands ............................................................................................................ 24 4.2.5 Moving Averages ......................................................................................................... 25 4.2.6 Parabolic SAR .............................................................................................................. 26 4.2.7 Stochastic ...................................................................................................................... 27 4.2.8 Fibonacci Indicators ..................................................................................................... 28 4.2.9 Relative Strength Index ................................................................................................ 29 4.2.10 Commodity Channel Index ......................................................................................... 31 4.2.11 Ichimoku Kinko Hyo .................................................................................................. 31 4.2.12 Relative Vigor Index .................................................................................................. 33 4.2.13 True Strength index .................................................................................................... 33 4.2.14 Average true Range .................................................................................................... 34 4.2.15 Camarilla Equation ..................................................................................................... 35 4.2.16 Average Directional Index .......................................................................................... 36 4.3 Fundamental Analysis ......................................................................................................... 37 [iii] 4.3.1 Gross Domestic Product ............................................................................................... 38 4.3.2 Inflation/Deflation ........................................................................................................ 39 4.3.3 Consumer Price Index .................................................................................................. 40 4.3.4 Interest Rates ................................................................................................................ 41 4.3.5 Retail Sales ................................................................................................................... 42 4.3.6 Unemployment Rates ................................................................................................... 44 4.3.7 Industrial Production .................................................................................................... 45 4.3.8 Consumer Confidence Index ........................................................................................ 47 4.3.9 ISM Manufacturing Index ............................................................................................ 48 4.3.10 Interpreting Macroeconomic Issues ............................................................................ 50 4.4 Programming and Robot-Based Trading............................................................................. 54 4.5 Important Resources ............................................................................................................ 60 4.6 Starting an Investment Company ........................................................................................ 61 4.6.1 Location ........................................................................................................................ 61 4.6.2 Legal Structure ............................................................................................................. 63 4.6.3 Important Regulatory Authorities ................................................................................. 64 4.6.4 Licensing ...................................................................................................................... 66 4.6.5 Performance Indicators ................................................................................................. 66 5. Results ....................................................................................................................................... 68 5.1 Trading Strategy .................................................................................................................. 68 [iv] 5.1.1 Devin Kehler................................................................................................................. 68 5.1.2 Gabriel McCormick ...................................................................................................... 71 5.2 Company Parameters........................................................................................................... 73 6. Conclusion and Recommendations ........................................................................................... 76 7. Bibliography ............................................................................................................................. 79 Appendix A: Trading Journal ....................................................................................................... 88 A.1 Gabriel McCormick ............................................................................................................ 88 A.2 Devin Kehler .................................................................................................................... 107 Appendix B: Programming Projects ........................................................................................... 120 B.1 Group project ...................................................................................................................
Load more

Recommended publications
  • Forecasting Direction of Exchange Rate Fluctuations with Two Dimensional Patterns and Currency Strength
    FORECASTING DIRECTION OF EXCHANGE RATE FLUCTUATIONS WITH TWO DIMENSIONAL PATTERNS AND CURRENCY STRENGTH A THESIS SUBMITTED TO THE GRADUATE SCHOOL OF NATURAL AND APPLIED SCIENCES OF MIDDLE EAST TECHNICAL UNIVERSITY BY MUSTAFA ONUR ÖZORHAN IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF DOCTOR OF PILOSOPHY IN COMPUTER ENGINEERING MAY 2017 Approval of the thesis: FORECASTING DIRECTION OF EXCHANGE RATE FLUCTUATIONS WITH TWO DIMENSIONAL PATTERNS AND CURRENCY STRENGTH submitted by MUSTAFA ONUR ÖZORHAN in partial fulfillment of the requirements for the degree of Doctor of Philosophy in Computer Engineering Department, Middle East Technical University by, Prof. Dr. Gülbin Dural Ünver _______________ Dean, Graduate School of Natural and Applied Sciences Prof. Dr. Adnan Yazıcı _______________ Head of Department, Computer Engineering Prof. Dr. İsmail Hakkı Toroslu _______________ Supervisor, Computer Engineering Department, METU Examining Committee Members: Prof. Dr. Tolga Can _______________ Computer Engineering Department, METU Prof. Dr. İsmail Hakkı Toroslu _______________ Computer Engineering Department, METU Assoc. Prof. Dr. Cem İyigün _______________ Industrial Engineering Department, METU Assoc. Prof. Dr. Tansel Özyer _______________ Computer Engineering Department, TOBB University of Economics and Technology Assist. Prof. Dr. Murat Özbayoğlu _______________ Computer Engineering Department, TOBB University of Economics and Technology Date: ___24.05.2017___ I hereby declare that all information in this document has been obtained and presented in accordance with academic rules and ethical conduct. I also declare that, as required by these rules and conduct, I have fully cited and referenced all material and results that are not original to this work. Name, Last name: MUSTAFA ONUR ÖZORHAN Signature: iv ABSTRACT FORECASTING DIRECTION OF EXCHANGE RATE FLUCTUATIONS WITH TWO DIMENSIONAL PATTERNS AND CURRENCY STRENGTH Özorhan, Mustafa Onur Ph.D., Department of Computer Engineering Supervisor: Prof.
    [Show full text]
  • Technical-Analysis-Bloomberg.Pdf
    TECHNICAL ANALYSIS Handbook 2003 Bloomberg L.P. All rights reserved. 1 There are two principles of analysis used to forecast price movements in the financial markets -- fundamental analysis and technical analysis. Fundamental analysis, depending on the market being analyzed, can deal with economic factors that focus mainly on supply and demand (commodities) or valuing a company based upon its financial strength (equities). Fundamental analysis helps to determine what to buy or sell. Technical analysis is solely the study of market, or price action through the use of graphs and charts. Technical analysis helps to determine when to buy and sell. Technical analysis has been used for thousands of years and can be applied to any market, an advantage over fundamental analysis. Most advocates of technical analysis, also called technicians, believe it is very likely for an investor to overlook some piece of fundamental information that could substantially affect the market. This fact, the technician believes, discourages the sole use of fundamental analysis. Technicians believe that the study of market action will tell all; that each and every fundamental aspect will be revealed through market action. Market action includes three principal sources of information available to the technician -- price, volume, and open interest. Technical analysis is based upon three main premises; 1) Market action discounts everything; 2) Prices move in trends; and 3) History repeats itself. This manual was designed to help introduce the technical indicators that are available on The Bloomberg Professional Service. Each technical indicator is presented using the suggested settings developed by the creator, but can be altered to reflect the users’ preference.
    [Show full text]
  • Technical Analysis: Technical Indicators
    Chapter 2.3 Technical Analysis: Technical Indicators 0 TECHNICAL ANALYSIS: TECHNICAL INDICATORS Charts always have a story to tell. However, from time to time those charts may be speaking a language you do not understand and you may need some help from an interpreter. Technical indicators are the interpreters of the Forex market. They look at price information and translate it into simple, easy-to-read signals that can help you determine when to buy and when to sell a currency pair. Technical indicators are based on mathematical equations that produce a value that is then plotted on your chart. For example, a moving average calculates the average price of a currency pair in the past and plots a point on your chart. As your currency chart moves forward, the moving average plots new points based on the updated price information it has. Ultimately, the moving average gives you a smooth indication of which direction the currency pair is moving. 1 2 Each technical indicator provides unique information. You will find you will naturally gravitate toward specific technical indicators based on your TRENDING INDICATORS trading personality, but it is important to become familiar with all of the Trending indicators, as their name suggests, identify and follow the trend technical indicators at your disposal. of a currency pair. Forex traders make most of their money when currency pairs are trending. It is therefore crucial for you to be able to determine You should also be aware of the one weakness associated with technical when a currency pair is trending and when it is consolidating.
    [Show full text]
  • The-Power-Of-Divergence.Pdf
    Trading with the Trendlines The Power of Divergence DAVID CARLI ii Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange, you should carefully consider your investment objectives, level of experience, and risk appetite. No information or opinion contained in this e-Book should be taken as a solicitation or offer to buy or sell any currency, or other financial instruments or services. Past performance is no indication or guarantee of future performance. Copyright © Fifth edition April 2020 by David Carli. All rights reserved. This book or any portion thereof may not be reproduced or used in any manner whatsoever without the express written permission of the publisher except for the use of brief quotations in a book review. First Printing: 2016 ISBN: 9798645292959 Website: www.tradingwithdavid.com E-mail: [email protected] iv DEDICATION My parents, who made me the person I am today. Introduction – About the Author 1 Introduction – About TradingView 3 Introduction – Preface 5 Chapter 1 – Chart 7 Chapter 2 – Some Technical Analysis 17 Chapter 3 – Commodity Channel Index 35 Chapter 4 – The Strategy 40 Chapter 6 – Money Management 64 Chapter 7 – Final Comments 69 Appendix A – Web Resources 74 David Carli is an Italian trader and independent financial analyst. He completed his studies at the University of Pisa, and he has released several successful books about trading. It is his success and knowledge that David wishes to pass on to other potential traders, helping them to avoid mistakes and succeed in the finance and investment markets.
    [Show full text]
  • My Favourite Trading Strategy Commodity Channel Index
    My Favourite Trading Strategy Commodity Channel Index • Donald Lambert 1980 • Identify new trends or warns of volatility • Developed to identify cyclical turns in commodities • CCI measures a current price level vs. an average level over time • CCI is high when price is above average CCI Calculation • CCI = (Typical Price - 20-period SMA of TP) Divided by (.015 x Mean Deviation) • Typical Price (TP) = (High + Low + Close)/3 • Constant = .015 Commodity Channel Index • Lambert set the constant at .015 to ensure that approximately 70 to 80 percent of CCI values would fall between -100 and +100. • The smaller the CCI period (look back period), the smaller the number of values between -100 and +100. Commodity Channel Index 20 period Commodity Channel Index 40 period CCI Interpretation • A coincidental indicator – surges above 100 show strong price action and could signal the start of an uptrend. • A leading indicator – overbought or oversold conditions with bullish and bearish divergence. CCI - Coincidental CCI - leading Stochastic Oscillator • A momentum indicator developed by George Lane in the 1950’s. • Does NOT follow price or volume. • Follows SPEED or MOMENTUM of PRICE. • As a rule, momentum changes direction before price. Fast Stochastic • %K = (Current Close - Lowest Low) Divided (Highest High - Lowest Low) X 100 • %D = 3-day SMA of %K (trigger line) Fast Stochastic Slow Stochastic • Slow %K = Fast %K smoothed with 3-period SMA • Slow %D = 3-period SMA of Slow %K • I use 8-period SMA and 4-period SMA of Slow %K Slow Stochastic Slow Stochastic Interpretation • Overbought – above 80 • Oversold – below 20 • Ignore Overbought/Oversold when trending.
    [Show full text]
  • FOREX Investment and Trading
    FOREX Investment and Trading An Interactive Qualifying Project Report submitted to the Faculty of WORCESTER POLYTECHNIC INSTITUTE in partial fulfillment of the requirements for the Degree of Bachelor of Science By Edgar Buenrostro Alberto Mateo Adrian Ramirez Date: September 25th, 2012 Approved By: Professor Hossein Hakim ii ABSTRACT The principal objective of this paper is to exhibit the most feasible method to establish a Forex firm successfully. The intent of this project is to provide a detailed explanation of the currency trading market for all kinds of audience. Thus, it provides the essentials of the Forex market as well as samples of trades from the group, in which is possible to appreciate the common risks and mistakes a person is susceptible to while trading. In addition, it includes an explanation of the methodology utilized by the group such as the use of technical and fundamental analysis. Furthermore, automated trading is introduced. iii Acknowledgement We would like to thank Hossein Hakim, Professor, Electrical & Computer Engineering Department, and Michael Radzicki, Professor of Economics, Worcester Polytechnic Institute for their guidance throughout the course of this project and their contributions to this project. iv Table of Contents Abstract……….……………………………………………………………………………………………………………………………..ii Acknowledgement……………….……………………………………………………………………………………............…........iii Table of Figures ........................................................................................................................................
    [Show full text]
  • Commodity Channel Index: Evaluation of Trading Rule of Agricultural Commodities
    International Journal of Economics and Financial Issues ISSN: 2146-4138 available at http: www.econjournals.com International Journal of Economics and Financial Issues, 2016, 6(1), 176-178. Commodity Channel Index: Evaluation of Trading Rule of Agricultural Commodities Mansoor Maitah1*, Petr Prochazka2, Michal Cermak3, Karel Šrédl4 1Department of Economics, Faculty of Economics and Management, Czech University of Life Sciences, Prague, Czech Republic, 2Department of Economics, Faculty of Economics and Management, Czech University of Life Sciences, Prague, Czech Republic, 3Department of Economics, Faculty of Economics and Management, Czech University of Life Sciences, Prague, Czech Republic, 4Department of Economic Theories, Faculty of Economics and Management, Czech University of Life Sciences, Prague, Czech Republic. *Email: [email protected] ABSTRACT This paper is focused on evaluating the trading rule of indicator commodity channel index (CCI), using selected agricultural commodities. The reason of testing is that this indicator is calculated with respect to fluctuation of commodity market - volatility. The recent issue of commodity markets examines trading under risk. The concept is in analyzing of predictive power of CCI. The main core of this paper is if the trading strategy under evaluating using technical analysis, respectively CCI, reaches positive profit. The returns of trading rule are measured using signals to buying or selling and comparison each of them. Authors of this paper created trading rule based on CCI and tested it on commodity markets. The results are positive in term of % CCI. Findings of the strategy are positive due to measurement volatility involved in indicator. The commodity markets are volatile, time series are fluctuating due to actual announcements or news.
    [Show full text]
  • Basics of Technical Analysis Disclaimer
    Basics of Technical Analysis Disclaimer This document has been prepared by Bernstein Bank GmbH, exclusively for the purposes of an informational presentation by Bernstein Bank GmbH. The presentation must not be modified or disclosed to third parties without the explicit permission of Bernstein Bank GmbH. Any persons who may come into possession of this information and these documents must inform themselves of the relevant legal provisions applicable to the receipt and disclosure of such information, and must comply with such provisions. This presentation may not be distributed in or into any jurisdiction where such distribution would be restricted by law. This presentation is provided for general information purposes only. It does not constitute an offer to enter into a contract on the provision of advisory services or an offer to buy or sell financial instruments. As far as this presentation contains information not provided by Bernstein Bank GmbH nor established on its behalf, this information has merely been compiled from reliable sources without specific verification. Therefore, Bernstein Bank GmbH does not give any warranty, and makes no representation as to the completeness or correctness of any information or opinion contained herein. Bernstein Bank GmbH accepts no responsibility or liability whatsoever for any expense, loss or damages arising out of, or in any way connected with, the use of all or any part of this presentation. This presentation may contain forward-looking statements of future expectations and other forward-looking statements or trend information that are based on current plans, views and/or assumptions and subject to known and unknown risks and uncertainties, most of them being difficult to predict and generally beyond Bernstein Bank GmbH´s control.
    [Show full text]
  • Copyrighted Material
    INDEX Page numbers followed by n indicate note numbers. A Array, investing and, 456 Ascending triangle, 192, 193–194 Absolute return, 537 Aspray, Thomas, 160 Acampora, Ralph, 151 Aspray’s demand oscillator, 160–161 Accumulation and distribution, 159 Asset allocation, 448, 540 Accumulative average, 62 Athens General Index, 470–471 ACD method, 239 ATR. See Average true range Active portfolio weights, 539 Autoregressive integrated moving average Activity-based intervals, 17–18 (ARIMA), 429–435 tick bars, 17–18 forecast results, 433 volume-scaled charts, 17 Kalman filters, 434–435 Adaptive markets hypothesis (AMH), 546, 553–554 mean-reverting indicator, 581 Adaptive Trading Model, 527 slope, 434 A/D oscillator, 132–136 trading strategies, 433–434 Advance-decline system, 174–175, 706 use of highs and lows, 434 Advance Market Technologies (AMTEC), Autoregressive model, 50–51 726–727n2 Average-modified method, 57 760 Advances in financial machine learning, 575 Average-off method, 57 ADX line, 39–40 Average true range (ATR), 32 Alexander filter, 624 Average volume, 153 Allais Paradox, 351 Alpha description of, 537 B method, 461–462 Backtesting, statistics of, 569–580 returns, 537 price data, 573–575 American Association of Individual Investors statistical concerns in, 576–580 (AAII), 380 time-series price data, 572–573 Amex QQQ volatility index, 348 Bacon, Francis, 599–600 AMH. See Adaptive markets hypothesis Bailout, 212 AMTEC. See Advance Market Technologies Bands, 42–45, 75–84 Anchoring, 362–363 confidence, 435–437 Animal spirits, 561 formed by highs and lows, 75 Annualized rate ofCOPYRIGHTED return, 754 rulesMATERIAL for using, 81–82 Apex, 192, 234 trading strategies using, 44–45 Appel, Gerry, 169 Bandwidth indicator, 45 APT, 680n22 Barberis, Shleifer, and Vishny (BSV) hypothesis, Arbitrage, 647–649, 655 668–670 Arguments, 588–592 Bar chart, 185, 208–209 ARIMA.
    [Show full text]
  • Price Headley's Simple Trading System for Stocks, Etfs and Options
    Using Price Headley’s Simple Trading System for Stock, Acceleration ETF & Option Traders Bands, CCI & Williams’ %R How Technical Indicators Can Help You Find the Big Trends For any type of trader, correctly forecasting short-term price action is imperative to long-term success and, in my view, technical analysis is the best way to achieve this. Many would say the "Holy Grail" of technical analysis is to find true "leading" indicators, namely those that point to directional movements and trends as they are occurring or before they occur, not lagging indicators that show what has already occurred. I've tested and designed hundreds of technical indicators over the years and I will share with you one of my trading systems that uses my top 3 favorite and time-tested indicators. What are these three indicators? One is Acceleration Bands, which I created. Another is the Commodity Channel Index (CCI), developed by Donald Lambert. The third critical indicator is Williams' Percent R (%R), which I have modified from Larry Williams’ original parameters and created specific rules to utilize that are different than is seen in normal trading systems. A major problem that many traders have is too many signals. In other words, their criteria need to be tightened and refined. As many of you already know, I look for the Big Trends that rarely occur—this helps me leverage my capital while reducing the number of total trades. Now, don't be fooled. There is no fool-proof system out there so risk control is an important part of any technical system.
    [Show full text]
  • Indicator Help DICATORS
    ® TAME INDICATORS & PATTERNS Help Document NSE TAME ® (Technical Analysis Made Easy) is a technical analysis tool provided by NSE to its Trading members. This tool provides users an exhilarating experience in carrying out technical analysis. TAME provides a variety of charts, and most of the popular technical indicators. It has a friendly and interactive user – interface which gives great flexibility to customize, view and analyse charts and indicators. The interface presents the data in a manner most suitable to support trading decisions. TAME charting is available to all NSE markets. National Stock Exchange of India Limited June 2010 HELP DOCUMENT Contents 1. Accumulation / Distribution (AD) ...................................................................................................... 4 Concept ............................................................................................................................................................ 4 Calculation ........................................................................................................................................................ 4 Use ................................................................................................................................................................... 4 2. ADX .................................................................................................................................................... 5 Concept ...........................................................................................................................................................
    [Show full text]
  • Forex Trader E-Book a Must to Have Manual for All Forex Traders
    Forex Trader E-Book A must to have manual for all Forex traders (Detailed explanation for the most currently used Technical Analysis indicators & fundamental explanation for the most effective economic data on the prevailing markets) Table of contents I. Forex Online Trading 1. What is Forex? 2. Technical and Fundamental Analysis a. Technical analysis b. Fundamental Analysis 3. Psychology of Trading 4. Forex vs Equities and Futures 5. The 8 most important trading recommendations II. The Basic of Technical Analysis: 1. Support 2. Resistance 3. Trend 4. Channel 5. Double top (reversal formation) 6. Double bottom (reversal formation) 7. Triangle 8. Head and Shoulders 9. Fibonacci III. Types of Chart 1. Introduction 2. Line Chart 3. Bar Chart 4. Candlestick Chart IV. Candlestick 1. Introduction 2. Falling Three Methods 3. Rising Three Methods 4. Doji a. Dragon fly doji (Dragongly) b. Gravestone doji (Pagoda) c. Long-legged doji 2 5. Engulfing Patterns a. Bearish engulfing lines b. Bullish engulfing lines 6. Hammer a. Hanging man b. Inverted hammer and shooting star 7. Harami a. Bearish Harami b. Bullish Harami c. Bearish Harami cross or Bearish Harami doji d. Bullish Harami cross or Bullish Harami doji 8. Long white (empty) line 9. Long black (filled-in) line 10. Doji a. Bullish doji star b. Bearish doji star c. Evening star d. Evening Doji star e. Morning Star f. Morning Doji star 11. Three Black Crows 12. Three White Soldiers V. Technical Indicators 1. Average True Range – ATR 2. BOLLINGER BAND 3. CCI – Commodity Channel Index 4. Linear Regression 5. MACD - Moving Average Convergence Divergence 6.
    [Show full text]