Don't buy an additional one Forex eBook before you read this!
Most of them are Scams!
That's right. The surmise they are sold is because the persons who wrote them couldn't make money of the Forex market themselves so he/she idea that writing an eBook and selling it was an easier to make money.
That is right. 90% of population giving it a go will loose money on the Forex market.
I've read many of these eBooks (not to mention the money I've spent) in the hope that they'll give me an edge and I can become a (more) flourishing trader. They all look good. They are so convincing that the techniques they characterize are truly working, you would believe it too....
Until you start trading.....
You will then soon realise that they are giving you basic facts on what indicators to use and how to join it with Pivot Points, Trend lines etc.
There are two types of indicators that traders ordinarily use.
1) Oscillators:
Indicators like Macd, Rsi, Stoch, Cci are working well when the market is oscillating sideways.
2) Trend following Indicators:
Indicators like enchanting Averages, and many of their variants, trend Lines, Channels are perfect when the market is trending in one direction, up or down.
The question is that you never know either the market is going to trend strongly or going to oscillate. So how do you know what type of indicator to use: Oscillator or Trending type?! Unfortunately there is no reliable indicator to tell you what type of market conditions are coming. There is one, called Adx, that allegedly is able to rule the market change, but it is delayed and not at all that reliable.
So what do you do?
Well, you can either give up trading or study further.
In the early 1990's, when computers started to become available in private homes, the Neural Network-based systems had very high hopes. They pretty much worked like the human brain. population idea they could just throw whatever at a Neural Network-based theory and it will somehow magically form out a profitable trading strategy. Needless to say, it didn't happen.
What did happen, however, was that population who were already successfully trading by using some sort of mechanical system, added the smarts of the Neural Network's capability to recognize patterns and thus increased their winning chances by a few percentages. And that is truly a big difference.
Most population however, who weren't good traders, tried to crack the market using Neural Networks and it just didn't happen for them.
Neural Networks however stayed and have been successfully employed by traders and financial institutions all colse to the world to create profit.
Using Neural Networks and artificial brain are, in my opinion, about the only way one can consistently beat the market. Former indicators can work for a few days, few weeks or even months depending on what timeframe you use. In the long run, however, you will almost by all means; of course lose money unless you have a good insight of the market and have a 6th sense to recognize trade directions. Many experienced traders develop this feel for the market over numerous years and they can truly beat the market.
If you don't have a 6th sense or haven't industrialized this feel for the market yet, then using Neural Networks and artificial Intelligence-based trading systems are the next best thing because they can learn the market quicker than a human and as long as they are set up correctly, they can trade almost as well as an experienced trader.
I was quite pleasantly surprised when I came across the Forex-Ai Autotrader, a theory industrialized by some Gary White. It seems to have most of the things I would like to see in a trading theory and the way I myself would have industrialized it if I knew how.
Let me go through the goods and bads I found while working with this system.
It uses Neural Networks to recognize market trend, not some only fashion indicators. So I give a tick for this one.
It uses a 4-hour timeframe.
I've truly done a lot of study and found that any shorter timeframe is difficult to predict because short term swings will just stop you out and you will almost truly loose money. I truly don't think that 1-, 5-, 15- or even 30-minute charts show enough consistent trends to be able to trade them profitably. I prefer 1-, 2- or 4-hour charts.
Using longer than 4-hour time frame is not truly good either (e.g. A daily one), because in order to get a reliable prediction you need at least 2-3 years' data and if you go back that far, you should know that market conditions were distinct then. So I agree with the originator of Forex-Ai in that 4 hours is about the only timeframe worth watching.
The other thing about the Forex-Ai I found to be quite neat, is the built-in money management. It's nothing extraordinary, but it automatically sizes your positions based on your list balance. You can also switch this off and manually define them yourself.
The study manual gives clear instructions on how to configure the Gold and Crude Oil seal as a parameter in your Forex-Ai AutoTrader. These symbols are distinct depending on which broker you use. It is not revealed either other symbols are being used in the prediction of the Eurusd movement, but it might be the case. If it is, they don't need to be a configurable parameter as they are the same across all brokers.
Just like any Ai-based system, the Forex-Ai Autotrader also needs to be retrained occasionally. Depending on who you talk to, this should be done once every 2-3 months, but some population re-train it every week. I truly think this frequency is an overkill. One monthly training of the theory is probably the best and is in line with the recommendations of the author.
I was a bit surprised by the fact the Forex-Ai theory only works with the Eurusd pair. I admit it, this is bar far the most traded currency pair, but focusing on that pair only, seems minuscule to me. I emailed Gary in this regard and received the following reply:
"I use Eurusd only because it is the most traded currency pair and both currencies have strong correlation to Gold and Crude Oil. Therefore predicting its movement with my theory is relatively easy. Nevertheless, I am working on two other currency pairs and I may publish them later, but I have no plans of doing that at this stage."
That's what I thought, but you'd great check. If you are a beginner in Forex trading and you want to develop the feel for the market, it is typically recommended to use this pair so I don't think this truly is a serious limitation unless you have a large list size.
I personally prefer to trade 2-3 currency pairs for diversification, but you need to make sure the other pairs you trade are not in right correlation with the Eurusd pair because if they are, you aren't diversifying really. I don't want to go into information about this issue, just wanted to feature that diversifying in Forex to trade many currency pairs is for pros only.
Conclusion:
As you've probably guessed by now, I became quite a fan of the Forex-Ai theory since I got it. It is probably the best theory I came across for quite some time.
Positives:
o It uses Neural Networks
o It uses 4-hour timeframe, which I believe to be the best predictable
o It has a uncomplicated money management built in
o It uses up to 3 data series to improve prediction accuracy
Negatives:
It only trades the Eurusd pair.
Don't Buy someone else Forex eBook Before You Read This!
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