Book Image

Getting Started with Forex Trading Using Python

By : Alex Krishtop
Book Image

Getting Started with Forex Trading Using Python

By: Alex Krishtop

Overview of this book

Algorithm-based trading is a popular choice for Python programmers due to its apparent simplicity. However, very few traders get the results they want, partly because they aren’t able to capture the complexity of the factors that influence the market. Getting Started with Forex Trading Using Python helps you understand the market and build an application that reaps desirable results. The book is a comprehensive guide to everything that is market-related: data, orders, trading venues, and risk. From the programming side, you’ll learn the general architecture of trading applications, systemic risk management, de-facto industry standards such as FIX protocol, and practical examples of using simple Python codes. You’ll gain an understanding of how to connect to data sources and brokers, implement trading logic, and perform realistic tests. Throughout the book, you’ll be encouraged to further study the intricacies of algo trading with the help of code snippets. By the end of this book, you’ll have a deep understanding of the fx market from the perspective of a professional trader. You’ll learn to retrieve market data, clean it, filter it, compress it into various formats, apply trading logic, emulate the execution of orders, and test the trading app before trading live.
Table of Contents (21 chapters)
1
Part 1: Introduction to FX Trading Strategy Development
5
Part 2: General Architecture of a Trading Application and A Detailed Study of Its Components
11
Part 3: Orders, Trading Strategies, and Their Performance
15
Part 4: Strategies, Performance Analysis, and Vistas

Alpha classics – trend-following, mean reversion, breakout, and momentum

Let’s quickly recap the idea of generating alpha: we want to beat the market or perform better than an index (or just the rate itself in FX trading) by actively managing the position in the market. This means we try to buy when we expect the price to go up and we try to sell when we expect the price to go down.

Therefore, in order to successfully generate alpha, we basically have only two options: either we suppose that the price will continue moving in an already established direction, or we anticipate a change. In the former case, we make an attempt to buy when prices go higher and sell when they go down. In the latter case, we try to buy when prices go down and sell when they go up.

Note for nerds

In all the discussions and examples here, I intentionally don’t go deep into mathematics. We are focusing on the qualitative side of these phenomena to better understand their nature...