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

Event-driven trading strategies

An event-driven strategy mostly relies on non-market data such as economic or political news. We already considered the impact of these events on the market price (see Chapter 6, Basics of Fundamental Analysis and Its Possible Use in FX Trading). So, an event-driven strategy can attempt to enter when significant news hits the market and exit soon after.

The problem with strategies of this kind was also considered in detail in the same chapter: due to insufficient liquidity around the time of a news release, the price may jump in virtually any direction at an arbitrary distance, so you have no chance to place a trade at the desired price. At the same time, the return of liquidity may drive the price in the opposite direction, completely eliminating the potential for a profit in a few minutes (see Chapter 6 again for an example with the British pound and the release of the UK’s GDP figures).

I can confirm that profitable news traders used...