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

Trade analysis

As you remember, the difference between trading and investing is, broadly speaking, the number of trades. If you buy and hold a position in an asset for 1 year or more, then it’s an investment. If you buy, sell, and buy the same asset or different assets again multiple times during the same year, it’s trading.

Why a year?

According to most tax laws, holding a position for 1 year and 1 day qualifies it as an investment, and any profit resulting from this activity is taxed at a discounted rate. If you held the position even for 1 day less than 1 year, it will be considered trading and the resulting profit will be taxed at a full income tax rate. This rule is applicable mostly to equities trading, but at least it makes sense to use 1 year as a reference term.

So, the strategy is actively opening and closing positions during a given period. Regardless of the total net profit (or loss) for the entire period, first, and above all, we are interested in...