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

Paper trading and backtesting – an essential part of a systemic trader’s risk management

Imagine that we have used all the power of Python and developed a trading application. Now what? Is it time to immediately launch it and try earning some money? No! Before jumping in the pool, it’s essential to make sure there’s water in it, and in our case before putting the app into production, it’s essential that it can make money, at least in theory.

In this section, we’ll consider paper trading and backtesting – two cornerstones of systematic trading that help us understand potential pitfalls with the newly developed strategy. We will learn about historical data, trade simulation, and ordering, and we’ll also quickly consider some ready-made packages that simplify this part of the development.

What are paper trading and backtesting?

After we have developed a trading algorithm, connected to the data source, and are ready to send...