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The Best Way to Trade the Euro Currency

Posted by David Bean on

In the world of algos, machine learning, and high frequency trading, some traders or advisors may tell you that it is impossible to compete. Yes and No. If you try to compete with Ultra High Frequency or High Frequency Trading algos who have millions of dollars invested in infrastructure and low transaction costs, then it is impossible to compete as a retail trader.

If you trade low frequency strategies with higher average trade profits, you are not competing against them. In the world of electrical engineering (my formal degree), we call it a bandpass filter, meaning we filter out trading in certain frequencies. We don't worry about the "small wiggles" in the market in which the HFT's or UHFT's compete. 

One of the secrets in trading is that if you find a strategy that trades very frequently and has a amazing edge, it will probably cease to work as the market corrects its inefficiencies. If however, you trade a strategy that has a nice edge but trades infrequently or for longer time periods, then the market will not discover its own inefficiencies as easily. There is a balance though because a strategy that does not trade enough, may not have enough history to be statistically significant. Also, when a strategy trades more frequently, we can determine if it is still in tune with the market.

Cobra Euro is an example of this low frequency approach and has been around awhile. It did not trade in November but is off to a nice start in December. Historically we see it has a over $100 average trade profit before slippage and commission. Cobra Euro is part of all of our portfolios and the best way we know to trade the Euro Currency.


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