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June 7th, 2018, 03:13 PM   #1
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Forex trading from engineer with good background in mathematics and neural networks

Hi all.

I am engineer with a good mathematical and neural networks background:

In Mathematics I know very well all the aspects of Mathematical Analysis (including Lebesgue Measure and Integration), Numerical Analysis (including numerical methods of Differential Equations), Linear and non Linear Algebra (with applications in Signals and Systems, Discrete Time Signal Processing, Control Systems Design, Computer Vision) and Mathematical Logic. Moreover I know the most popular optimization algorithms.

In Neural Networks and Artificial Intelligence, I know very well all their aspects, for example Dimensionality Reduction, Multivariate Visualization, Classification Algorithms, Shallow Networks (Classification, Regression, and Clustering), Generalized Models, Mixed-Effects Models, Analysis of Variance, Fitting Distributions, Deep Learning Training, Pretrained Models, Accelerated Training with GPUs, and Preprocessing and Postprocessing.

Also, I know how to apply all of them in Matlab and Python, and the Computational Finance toolboxes of Matlab are 95% understandable by me: https://www.mathworks.com/solutions/finance-and-ri...

So my question is the following: I have decided to get into the forex online trading. How to do so? What are my first steps? What are my first expectations? For example if I start tomorrow, what I have to expect the first month, the first 6 months and the first year?

All the google is full of advice for people with Middle School Mathematical level and it kind of confuses me. The first advice is to focus on indicators (like RSI, MACD etc), to create automated trading robots (Expert Advisors etc) etc. And it is expected to have profits. Also metatrader 5 has a manual neural network choice, in which you can optimize your strategy (training) and then you can validate it (forward)

About me, I have to focus on this advice, or is there a different way to apply my knowledge in that field? For example can I take the historical data of eurusd and apply to it all the signal processing and neural networks toolboxes of Matlab and Python?

Simply said, what steps I have to follow on the beginning and what my expectations should be?

Thanks in advance.
Konstantinos is offline  
 
June 9th, 2018, 09:39 PM   #2
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You know enough math, but how can you apply it if you do not know financial market theory and history? There are plenty of courses and texts on financial economics. If you want to trade foreign exchange, one place to start in terms of theory is to learn about covered interest arbitrage, which is one of the motivations for foreign exchange trading. https://en.m.wikipedia.org/wiki/Cove...rest_arbitrage

A basic point is that if there is information showing an asset in a competitive market to be underpriced, the resulting profit opportunity will disappear as soon as enough people discover that information and recognize its relevance. In other words, such profit opportunities are always temporary and relatively rare. They exist, and this is how program traders and arbitragers make money (when they do), but they have all kinds of data, computing power, and very bright specialists to help them.

But even very knowledgeable and well trained people can get trapped by the unanticipated. For example, my son used to be one of the lead IT people for a Wall Street and Hong Kong program trader, and the very first thing they had him do when he was hired was to study the bankruptcy of Long-Term Capital Management. See https://en.m.wikipedia.org/wiki/Long...tal_Management and https://en.m.wikipedia.org/wiki/When_Genius_Failed

That firm had Nobel Prize winners associated with it and still blew up.

Remember the line attributed to Keynes: "The market can remain irrational longer than you can remain solvent."

Good luck.
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