Trading Strategies and Their Core Elements
In previous chapters, we considered algorithmic (algo) and systematic trading from two standpoints: we learned about the market itself, its participants, the way it operates, and how all this is reflected in the pricing; on the other hand, we did some preparation work in programming, so now we can retrieve and process market data, build technical indicators, and do some charts and plots. In other words, we have the heart and the bones of the body of our future trading application, and now it’s time to add brains and limbs: the trading logic that generates orders, and the order execution control mechanism that finally connects the app with the final destination – an exchange, a broker, or an electronic communication network (ECN).
In this chapter, we will consider the most important classes of trading strategies that are typically used to trade the FX markets. We will learn about the sources of profit generation, consider typical...
