Stochastic Oscillator for Binary Options - Get your XRay ...

After 9 months of obsession, here is my open source Node.js framework for backtesting forex trading strategies

TL;DR There's lots more to the story. But the code is all open source now. Have at it. I'm too exhausted to continue with this. If you'd like more details, feel free to message me. If you happen to carry on with this project or use any ideas from it, I would greatly appreciate it if you could keep in touch on your findings. If anyone has any insights, please feel free to comment or message me.
I've spent the last nine months working furiously on this. I started a project for backtesting strategies against data I exported from MetaTrader. I had a very powerful computer crunching numbers constantly, trying to find the most optimal configuration of strategy indicator inputs that would results in the highest win rate and profit possible.
Eventually, after talking with a data scientist, I realized my backtesting optimizer was suffering from something called overfitting. He then recommend using the k-fold cross-validation technique. So, I modified things (in the "k-fold" forex-backtesting branch), and in fact it provided very optimistic results when backtested against MetaTrader data (60 - 70% win rate for 3 years). However, I had collected 3 months of data from a trading site (by intercepting their Web Socket data), and when I performed validation tests against that data using the k-fold results created from the MetaTrader data, I only got a ~57% win rate or so. In order to break even with Binary Options trading, you need at least a 58% win rate. So in short, the k-fold optimization results produce a good result when validation tested against data exported from MetaTrader, but they do not produce a good result when validation tested against the trading site's data.
I have two theories on why this ended up not working with the trading site's data:
For the strategy I use the following indicators: SMA (Simple Moving Average), EMA (Exponential Moving Average), RSI (Relative Strength Index), Stochastic Oscillator, and Polynomial Regression Channel. forex-backtesting has an optimizer which tries hundreds of thousands of combinations of values for each of these indicators, combined, and saves the results to a MongoDB database. It can take days to run depending on how many configurations there are.
Basically the strategy tries to detect price reversals and trade with those. So if it "thinks" the price is going to go down within the next five minutes, it places a 5 minutes PUT trade. The Polynomial Regression Channel indicator is the most important indicator; if the price deviates outside the upper or lower value for this indicator (and other indicators meet their criteria for the strategy), then a trade is initiated. The optimizer tries to find the best values for the upper and lower values (standard deviations from the middle regression line).
Additionally, I think it might be best to enter trades at the 59th or 00th second of each minute. So I have used minute tick data for backtesting.
Also, I apologize that some of the code is messy. I tried to keep it clean but ended up hacking some of it in desperation toward the end :)
gulpfile.js is a good place to start as far as figuring out how to use the tools available. Look through the available tasks, and see how various "classes" are used ("classes" in quotes because ES5 doesn't have real class support).
The best branches to look at are "k-fold" and "master", and "validation".
One word of advice: never, ever create an account with Tradorax. They will call you every other day, provide very bad customer support, hang up the phone on you, and they will make it almost impossible to withdraw your money.
submitted by chaddjohnson to algotrading [link] [comments]

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Full Review of the Stochastic Oscillator For Binary Options . I want to preface this tool review by saying I use stochastic, it is perhaps my favorite and most indicator and one that I highly recommended for binary traders of all levels. What is stochastic? It is an oscillator that can provide a near x-ray vision on the financial markets. It is based on random walk theory and Brownian Motion ... Hey Traders, I hope you are fine.In the previous article I talked about three ways for taking trades after a reversal.In this article I will make some comments for my today trades and I will explain how I use the stochastic oscillator for an extra confirmation in my trades.Here are my trades in 10/4. I had 7/9 ITM and one Tie, 78% performance.. The first screenshot is from EUR/USD currency ... Stochastic oscillator is one of the widely used indicators for Binary Options Trading.As the name implies, stochastic oscillator is a curve which is oscillating between two levels - 0 and 100. Stochastic is a momentum indicator which measures the divergence of a price in comparison to its price range over a predefined period of time.A 'period' number defining the stochastic curve (Example ... Stochastic Oscillator. Quite a mouthful, but the concept is quite simple. The indicator moves between 0 and 100 and reflects where an asset’s price is relative to a given time frame. If the indicator is near 0, the price is very near the low of the time frame you’re looking at. If the indicator is near 100, the price is very near the high price of the time you’re looking at. This ... The binary options trader is also encouraged to try different Stochastics settings and apply them to different setups on the chart. This was how yours truly was able to devise a trading system which actually works for long term trading. There is no limit to what is possible when working with momentum indicators such as the Stochastics oscillator. Stochastic Oscillator Strategy was developed to solve the issue of fake breakouts, filter the market noise, lower the number of trading signals and increase their efficiency. Let’s find out how the technical analysis can help binary options in that task. Technical indicators based on measuring market waves - oscillators - became very popular as they show several layers of information needed ... The Stochastic Oscillator is a commonly used technical indicator that attempts to determine the momentum of the price. As momentum changes we get indications of the next likely direction. This indicator is range bound, between 0 and 100. Therefore it also helps in identifying overbought or oversold levels.

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Stochastic Oscilator - Binary Options Indicator - YouTube

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