are forex options linear or nonlinear
Nonlinear risk exposure arises in the VaR calculation of a portfolio of derivatives. Nonlinear derivatives, such as options, depend on a variety of characteristics, including implied volatility, time to maturity, underlying asset price and the current interest rate. The slope of the line is called the midpoint or median line. The midpoint or slope of a line is determined by the calculation method. In eSignal, the close of a data bar is the default value used for the linear regression calculation. Linear Regression Channels are parallel lines that are a standard deviation away from the linear regression line on either side of it. This is a discussion on Non Linear Trading within the Forex forums, part of the Markets category; anyone use or has looked into this method of trading? ie the buy 1 every x points down with x ... If you fail to understand WHERE and WHY to enter Long. Otherwise, it is a very Stealthy way to trade-again-IF done correctly, as by definition it will always lead the Trader to the Trend Reversal Point-automatically. ie the buy 1 every x points down with x profit target and sell 1 every x points up with x profit target so that over the day you will have long and short positions. __________________. OT. Last edited by oiltanker; Feb 26, 2010 at 12:35pm. By Investopedia AAA |. A: The value at risk (VaR) is a statistical risk management technique that determines the amount of financial risk associated with a portfolio. There are generally two types of risk exposures in a portfolio: linear or nonlinear. The eSignal default set to 0 means all data is used for a Linear Regression calculation. While there are several ways to trade using Linear Regression Channels, this strategy focuses on using the following settings: Source = Open, Number of Bars = 0, Standard Deviation = 2. Re: Non Linear Trading. I've heard of such an approach before-e.g. every time the Dow drops 200pts, open another long position. Getting in at the bottom of the downleg and out at the top of the short-term bounce is surely the ultimate gymnastics without a safety net. The corresponding value is not proportional to the input due to the time and volatility portion of the model, since options are wasting assets. The nonlinearity of derivatives leads to nonlinear risk exposures in the VaR of a portfolio with nonlinear derivatives. Re: Non Linear Trading. This is NOT irrational trading IF you understand WHERE to position the entries. I'm not going to get into a long thesis on this subject, but this can be a VERY profitable way to trade.
Non Linear