4.28 How FX PnL Actually Works
FX profit is born in the quote currency, not in pips. EURUSD pays in one step; USDJPY needs converting back to dollars. Get the per-pair pip value wrong and you mis-size every trade.
Independent research on systematic & quantitative trading
Aligrithm is an independent research publication on systematic trading, quantitative research, market microstructure, and adaptive systems. Long-form essays, code notebooks, and architecture breakdowns across eight pillars, built for traders who care more about how markets behave than about hype.
More about the publication →The ten pillars
Read in order. Each pillar walks you out of one trap with one new ability. The newest article is the worst place to begin.
- 1 The Scientific Trader Rebuild what you accept as evidence. Every rule becomes a hypothesis, every backtest an experiment you can falsify. 28
- 2 Indicator Engineering The input decides the ceiling. Build features with measurable properties that survive the tests. 82
- 3 Robust Systems Lab A strategy is not robust for surviving one friendly backtest. Here it survives hostile testing. 44
- 4 Market Structure Notes The same rule is edge on one instrument and noise on another. Read a market's personality before you deploy. 77
- 5 Microstructure Alpha The order-book layer. The same signal is worthless as taker flow and valuable as a maker improvement. 53
- 6 Portfolio Construction & System Death A real signal still loses if the size and correlations are wrong. Sizing is part of the signal. 59
- 7 Python Research Notebooks Stop taking results on faith. Re-run every claim on your own data and see whether it holds. 5
- 8 Physics, Geometry & Event-Driven Markets The frontier. Markets as event-driven nonlinear systems, not fixed-time price series. Read it last. 12
- 9 Prediction Market Arbitrage The cleanest money on Polymarket and Kalshi comes from prices that contradict each other, not prices that turn out wrong. 42
- 10 Cross-Sectional & Factor Investing Stop timing one asset. Rank the whole cross-section and let relative value, not direction, carry the return. 22
Latest articles
4.27 Why Retail FX Execution Is Not the Same as Interbank FX
Interbank fills are tight and firm; retail adds markup, wider spreads, last look, and a B-book conflict. The same signal earns a different net edge by tier, so test with your tier's real frictions.
4.26 The Real Heart of FX Liquidity
FX liquidity lives on a few primary interbank venues; every other price is a thinner copy. It runs inverse to volatility, so slippage is worst exactly when your breakout fires.
4.25 FX Is Not One Market: Retail vs Wholesale Structure
FX is two markets, not one: a wholesale tier where price is discovered and a retail tier selling a marked-up, wider-spread copy. Backtest one and trade the other, and the gap eats your edge.
4.24 From Intermarket Analysis to Network Momentum
Classical intermarket is a hand-drawn graph of a few edges. Network momentum learns the whole graph from prices and builds each asset's signal from its neighbors' momentum. Same equation, more edges.
4.23 Lead-Lag Relationships in Global Markets
A leading market forecasts the one that follows, the rarest intermarket edge and the most fragile. Measure it with lagged cross-correlation, demand an economic reason, and expect it to decay.
4.22 Cross-Asset Confirmation for Trend Systems
Confirmation makes a second related market second a trade before you act. A real trend moves both markets; a false breakout moves one. It cuts whipsaws, at the cost of fewer, later trades.
4.21 Why FX Traders Must Watch Gold, Rates, and Equities
A currency price is a relative number; the force that moves it lives off the chart. Watch rates, equities, and gold, take the trade only when a majority confirm, and respect the dollar smile.
4.20 Intermarket Divergence as a Trading Filter
When two correlated markets agree they tell you nothing; the signal is the disagreement. Divergence flags when leader and lagger split, but you must know which leads, and the lead shifts.
4.19 Using Ratios as Trading Signals
A ratio nets out the move two markets share and keeps only who is winning. Signal off it like a price to rotate between them, but watch for near-zero denominators and whipsaw on both legs.
4.18 Crude Oil, Inflation, and FX
Crude is the price of energy and a leading inflation gauge. It runs inverse to bonds and the dollar and feeds FX through trade and rates. A supply shock fakes the read, so cross-check copper.
4.17 Copper as an Economic Activity Indicator
Copper is almost pure industrial demand, so it reads activity before the statistics do and leads bond yields. Use it to gate bonds and growth assets, but a mine strike fakes the signal.