Day Trading & Forex Forum

Citizen2007

Interesting read.

Just one question. Why is it that people belive that 100% mechanical systems do not exist or can not be created? Surely this is dependant on your trading style and method ?

Is this reference to a trading record that does not win 100% of the time or are we talking about other factors?

I understand that markets change over time but that does not mean that a trend does not exist during these changing phases. There for if you are trading a trend based system, the trend can exist in any timeframe, then your system should still work.

Or are you trying to say that it is difficult to identify the trend and when it begins to change ?

I ask this because i am in the process of creating a mechanical system. To me this means having a rigid set of rules that are very clear and can be clarified in code. Also i should be able to trade this system manually with equal success.

If i can manually produce X% winners using my system manually, why should this be different when programmed mechanically?

pedro01

Shouldn't make any difference - but surely there's some level of decision making you won't put into the system.

For instance - would you leave your system on & unattended for a few months ? Even through days where there are major announcements such as employment numbers ?

Also - I get the impression from the OP that he doesn't have a system he can trade manually and I think that starting off just with coding knowledge won't get you there.

IMO - either get the trading knowledge or partner with people that have it - then you stand a better chance.

Citizen2007

Thank you for your reply Pedro.

I see your point about some aspects of the decision making not being in the program. Also that you need to be able to trade the system manually with complete discipline in order to see how it works before going to the pains of programming something only to find it does not meet expectations.

Personally my system timings can be adjusted on a day to day or week to week basis. I am also sceptical about leaving my system running unattended for months, this is due not to the methodolgy but more to do with technical issues. The program stability etc and broker links with the system have to be tested to ensure their stability and to discover any further glitches that may be likely to arise. I am not a a programmer so these issues are a major concern at the moment. However the end goal is to develop a program that can be left to run un attended. Although this will not go on for months without regular checks to monitor performance, the system(or software) should however not be the reason for the failure.

Also news announcements etc. are not really an issue at this time, so far the system has kept me on the right side of the market during these announcements, but yes volatility can certainly be an issue. Therefore there are seperate rules for announcement days which the program can follow.

The target at the moment is to complete the system so it can trade the big moves throughout the day.There will initially be smaller moves which will rersult in small wins or small losses, but these filters will be programmed in at a later stage as my programming skills develop.

Programming is the big difficulty that I myself and a few of my fellow traders struglle with, after spending many years trying to understand the trading side of things this is now the new challenge to keep ahead of the game. Not entirely sure whether i want to go the lenghths and of learning a complete language again or find a programming partner . My current program is failrly flexible in that it allows me to use any chart format, with multiple timeframe collaborations and automatic order entry. But the major concern here is stability, which is what we are in the process of testing right now.

sirviente

Dear Citizen2007 and Pedro,

Yes, i am on the other side, i am good with programming, but lack the years of trading expertise. So i was inclined to only work in programming, as i have seen emotions are overwhelming while trading, and hopefully find an automated solution.

I have been programming for 6 months more or less, and although i have a lot of code developed, the end result, is usually break even or very small gains at the end of the day. I think that teamwork is the best, but I haven't seen such a thing, it seems to me that traders, usually tend to be loners because of so much "emotions" in regards to money.

Some very basic test, which i was amazed with, is that if i program system that would buy and sell immediately , it looses 80% of the time. Pathetic.

Regards,
Sirviente

new_trader

The problem is this, and I will explain with an analogy.

Imagine you are blindfolded and put somewhere in a large unfamiliar desert. The blindfold is removed and you are told that you have to find your own way out. You are only given one clue which is "If you walk in the right direction you should make it to safety before you die of thirst".

So, all you have to do is choose a direction and walk it. The question is, how far do you walk before you are convinced you are walking in the wrong direction? This is where the real psychological battle takes place. You might think you are going the right way and safety might be just up ahead a little further...a little further....a little further, or you might convince yourself you should take a new route in the opposite direction.

In this example, direction isn't an analogy for market direction; instead it is an analogy for drawdown.

People who insist on taking the mechanical route because it eliminates emotions from trading are fooling themselves and those foolish enough to listen to them. When your mechanical system has produced 10,11 even 15 losses in a row and your account is in 30% or 40% drawdown and has been for 3 months, will you continue trading it without any emotion? Honestly? Will you be able to convince yourself that the next trade or the next one or the one after that is going to be a big winner and not another loser? Will you be able to do this without any emotion whatsoever? Honestly?

__________________
"It always pays a man to be right at the right time."
-Jesse Livermore

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N.B: Most of my views, advice and opinions are based on short-term trading.
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sirviente

Hello New_Trader

Thank you for your comments, the idea of mechanical trading is to "remove" the pain of trading, and of course, in theory, that it would be able to make money steadily as compared to a human and its emotions. But as you were saying, one cannot escape the challenge of facing one's own emotions, because emotions come anyway, sooner or later. Most people handle these emotions by taking a 9 to 5 job, which seems to me as the worst solution.

Its like the winter and summer season, these emotions happen anyway, whether we want it or not.

I was hoping to hear someone that was doing 100% mechanical trading to know if there was something clear to aspire to. But the results are just the opposite. Unless i would be a multibillion dollar corporation, i don't have enough funds to do the kind of research to pull off an automated solution (like those guys who used 200 playstations to hack a 128 SSL encryption...).

Regards,
sirviente

new_trader

sirviente,

Maybe you are missing the obvious.

"I was hoping to hear someone that was doing 100% mechanical trading to know if there was something clear to aspire to."

You won't hear form someone because they don't exist. What you really mean when you say that is you are hoping that someone tells you what you want to hear and will continue to ignore those that tell you what you need to hear.

Even if someone tells you that profitable mechanical trading is possible with minimum effort, then what? Will they tell you what they know? Will they give you their 'system'?

You are going to eventually face the ugly fact one day, better sooner than later - There are NO SHORTCUTS.

But trying to convince you (and all the others that persist with the mechanical route) of this fact is like trying to convince a 3 year old child that the Fisher Price Laugh & Learn™ Roll-Along Turtle might be the only toy you will ever want but in a year or two you will grow out of it and never touch it again.

__________________
"It always pays a man to be right at the right time."
-Jesse Livermore

-----------------------------------------------------------------------------------------------
N.B: Most of my views, advice and opinions are based on short-term trading.
-----------------------------------------------------------------------------------------------

everyonerich

mechnical trading possible = wrong questions.

all fundamental or mechanical will fail, correct questions is you should ask what you can do if fail.

__________________
try making "a million dollars on a million trades, not a million dollars on one trade."