Automation ain't necessarily 100%
Auto-trading need not be 100% (unless you want to take a purist view). By that I mean that you can automate parts of the complete trading process as you feel comfortable with.
Probably at its most basic we have all used some sort of trading automation. The display of price and volume data in a chart is an automated process. Clicking on a mouse to enter a trade is to some extent automated.
However these aforesaid functions are not decision making functions. It is this element which, I think, most people think of as being at the core of an automated trading program.
I would not advocate using pre-programmed EAs, black boxed or whatever you wish to call them. I would advocate, assuming you would like to automate more of your trading actions, to find a platform with a sophisticated programming language over which you have absolute control. Examples include Metatrader and Easylanguage.
Having mastered the programming language it is possible to look at the various trading functions and to construct trading modules. For example, one module might establish prevailing market direction and volatility. One module might determine suitable stocks for trading - a scanning module for example. Another module might determine exit criteria for existing positions, perhaps based on price levels.
Initially these would not "talk" to each other. They would merely inform you to make manual decisions, but in time as confidence grows of their efficaciousness they could be linked thus making the process more and more automated.
Some have commented on the fact that such systems cannot be relied upon over the long term - markets change. I don't think that is necessarily true. There are fundamental aspects of the market which have not changed.
Admittedly there are market cycles - areas of trending and consolidation for example. If a trading system is only programmed for one such area then it will fail at times, but a good trading system should be programmed to either cease trading when it hits situations it was not designed for or to switch modes.
For that reason a good trading system needs an over-arching control system to monitor its effectiveness and the existence/lack of the conditions for which it was designed.
So to create the 100% automated system is extremely difficult, but there is no reason why you cannot, without a great degree of work, create a semi-automated system.
