Spread betting, a viable option to make a living out of?

[Black Swan]

As they say, being flat is also a position.

there's a 'carry on' style joke in there somewhere...

 

[ffsear]

Trading currencies is about waiting for those two to three trades a year.The rest of those two thousand trades a year , trader should be sitting and doing nothing.These two or three opportunities are sure-fire opportunities where your risk of loss is negligible.

If that where true the FX markets would be dead for 99% of the year.

 

[oildaytrader]

Precisely, hence one reason to distrust backtesting.
There are several reasons to distrust demo trading also, although I think it does have its place; just don't assume live trading will turn out the same.

Anyone who can swing trade should also know how to range-trade. That's part of the discretionary element.

.

What you fail to realize is manual traders get their knickers in a twist trying to judge between ranging or trending markets, they even get caught undecided between closing /running their profits , ie close too early , too late and all sorts of problems. There are hundreds of little reasons why the manual trader can go horribly wrong .

At least the backtests on the systems will show you how robust the system is and how robustly it will perform in all types of market conditions.

I am not gonna preach you anymore , go do your own research on why traders fail .My belief is the automated systems will perform better than humans.

If you follow a rule based system,the system will perform as robustly as it did in back testing, profitability may be different based on market conditions ,broker fills and liquidity.Every reason to go for D M A and highest liquidity instruments like euro/usd.There are very few reasons to doubt backtesting , if used on the right instruments.

 

[oildaytrader]

If that where true the FX markets would be dead for 99% of the year.

Thats why you only get a few major trends every year with all this liveliness you input.

 

[montmorencyt2w]

there's a 'carry on' style joke in there somewhere...

ooh matron...

 

[montmorencyt2w]

What you fail to realize is manual traders get their knickers in a twist trying to judge between ranging or trending markets, they even get caught undecided between closing /running their profits , ie close too early , too late and all sorts of problems. There are hundreds of little reasons why the manual trader can go horribly wrong .

Certainly possible, but I don't see why automated systems should do any better, unless the person who programmed the automated system knew much more about the markets than these hypothetically failing discretionary traders you are describing. But someone with that degree of knowledge could also trade manually/with discretion. I don't see what virtue an automated system has apart from lack of emotions and lack of "finger trouble" (except that as a former programmer, I know that programmers make plenty of "finger trouble" mistakes as well).

At least the backtests on the systems will show you how robust the system is and how robustly it will perform in all types of market conditions.

Er, no. They will show how they hypothetically performed in ideal conditions (e.g. perfect fills every time over a certain period in the past.)

I am not gonna preach you anymore , go do your own research on why traders fail .My belief is the automated systems will perform better than humans.

preach

belief

It seems as though this is more of a religious issue to you, in which case rational debate is ruled out.

If you follow a rule based system,the system will perform as robustly as it did in back testing, profitability may be different based on market conditions ,broker fills and liquidity.Every reason to go for D M A and highest liquidity instruments like euro/usd.There are very few reasons to doubt backtesting , if used on the right instruments.

It's a point of view.

 

[oildaytrader]

Certainly possible, but I don't see why automated systems should do any better, unless the person who programmed the automated system knew much more about the markets than these hypothetically failing discretionary traders you are describing. But someone with that degree of knowledge could also trade manually/with discretion. I don't see what virtue an automated system has apart from lack of emotions and lack of "finger trouble" (except that as a former programmer, I know that programmers make plenty of "finger trouble" mistakes as well).


.

Knowing is one thing , doing it is another.There are people with with knowledge who have designed brilliant systems.Unfortunately these eccentrics are not obeyers and lack the discipline to follow their own systems.There are two types of people i.e obeyers and non obeyers of tasks.If these eccentrics were obeyers, they would not write brilliant programs /systems.These people tend to take more chances.

Before using automated programs, they are thoroughly forward tested for months and backtested for years for errors, I do not see where the finger trouble comes from?Please explain.

 

[tomorton]

I'm not sure what the debate is about: what is a discretionary trade?

 

[oildaytrader]

I'm not sure what the debate is about: what is a discretionary trade?

Trades based on individual trader's biases examples
1) Its friday and market has dropped more on last few fridays than risen , so I will short
2)Pound has fallen so much , it can fall any further , I will buy on open
3)Euro has failed to go above 1.50 last few months , so I will go short at the next high
4)Euro is expected to go to 1.58 , so I will buy on yesterday's low

It is what people believe a price should be and all sorts of other views

 

[oildaytrader]

I'm not sure what the debate is about: what is a discretionary trade?

http://www.traderslaboratory.com/forums/f2/discretionary-trading-vs-automated-trading-942.html

 

[chilltrader]

ok - so which one of you was trading while flying?

http://news.bbc.co.uk/1/hi/world/americas/8327073.stm

 

[tomorton]

Trades based on individual trader's biases examples
1) Its friday and market has dropped more on last few fridays than risen , so I will short
2)Pound has fallen so much , it can fall any further , I will buy on open
3)Euro has failed to go above 1.50 last few months , so I will go short at the next high
4)Euro is expected to go to 1.58 , so I will buy on yesterday's low

It is what people believe a price should be and all sorts of other views

Thank you for this, and the link. I could not have Googled this before tonight as I wouldn't have known what I was looking for. This also lets me understand why this type of trading can't be backtested. Looks very scarey.

This reminds me most of playing that game paper-rock-scissors against the market. I see that a select few could make this work long-term, as a series of happy accidents, ability to predict which is discovered by pure chance - but I don't see how anyone could seriously recommend this as a consistent approach to make profit from a standing start.

 

[oildaytrader]

Precisely, hence one reason to distrust backtesting.
There are several reasons to distrust demo trading also, although I think it does have its place; just don't assume live trading will turn out the same.

Anyone who can swing trade should also know how to range-trade. That's part of the discretionary element.

In practise how can a overnight swing trade be changed to a range trade?

Do you know what swing trading we are discussing?

http://en.wikipedia.org/wiki/Swing_trading

 

[montmorencyt2w]

Knowing is one thing , doing it is another.There are people with with knowledge who have designed brilliant systems.Unfortunately these eccentrics are not obeyers and lack the discipline to follow their own systems.There are two types of people i.e obeyers and non obeyers of tasks.If these eccentrics were obeyers, they would not write brilliant programs /systems.These people tend to take more chances.

Before using automated programs, they are thoroughly forward tested for months and backtested for years for errors, I do not see where the finger trouble comes from?Please explain.

Have you ever written a computer program? If you had you would know what I mean. It's possible to write something that appears to work. "Just because it worked, it does not mean that it works" (from the book "Code Complete" by Steven C. McConnell.)

These automated systems of which you speak: Have they actually ever made you any money? (By direct trading yourself I mean; not by selling them, which is what I presume that you do). If so, for how long? (Real money, I mean, not demo trade money).

By the way, I don't agree with your definitions of discretionary trading.

In practise how can a overnight swing trade be changed to a range trade?

I didn't say that it could be. What I mean was that someone who knows how to swing trade should also be able to recognise when the market is ranging, and change his style accordingly.

Do you know what swing trading we are discussing?

Yes, thank you. In practice, people's definitions of this and the ways people actually do this, are quite varied.

By the way, from that Wikipedia entry you referenced:

Small consistent earnings that involve strict money management rules can compound returns significantly. Most important is to understand that there is no foolproof mathematical model or algorithm that will always work so only use them as research tools not decision making engines.

That would seem to suggest that it is not possible to generated an automated system that will always work.

 

[mbtrading]

That would seem to suggest that it is not possible to generated an automated system that will always work.

Which would be correct.

Its also not possible to have a manual system that will always work.

Why?

Because markets (all of them, not just forex) are ever evolving.

Having a system is good. Some of the better commercial ones can help new people in so far as giving them high (ish) probability entry signals and half decent exit stop loss choices, but anyone blindly following any system - manual or automatic- will eventually lose their bank.

The ONLY way to be successful (and by successful I mean showing a profit ) over the long term is to understand the market you trade, if you use a system understand why its entry/exit/stop loss points are where they are so when it stops producing (and it inevitably will) you can adapt it to meet market conditions rather than run off and start again looking for the next system to purchase. Its cheaper in the long run in terms of financial outlay and in terms of trading profit/loss.

This is why, in my opinion, black box selling to newbies should be made illegal, because it will eventually lead to big losses through people pressing a button risking real money with absolutely no idea why or how its either making or losing them their life savings.

 

[oildaytrader]

Have you ever written a computer program? If you had you would know what I mean. It's possible to write something that appears to work. "Just because it worked, it does not mean that it works" (from the book "Code Complete" by Steven C. McConnell.)

I just use a good programmer


These automated systems of which you speak: Have they actually ever made you any money? (By direct trading yourself I mean; not by selling them, which is what I presume that you do). If so, for how long? (Real money, I mean, not demo trade money).

I do not sell any programs , just use them for my own trading and they have made 20% for 6 months




I didn't say that it could be. What I mean was that someone who knows how to swing trade should also be able to recognise when the market is ranging, and change his style accordingly.

I bet he can read the future ,and daily closes before they happen

Yes, thank you. In practice, people's definitions of this and the ways people actually do this, are quite varied.

By the way, from that Wikipedia entry you referenced:

That would seem to suggest that it is not possible to generated an automated system that will always work.

It all depends on how it is designed , who designed it and the expectations of the automated systems.

If you study the chart below , you will be able read our expectations of the system we use.It does not always work, but it works over all.Look at the downward equity slopes on the charts.This is the period when it is not working.

The above statement is a bit like " you can't make hay all year".We all know that!Users of automated systems know these things.

I much more advanced in the whole process of automation and none of you are qualified to doubt it.Opinions on forums are always read, but rarely used.

 

[oildaytrader]

Which would be correct.



The ONLY way to be successful (and by successful I mean showing a profit ) over the long term is to understand the market you trade, if you use a system understand why its entry/exit/stop loss points are where they are so when it stops producing (and it inevitably will) you can adapt it to meet market conditions rather than run off and start again looking for the next system to purchase..

Better to design a robust system to start with, rather than adapt and change .You may need to keep adapting it and changing it frequently, and that process is lagging.

 

[mbtrading]

Better to design a robust system to start with, rather than adapt and change .You may need to keep adapting it and changing it frequently, and that process is lagging.

As I said in the bits you chopped out, such a thing doesnt exist, because markets and their behaviour are not static. EVER.

There is a reason you make a living touting programmes on the internet, rather than simply trading the wonderful infallible system you created Im sure.

 

[zupcon]

There is a reason you make a living touting programmes on the internet, rather than simply trading the wonderful infallible system you created Im sure.

NO NO NO lets get the facts stright....that should read

"the wonderful infallible systems that he PLAGERIZED from other forums prior to being banned"

 

[oildaytrader]

As I said in the bits you chopped out, such a thing doesnt exist, because markets and their behaviour are not static. EVER.

There is a reason you make a living touting programmes on the internet, rather than simply trading the wonderful infallible system you created Im sure.

If you are a good designer you can create systems for dynamic markets,obviously most programmers and traders are not good designers.

You have absolutely no proof of me having sold anything.

Show me a receipt of sales or retract!