Automated Trading - Is there hope?

jack.r

Newbie
3 0
I would say automata trading is good, but only if you created the given EAs. I made huge losses, while testing different EAs, but I still think we have to find the balance between automata and manual trading. Nowadays, I don't really have time for trading, therefore I decided to invest a higher amount at a professional and regulated European trader, and I can say it was a good decision. Since January he already made 54% profit on my trading account, so i am more than satisfied. :) Although I know when I will have time, I will continue trading, as I love trading on forex.
 

random12345

Established member
793 279
So why automate?
Few reasons:

- More measurable returns as regards daily SD vs a historical sample/variance personally help me with psychology as I don't have the motivation to build up a manual sample.

- I trade 21 hours a day.

- I don't think I would be able to outperform them manually unless I was a trading savant. I am not Paul Rotter.

- I have a poor boredom threshold regarding waiting for entries.

- As with LV I wrote my own algos primarily because I was otherwise engaged during the day.

Having said that I have just lumped some cash into RCG to blow some cash on the FGBL. "Hello old friend."
 

random12345

Established member
793 279
"My only 'intelligent' investment in B&M has been commercial property in the latest w@nker, sorry 'hipster' areas - I bought commercial properties in Hoxton that have appreciated quite a bit and I much prefer to deal with business owners when it's in their interest to keep the place clean and fully repaired and insured."

It's amazing how much East London has changed in the last 5-10 years. A great investment.
Yes it is ironic to say the least to see middle class Uni kids enjoying the latest crappelatte in Hoxton Sq.
 

fozzybear

Newbie
1 0
(I'm horrible at writing my thoughts down, so here goes)

What I don't understand, is that successful traders say "come up with a plan, write it down, and stick to it".

So, if you do this, and it's a winning plan, you should be able to wrote code to implement it.

If you can write code to implement it, it's an automated trading.

A lot of successful traders never have backtested their system, yet it works for them (I'm not trying to take anything away from them), yet they bash automated trading.

I'm having a hard time understanding how someone can bash an statistically valid system, but yet have never backtested theirs.

Does that make sense?

--fozzy.
PS:Not trying to step on anyone's toes here, just trying to understand the mentality.
 

Liquid validity

Senior member
2,422 692
(I'm horrible at writing my thoughts down, so here goes)

What I don't understand, is that successful traders say "come up with a plan, write it down, and stick to it".

So, if you do this, and it's a winning plan, you should be able to wrote code to implement it.

If you can write code to implement it, it's an automated trading.

A lot of successful traders never have backtested their system, yet it works for them (I'm not trying to take anything away from them), yet they bash automated trading.

I'm having a hard time understanding how someone can bash an statistically valid system, but yet have never backtested theirs.
Different strokes for different folks.
Both can fail.

Discretionary trading subscribes to the theory that every moment is unique and unrepeatable (which is true).
The aim is to trade what is happening, rather than try and fit a trade to a set of broad and rigid
rules.

Automated trading (that works for a reasonable length of time) accepts that
each moment is unique, but there is also a certain common behaviour in markets
that take a long time to change.
Automation aims to profit from this common behaviour, and accepts the
inefficiencies that arise from unique moments that don't conform to that general
behaviour.
In practice that can mean automation is more susceptible to prolonged periods
of making little or no money, or even quite deep drawdown.

Its all shades of grey, retail automation is generally not as efficient as retail discretionary.
That is assuming a sound proven methodology, without that, its straight to the poor house.
Institutional automation can in certain cases wipe the floor with everything .
In other cases, dramatic blowups result.

Neither way is any guarantee.
Anyone and anything can fail or go into drawdown.
Potential failure and drawdown are probably the most
important things to focus on, no matter how you trade.
 
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random12345

Established member
793 279
Well, I was doing ok - looking at my record for the last year or so ... until 15/8/13.

Of course irl I got stopped out at 6580, but my model makes no such fine distinction.

I have a suspicion that that the rules are in transition.

Is there hope - yes.
What happened?

Not sure how you trade, but August loses some significant speculative volume during the London session in my experience and I always find August a bit of a miserable half profit eek out.
 

new_trader

Legendary member
6,181 1,258
Discretionary trading subscribes to the theory that every moment is unique and unrepeatable (which is true).
I don't know who subscribes to that theory but I certainly don't, quite the opposite in fact. As Jesse Livermore said "There is nothing new in Wall Street. There can't be because speculation is as old as the hills. Whatever happens in the stock market today has happened before and will happen again."

You can bank on that.
 
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Liquid validity

Senior member
2,422 692
I don't know who subscribes to that theory but I certainly don't, quite the opposite in fact. As Jesse Livermore said "There is nothing new in Wall Street. There can't be because speculation is as old as the hills. Whatever happens in the stock market today has happened before and will happen again."
Yes I agree, I mentioned that here, also I said that behaviour takes a long time to change,
that is referring to market cycles:
Automated trading (that works for a reasonable length of time) accepts that
each moment is unique, but there is also a certain common behaviour in markets
that take a long time to change.

Automation aims to profit from this common behaviour, and accepts the
inefficiencies that arise from unique moments that don't conform to that general
behaviour.
By unique I meant price and tick volume are never going to
be the same at a certain point every day.
No two intraday charts ever look exactly the same.
The tape on one day will never be the same as the tape on any other day.
Yes there will be similar characteristics that suggest trend or range.
Exactly the same, no, hence unique.
I'm pretty sure you already knew that though...
 
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new_trader

Legendary member
6,181 1,258
Yes I agree, I mentioned that here:


By unique I meant price and tick volume are never going to
be the same at a certain point every day.
No two intraday charts ever look exactly the same.
The tape on one day will never be the same as the tape on any other day.
Yes there will be similar characteristics that suggest trend or range.
Exactly the same, no, hence unique.
Yes, but this why traders who recognize intent have an (the?) edge.
 

numbertea

Well-known member
257 9
Repeatability?!! It's like gravity, it's going to keep pulling to the center of the earth for as long as the earth exists. Auction theory and human nature, they are not going to change for a long time. The only change that could spoil my day is if the SEC completely revamps the market place. Even with that it will only be a hard day of emotion before I adjust my system and it works again. Repeat-ability is the only reason we can trade profitably at all, or do anything else correctly in life for that matter.

Cheers
 

D70

Established member
839 195
Just that I intend to retire from trading after a few more years - I've had enough of sleepless nights. I've had winning streaks of over 30 working days in a row and I STILL can't get more than 4 hours during those times. Even less during others.

The idea that you've just been found out and been lucky for the past x years never goes away on a losing day... the lows of a losing day are much lower than the highs of a winning day, no matter the magnitude of the latter vs the insignificance of the former.

In my mind, anyway.
No one "retires" from trading. They just run out of money.
 

andrewdb

Junior member
17 0
What happened?

Not sure how you trade, but August loses some significant speculative volume during the London session in my experience and I always find August a bit of a miserable half profit eek out.
... I think the market is behaving differently, and I went on holiday (which was a good thing).
currently chewing my way through 'the evaluation and optimisation of trading strategies' by r pardo which has some interesting insights but was hoping for more.

There was one comment he made - markets are bullish/ bearish/ cycling/ congested. I think we are currently congested.

If anyone knows of a better place to look, please tell.
 

CityMasterTrader

Member
77 2
What happened?

Not sure how you trade, but August loses some significant speculative volume during the London session in my experience and I always find August a bit of a miserable half profit eek out.
Yeah. Volumes always drop. For me, it’s right to be suspicious of any move in August/Christmas on light volumes. Tells me that the move is probably ‘false’ to some degree.

Why not use it as an excuse to go and lie on a beach somewhere?