Automated trading doesn't work
- Thread starter irniger
- Start date
That is not a proper question. A proper question is:
Are profitable automated systems possible?
You can have a perfectly automated trading system that does not make money. Like a fancy mouse trap that does not catch mice.
The answer to the proper question is YES.
One must distinguish between the extrinsic property "automated" and the intrinsic properties of subject "trading system". The extrinsic property does not change the intrinsic properties of the subject like "profitable" or "losing" if it is implemented correctly.
I don't doubt however that many through implementation of automation property affect the intrinsic properties of a trading system due to lack of knowledge of how the automation process works in conjunction with the platform used and programming language.
I hope I clarified the issue here. Anyone who is still confused, please stay away from automated trading, or even trading in general. It is not for you.
Automated Trading does not work.
There's only 3 or 4 posters in ET that I suspect who are qualified and has the skills as a systematic trader. I'm guessing that the number won't increase anytime soon reading what others are writing. Considering the difference between the counts of traders who "knows what he's talking about" and "claim to know" are very high. If I tell this to a discretionary trader, I'm sure there's going to be a big disagreement. Though, you're dealing with a bunch of systematic traders....
Seriously...
1. You hear a bunch of guys running around claiming they're better than the bigger institutions, where in reality the guy has no sense of risk management and tolerance implemented within his trading. Of course, they take a short instance of a situation and obsess about it.
2. You have a bunch of guys talking based on 2nd+ hand information as if they've been there first hand. Even more, you have people say, "I know a guy who is... so and so..." as part of a discussion.
3. You have a bunch of guys using Tradestation and Wealth-Lab with no math skills debating about Risk Management.
4. Plenty more... but too long of a list...
Anyways... with a crowd like this...
Automated Trading does not work...
There's only 3 or 4 posters in ET that I suspect who are qualified and has the skills as a systematic trader. I'm guessing that the number won't increase anytime soon reading what others are writing. Considering the difference between the counts of traders who "knows what he's talking about" and "claim to know" are very high. If I tell this to a discretionary trader, I'm sure there's going to be a big disagreement. Though, you're dealing with a bunch of systematic traders....
Seriously...
1. You hear a bunch of guys running around claiming they're better than the bigger institutions, where in reality the guy has no sense of risk management and tolerance implemented within his trading. Of course, they take a short instance of a situation and obsess about it.
2. You have a bunch of guys talking based on 2nd+ hand information as if they've been there first hand. Even more, you have people say, "I know a guy who is... so and so..." as part of a discussion.
3. You have a bunch of guys using Tradestation and Wealth-Lab with no math skills debating about Risk Management.
4. Plenty more... but too long of a list...
Anyways... with a crowd like this...
Automated Trading does not work...
I have been fully automated for 50 days as of today (no discretionary intervention whatsoever). I have made in this time a % profit higher than what investment funds would yield me in years. Provided things will keep going this way, I can say that automated trading is indeed profitable. Or, if I am allowed to phrase it as I did earlier, "automated trading works".
Also, as far as I am concerned, after doing discretionary trading for over 10 years, and having a negative yearly balance for all ten years (I made some money in certain months, but then lost it the next month), I can say that (my) discretionary trading does not work, or, for mr. dictionary, "is not profitable".
Also, as far as I am concerned, after doing discretionary trading for over 10 years, and having a negative yearly balance for all ten years (I made some money in certain months, but then lost it the next month), I can say that (my) discretionary trading does not work, or, for mr. dictionary, "is not profitable".
Isn't just one long-term profitable automated trader enough to render this topic statement invalid (regardless of how many thousands who are unprofitable)?
(Along the lines of the Black Swan)
(Along the lines of the Black Swan)
Automated trading works for very few people, but it works.
(wink, wink)Do you mean:
After many years of research, testing dozens of strategies, systems and programs and working intensely with dozens of knowledgeable traders and programmers, I have come to the conclusion - I have not been able to implement automated trading strategy that does work reliably and profitably in the long run.
If you have a system then by definition it must be possible to describe that system with a number of clearly expressed rules.
If you can automate those rules then your system can be traded by a machine.
It's as simple as that.
Discretionary traders will tell you that their systems can't be automated because they need to 'feel' the market. What they are actually telling you is either:
(a) they can't describe their rules because they don't rigidly follow a system at all and are trading on impulse. The end result is almost certain failure over a prolonged period of time (although obviously the laws of probability come into effect here and there will be a few that continue to win just through blind luck)
(b) they can't describe their rules because they don't have the ability/time to break down every aspect of their trading system into clearly defined rulesets.
Building a complex automated trading system will be almost impossible if you don't understand how to accurately translate your system into logical rulesets and then code them. A lot of knowledge and experience of software design is needed to do it properly IMHO.
However, at a conceptual level ANY system can be broken down into a finite numbers of rules and if you have the know-how these rules can be automated. It's just that the majority of retail investors don't have the ability/time to do this.
If you can automate those rules then your system can be traded by a machine.
It's as simple as that.
Discretionary traders will tell you that their systems can't be automated because they need to 'feel' the market. What they are actually telling you is either:
(a) they can't describe their rules because they don't rigidly follow a system at all and are trading on impulse. The end result is almost certain failure over a prolonged period of time (although obviously the laws of probability come into effect here and there will be a few that continue to win just through blind luck)
(b) they can't describe their rules because they don't have the ability/time to break down every aspect of their trading system into clearly defined rulesets.
Building a complex automated trading system will be almost impossible if you don't understand how to accurately translate your system into logical rulesets and then code them. A lot of knowledge and experience of software design is needed to do it properly IMHO.
However, at a conceptual level ANY system can be broken down into a finite numbers of rules and if you have the know-how these rules can be automated. It's just that the majority of retail investors don't have the ability/time to do this.