Beginner looking for some guidance

J

JCesar

I'm 18 and this year I've discovered this entire new world that is trading, and I've been reading and studying a lot of aspects about it. I can say now I'm truly interested in trading in the future when I have more money to do so, and I realize I have time in my side.

I'm also curious about automated trading, despite not knowing ANYTHING about it besides that it looks really hard and complex. I also have no idea if it can be done or if it is worth to build automated strategies or if it's better just to learn trading manually. Would love it if someone with more experience in trading and programming could briefly explain to me the pros and cons of that area, and if i'm better off using my time to learn other aspects of trading other than programming.

Another question is: For a complete begginer, what would be a good way to start learning programming in general, and afterwards using that knowledge to build automated trading systems?

You can already see i'm kinda lost in the middle of so much information that is available in the subject, and I think i've not been able to decide what would be the better path to follow, and there is no clear consensus about the most efficient way to trade (manually or not)

Thank you for taking the time to help me

JCesar
 
JCesar said:
I'm 18 and this year I've discovered this entire new world that is trading, and I've been reading and studying a lot of aspects about it. I can say now I'm truly interested in trading in the future when I have more money to do so, and I realize I have time in my side.

I'm also curious about automated trading, despite not knowing ANYTHING about it besides that it looks really hard and complex. I also have no idea if it can be done or if it is worth to build automated strategies or if it's better just to learn trading manually. Would love it if someone with more experience in trading and programming could briefly explain to me the pros and cons of that area, and if i'm better off using my time to learn other aspects of trading other than programming.

Another question is: For a complete begginer, what would be a good way to start learning programming in general, and afterwards using that knowledge to build automated trading systems?

You can already see i'm kinda lost in the middle of so much information that is available in the subject, and I think i've not been able to decide what would be the better path to follow, and there is no clear consensus about the most efficient way to trade (manually or not)

Thank you for taking the time to help me!

JCesar
More...

Hi there,

Welcome to ET! Trading is a very challenging endeavor, like casinos it is a very exciting idea, but just like in casinos, the odds are overwhelmingly against the trader.

I have been developing & trading fully automated systems for about 5 years. My current systems are intraday swing systems, based on statistical analysis of price-action.

IMO the advantages of automated vs manual as you call it (really, discretionary), are:

1. Flawless execution of the trading strategy (assuming it has been properly developed & tested) ... the computer works 24/7 without breaks nor distractions (nor emotions)
2. Ability to assess a trading strategy performance on past market data, and reject the numerous ones which don't pass this test
3. Ability to diversify, both in terms of markets, and in terms of trading strategies - the computer can run perfectly many strategies on many markets, not the case for a human trader

This comes with 2 major hurdles:

1. It is very easy to design a trading strategy that works well on past market data, and poorly on real-time, live market - this phenomenon is often referred to as over-fitting a system to past data. There are some steps one can take to reduce the risk of over-fit (in particular, making over-fit more difficult by mandating thousands of trades in backtest).
2. It is not practical to code in a trading system all of the nuances which can be use in discretionary trading. As a result, automated systems sometimes take "stupid" trades, and these or mostly noticed during live trading of the system, as it isn't cost effective to go through thousands of backtest trades 1 by 1, and try to incorporate the nuances that would allow to filter or better handle some of those "stupid" trades.

Cheers
D.
 
dom993 said:
Hi there,

Welcome to ET! Trading is a very challenging endeavor, like casinos it is a very exciting idea, but just like in casinos, the odds are overwhelmingly against the trader.

I have been developing & trading fully automated systems for about 5 years. My current systems are intraday swing systems, based on statistical analysis of price-action.

IMO the advantages of automated vs manual as you call it (really, discretionary), are:

1. Flawless execution of the trading strategy (assuming it has been properly developed & tested) ... the computer works 24/7 without breaks nor distractions (nor emotions)
2. Ability to assess a trading strategy performance on past market data, and reject the numerous ones which don't pass this test
3. Ability to diversify, both in terms of markets, and in terms of trading strategies - the computer can run perfectly many strategies on many markets, not the case for a human trader

This comes with 2 major hurdles:

1. It is very easy to design a trading strategy that works well on past market data, and poorly on real-time, live market - this phenomenon is often referred to as over-fitting a system to past data. There are some steps one can take to reduce the risk of over-fit (in particular, making over-fit more difficult by mandating thousands of trades in backtest).
2. It is not practical to code in a trading system all of the nuances which can be use in discretionary trading. As a result, automated systems sometimes take "stupid" trades, and these or mostly noticed during live trading of the system, as it isn't cost effective to go through thousands of backtest trades 1 by 1, and try to incorporate the nuances that would allow to filter or better handle some of those "stupid" trades.

Cheers
D.
More...

Thank you dom993 for your time, i really appreciate it.

May I ask you how did you start learning to program? Also, what do you think would be the most effective programming languages for me to begin?
 
I learned programming over 30 years ago, getting an engineering degree in computer science. I then worked over 20 years in high-tech/telecoms & information systems, most of it in management positions, but I always stayed current on technology - in particular software engineering.

Re. which programming language to start with, I would say either C# or Java ... C# is my all-time favorite but it is Microsoft-centric, Java is more open, in the end it all depends what you learn programming for. NinjaTrader & MultiCharts both offer a C# development environment, if you don't mind buying a commercial trading platform (I use NinjaTrader).
 
Interesting. I'll start to search a bit about those two before choosing one of them to begin with. Looks like programming is something you need to put a lot of time and effort to master, just like trading. I hope someday I can develop my own automated trading program, just like you. Thank you a lot.

And if there are other people who can help me by sharing your opinions and experience in the area, i'd appreciate it too.
 
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