Auto Trading is short term and and if it moves the market, we have a problem!
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Can automated trading system be profitable?
- Thread starter newguy05
- Start date
thanks guys but what i am really trying to understand is are trading bots using fundamentally different approach to trade than humans. I am not looking for specific strategies etc.. (although if you wanna share that's fine )
For example, ta chart pattern, yes you can program that easily into one of many opensource filters out there to search for them.
But is that the right approach? do trader bots use chart pattern in general or does that just not work after trials, and most bots use tape reading etc...
Basically once a general correct approach is identified (ie chart pattern or tape reading or some other completely different model), then it becomes much easier to dive into the research on the actual strategies / patterns to use based on the approach.
For example, ta chart pattern, yes you can program that easily into one of many opensource filters out there to search for them.
But is that the right approach? do trader bots use chart pattern in general or does that just not work after trials, and most bots use tape reading etc...
Basically once a general correct approach is identified (ie chart pattern or tape reading or some other completely different model), then it becomes much easier to dive into the research on the actual strategies / patterns to use based on the approach.
Quote from pneuma:
Have a look at Wealth-lab.com for thousands of examples. Whether they work or not is a different story, and you can automate with that software if you are inclined.
The key is these bots aren't scalable. One system with moderate float = excellent returns, HOWEVER 1000's traders with millions = $0.
pneuma
nice site! heh the top script there says 500% return, and i used their backtesting on a few symbols and it looks interesting, all the losses were concentrated in a few months period(to be tuned?) while the rest are profitable, and it's only a 1 page script.
Not too clear on what syntax they are using but definitly a good place to start. thanks!
Impossible to automate random buy sells based on your gut. ----->>> Exactly why automated systems work for a while and then stop working. There is no substitute for experience and judgment. No two setups are ever alike. It's the TRADER that makes money, not his/her SYSTEM.
Quote from frostengine:
Haha, very nice. Why didn't I think of that? But in all seriousness I do agree with you that if it can be traded by hand it can be automated. That is something I didn't believe just a few years ago. However one caveat is, it MUST actually be a strategy..Impossible to automate random buy sells based on your gut. Unless, there is an underlining reason giving you these gut feelings...If there truly is an underlining strategy even if you don't necessarily know WHAT it is, it has the possibility to be automated.
Very good idea to lure people into giving you strategies though.
Quote from forex-forex:
One strategy I'm playing around with is buying CAD futures at a set time - or within 90 minutes - every trading day with a 20 tick ($200.00) profit and 200 tick stop. The risk/reward ratio is 10:1 and isn't as bad as it might seem at first glance, since a 20 tick movement in either direction is very common. So far with about 7 paper trades and 3 live trades I have a 100% success rate. 9 positions were closed within 5 hours and one took over 24 hours to get that 20 ticks.
This could easily be automated and the time of day is key here for entry, which I won't reveal. One thing that I don't like is that one bad trade will wipe out 10 trades, I might reduce the 200 tick stop to 150 or even 100.
you'll never make $$$ on a 5:1 risk/reward. How about 1:2 risk/reward ... that makes sense -- but then you need a 'good idea' to make it test well.
forex-forex: you must be joking!
sam mcgee: i'd love to compete with an automated chart pattern trading system. really. i would love to humiliate it. will it also do position management and be aware when to do it and when not to? like, you know, news is coming and you'd better seal your shit tight? anyways, just show me ONE piece of software that identifies patterns correctly and it's fine by me.
Actually, there is a company in Kansas City named tradebot that buys and sells 20 percent of nasd stocks by computer programmed by a floor trader of commodities and a computer science professional...all the same person....look it up. Now the firm is owned by the majors and its life span is questionable.
http://www.bizjournals.com/kansascity/stories/2005/01/17/smallb1.html
check it out.
Also, a number of New York companies are successful on futures using applied math to short term trading of ES and Russell.
check it out.
Also, a number of New York companies are successful on futures using applied math to short term trading of ES and Russell.
Quote from alex.samant:
sky: if you're that good just program a system that highlights double tops correctly and that would prove your words.
i agree with Sky123987 and frostengine. You can automate almost everything. You can even automate a random buy/sell using a rand() function of choice. The big wallstreet firms and market makers are using automated trading strategies. if you want a human invovled you need to go into the OTC or structured product area where people still use phones and faxes.
alex.samant: can you define double tops in a very detailed manner and then refine that definition in a more detailed manner a few times. After that you will basically have you double top strategy