Trading 101
Quote from John Merchant:
The joy of scalping is that there is always a trend in SOME timeframe. The only question is "How LOW, can you GO?".
Quote from EricP:
I think automated systems are being used for every kind of trading that manual traders are implementing. Momentum, scalping, trend-following, counter trend, etc. If a system can be successfully traded manually, then someone is likely trying to save their time and increase their speed by automating it if possible.
Quote from EricP:
I'm sure that Garry Kasparov would have strongly agreed with you, until he got his butt kicked by Deep Blue in 1997. In that matchup, you are not just talking about the discipline of the human brain, but you are talking about the undisputed #1 human brain in the game of chess. And still, given this apparent 'mismatch,' the computer beat him.[...]
Quote from nononsense:
Love them machines. They can't be smarter than the people who built the. Not many smart people hang around in the market, so most of them machines are rather clumsy as well.
John Merchant: The slippage and commission will kill you. Then the latency of the internet will make sure you are always on the loosing side of those systems that sit on the exchange floor , are fully automated and can execute 50 times per second.
EricP: One reason why you should never reveal your real edge. Someone will take it and program it.
Secondly: Chess is conditional upon fixed rules and only the computational different options needs to be considered. It was just a matter of all the different possibilites that previously could not be assessed within a reasonable timeframe. Markets are not having fixed rules, big difference and hence no comparison.
nononsense: I still vividly remember the Y2K problem. The biggest issue was that the people who programmed the original COBOL programs were no longer around and the business logic was lost. A lot of "wrapping" the old system was done so no real new system has eventuated. At one stage I worked at a polytechnic and when the computers were introduced the teachers complained that the assignments handed in were only show and no contents. same with calculators, it annoys me to see cashiers requiring a calculators to give you the change at the till. In general the youth these days seem to be unable to think (reason).
I used to be in professional photography before I went into the computer industry and initially I could easily outperform the "automated" systems. But as the automated systems got smarter and smarter it became harder and harder. Now it is rarely wrong and will overall outperform myself. Howver there are still occasions that I need to "override" it.
Having said all this I have noticed that in a directional move a lot of these bots stand aside. I also think less and less retail traders are present in the markets. This has certain implications. For one thing I can see limit up and limit down moves coming back and I can see a more "square wave" like type of price behaviour.
There is still money to be made in the markets but let me quote Jessie Livermoore (Reminicences of Stock Operator) that is still true today as it was in his time:
page 60:
The average ticker hound - or, as they used to call him, tape worm - goes wrong , I suspect, as much as from overspecialization as from anything else. It means a highly expensive inelasticity. After all, the game of speculation isn't all mathematics or set rules, however rigid the main laws may be.
page 61:
The average chart reader, however, is apt to become obsessed with the notion that the dips and peaks and primary and secondary movements are all there is to speculation. If he pushes his confidence to the limit he is bound to go broke.
Interesting piece is following on page 61, I will let it to yourself to look it up. Because it deals with a clever man who made regularly money until WW II knocked him (and his followers) out.
I cannot remember where I read it but it is being said that the market will always find a way to beat a systematic exploitation that is being done on a large scale.
With over 20 years experience in the computer industry I have gone beyond what most others have. After trading automatically I have now gone discretionary as I find that more rewarding. My system is deliberately desgined that it will be hard ( never say: cannot .....) to automate. My philosophy here is that if it can be programmed then it is only a matter of time before it is obsolete. (others will hit on the same idea)
I am seeing when the market manipulators play their game and then I pitch my game accordingly. During the development of the trade I may adjust my stop strategy, profit taking strategy, targets etc. Nothing is static, it is all dynamic.
I get only a few setups a week but that is OK by me.
Rest assured that is possible to outperform these machines because they are (more often than not) only designed for a particular market setup / condition and stand aside when they cannot analyse what the market is doing. And there will always be new things happening in the markets.
In fact I think that this "bot handicap" that we are facing today is not much different from the "bucket shop" handicap that Jessie Livermore faced. And he had to totally adapt his methods when he went to New York, took him several attempts before he finally got it.
At the end of the day trading is all about psychology (fear and greed and manipulation). Try working from a different perspective, a contrarian approach, and question the fundamentals that you have read about.
Jessie Livermore would say: "There is a time to be long, a time to be short and a time to go fishing."
This is post 101, and I am calling it quits here. Other things in life require precendence over ET. ( Time for me to go fishing
)
Adieu
Sherlock.
