Quote from Craig66:
What is meant by 'handling the bid/ask'?
The Bid and Ask prices are one of the most important indicators or data points used in daytrading. Your system has to be able to interrogate the Level II screen.
Since a market order buys on the Ask and sells on the Bid, if you buy a stock with a .50 spread (ask - bid), you are already down .50 on the trade right out of the gate. My trading system allows you to set the max ask-bid amount.
I set the max spread to .05 in my strategies.
Also, when you buy a stock, you have to sell it to close. You need to know the current bid price to know that you have reached your profit goal.
Also, if you are looking to buy 5000 shares of a stock, it helps to know how many shares are available at the price you want.
Professional traders live and die by the level II screen. I don't know a professional trader who could or would execute a trade without seeing those prices.
Another important thing about automated trader development is that you cannot know EVERY rule you are going to use at the time the system is being developed. You have to be able to change your strategies WITHOUT having to call the programmer back. That of course is not possible. Therefore, what that means in the real-world, is that you are going to be paying that developer for a long, long time.
I suggest saving yourself thousands of hours of programming (time and cost) and use an existing system already available. Some are free to a small monthly subscription fee and include live data feeds. If you use an indicator that doesn't already exist in the system, many times the company will add that indicator. I know many of the indicators in my system came from subscriber requests.
Something else (and there are a lot more) that you need to consider is the daily programs (and problems) that you will have to run to keep your indicator database(s) up to date. A 200 Day Moving Average or Welles Wilder +-DMI doesn't just appear out of thin air.
Ed
