Is fully automated trading a fantasy? Your opinions here
- Thread starter ybfjax
- Start date
Gentlemen:
I'd like to thank you for a pretty clean and extremely informative thread on automated trading.
I enjoyed reading it last nite during my dinner break and there is a lot to be said for automating at least a part of your trading strategy.
While not originally automated, the orginal turtle traders were extremely diligent about their rulesets, and there are automated versions which currently exist (ah, the advances of technology).
Here's some info from one of the originals about the system:
turtle info, he [inflector] currently has a company which specializes in totally automating systems called trading blox (not an advertisment).
There is also a very successful hedge fund which (may or maynot be totally automated - I don't know), but it uses a similiar, trend following system to access any and all markets that trade (once you find a pattern, the individual indicie just doesn't really matter).
Quadra Superfund
As traderdragon mentions, there is a pretty steep curve to being an exceptional trader and a exceptional programmer, and I would think that is what you need to create an exceptional automated system.
If nothing else, this is an excellent dialogue on why a system trader should codify their rules and apply them to the markets with no concern for results, as someone else mentioned, "you can't drive the highway with your attention focused 10 feet in front of you".
Good trading,
JJ
I'd like to thank you for a pretty clean and extremely informative thread on automated trading.
I enjoyed reading it last nite during my dinner break and there is a lot to be said for automating at least a part of your trading strategy.
While not originally automated, the orginal turtle traders were extremely diligent about their rulesets, and there are automated versions which currently exist (ah, the advances of technology).
Here's some info from one of the originals about the system:
turtle info, he [inflector] currently has a company which specializes in totally automating systems called trading blox (not an advertisment).
There is also a very successful hedge fund which (may or maynot be totally automated - I don't know), but it uses a similiar, trend following system to access any and all markets that trade (once you find a pattern, the individual indicie just doesn't really matter).
Quadra Superfund
As traderdragon mentions, there is a pretty steep curve to being an exceptional trader and a exceptional programmer, and I would think that is what you need to create an exceptional automated system.
If nothing else, this is an excellent dialogue on why a system trader should codify their rules and apply them to the markets with no concern for results, as someone else mentioned, "you can't drive the highway with your attention focused 10 feet in front of you".
Good trading,
JJ
Just looking at the OP's options selection box and focus on living off of 10k, another way to think of your question as that by making consistent returns you will be able to compound them, thus increasing your position size and eventually working with 100k instead of 10 (not only is is not possible for most systems to consistently make a lot of money ALL THE TIME, it isn't really necessary to really successful trading).
At that point, I'm sure anyone would be able to live off of the proceeds.
It's incorrect to focus on trying to live off of 10k, and doing so leaves out one of the more important but least spoken about aspects of any good trading system ... the money management.
Good trading,
JJ
At that point, I'm sure anyone would be able to live off of the proceeds.
It's incorrect to focus on trying to live off of 10k, and doing so leaves out one of the more important but least spoken about aspects of any good trading system ... the money management.
Good trading,
JJ
Here's a link to "Building Automated Trading Systems"
by Ben van Vliet
Amazon.com
The author is an Associate Director of the M.S. in Financial Markets program, Stuart Graduate School of Business, Illinois Institute of Technology in Chicago.
Good trading,
Jimmy Jam
by Ben van Vliet
Amazon.com
The author is an Associate Director of the M.S. in Financial Markets program, Stuart Graduate School of Business, Illinois Institute of Technology in Chicago.
Good trading,
Jimmy Jam
Yes. I wasn't implying that you would ONLY remain with $10k by no means. But you would have to compound your gains to make anything significant.
So that small guy would have to hustle to get his acct up to $100k
But in order to get that 10k >>> 100k (1000% return on original investment), how long would that take?
Let's see. So now we would need a minimum of 2 systems. One to build our 10k to 100k. And another system to take the 100k and turn it into 1 mil or more.
Unless 1 really good system could handle both large and small balances.
If we are treating this as a business, then how long should it take to where you can recoup your initial investment? I've always heard 3-5 years for the restaurant business to recoup your initial investment (equipment, leasing, overhead, etc).
With a decent trading system, or at least one to live off of, we're hoping for quicker results. Let's say 10k to 100k in:
$10k >> $100k in
3 months: 215.4% compounded monthly
6 months: 146.8% compounded monthly
1 year: 121.2% compounded monthly
2 years: 110.1% compounded monthly
3 years: 106.6% compounded monthly
5 years: 103.92% compounded monthly
weekly would be a bit more aggressive:
3 months (13w): 119.3% compounded weekly
6 months (26w): 109.28% compounded weekly
1 year (52w): 104.55% compounded weekly
2 years (104w): 102.25% compounded weekly
3 years (156w): 101.5% compounded weekly
5 years (258w): 100.9% compounded weekly
This is assuming that your system can pull these gains REAL-TIME consistently. And there's not a lot of room for large drawdowns, as you'd consistently would have to make your goal every week/month in order to eat.
Then after you get $100k. Then what would be an acceptable amount of monthly returns? I believe one guy mentioned a system that averaged 20% monthly returns. So $20k per month wouldn't be bad at all.
So the question still remains, could an automated system pull off these numbers, or something similar starting at $10k acct? How long would it take?
Looks like a brand new book. I have way too many already I have to catch up on reading, but I may take a look at it sometime down the road.
There are many companies running automated trading systems profitably. Today's big trading success often meens automation in fact.
TradeBot is an example:http://www.bizjournals.com/sanjose/moneycenter/story.html?id=3498
Vlad Jovanovic's bot is an other example :
http://www.elitetrader.com/vb/attachment.php?s=&postid=1263772
There are so many...
Closer, you can simply watch the trader P§L 2007 thread. EricP is a very profitable automated trader I think.