Is fully automated trading a fantasy? Your opinions here

[MarkBrown]

this year starting with enough cash to trade one lot emini sp you could have made 7500.00 with less than 1% risk for the period to date.

so depending on what your clearing firm lets you do in the way of day trading margin, you can figure how many contracts you could have traded.

yes i think a trader could start with 10,000 and make a living, but only with a mechanical system you developed yourself and you fully understand the logic - like to the max.

what are the odds - not very good - it would be more likely to win the lottery. but the thing about it is that if you could do it - it would be better than the lottery cause you can do it over and over again.

 

[Kohanz]

Disagree: that it would be without human error. When you say this you mean no error in execution, which is correct. But is the system itself without error ? Only the balance sheet will tell over time.

I guess I should have clearer in saying that, if implemented correctly, an automated system rules out any human error in the execution of the implemented algorithm/system, whereas a discretionary trader may not stick as steadfastly to his system rules, perhaps to advantage or disadvantage, but this goes against the idea of system trading in either case.

I'll never understand why people question whether you can make money with an automated system.

Have you ever questioned whether there are any manual system traders out there who can make a living off of what they do? If you believe there are, then you have to believe that profitable automated systems exist that can support their creators. End of story.

If you don't believe that there are profitable system traders out there, manual or automated, well, I don't know what to tell you, other than it is the year 2007.

 

[ybfjax]

Quote from Kohanz:

I guess I should have clearer in saying that, if implemented correctly, an automated system rules out any human error in the execution of the implemented algorithm/system, whereas a discretionary trader may not stick as steadfastly to his system rules, perhaps to advantage or disadvantage, but this goes against the idea of system trading in either case.

I'll never understand why people question whether you can make money with an automated system.

Have you ever questioned whether there are any manual system traders out there who can make a living off of what they do? If you believe there are, then you have to believe that profitable automated systems exist that can support their creators. End of story.

If you don't believe that there are profitable system traders out there, manual or automated, well, I don't know what to tell you, other than it is the year 2007.

Thanks for the feedback. I do believe that there are profitable automated and manual systems. How profitable could they be? I've seen a manual one in action, and I could see how it can make money consistently.

But I would have to see it for myself for an automated one. Especially the stats such as drawdown .

I believe your initial explaination makes more sense. That the auto systems trader cannot turn it on autopilot fully. They have to constantly monitor the systems and make adjustments to the algorithim to make it/keep it profitable.

And if it was worth its salt, it probably wouldn't be sold

I mentioned 10% because $1000 a week was reasonable to live off of (starting with $10k). But I guess we could, for augumentative purposes live off of of 5% or $500. The point is that your returns would have to be high to start with a smaller dollar amount. (And then, compounding would be a concern).

It's easy to say "I made $200k with an automated system last year" but what did you start with?

So the conclusion so far is mostly in line with what my teacher said.

At best you can automate PARTS of a system. But there is no totally hand-free solution. At least for the small guy.

Now exactly HOW MANY PARTS of the system you can automate would depend on the ability of the programmer and the limitations of the platform.

Quote from Kohanz:

1. If a profitable automated system is being sold, that should be your red flag right there. It is probably useless, or has outlives its usefulness.

2. The reason a lot of people are skeptical about automated trading is because they simply don't understand what it entails. They think you press a button, go away forever and, as you said, wait for it to "print money". And while, yes, a good automated system should require little to zero attention for it's actual algorithm and trading execution, this does not mean that you can let your automated system sit for months and months or years and years (depending on the time frames it trades) without needing to be vigilant in monitoring it's performance, tweaking the algorithm, and essentially keeping it as profitable as you possibly can.

Think of automated traders as discretionary system traders, who don't have to do all the work of executing the trades manually, but still have to do all the work researching and perfecting the system. On top of that, they may have multiple systems to manage, rather than one, so in essence, automated traders can easily end up having to work harder than discretionary traders and IMHO this is probably the case for most profitable automated traders.

What is the advantage then? One might ask this. Other than being able to stick to the system rules steadfastly, no questions asked, without human error, there is the important ability to scale out to many more instruments than a manual trader could ever hope to monitor or manage.

 

[sulli]

Quote from frostengine:


10% a week..... how many discretionairy systems do you know that can produce 10% a week with little drawdowns? If you ask me, that is your fantasy, not automated systems. Could an automated system produce that? Possibly... but before you knock an automated system for not being able to produce those returns show me a discretionairy one that CONTINUOUSLY produces that with little draw downs.

right on bro

takes a damn good trader to pull that much consistently imo. - not my reality

 

[traderdragon2]

EricP made 100K in a week and he is full auto. Think thats enough to live on?

Full auto exists, its just that most people will never have the combination of skills to be able to do it themselves.

 

[ybfjax]

Quote from traderdragon2:

EricP made 100K in a week and he is full auto. Think thats enough to live on?

Full auto exists, its just that most people will never have the combination of skills to be able to do it themselves.

Okay....How much did he start with? Is he doing this consistently or did he get lucky? Over a months/years time, how well did that same system do? I doubt he started with just 10k or even 100k which would be 100% profit.

What platform did he use, anyway?

Is he able to literally walk away from the system other than, say, to take it down for brief periods such as backup or system mainenance?

And yes I do agree, you would have to be both a trader, a programmer, and have an ability to codify your ideas onto a systems platform, accounting for all possibilities.

 

[traderdragon2]

I cant speak for ericP, but I do know that was a very exceptional week for him, but im also pretty sure he is very consistent with low drawdowns from what I can tell.

But im full auto also, and I leave my system to run full auto for up to a week at a time without touching it in any way.

Im sure it could probably go for a year without ever looking at it once.

As for how much they make, they are no different that discretional traders. It depends on good the trader is.

Just because its full auto does not automatically mean it has to be less effective at trading and make less money.

In fact, I could make an argument that its more effective for multiple reasons. Lack of emotion, speed, and precision, being some of them.

The problem for most traders is, it would take about 5 years of full time professional programming to get good enough to write a system robust enough to trade on its own with confidence. The opportunity cost isnt worth it to them.

 

[fickletrader]

Sounds like the blind leading the blind. You are gonna lose that little roll of yours trying to maintain that level of returns by any avenue you might take. No question. You will be better off if you throw a giant party, put a down payment on a nice car, or take a sweet vacation and forget about the markets forever.

Quote from ybfjax:

I mentioned 10% because $1000 a week was reasonable to live off of (starting with $10k). But I guess we could, for augumentative purposes live off of of 5% or $500. The point is that your returns would have to be high to start with a smaller dollar amount. (And then, compounding would be a concern).

 

[Maverickz]

traderdragon2,

What platform do you use for full auto? Also what types of instruments?

Also I wonder if anyone has tried to full auto trader28's Simple Profitable Method? If so how well has it done?

Also on a side note while searching around a bit I found a site claiming to have a full auto Forex trading Robot and for 30% of the profit they will allow you to use the robot. However I am not sure I would trust financial guru's that use Geocities for a web host.

 

[ybfjax]

Quote from traderdragon2:

I cant speak for ericP, but I do know that was a very exceptional week for him, but im also pretty sure he is very consistent with low drawdowns from what I can tell.

But im full auto also, and I leave my system to run full auto for up to a week at a time without touching it in any way.

Im sure it could probably go for a year without ever looking at it once.

As for how much they make, they are no different that discretional traders. It depends on good the trader is.

Just because its full auto does not automatically mean it has to be less effective at trading and make less money.

In fact, I could make an argument that its more effective for multiple reasons. Lack of emotion, speed, and precision, being some of them.

The problem for most traders is, it would take about 5 years of full time professional programming to get good enough to write a system robust enough to trade on its own with confidence. The opportunity cost isnt worth it to them.

Thanks for the insight. What kind of platforms do you use? What kind of programming do you do?