Manual trading and profitable?

[themickey]

With manual trading all one needs is charts, money, broker and the urge to place a trade.
Can happen very quickly.
With algo trading one may need to spend weeks or months to write your program before you can trade. Longer if you don't know how to formulate it.
But the time spent writing a program is not wasted time, it's preperation time.

I've been coding for numerous years, just completed a new system and it took 16 attempts to get it written and nearly 3 months mostly full time including weekends.
Been my biggest coding job yet, was extremely difficult.
Yet the system itself is a very simple concept.

 

[Laissez Faire]

I don't see how manual traders can have an edge over algos.

What does this specifically mean, i.e., an edge over algos?

And further, is "an edge over algos" needed for a manual trader to trade profitably? As long as a trader can buy low and sell high or vice versa isn't that all that matters?

Think about it for a second, how can someone spend months or however long it takes to create an algo which disadvantages them by being worse than manual trading?

Could be a myriad of reasons for that ranging from not being able to trade profitably manually to not wanting to have to trade manually and so on.

Further, you're assuming that just because someone spend months trying to create an algo it will give them an advantage. Rest assured there's plenty who spent years trying to create an algo and ended up failing massively.

However, an algo thinks faster and collects more data than a tired or stressed or distracted manual trader.

An algo is like an encyclopedia, it stores a huge number of variables which a manual trader may overlook in the heat of a moment.

Yes, but you may be comparing apples and oranges.

A calculator will of course always be faster than a human. But the calculator is only performing an operation/output where the human defined the problem and typed in the input.

An algorithm will only perform based on the rules you as a human created.

The question then is if it's possible to fully automate a good discretionary / semi-discretionary system and cover all bases/angles that an experienced human trader can?

I think it's possible, but I'm sure it's very hard.

I don't claim to have a fantastic system, but I've automated everything that can be automated, i.e., data collection, computing statistics, creating reports, basic indicators and so on. But at the end of the day I trade discretionary based on the above and my experience using this. I think it would be very hard to automate everything, but it's certainly an end point I may have in mind at some point.

 

[themickey]

What does this specifically mean, i.e., an edge over algos?

And further, is "an edge over algos" needed for a manual trader to trade profitably? As long as a trader can buy low and sell high or vice versa isn't that all that matters?

Could be a myriad of reasons for that ranging from not being able to trade profitably manually to not wanting to have to trade manually and so on.

Further, you're assuming that just because someone spend months trying to create an algo it will give them an advantage. Rest assured there's plenty who spent years trying to create an algo and ended up failing massively.

Yes, but you may be comparing apples and oranges.

A calculator will of course always be faster than a human. But the calculator is only performing an operation/output where the human defined the problem and typed in the input.

An algorithm will only perform based on the rules you as a human created.

The question then is if it's possible to fully automate a good discretionary / semi-discretionary system and cover all bases/angles that an experienced human trader can?

I think it's possible, but I'm sure it's very hard.

I don't claim to have a fantastic system, but I've automated everything that can be automated, i.e., data collection, computing statistics, creating reports, basic indicators and so on. But at the end of the day I trade discretionary based on the above and my experience using this. I think it would be very hard to automate everything, but it's certainly an end point I may have in mind at some point.

Lots of questions and it would take a while to answer as we enter the rabbit holes.
In summary my reply is all traders think differently.
For some math is not for them.
Some of us are visual, others analytical.
Some enjoy reading and studying, others prefer being stimulated by other sources.
But If we think of some of the large whale traders, I'm guessing they don't trade off visual charts manually.
There are better ways of harvesting a crop with machines than manual labor, but there's always exceptions.

 

[Laissez Faire]

Lots of questions and it would take a while to answer as we enter the rabbit holes.
In summary my reply is all traders think differently.
For some math is not for them.
Some of us are visual, others analytical.
Some enjoy reading and studying, others prefer being stimulated by other sources.
But If we think of some of the large whale traders, I'm guessing they don't trade off visual charts manually.
There are better ways of harvesting a crop with machines than manual labor, but there's always exceptions.

Well, I was questioning your statement where you said you fail to see how a manual trader can have an edge over algos.

My point was that you may be comparing apples and oranges.

All things equal a computer will always be faster than a human and perform the same way every single day without emotion. So, HFT trading or arbitrage, human versus computer, isn't even a comparison worth doing.

However, a complex and discretionary system may not easily be translated into code. As such, my answer/take is that this is where a manual trader may have an advantage over an algorithm.

 

[Concinnity]

Yah, I'll continue to disagree with your line of thinking...
Firstly, a manual trader would be trading discretionally, ie, seat of pants, via how he feels emotionally, gut feeling instinct, experience.
He wouldn't be strictly rules based, maybe partially rules based, maybe even breaking their rules at times.
Second; when you mention turning off an algo during certain times, has it occured to you maybe at certain times a trader should just shut down trading completely because the mkt is just untradeable at times for particular traders.

Imo, a strict rules based system is superior to discretionary.
If a manual trader can trade a strict rules based system, fine, but the problem becomes one of discipline, keeping on repeating, keeping up the focus which is difficult just via manually.

There are not many people who can sit still, they always want to fidgit.
Manual traders will suffer too much from a wandering mind imo.

It's make the conversation difficult, when you say will continue to disagree, but basically agree with majority of what I said.

There's no doubt most people can't be disciplined, that's why so many people fail and why bots / algo's can be very good.

It doesn't change the fact that not many people succeed in retail with either one and it also doesn't change the fact that there are traders who are that disciplined. So the point still stands all things being equal, at the highest level of retail a manual trader will generally beat a bot/algo. The thing is as tough as it is to be disciplined, it's equally tough to code a bot well enough to be long term profitable. Basically what Laissez Faire is saying.

A mix of manual intervention and automation I think can work wonders as a middle ground as well.

 

[Tradess0610]

What instruments do you trade? HG
What strategy do you employ? Very Simple Price Action
How did you reach consistency? via stats and what is essentially the Morse 4
What do you believe is your edge over algorithmic trading? Never considered the question.

Tradess0610 - Question for you if I may: Would you say you are/want to be more of an artistic intuitive trader or a rules based trader?

I would say rules-based. Because it is easier to analyze past trades. Simple question: did I follow the rules or not? Easier to backtest than going with intuition I believe...

 

[Tradess0610]

I can just list some that I would consider a hard edge in no particularly order:

#1 Being able to determine when a short or long has less probability to work and/or less probability to produce a sizable move even if the signal does work in your direction. In other words not just using your information and indicators to find a trade, but using them to rule out low probability trades as well. Every loss you can avoid, has the potential to greatly increase your profitability / profit factor, whatever terminology one wants to use.

#2 Being able to understand where and how buyers and sellers are being trapped.

#3 Having actual hard math mathematical probability as to if the low or high of day has been put in during a session.

#4 Understanding when and how to use means reversion / imbalances getting filled. Also understanding what % of the time intra-day do the imbalances get filled before the market closes.

#5 Understanding when overbought scenario is actually bearish and when it's actually super bullish and you should be taking long positions.

#6 Just pure screen time and ability to understand how stable the market is, during a particular session.

Just rattling off some things here. All these could be edges that if added to a basis of discipline and strong risk management, could turn decent gains into outsized gains. Hopefully this is an acceptable or reasonable answer.

Agree with the above. Of course, the devil is in the details - deeper understanding of the points listed

 

[Tradess0610]

My first 32 years I traded mostly manually, my edge was knowledge of price patterns, volume, and knowing the "why's". Long term did it right from beginning, took 7 disastrous years to learn how to scalp and be profitable and another seven years to become expert level.
If I had to do all over again, I would have stuck to long term futures, hedging and swinging options. Huge profits there and less commissions.
Last thirteen years been 99% automation, turned off most intraday systems recently except for 2 intraday systems and still trade four which are long term/swinging futures/options. I have learned never to describe how I trade cause there are some very smart traders who could break down style of what I do.

The amount of knowledge to learn on RISK is huge, learning entries is last, your edge should be "risk", know when to pass on viable trades, where not to place your stops, understand where retail stops are.
Commissions will eat you up manually too.

Eventually, if smart enough, you develop "Holy Grails", but you learn how to program, and sample sizes based on ticks over a decade of data to generate 20,000 trades plus.
Overall, been fun in beginning and now just a job like anything else. After 45 years, never going to retire, I can answer all my own questions.

Discipline tough to experience and learn. Gut feeling is actually much past knowledge.

I would never advise anyone to do full time manually day trading, stress, huge amount of time taken away from family, and years of info to remember.

Welcome to shark tank.

Awesome, wish you all the best for the future. So inspirational!!!

 

[Leob]

I can just list some that I would consider a hard edge in no particularly order:

#1 Being able to determine when a short or long has less probability to work and/or less probability to produce a sizable move even if the signal does work in your direction. In other words not just using your information and indicators to find a trade, but using them to rule out low probability trades as well. Every loss you can avoid, has the potential to greatly increase your profitability / profit factor, whatever terminology one wants to use.

#2 Being able to understand where and how buyers and sellers are being trapped.

#3 Having actual hard math mathematical probability as to if the low or high of day has been put in during a session.

#4 Understanding when and how to use means reversion / imbalances getting filled. Also understanding what % of the time intra-day do the imbalances get filled before the market closes.

#5 Understanding when overbought scenario is actually bearish and when it's actually super bullish and you should be taking long positions.

#6 Just pure screen time and ability to understand how stable the market is, during a particular session.

Just rattling off some things here. All these could be edges that if added to a basis of discipline and strong risk management, could turn decent gains into outsized gains. Hopefully this is an acceptable or reasonable answer.

Hard edge is when you scalp context and understand when context strat to switch.
When Yin start to be Yang and when Yang start become Ying.

 

[2rosy]

However, a complex and discretionary system may not easily be translated into code. As such, my answer/take is that this is where a manual trader may have an advantage over an algorithm.

You can automate a complex and discretionary system by adding random() function calls.