The Future Of Systems Trading?

T

tommo

Hi,

It seems everyone wants to be a systematic trading these days. The majority of trading jobs you see advertised these days ask for C# prgramming skills or quant background. I trade as a local and as many scalpers find life harder and harder i see more people turning to backtesting systems as an easy route out. Its never been easier to set up your own mechanical trading system.

I personally dont see this as a good thing (for people that already have systems in the market) as more people start stumbling across similar entry techniques logic suggests this will dimish their edge.

I am interested to see how other systematic traders see the markets evolving as more and more is done systematically?
 
As baseball player Wee Willie Keeler said, when asked how he was able to make 200 or more hits in eight consecutive seasons: "Hit em where they ain't."

Applying this suggestion to your predicament: Figure out what large numbers of unsophisticated systems traders are doing. Then: Don't do that. If you've got lots of guts, do the opposite. Fade the ignorant.
 
Quote from tommo:

Hi,

It seems everyone wants to be a systematic trading these days. The majority of trading jobs you see advertised these days ask for C# prgramming skills or quant background. I trade as a local and as many scalpers find life harder and harder i see more people turning to backtesting systems as an easy route out. Its never been easier to set up your own mechanical trading system.

I personally dont see this as a good thing (for people that already have systems in the market) as more people start stumbling across similar entry techniques logic suggests this will dimish their edge.

I am interested to see how other systematic traders see the markets evolving as more and more is done systematically?
More...



Well, firstly ignore all the rubbish of fading and hitting them where they ai'nt. The simple truth is that mechanical trading is very hard and almost all traders fall flat on their face when back-testing a system or anywhere along the system development life cycle. So it is not they so many people are doing it, its that so many people who are mechanical traders get screwed and very quickly. Building a mechanical or automated system is as much an art as it is scientific. If you one millimiter off, you can get screwed.

At the end of the day, you may be a quant or a c+ programmer but you have to know what you are trying to exploit scientifically then build a theoritical model and then a practical one and then test it on data if it doesnt work thats it, try something fancy like optimization software and you will get screwed.......so may pitfalls, but the solution is very simple in hindsight.

"In system trading success is never final" by Nahequilibrium
 
Quote from Nashequilibrium:

The simple truth is that mechanical trading is very hard
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I agree with you, but not because I think succesful strategies are incredibly difficult to build. Yes, of course it's a time consuming and often frustrating experience. And yes, some people are far more skilled & knowledgable than others in the field. However, with those caveats in place, I see psychology as the big one to master. Drawdowns and doldrums are still very real events, to me at least.

A recent example from the other side of the coin, I absolutely hated paying 694 for some corn the other day. Any fool could tell it was far too expensive a price to pay. However, I followed my system and am reasonably happy with the outcome of that particular trade so far. From a personal perspective, I hope in time I genuinely won't care about any one trade or market. I'm not there yet but I continue to follow my system 100%. Easier said than done sometimes....
 
The more complex the ATS is, the more likely it is too fail. Keep it simple, trade a very liquid market and try to emulate a manual strategy that has already been tweaked and back-tested successfully.
 
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