Why I prefer EA's to Manual Trading

[ybfjax]

Quote from fxgator:

Agree upon being hybrid. Both have the advantages and disadvantages. So why not use both? Double the trouble? No. We are doubling the money.

The problem with this type of thinking is that you are imposing limitations on yourself. Mixing automatic and manual trading techniques in unison should only be to the extent that one is unable to automate, such as

1) inability to properly describe your methodology mathematically / logically (step-by step entry/exit rules. (even feelings have a trigger)

2) inability to find competent programmer to properly convert ideas into usable code to reflect ideas. (what you say vs what the other person understands) vWorker has excellent article on spiral development to overcome this frustration.

3) platform limitations. This is rare, because there is almost always a workaround to code something, or more than one way to code it. 10/10 the platform alone without human intervention can outperform manual repetitions signifcantly.

Indicators are an excellent example of repitition in action

 

[ElectricSavant]

I had access to a professor in C programming.
He could not even build a profitable EA. But he
could write code like you have never seen...
One of the EA's had polynomial equations in it...

You need to be a trader. This is why I quit
trading EA's in Forex and quit my quest for
an EA that could consistently be profitable
long enough to get my original starting trade
capital doubled (my plan was to remove half
and trade w/house money).

I needed to learn how to trade my own stuff
then get an EA built.

Well then...you can understand why you would
not share your work publicly as a trader without
a signed statement not to divulge from the
programmer. You definitely would not share it for
free on public forums.

So...

This crap we call EA's that are shared publicly do
not work...so understanding them is a lost cause.
Most likely they are shared because any input does
not work and they have a false premise on how
the market trades.

You need to know how to trade manually first
then have a programmer build your EA for you.

I sampled thousands of public EA's and tried to
tweak their inputs after understanding what they
do...the problem is the market changes character
and they need to be reprogrammed and/or the inputs
need to be changed.

The only positive thing I can say about EA's is that
there is a possibility to have a price action EA written...
I am taking a break from trading to relearn how to
trade from an entirely different perspective. I am
lucky to have some help from a veteran trader
that is profitable. Did you know that it is possible to
be a veteran trader and not be profitable?

Below is a snippet from an old Price Action EA back
in the day when I tested EA's. This one I altered.
It has a 50% winrate and I just put a few days of
trading in this picture. The Target is larger than
the stop loss. It runs on Demo all of the time in
the background on my computer and I still run
it to this day. It trades a lot and usually there
is some price action triggering it to trade. The
price action provides the clue it needs to go
long or short and then wait for the SL or Target
to come true. It consistently hits each one 50%
of the time.

So why is it on a 1K Demo? I just do not have the energy
to lose once again...I could take it live and that is
where the rubber meets the road...it will fail....it is
a price action EA and when the fills screw up it will
fail...so no need to get excited (I use to).

 

[ybfjax]

here is the article on spiral development of software (EAs)

This applies just as easily to personal relationships as well.

Focus more on un-learning all you think you already know about the market. What's left will be market price action. I think your price action EA is on the right track. The analysis of the results.

I tend to look at the whole account equity (not individual trades) and designed a tool to assist in locking in profits with this mindset.

There is no need to fear if other people learn about your strategy. The same basic truth is available for all those who have the courage to see the market as it is, NOT the way they want it to be. There is no real secret to find....it's right in front of you.
That fear has origins in a poverty mindset/scarcity model, which is taught heavily in public and private fool systems. You would never worry about the ocean running out of water, or a tropical island running out of coconuts. Why worry if the dollar runs out?

 

[Cassius]

Quote from ElectricSavant:
Well then...you can understand why you would
not share your work publicly as a trader without
a signed statement not to divulge from the
programmer. You definitely would not share it for
free on public forums.

That's just one thing about it. Another is that if some profitable EA becomes public people start using it.
But the more people use it the less profitable it is. Money isn't appearing out of nowhere. If you win something it means somebody else lost. And if one man loses $100 and a hundred wins his money than how much each of them will earn? Just $1.
That's another reason why really profitable EA's will never be opened to public. At least intentionally.

 

[ybfjax]

Quote from Cassius:

That's just one thing about it. Another is that if some profitable EA becomes public people start using it.
But the more people use it the less profitable it is. Money isn't appearing out of nowhere. If you win something it means somebody else lost. And if one man loses $100 and a hundred wins his money than how much each of them will earn? Just $1.
That's another reason why really profitable EA's will never be opened to public. At least intentionally.

I guess the scarcity model is very hard to shake once you learn it and practice it for years. Profitable EAs are profitable not because they have some secret process. They are profitable because they can detect a pattern that occurs all the time and make a repetitious entry/exit choice.

Automation is simply a systems approach of taking different manual techniques and combining them in such a way that you can leave it unattended, just like a car motor or a email mailing list.

 

[ElectricSavant]

Very insightful posts in this thread...But I would never condone leaving an EA unattended...

ES

Quote from ybfjax:

I guess the scarcity model is very hard to shake once you learn it and practice it for years. Profitable EAs are profitable not because they have some secret process. They are profitable because they can detect a pattern that occurs all the time and make a repetitious entry/exit choice.

Automation is simply a systems approach of taking different manual techniques and combining them in such a way that you can leave it unattended, just like a car motor or a email mailing list.

 

[Good1]

Quote from ElectricSavant:

Very insightful posts in this thread...But I would never condone leaving an EA unattended...

ES

I'm reminded of Nicolas Darvis' method. It was set up to operate somewhat unattended, while he was out dancing around the world. If i recall, its ability to operate relatively unattended was part of his key to success. For many of us, our attendance can easily translate into meddling and interference. In my experience, what i've been able to automate did better than when i was not attending (meddling with) it. The weakest link with unattended, imo, is one's internet connection, whether it is sturdy (always on). This would be the prime reason for attending closely to any robot that is already programmed and tested well. It seems to me any robot with a robust connection ought to be able to go on it's own for at least 24 hours. I'm thrilled by those that can go a long time without intervention, and will be watching the MQ5 ATC very closely this year. Another time for close attendance would be the when a successfully demo'd robot is making the transition from demo to the unknowns of a live mode. Another time for closer attendance would be when raising the level of leverage (volume of lots) toward a higher risk% of equity per trade. Watching the screen hurts my eyes anymore, so i wouldn't be considering any of this unless there was the possibility of going a week at a time without looking at a screen. All the better if each week was likely to yield a gain, even if a small %.

 

[ElectricSavant]

You obviously have not automated with MT4.

ES

Quote from Good1:

I'm reminded of Nicolas Darvis' method. It was set up to operate somewhat unattended, while he was out dancing around the world. If i recall, its ability to operate relatively unattended was part of his key to success. For many of us, our attendance can easily translate into meddling and interference. In my experience, what i've been able to automate did better than when i was not attending (meddling with) it. The weakest link with unattended, imo, is one's internet connection, whether it is sturdy (always on). This would be the prime reason for attending closely to any robot that is already programmed and tested well. It seems to me any robot with a robust connection ought to be able to go on it's own for at least 24 hours. I'm thrilled by those that can go a long time without intervention, and will be watching the MQ5 ATC very closely this year. Another time for close attendance would be the when a successfully demo'd robot is making the transition from demo to the unknowns of a live mode. Another time for closer attendance would be when raising the level of leverage (volume of lots) toward a higher risk% of equity per trade. Watching the screen hurts my eyes anymore, so i wouldn't be considering any of this unless there was the possibility of going a week at a time without looking at a screen. All the better if each week was likely to yield a gain, even if a small %.

 

[Good1]

Quote from ElectricSavant:

You obviously have not automated with MT4.

ES

You seem to suggest that MT4 robots are not as robust as other types of robots, or that MT4 brokers are able and willing to pull more than average shenanigans. Please elaborate.

I understand there can be a big difference between a demo account that seems to do well, and a live account where a broker is taking the other side of your trade, and has ways to make sure they don't lose in the long run. As noted, this is where i would attend closely.

I suggest opening three accounts when going live, run the same trades through all of them, and monitor the bottom line. Stay with the one that least handicaps your results, cut the two handicaps, and add two more for monitoring. Keep this process going, and let the robots go unattended as they (and your internet connection) prove relatively reliable. You could have the robot send emails on a regular basis. If it misses an appointed mail time, it could mean that it has lost connection. If it's connected and still trading, it shouldn't be difficult to monitor account equity through automated email, allowing for a degree of unattended automation.

 

[ybfjax]

Quote from ElectricSavant:

Very insightful posts in this thread...But I would never condone leaving an EA unattended...

ES

If you can leave your car/truck idling, your refrigerator plugged in, your air conditioner on a timer, or your employee at the store, there is no reason not to leave Expert Advisor or other trading algorithm unattended on a VPS or other reliable server.

The whole point of partial or full automation is partial or full unattended repetition in action. Then the next stage is scalability. Once you have a systems approach, you can then refine the components in the system and scale up or down as necessary to achieve desired results.

Could you imagine if you had to think about breathing, or ridding your cells of waste? you wouldn't have any time to direct your life; you'd be spending all of your time micro-managing all the little tasks. If you take a closer look at automation, you will see that there is a minimum amount of required automation to even make a system operate at all or worth its time. Like your heart has to beat a certain minimum to keep blood flowing a minimum amount. Or your car needs a minimum # of RPMs to prevent engine from stalling.

I think the cause of the distrust of EAs comes from a lack of understanding of the internal workings of the EA....thinking that "luck", "faith" or some sort of mysticism is the magic recipe that makes the trading profitable. It's the underlying trading strategy that is profitable. Although there are certain volatile moving markets that would be difficult to manage through manual trading. It's not that the rules of the trading strategy changed, but you can only click your mouse so fast to open and close. Plus the possible "changing" of your rules due to fear/self-interference.

Quote from ElectricSavant:

You obviously have not automated with MT4.

ES

While MT5 will bring a lot of wanted features such as 64 bit support, net open positions tracking, Level II and 1-click trading built in, and compatibility with exchange-traded products, MT4 is still well capable of unattended automation.

The only problem i've had with mt4 natively is that if you have hundreds of open orders and have a sudden need to close them all. It can take 1-2 minutes, because mt4 has to close each ticket individually. MT5 uses net positions, so you can offset your open positions partially or fully with 1 order. Other mt4 problems are usually at the broker level or programming limitations. Of course if you pick a reputable broker, the broker problems are minimized. Programming limitations are minimal, if you have the right workarounds.

Despite the flack that mt4 has caught from some people in regards to being a "market maker" or broker-friendly charting package, one advantage that metatrader did provide for the forex community is portability and free client access to custom indicators and automation. If one broker gets out of line, you can almost seamlessly move to another broker and not have to reprogram everything with a new platform.

And development is cost effective. You are getting demo price feed for free, and can ask for an unlimited demo if needed. You can run your demo to forward test and verify that the algorithim works as intended. Use screen recording software such as BSR screen recorder or LiveStream.com's procaster. You can even record remote server "desktop" by implementing a special RDC trick shown in this youtube video: http://www.youtube.com/watch?v=SoybUfW0VdY