Short term trading EA's aren't working
I see nothing wrong with short term trades, however any shorter term trade which ignores the longer term trend is foolish. Shorter terms require parameters scaled to be effective on short term parameters. Expectations need to be adjusted.
personally i'd rather have small rewards repeatedly and more often than larger rewards spaced farther apart with long wait times in between. My working premis is that the small rewards repeatedly add up to more than the large rewards spaced apart. that's what I see with the shorter term or shorter time frame.
The Trouble with Scalping EA's and Short-Term Trades
The trouble with short-term trades is that when you test your EA in real time - paper trading - the platform doesn't add the time it takes to match the trades. Try closing trades made by a scalping EA manually while it's trading with real money. Sometimes it won't close at all. The EA is forced to give up and try again later. That's the reason EA's that paper trade one-trade-a-minute take hours in real time.
Although most brokers say they don't take the opposite position in their clients' trades, it's not possible to have the kind of speed we're accustomed to without. One thing they're not about to do is take the opposite position with a scalping EA. So you're forced to wait for someone whose willing to do it.
I see nothing wrong with short term trades, however any shorter term trade which ignores the longer term trend is foolish. Shorter terms require parameters scaled to be effective on short term parameters. Expectations need to be adjusted. personally i'd rather have small rewards repeatedly and more often than larger rewards spaced farther apart with long wait times in between. My working premis is that the small rewards repeatedly add up to more than the large rewards spaced apart. that's what I see with the shorter term or shorter time frame.
There is nothing wrong with any of these assumptions or goals. However, what is usually missing from these discussions is whether or not the market actually operates this way, producing many small profits for traders to take advantage of with their indicators and oscillators or analytical techniques. In my experience and from my testing the markets simply don't operate this way. They have their own agendas and giving many small profits out daily to traders is not part of the plan.
So we have a choice: either continue using our own beliefs/assumptions about what the markets should provide to us, or we should align our own beliefs/assumptions with what the markets actually do deliver. I would submit that aligning your beliefs with the realities of the market is very powerful. And from my testing the markets tend to move in wider, longer term cycles that make it difficult to bank profits every day, or even every week, but those longer term cycles tend to have a mean reversion aspect to them. The natural tendency of these markets seems to be much more oriented towards position traders than it does to day traders or traders who are looking to exit at a certain time of day. I know most people want to get rich scalping 20 times per day off the 1 minute chart trading part time, but that's about as likely as getting milk from a bull. Just my opinions/experience.
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I'm finding that all the short term EA's and strategies that I use don't work or don't appear to work. The longer term trading EA's are the only things working for me. Or appear to be working. I'll have to check my numbers again. What is everyone else's feelings?
The only way that I think a short term EA can work is by taking in lots of past data into account. EA's that just use indicators like buy if RSI>50 and such don't seem to work because these indicators are lagging indicators and they don't take into account what's happened in the last week or last month. The only way to win in forex in my opinion is to know what happened last week and use that to make decisions now. These EA's that just use lagging indicators just don't work. I'd like to see more EA's that use past information much like Hans did. Hans isn't even working for me now, though. I feel exhausted watching the chart move up and down.
What do you think about an EA that sums up RSI values of the last 4 - 6 months and uses this to dictate what to do this month. We are on the 21st of the month right now. What if we summed up RSI values of the last 6 months individually up to the 21st of each of those months and the one that is closest to where we are now would be used to make a decision for the market. Wouldn't this work?
Or what if we had an EA that looked at the high of the previous week, and the high of the two previous weeks and depending on whether they were higher or lower than the current price we would look for past history where this similar situation occurred and also based on the current RSI value, we made a decision. I think this would be much more accurate than how most the EA's work right now.