Manual trading vs Automated trading - an open discussion - page 3
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It is interesting how you can see the same opportunity using different tools. I like you approach using the two legs. But what about loss of profit? Are you setting your take profit point on the second leg based on the change in the first leg?
I did a trade (last night), I just finished the trade an hour ago, when I woke up. When I entered I looked at the market and saw an opportunity on NZDUSD. I set my take profit at the average daily range, which is about 100 pips). But I don't rely on that , instead I use the OsMA ( oscillation of the MACD) and the RSI level to decide when to exit.
I agree that producing quality code is very important. I would very much like to see some software development standards introduced/enforced on this site. There are many with little coding experience that have much to learn. How you release software is part of the software development process.
⚠️ Some text that violates forum policy removed by moderator
It is interesting how you can see the same opportunity using different tools. I like you approach using the two legs. But what about loss of profit? Are you setting your take profit point on the second leg based on the change in the first leg?
I did a trade (last night), I just finished the trade an hour ago, when I woke up. When I entered I looked at the market and saw an opportunity on NZDUSD. I set my take profit at the average daily range, which is about 100 pips). But I don't rely on that , instead I use the OsMA ( oscillation of the MACD) and the RSI level to decide when to exit.
I agree that producing quality code is very important. I would very much like to see some software development standards introduced/enforced on this site. There are many with little coding experience that have much to learn. How you release software is part of the software development process.
⚠️ Some text that violates forum policy removed by moderator
Here is an example in NZDUSD 1H
Both manual and automated trading have their own advantages and disadvantages, and which one is best for you depends on your individual preferences and trading style.
Manual trading involves making trading decisions based on your own analysis and strategy. This approach allows for greater flexibility and adaptability to changing market conditions. You have full control over your trades and can adjust your strategy as needed. However, manual trading requires a significant amount of time, effort, and skill to execute effectively.
On the other hand, automated trading uses algorithms and software to make trades based on predefined rules and parameters. This approach can be more efficient and less time-consuming than manual trading. It eliminates human emotions and biases from the decision-making process and can backtest strategies to optimize performance. However, automated trading can also be less flexible and may not adapt well to sudden market changes or unexpected events.
In summary, there is no one-size-fits-all answer to whether manual or automated trading is best. It ultimately depends on your trading goals, preferences, and experience. Some traders prefer the control and flexibility of manual trading, while others prefer the efficiency and objectivity of automated trading.
I would agree that manual trading is better, if you can control your emotions, However, I am located in Calgary, Canada, and the market is very active from 1 am to 7 am. That is the best time for me to sleep. So I like to use automated software to "help". I can set a manual position, then go to sleep. When I wake up the position is closed, often in a profit position.
I have noticed that I can read the market better than the automated software I am building. I can "see" the market better than my software can.
Chris
I agree with you on this point, I live in Indonesia, where the market starts to be active in the US session at 8.30 pm Bangkok time. At that hour I needed time to sleep, because at 5 am I had to get ready to take my children to school.
From my experience trading forex manually and simultaneously coding, I can't do it at the same time, maybe because I'm not a multitasking person, the emotions when trading forex manually don't really match the calm and concentration needed to code. And at this point I understand why Google, Apple, Facebook provide many facilities that make those who work there feel comfortable, because when the brain is relaxed it will get the best results.
And I realized that humans are better at observing trend movements than automated software, this made me in the early stages of starting to learn coding, I tried to create semi-automatic software to train the ability to observe trend movements as well as train decision-making skills on backtesters, because I saw that we can shorten our training to reach the master level by using the facilities and historical data provided by metaquotes. And from the software that I made, I got some important points that made my trading skills even better, at least I can apply them to the bot that I'm making.
Regards,
Sugianto
I agree with you on this point, I live in Indonesia, where the market starts to be active in the US session at 8.30 pm Bangkok time. At that hour I needed time to sleep, because at 5 am I had to get ready to take my children to school.
From my experience trading forex manually and simultaneously coding, I can't do it at the same time, maybe because I'm not a multitasking person, the emotions when trading forex manually don't really match the calm and concentration needed to code. And at this point I understand why Google, Apple, Facebook provide many facilities that make those who work there feel comfortable, because when the brain is relaxed it will get the best results.
And I realized that humans are better at observing trend movements than automated software, this made me in the early stages of starting to learn coding, I tried to create semi-automatic software to train the ability to observe trend movements as well as train decision-making skills on backtesters, because I saw that we can shorten our training to reach the master level by using the facilities and historical data provided by metaquotes. And from the software that I made, I got some important points that made my trading skills even better, at least I can apply them to the bot that I'm making.
Regards,
Sugianto
I totally agree. I find it better if I trade manually , I can absorb more information in my head, With code I need to know the conditions prior to trading as the code needs to know what to look for. But when I manually trade I can see things that might be an opportunity.
Here is an example in NZDUSD 1H
Sorry, I see the picture, but it is not marketed up so I don't know what you mean. But you gave me an idea about how to predict the potential size of the next leg. Often I set the take profit to 100 pips ( ADR = average Daily Range) but it seldom gets that large in the leg I am looking at. I was thinking about adding code to calculate the ADR but maybe I will try to calculate the leg instead.
Sometimes my code gets it wrong. When it works it is great, but sometimes it reverses too soon and I end up losing. I am going to try that out.
Sorry, I see the picture, but it is not marketed up so I don't know what you mean. But you gave me an idea about how to predict the potential size of the next leg. Often I set the take profit to 100 pips ( ADR = average Daily Range) but it seldom gets that large in the leg I am looking at. I was thinking about adding code to calculate the ADR but maybe I will try to calculate the leg instead.
Sometimes my code gets it wrong. When it works it is great, but sometimes it reverses too soon and I end up losing. I am going to try that out.
I think building software to do trading is a wiser use of my time than looking at a chart and attempting to trade throughout the night ( 10pm to 9am for me).
This, 100%. I'm kind of astounded how many people want to do manual trading.
Everyone who teaches anything about manual trading psychology or trading effectiveness says how important it is to be consistent, to have a plan and stick to it, not get caught up in emotions, make revenge trades, etc. What better way to do that than automatic trading?
And if you think your "system" can't be coded into an algorithm, then it's really not a system yet. "Discretionary" = "Arbitrary"
As far as your original question, here's the basic approach that I've found works pretty universally for developing algorithms.
First, decide your basic strategy, based on approach:
Trend Following: This strategy involves buying an asset when its price is in an uptrend and selling it when its price is in a downtrend. Traders use trend indicators, such as moving averages or the Average Directional Index (ADX), to identify and follow the prevailing market trend.
Mean Reversion: This strategy is based on the idea that prices tend to revert to their historical average or mean over time. Traders look for assets that have deviated significantly from their mean and take positions in anticipation of a price reversal. Common tools for this strategy include Bollinger Bands, RSI, and Stochastic Oscillator.
Momentum Trading: Momentum traders aim to capitalize on the acceleration of price movements in a particular direction. They use momentum indicators, such as MACD, RSI, or Rate of Change (ROC), to identify strong trends and enter positions in the direction of the trend, expecting the momentum to continue.
Breakout Trading: Breakout traders look for price movements beyond a defined level of support or resistance, anticipating that the breakout will result in a significant price movement in the direction of the breakout. Tools such as trend lines, moving averages, and chart patterns can help identify potential breakout levels.
Range Trading: This strategy involves trading within a defined price range, with traders buying at support levels and selling at resistance levels. Range traders use tools like pivot points, oscillators, and chart patterns to identify support and resistance levels and potential entry and exit points.
And time scale:
Momentum Indicators: These indicators measure the speed and strength of price movements, helping traders identify overbought and oversold conditions. Examples include:
Volatility Indicators: These indicators measure the degree of price movement or fluctuation in the market, helping traders to identify periods of high or low volatility. Examples include:
Volume Indicators: These indicators track the number of shares or contracts traded within a specific time frame, helping traders assess the strength or weakness of price moves. Examples include:
Trend Indicators: These indicators help traders identify and follow the prevailing trend in the market, whether it's up, down, or sideways. Examples include:
Support and Resistance Indicators: These indicators identify price levels where supply and demand are likely to balance, resulting in potential reversals or price congestion. Examples include:
Cycle Indicators: These indicators attempt to identify recurring patterns or cycles in price movements, which can help traders anticipate future market moves. Examples include:
Sentiment Indicators: These indicators assess market sentiment, helping traders gauge the overall mood of market participants. Examples include:
Based on your basic strategy and trading hypothesis, select one of those indicators as your primary entry signal (and probably exit signal, but it doesn't have to be).
Then, pick 2-3 indicators of a different category to use as filters to improve your results. You might also choose an indicator of the same type (or even the same indicator) on a higher timeframe as a filter.
Then test the hell out of it, in various combinations. Make each filter able to be turned on/off and optimized on its own.
There's a whole other conversation about backtesting, how to avoid overfitting, looking for range effects to make sure your optimal value isn't on the edge of a range effect, etc. And then what to optimize for, which also depends on context and your risk tolerance.
But that's the basic approach, and you can probably produce a profitable strategy optimizing just about any combination of 3+ indicators of different types, so long as you allow the right timeframes. Then you pick the best ones.
This is a much more predictable, consistent approach than algorithms that try to find "perfect" trade setups—they just don't come often enough, and you want frequency with algo trading.
I like what you have to say Scott. It looks like your put some real thought into this topic. How you segment the different types of indicators i to categories is very useful. Did you go to university to study this? Did you take any courses or training programs that I might be able to take? I love to learn. However, I am a little more advanced than a beginner, so I am having a hard time finding resources that are meaningful.
Are you working on and EA? I have a couple that are in testing (0.01 lot) on live accounts. I am hoping to gather a small group of developers who are interested in collaboration. I noticed this website does not really promote or endorse collaboration. but the benefits in doing so have produced some amazing results. Open source software is very strong due to collaboration.
i find it very weird how the study of Automated trading is so individualized. Everyone claims to me a guru, but I have yet to find many.
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I like what you have to say Scott. It looks like your put some real thought into this topic. How you segment the different types of indicators i to categories is very useful. Did you go to university to study this? Did you take any courses or training programs that I might be able to take? I love to learn. However, I am a little more advanced than a beginner, so I am having a hard time finding resources that are meaningful.
Are you working on and EA? I have a couple that are in testing (0.01 lot) on live accounts. I am hoping to gather a small group of developers who are interested in collaboration. I noticed this website does not really promote or endorse collaboration. but the benefits in doing so have produced some amazing results. Open source software is very strong due to collaboration.
i find it very weird how the study of Automated trading is so individualized. Everyone claims to me a guru, but I have yet to find many.
I'm no guru - just one beggar telling another beggar where I found bread.🤣 I'm still very much working it all out, but I've got hundreds of hours into it at this point. I'm in the fortunate position to be able to be basically full-time on this, and even have a little money to pay developers some to get the strategies that show promise ready for production. But I'm trying to learn as much as I can myself, to at least test proof-of-concept on my own.
And no, I didn't go to university to study this — so far just lots and lots of online reading and many hours watching YouTube videos. As far as learning algo trading, I highly recommend the Darwinex channel on YouTube. It's very detailed, goes into actually coding in MT5, not just theory. And I like the fact that I understand their motives — they have a good incentive to help people trade better, without trying to sell you a course or something.
And point taken about collaboration. I'm open to it. As far as not endorsing it, you have to remember that MetaQuotes makes a 10% commission on the Freelance section (as they should). So they understandably have rules, like other freelance marketplaces, about no customer/freelancer contact except through that mechanism.
But collaboration isn't freelancing. And this platform doesn't provide good tools for even one-on-one collaboration, much less a small group. Let's connect offline.