Manual trading vs Automated trading - an open discussion - page 4
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And if you think your "system" can't be coded into an algorithm, then it's really not a system yet. "Discretionary" = "Arbitrary"
There are many reason a trader may not be able to code. For example i share you my problem. When we code a pattern system, we know that a pattern need to be made,
A pattern may have following points to be coded
1. Fib ratios
2. Waves e.g. AB and BC and CD
Now if we code wave AB and use ZigZag, it always does not work nicely. Reason is sometime a pattern is made on Extdepth 144, but sometime a pattern is made within Extdepth 8
so how would you code your system to study all Extdepth and find out in which actual extdepth the pattern is being made? Such problem can be considered in the optimization part and until these are resolved, All coding and development of any system will result in failure only.
so i agree, if you are making money manually, its possible that you will start losing money if you code your system and skip optimization which is a very lengthy process
in my opinion,
I really believe that the economic news that traders often see is only intended to lead public opinion to take certain actions. too many factors to be taken into account in fundamental analysis, it makes me speculate. the only thing i trust is technical analysis. especially on patterns in the market. because we can backtasted it in some period of time. The only thing I care about fundamental analysis is the time the news is released.
Hello Christopher,
Your inquiry is very comprehensive and thought-provoking. Indeed, manual and automated trading come with their own set of benefits and challenges. Let me address some of your points:
Fundamental Analysis: Although automated systems might not be adept at analyzing nuanced news events, they can ingest quantifiable data like economic indicators. So, in this sense, they could incorporate a degree of fundamental analysis. For example, avoiding trading around high volatility news events can be a simple but effective method.
The "Magic Indicator": There's no one-size-fits-all answer to this question. An indicator's effectiveness can depend on the time frame, the market, the volatility, and other factors. Rather than seeking a 'magic' indicator, you might consider using a combination of indicators to confirm each other, thus reducing false signals.
AI and Machine Learning: While these technologies have tremendous potential, they're not a silver bullet. The market's inherent unpredictability, randomness, and changing dynamics make it a challenging problem. However, these technologies could assist in identifying complex patterns or adapting to changing market conditions.
Diversification: A diversification strategy could help manage risk. Using multiple accounts, brokers, and symbols can spread risk and potentially smooth out equity curves. However, it's essential to ensure each strategy is robust on its own before combining them. Also, remember that managing multiple accounts and strategies can increase your workload.
As for my preferred methods, in manual trading, I lean toward price action and understanding market structure. In automated trading, I believe in using simple, robust systems. Overfitting and excessive complexity can lead to fragile systems. I use backtesting, forward testing, and walk-forward analysis to validate my strategies. Lastly, always remember that proper risk management is the foundation of successful trading.
I hope this provides some food for thought. Best of luck with your trading journey.
Best, Ariawan
Its interesting when we ask yourself >> indicators - not working, EAs - not working
What is working on market like forex
Many time i ask myself, and i think now that system is working perfectly " How to Read The Market Without Indicator"
...
Questions I am thinking about
1. What about fundamental Analysis? Is this important? So far I have not found a need. As anyone done something with this and had success?
2. Is there a "Magic Indicator" or group of indicators that will have lots of trades with low drawdown? I usually can get only one or another.
3. Is AI going to solve this problem? I first thought so but my recent experience has me questioning if this is so.
4. What about multiple accounts, multiply brokers, multiple symbols. I am considering some serious diversification. All it takes is one software bug to wipe out your account. Again a recent experience. Has anyone seen positive results using 10 or more trading accounts?
What are your thought?
What are your favorite methods for manual day-trading and Automated software(EA) Trading?
Christopher Pinter
Hi Christopher. I have not read all responses on topic, but I wanted to give you advice based on my experience.
1. What about fundamental Analysis? Is this important? So far I have not found a need. As anyone done something with this and had success?
When we talk about day trade, it doesn't matter how the global/country economy is. On day trade you are trying to get small profits on small market movements and small movements will happen anyway. That being said, you need to know if there are any important news that could make sudden/strong movents on the market you are trading. For exemple FOMC, political speeches, etc.
2. Is there a "Magic Indicator" or group of indicators that will have lots of trades with low drawdown? I usually can get only one or another.
I don't think so and I tried every combination imaginable. I mostly use indicators to stop my EA from trading when something unexpected happens. For example: I use momentum indicator so my EA will stop trading if the momentum raises/lowers very suddenly. Usually imporant news have that effect. While I don't let my EA run during scheduled news, some news are unexpected. This is just one example.
I think that the most "important" indicators are based on Volume, because thats what shows you what is happening "behind the curtain". Areas of great volume means strong support and resistance for example - but you need volume profile to see this, you won't find it on MT5 default indicators. Also daily VWAP is a very strong indicator for day trading. Everytime the price crosses VWAP, the price will react to it, because it is the line where buyers and sellers are disputing to see who is on the winning side.
3. Is AI going to solve this problem? I first thought so but my recent experience has me questioning if this is so.
I don't think so. At least not for some years... I think when it happens, everything we know about the market will change.
4. What about multiple accounts, multiply brokers, multiple symbols. I am considering some serious diversification. All it takes is one software bug to wipe out your account. Again a recent experience. Has anyone seen positive results using 10 or more trading accounts?
I think it is better to specialize on a single market. Each market has its own behaviour. While I test some ideas on multiple pairs/markets because some ideas pop up on my head, it's more difficult to make a strategy that works on several different markets. The best EAs/strategies I have made on the past years were all on a single market, where I've learned everything there is to know about it. Even each timeframe has it's own movement "pattern".
One last tip, do not try to day trade forex pairs, low timeframes (M1, M5, even M15) are very chaotic, unexpected. Day trading is easier on indexes.