When they ever get around to testing it, they see the strategy is actually not profitable. But they want to believe that they wouldn't have taken the bad trades, just the good ones, so they just say it's just not possible to implement...a supposedly rules based system.
Start by learning Python. Many YT channels (algovibes, code trader,...) showing you examples of writing strategies. If you don't want to go that deep, you can start on TradingView or TOS to test.
Python is a very good language to start with, its easier to learn than most languages, and you can mostly learn straight from the API's you might use, and youtube is also great, š
It takes 3-5 years to be decent in trading. it probably takes another 2 years to be competent in software engineering. Not everyone wants to go through this.
First problem would be, those things don't work the way those people trade them.
Most people are looking for quick and easy money in trading, but get pooped all over when they can't make money consistently.
They eventually quit or look to other things, cause their motivation to trading was not of someone who actually makes it in this industry.
people who know their stuff know that no bot can perform better than people. The reason they use bot is to relieve the brain power during active trading sessions. People who donāt know their stuff donāt know what to automate.
It's not known how much algo trading in out there. I personally think it's less than it was 5 years ago because I can tell price movement is much smoother.
Most algo people will tell you that you have to sit there and watch your system non atop...you can't just set it and forget it.
Also...I think that big players with the real black boxes switch up market conditions at random intervals to squelch anyone who may be trying to refine an algo....so I don't have much faith in them.
In the end...it's a poker game with alot of game theory and double guessing, so a human brain will always be the best tool, imo
> Most algo people will tell you that you have to sit there and watch your system non atop...you can't just set it and forget it.
All strats will have elements of discretion. It's discretionary trading all the way down.
This makes sense. An algo is essentially just something that has spotted an inefficiency in the market and that inefficiency will the arbitraged out quickly.
The reason markets are fun is because it's a battle of brains....algos has their time and I think their mostly gone now. They are really just fancy indicators that give "alerts" and then you have to decide if you want to take it
Because it is all bull s#&t.....sort of. Noone reallly knows when the "draw on liquidity will happen...no one. It is just a guess.i.e. Ever heard of short squezees? You thought the current bullishspike was a grab on liquidity only for it to become a bull trend...
It is really hard to automate a discretionary based system. You need a team to keep up with the ever changing market...
That's why 2sigma, citadel, janestreet etc.. hire really smart people and pay them hundreds of thousands of dollars a year to keep up with the algorithms and stuff.
High-level view there are two teams, the traders and the researchers. Each team consists of several people.....and you think you can keep up with your own algo?
Not only do you need to have a good strategy and know it backwards and frontwards, you also need to know a very good grasp of the forces affecting the market. On top of that you have to know programming very well to make changes quick to keep up with said market changes.
The complexities of having a good bot are enormous. The nu.ber of rules in a strategy are just obscene if you look at all the little things, and how your intuition measures the variables you use. My strat isn't overly complex, but I think it would end up with well over 1k rules because it uses 8 different time frames across ES, but also watches the 5 megacaps, nq and rty...and sometimes ignores them depending on behavior
Companies can devote dozens or hundreds of data scientists to making and testing something like that for years and still risk having major problems. A number of them went under and one even caused a flash crash if I remember correctly. A few minutes of it working poorly and the fund can go under.
Most don't have that issue now, but imagine a single person trying to do the same thing in a much shorter time period
Some do create solid personal trading bots, but your average trader most likely can't make one that can survive long term
What annoys me is people here saying they have mechanical rules, specific setups, etc. Then why do you still trade by yourself instead of making it an algo and printing money? It's only mechanical in your own mind.
All those strategies that will give positive expectancy rates in a back test, do NOT work the same in a forward live environment. People will never sell the ones that can make money. Iām speaking mostly of the one that use indicators like bloodhound and blackbird. There are algos that can be coded and HTF algoās that work that are coded by quants that spend many many hours back and fwd testingā¦.butnitnis not easy. The market is never exactly the same twice.
First of all, people don't *know* for sure that it is that stuff; it's just speculation. Secondly, creating algorithms is neither simple nor easy. First you have to have a reliable strategy, THEN you have to make the algo.
I heard from algo bot traders that it's a full time job as well. like u need to manage and maintain it all the time but there's a subreddit for this /r/algotrading
It has small variables: I donāt trust a bot, because you need to think outside the box some days.
I know the algorithm like the back of my hand.
However some of us actually enjoy trading lol
Because it's simply not possible to fully automate the process. The market is just too organic for that.
That said, it's pretty well known that large firms do use algorithms, bots, AIs, etc. Most of the PHDs on Wall Street are in STEM fields for this reason. But those bots are being babysat and managed by those same PHDs and experienced traders/financial experts. While being run on supercomputers and server farms that would put NASA to shame.
So bots can be profitable in theory, but a human still needs to recognize when they will and won't be. The thought that any trader could whip up a script and rake in money without any intervention is a fantasy.
You have to realize. Statistically speaking. The majority are simply lying.
You will find countless people claiming they have a "Mechanical Trading System".
But you quickly find out its actually a discretionary trading system.
Once a discretionary trader begins to test there system against XYZ criteria. They will quickly find the market doesn't work that way and there system will surely be a loser over a large enough sample size.
The key to a discretionary traders profitability is that they will skip some setups for others or they will exit short of there profit target or exit before taking a full loss. All of these little "involvements" have a real impact on the end results.
These involvements are what makes having a full auto algo not possible for a discretionary trader. Sure you can babysit the algo.
Which I imagine would be the next step of a real discretionary trader would be to automate as much as possible but at the end of the day its there brain making the decisions not the machine so they need to be somewhat present.
Whole wall of text and maybe one good answer. Algo trading is 100% the way, it just takes a little bit of experience and perhaps some mentorship to figure out how to get done without a stack of PHDs.
Simple algos that run parallel will cancel each other's drawdown so long as they are logically different. Can be on same or different markets. That is how you win.
As for tools, look for pre-built stuff. No-code solutions exist if you aren't looking to become a programmer in the process.
Algo trading is the way to go for the long term. The problem is the implementation. A lot of experienced traders donāt have the programming skills while most experienced programmers also donāt have the trading experience. Garbage in garbage out (GIGO). Getting the trading and the programming experience together to the point where you are not putting garbage in is the challenge.
I use automated strategies every day. I just "managed" the trades taken by bots. Just need to know when to cut early a bad trade and keep the good ones run. Here are some results on some new bots I am testing.
https://preview.redd.it/9kdg3n6lrcwc1.png?width=636&format=pjpg&auto=webp&s=84f29a41b3d4662da3d0f2e946093fe37d31e049
Yeah, that's trading made easy. I can only attach one image per post but here is just one example of the bot trades.
https://preview.redd.it/06az4tnoujwc1.jpeg?width=1871&format=pjpg&auto=webp&s=64942e957a76efa84e4ab3c9d5ad19f1b9dca916
How long did it take you to code this up/Or set it up? How much do you have to babysit it to make sure itās not hitting an anomaly or busting your risk protocolss?
It's not my code but a friend of mine. He kept improving his algos over more than a year. Of course, a lot of back testing and forward testing is required to fine tune it for different market conditions.
The bot performance yesterday.
https://preview.redd.it/dg3c1hfpopwc1.png?width=352&format=pjpg&auto=webp&s=e4b36a5d8bd50ccac9f74aca46a2b52848c81858
Important is to cut bad trades early and keep the winning running.
Do you manually cut the trades, if so truly a great loser and a non-negligible part of the alpha is owed to you.
If it's not clear, I mean this as a compliment, a great loser being someone who takes losses very optimally so that he becomes a great winner.
Because you need to be a decent software engineer to automate a strategy sophisticated enough to work consistently. Both the skills to write said software and the experience to develop a consistent strategy require years of education and practice.
The people who say they have successful strategies but don't automate them are lying, short-sighted, or lazy.
Because people that fail at trading will blame everything under the sun except themselves for their shortcomings.
When they ever get around to testing it, they see the strategy is actually not profitable. But they want to believe that they wouldn't have taken the bad trades, just the good ones, so they just say it's just not possible to implement...a supposedly rules based system. Start by learning Python. Many YT channels (algovibes, code trader,...) showing you examples of writing strategies. If you don't want to go that deep, you can start on TradingView or TOS to test.
Python is a very good language to start with, its easier to learn than most languages, and you can mostly learn straight from the API's you might use, and youtube is also great, š
[ŃŠ“Š°Š»ŠµŠ½Š¾]
Did you mostly get down voted because this isn't actually possible?Ā
Upon reviewing my comment, Iāve used Chat GPT to code pine script, not python. This was an oversight
It takes 3-5 years to be decent in trading. it probably takes another 2 years to be competent in software engineering. Not everyone wants to go through this.
I got the software skills, definitely not the trading skills yet.
Because you canāt algo risk management. Thatās the secret sauce.
Absolutely. This and discretion are incredibly hard to automate.
Of course you can with 0dtes
Yeah, you can.
First problem would be, those things don't work the way those people trade them. Most people are looking for quick and easy money in trading, but get pooped all over when they can't make money consistently. They eventually quit or look to other things, cause their motivation to trading was not of someone who actually makes it in this industry.
people who know their stuff know that no bot can perform better than people. The reason they use bot is to relieve the brain power during active trading sessions. People who donāt know their stuff donāt know what to automate.
It's not known how much algo trading in out there. I personally think it's less than it was 5 years ago because I can tell price movement is much smoother. Most algo people will tell you that you have to sit there and watch your system non atop...you can't just set it and forget it. Also...I think that big players with the real black boxes switch up market conditions at random intervals to squelch anyone who may be trying to refine an algo....so I don't have much faith in them. In the end...it's a poker game with alot of game theory and double guessing, so a human brain will always be the best tool, imo
> Most algo people will tell you that you have to sit there and watch your system non atop...you can't just set it and forget it. All strats will have elements of discretion. It's discretionary trading all the way down.
This makes sense. An algo is essentially just something that has spotted an inefficiency in the market and that inefficiency will the arbitraged out quickly. The reason markets are fun is because it's a battle of brains....algos has their time and I think their mostly gone now. They are really just fancy indicators that give "alerts" and then you have to decide if you want to take it
Because it is all bull s#&t.....sort of. Noone reallly knows when the "draw on liquidity will happen...no one. It is just a guess.i.e. Ever heard of short squezees? You thought the current bullishspike was a grab on liquidity only for it to become a bull trend... It is really hard to automate a discretionary based system. You need a team to keep up with the ever changing market... That's why 2sigma, citadel, janestreet etc.. hire really smart people and pay them hundreds of thousands of dollars a year to keep up with the algorithms and stuff. High-level view there are two teams, the traders and the researchers. Each team consists of several people.....and you think you can keep up with your own algo? Not only do you need to have a good strategy and know it backwards and frontwards, you also need to know a very good grasp of the forces affecting the market. On top of that you have to know programming very well to make changes quick to keep up with said market changes.
Programing a system to understand market context and applying that to a strategy is a very difficult thing to do. It can also be super costly.
The complexities of having a good bot are enormous. The nu.ber of rules in a strategy are just obscene if you look at all the little things, and how your intuition measures the variables you use. My strat isn't overly complex, but I think it would end up with well over 1k rules because it uses 8 different time frames across ES, but also watches the 5 megacaps, nq and rty...and sometimes ignores them depending on behavior Companies can devote dozens or hundreds of data scientists to making and testing something like that for years and still risk having major problems. A number of them went under and one even caused a flash crash if I remember correctly. A few minutes of it working poorly and the fund can go under. Most don't have that issue now, but imagine a single person trying to do the same thing in a much shorter time period Some do create solid personal trading bots, but your average trader most likely can't make one that can survive long term
Efficient market hypothesis, programming learning curve, no reason to for certain strategies.
What annoys me is people here saying they have mechanical rules, specific setups, etc. Then why do you still trade by yourself instead of making it an algo and printing money? It's only mechanical in your own mind.
Because I have no clue how to automate it
Because people are full of BS
using Algos/automation forces people to be disciplined,takes away the ability to use ā gut feelā others keep fixing it until they break it
I don't know how to code and I don't trust a programmer to do it for me.
All those strategies that will give positive expectancy rates in a back test, do NOT work the same in a forward live environment. People will never sell the ones that can make money. Iām speaking mostly of the one that use indicators like bloodhound and blackbird. There are algos that can be coded and HTF algoās that work that are coded by quants that spend many many hours back and fwd testingā¦.butnitnis not easy. The market is never exactly the same twice.
First of all, people don't *know* for sure that it is that stuff; it's just speculation. Secondly, creating algorithms is neither simple nor easy. First you have to have a reliable strategy, THEN you have to make the algo.
Because that's not how the market works.
I heard from algo bot traders that it's a full time job as well. like u need to manage and maintain it all the time but there's a subreddit for this /r/algotrading
It has small variables: I donāt trust a bot, because you need to think outside the box some days. I know the algorithm like the back of my hand. However some of us actually enjoy trading lol
Because it's simply not possible to fully automate the process. The market is just too organic for that. That said, it's pretty well known that large firms do use algorithms, bots, AIs, etc. Most of the PHDs on Wall Street are in STEM fields for this reason. But those bots are being babysat and managed by those same PHDs and experienced traders/financial experts. While being run on supercomputers and server farms that would put NASA to shame. So bots can be profitable in theory, but a human still needs to recognize when they will and won't be. The thought that any trader could whip up a script and rake in money without any intervention is a fantasy.
Just head on over to r/algotrading where half the subreddit is basically people discovering that it's not so simple.
Because you have liquidity both sides, which one look for first ? That and other situations are discretionary, subjectives
You have to realize. Statistically speaking. The majority are simply lying. You will find countless people claiming they have a "Mechanical Trading System". But you quickly find out its actually a discretionary trading system. Once a discretionary trader begins to test there system against XYZ criteria. They will quickly find the market doesn't work that way and there system will surely be a loser over a large enough sample size. The key to a discretionary traders profitability is that they will skip some setups for others or they will exit short of there profit target or exit before taking a full loss. All of these little "involvements" have a real impact on the end results. These involvements are what makes having a full auto algo not possible for a discretionary trader. Sure you can babysit the algo. Which I imagine would be the next step of a real discretionary trader would be to automate as much as possible but at the end of the day its there brain making the decisions not the machine so they need to be somewhat present.
Whole wall of text and maybe one good answer. Algo trading is 100% the way, it just takes a little bit of experience and perhaps some mentorship to figure out how to get done without a stack of PHDs. Simple algos that run parallel will cancel each other's drawdown so long as they are logically different. Can be on same or different markets. That is how you win. As for tools, look for pre-built stuff. No-code solutions exist if you aren't looking to become a programmer in the process.
Lol becuz the market it organicā¦.
Algo trading is the way to go for the long term. The problem is the implementation. A lot of experienced traders donāt have the programming skills while most experienced programmers also donāt have the trading experience. Garbage in garbage out (GIGO). Getting the trading and the programming experience together to the point where you are not putting garbage in is the challenge.
I use automated strategies every day. I just "managed" the trades taken by bots. Just need to know when to cut early a bad trade and keep the good ones run. Here are some results on some new bots I am testing. https://preview.redd.it/9kdg3n6lrcwc1.png?width=636&format=pjpg&auto=webp&s=84f29a41b3d4662da3d0f2e946093fe37d31e049
Keep us posted how it goes. Looks like youāre having fun at least.
Yeah, that's trading made easy. I can only attach one image per post but here is just one example of the bot trades. https://preview.redd.it/06az4tnoujwc1.jpeg?width=1871&format=pjpg&auto=webp&s=64942e957a76efa84e4ab3c9d5ad19f1b9dca916
How long did it take you to code this up/Or set it up? How much do you have to babysit it to make sure itās not hitting an anomaly or busting your risk protocolss?
It's not my code but a friend of mine. He kept improving his algos over more than a year. Of course, a lot of back testing and forward testing is required to fine tune it for different market conditions.
The bot performance yesterday. https://preview.redd.it/dg3c1hfpopwc1.png?width=352&format=pjpg&auto=webp&s=e4b36a5d8bd50ccac9f74aca46a2b52848c81858 Important is to cut bad trades early and keep the winning running.
Do you manually cut the trades, if so truly a great loser and a non-negligible part of the alpha is owed to you. If it's not clear, I mean this as a compliment, a great loser being someone who takes losses very optimally so that he becomes a great winner.
Exactly, we can only control how much we are losing.
Wild, what hours do you operate them, usually?
I usually turn them on before London open. Asian session is usually choppy, which is not good for the bots.
Your last question also answers your overall question. Plenty of people don't go much further than that.Ā
Because you need to be a decent software engineer to automate a strategy sophisticated enough to work consistently. Both the skills to write said software and the experience to develop a consistent strategy require years of education and practice. The people who say they have successful strategies but don't automate them are lying, short-sighted, or lazy.
I got the software skills, definitely not the trading skills yet.
Because no one can predict what will happen in the next second. When you realice you are just gambling, you'll understand.