Thanks to all who helped, and good luck to all those who have similar problems with their systems. I believe this is what I am going to do. Stay the hell off of my system, as was advised. Since the system is good, but not good enough to be used with all available leverage, I will use as few contracts as possible. My ambition was just too much to be satisfied by my system. I'll have to live with lower returns, and accept a drawdown. Edbar, I don't know if I can use trailing stops because that would mean interfering with my systems. I tested them and they work better with time exits rather than with takeprofits, trailing stops, stoplosses. Just time exits. And I can't change that or I wouldn't be using my back-tested systems. I was exiting some trades manually (in takeprofit mode), and maybe it made my systems even more profitable (despite what the tests said), but I just cannot stay in control for long if I allow myself to make manual trades. It'll be ok for a few days, but sooner or later I'll start making trades on my own (not just closing the system's trades), and overall I'll lose more than if I never touched anything.
What about: 4.a Let the ATS do its work untouched 4.b Take time to aquire more practice with simulated trading cons: for a short time you will think you loose some money because you do not really trade pros: in reality you save much money, the ATS makes some money and you can build the base for much better strategies It is just logical that an ATS (given the current level of software sophistication) will never be as profitable as human trading when it is helped by software. This is due to the fact that today humans are still much better in pattern recognition than every computer program. People find patterns in charts and deduct rules from it. Then they start trading with it. Then they fail and have the feeling they could not adhere to their rules. In my view this is nearly all the times not a lack of discipline. It is just a lack of experience. Nobody would be so foolish to change his or her mind if they surely knew that their decision would have negative consequences. Therefore, if you have the impression, that you cannot stick to the rules just give yourself the time to get really sure about them. In the longer term you will probably find that in fact the rules found in the first place where not clear enough sometimes even false. Furthermore every ATS will loose its edge after some time. So it is wise to get prepared for that and aquire new ideas for new systems.
Ok, I might do 4, too, as you advise and I agree with its advantages. Besides, the paper trading mode is available with IB's TWS, so I can use it while I wait. On the other hand, an important "con" you forgot (at least in my case) is "you paper-trade and you make a lot of money and you're tempted to trade with real money, you do it, and you lose everything". Also I agree 100% on this thing you wrote (I said a similar thing in another post): "People find patterns in charts and deduct rules from it. Then they start trading with it. Then they fail and have the feeling they could not adhere to their rules. In my view this is nearly all the times not a lack of discipline. It is just a lack of experience. Nobody would be so foolish to change his or her mind if they surely knew that their decision would have negative consequences." Your last sentence ("every ats will lose its edge...") sounds very depressing. I hope you are wrong.
Don't worry. You are much smarter than you think. Just remember that it was a "gut feeling" (in fact it was the brain) that brought you to realize that something is wrong with the ATS. If you really take the time to get the experience and you are honest in papertrading you will exactly know: - how many contracts you can trade - what the drawdown is that you have to expect So you surely will not overtrade. Anyway it will be wise to start with only small leverage as soon as you feel you are ready to go live. (Might even trade ETFs instead of futures). In my view that is what makes trading interesting: Constantly changing environments (like life itself).
That's fine. I run multiple ATS systems and associate with many others who also run automated systems with different strategies. We are all constantly sharing ideas that make our systems better and better and better... For instance, a simple rule for picking stocks is to pick stocks that move by over 5% per day (between the high and the low), so you are only working/trading stocks that move enough for me to scalp (take profits) of 1% to 2% a day. Without that rule, you could be trading stocks that are lucky to move 1% in a week. That would limit your chances of making money dramatically. The recent article about Goldman running strategies that rake in tens of million$ in profits each year is evidence that ATS' can work. http://www.nytimes.com/2009/07/07/business/07goldman.html?ref=business Ed
Never questioned that ATSs can work. But it is important to see in which league the code mentioned in the NYT article is playing (assuming the whole thing is real and not just one more "Wunderwaffe"-story as they come up from time to time): They are certainly not talking about retail-level ressources (latency ranging in >200 msec, account size < 1 M$, programming code worth less than one man-year).
You're right. They are talking about the kind of software (speed/volume) that can move prices - yet another advantage over the ATS systems available to the rest of us. Ed
I always wanted to ask a question to those who make money with trading and yet are offering help to other traders (even if they are charging a fee for that help), and I am assuming that you are telling the truth, don't get me wrong. Of course, there's also some of those selling systems and other tools that are not making money through trading but only through selling. But I believe there's another part of you who are indeed making money. The question is: why do you spend time helping other traders instead of just making money and spending the rest of the time away from your desks, doing other more relaxing things, like swimming, playing music, and so on. Are you addicted to trading, to work, or similar? It's just curiosity. I don't mean to be critical, or sarcastic. I am asking, because I think the first thing I would do, if I ever will make any money in a stable and constant way, is to quit my job, live at the beach, swim, and maybe spend only 1 hour a day at the computer.
In my case, I'd prefer to go to the beach, but I'm still not convinced that I have programmed all possible things that can go wrong. If my trading software went crazy it could lose extraordinary amounts of money very quickly. So, I sit and look at it while I play with new concepts (system ideas) Maybe after a few years of error-free trading i'll be a bit more relaxed
Travis, That is a good question and there is no answer that will not be criticised by some. If you read some of my posts you will see that I am critical of the institutions that are running automated trading systems against the public, and can clearly see that their public upgrades/downgrades as nothing more than propaganda to get the masses to buy/sell on demand. It amazes me that many cannot see this the obvious market manipulation that it is. Also the DOW index is only 30 stocks out of 8000+ but many actually believe that an up day on the DOW actually means an up day in the overall market. I personally played the "full retirement" game for 5 years and trust me, it is not all that it is cracked up to be. I can totally understand why so many die shortly after retiring. After the 2000 crash and I saw what the insitutions did to the markets, it brought me out of retirement to create automated stock trading systems. Hence CoolTrade! I don't claim to be a expert in the stock market, in the traditional sense. I see the market as nothing more than numbers going up and down and a lot of public manipulation to get the masses to buy and sell. I am not interested in hearing the propaganda of anyone who is competing against me. When I see analysts on TV, I honestly GAG. The fact is, if anyone could honestly tell you a stock that was going to go up in the next 5 minutes, they would be richer than Bill Gates! I say this "whole heartedly". If you truly believe this statement, then my question is, how can you listen to all of their predictions (upgrades/downgrades) without seeing it for what it really is? Some people will laugh and say "ha ha, he thinks a large bank cares about his 1000 shares". My answer is "a President doesn't get elected by my one vote either!". You're certainly not paying me for this information. But it also doesn't cost me anything to share my honest thoughts. The only way to fix the market is for more of us to see it for what it is. Mutual funds dropped 50% in value last year. That means thousands of people lost 1/2 of their savings, simply because the fund managers didn't have the intelligence to see that 99% of all stocks in the market where heading down!. I think they were at the beach!! So regardless of why I would help someone, my question is why aren't paid fund managers helping? Ed