Automate Price action, candles and tape reading

Discussion in 'Automated Trading' started by ssp729, Aug 23, 2019.

  1. ssp729


    Hello everyone. I would like to know is it possible to automate a strategy using Price action, candles and tape reading?
  2. no
    comagnum and tommcginnis like this.
  3. wrbtrader


    Putting all three together as an automated trading system...

    Lets see, Japanese Candlestick analysis is a type of price action trading and Tape Reading/Order Flow/Market Depth is a type of price action trading.

    Sounds like too much work especially with all of the fake outs in algorithms that control the markets. :D

    Last edited: Aug 23, 2019
    tommcginnis likes this.
  4. tiddlywinks


    As wrb mentioned you've got multiple methods of the same thing.
    I'll add that candlesticks and the possible "patterns" they produce, can, will, and do morph during formation. It doesn't matter if they are time-based, volume-based, tick-based, or anything else. During formation, morphing is always possible and likely until the candle basis parameter has completed.

    Your description is not-doable. But if thought out extensively and well-honed, it's possible to automate.
  5. guru


    Well, if you don’t know that finance industry exists and that $billion dollar hedge funds trade every day and employ thousands of quants who work day and night creating strategies, and use tape to get price data, and use statistics to analyze price actions, and that most trading is automated, or that colleges teach finance - then I’d recommend going to an elementary school to get basic education.
  6. trend2009


    do you know anyone has successfully automated a trading strategy based on candlestick chart? one of my friends who trades NQ future based on 1-minute chart makes 300-500k USD consistently over 10 years. I guess his sharpe ratio is around 4. If his method can be automated, his strategy can be applied to all liquid instruments, over all time-frames, then the profit would be easily more than tens of millions. His strategy is to read chart context, first determine trend, then enter on breakout.

    so does anyone think such kind of strategy can be automated? sure, the hard part of automation is to code the computer to understand chart context. for price action, everything is dependent on candle context.
    qlai likes this.
  7. guru


    I think that many people here on Elite Trader are strategy developers, and every strategy is based on price, which also means candlesticks. For example if you compare current price to the price 5 minutes ago or 5-min high/low then automatically you’re looking at candle sticks in one way or another. So most strategies have something like this and there are hundreds of thousands of people creating/automating them.
    I do that too, although this is an ongoing project.
    No one has really proven successful to the level where we can point to specific person or website and say “that’s the one”. Hedge funds may have something that works well enough but sometimes their computers would need to buy $millions in futures in a minute, so other computers would need to sell it to them but they also have their own strategies and try to outsmart each other. So it’s not that easy, but some pros may be successful to limited capacity. It’s just unlikely that a single strategy will work that well and on a big scale, especially if you don’t have an experienced team working with you. Your friend may not be consistent, so it may not be a single strategy. Traders usually adapt to an environment and trade differently at different times, especially in bull market vs bear market.
    Last edited: Aug 23, 2019
  8. comagnum


    Systematic trading has taken a big nose dive. The space got real crowded, algos are battling each other, the big fish eat the little ones.

    There is still a place for systematic - like using algos to get better equity order fills, finding mis-pricing rapidly, & offloading some of the tasks that can be programmed. Most savvy discretionary traders these days use some level of systematic overlays, while discretionary trading is still the core theme.

    Systematic as a group, has been able to perform as well as discretionary, problem is the down side volatility is larger. Even the king of quants -Simmons, had been using a pool of discretionary mouse traders to oversee their systematic trade candidates.

    The sweet spot seems may be somewhere in the middle - a hybrid of both discretionary & systematic. Systematic programs have to adapt to the changing market conditions, which depends on discretionary decisions.
    Last edited: Aug 23, 2019
  9. easymon1


    mr trend2009
    to your posts last question - . . .automated? i say yes i do think so.

    my question for you is - can your friend teach you that very last bit.
    that part about - then enter on breakout.
    nothing else, just that part.

    ask him if he can teach you that last bit.

    if you'd like to follow up on that, reply with his yes response.
  10. Overnight


    Did he share this super-secret strategy with you, or did he suddenly zip up when you asked about it, because SOMEHOW, in SOMEWAY, if even one other person did it, it would nullify the NQ system?

    Hmm. The claims like the one you just made above make me ill. "A friend"...Consistently...Uh huh.
    #10     Aug 23, 2019