Automation vs. Manual

Discussion in 'Trading' started by Bluegar3, Mar 24, 2007.

  1. When I first started trading, I was looking at every avenue you can take, learning a little about a million things. I eventually came across TradeStation's Strategy trading idea, and was very impressed with the idea. As I started to get into it I realized that this was my home in the trading world that I had been searching for.

    For the past 3 months have I been toying around with trying to create an automated strategy. I felt that if you are taking your emotions out of the game then you are at an advantage. So from then I started to learn programming. It was kinda easy picking up the programming language because is was similar to my high school language.

    I have read many many books about the developement of automated strategies, even how to test correctly and do optimizations. I put my life an soul into trying to create this and believe me about 70-80 hours per week doing this, however I was just never able to come up with something. But that didn't stop me, I still read more books and read more forum posts to learn how to do this thing.

    But no matter how persistant I was, I was never able to come up with anything that actually worked. Sure there were times when I thought I had something but only ended up begin a stat. flub that produced better than normal results. At that point, I felt it was time to give automated trading a rest.

    I then took my strategies that I tried to create, and did them by hand. I would go back into time and have the last bar on the chart being at the extreme right where I could decide if I wanted to buy, sell, or do nothing then click to the next bar and see the result. I recorded the results on excel, and got amazing results. I then switched to another trading vehicle and got great results too.

    Last week was my first real week trading, and my real first week making any real money. Finally, the first time in my trading career, I finally feel confident in the market. I'm not sure if there is an element of feel that is present, but it sure seems like it is.

    I'm not going to give automated trading up, but at least for now I'm going to stick to grinding it out manually.
  2. It should be obvious that the trading rules you are following when doing it manually are not the same as those you implemented in your automated strategy. My suggestion is to look over the trades made by the automated strategy and compare to your manual results. Look at the differences and fix the automated strategy. There may be some subtle differences that require a significant amount of coding to automate. Some of the things your own mind can do most trivially on the fly can end up taking an exhorbitant amount of effort to code correctly.

  3. Bluegar3, I recognize you form the TS forums. Good to see you on ET...

    I would caution you on the following:

    When looking at a chart, the mind's eye will most often see what it is looking for rather than the complete picture. For this reason, when walking through a chart manually, you will see mostly the examples that fit your pre-determined expectation of the setup. Your eye will miss many of the times when your setup would not have worked. Automation prevents this. As the previous poster stated, you should program the idea, then match the strategy trades with your manual trades. This way, you can see exactly what I'm talking about.

    1 of 2 things will happen.

    1) You will realize your idea is not as good as you thought when you see a lot of the trades the strategy took.

    2) You will see the "bad" trades taken by your strategy and realize an additional filter or piece of code can improve the strategy and eliminate some of these trades.

    I often ask myself why I would ever attempt to trade manually without testing the idea at all. I have not yet found a good answer to the question...

    Happy trading and good luck in your quest :D
  4. hey,

    thanks for the responses. I'm doing what you guys suggest right now.

  5. SteveH


    > I felt that if you are taking your emotions out of the game then you are at an advantage

    Don't run from your emotions in trading. Embrace them. Learn from them. Control them.

    The majority of people who start trading are not 'wired right' to trade. What I mean by this is that your emotions are naturally designed to protect you from perceived harm, whether it be real or imagined. If a person is mentally well-balanced, this works fine in every-day life. But trading demands that you change what your current, well-ingrained perceptions of fear and hope are.

    You cannot run or hide from yourself. You have to face trading the same way you face life: head-on.


    You can read about Paris and you can talk to people who have been to Paris but you will never really know what Paris is like until you've been there.