I have been wondering if it sounds too good to be true that an automated trading method makes money. You do nothing, just relax and watch it making money....... If automation works in trading, every institution would be making money. Then where does the money come from (who are the losers)?
Automated trading is a lot like manual trading; there are some good traders/systems and many mediocre to poor ones. To get an idea, go to collective2 and see what's around. Though collective2 probably doesn't have a standout system.
It takes a lot of skill, effort and time to develop a working automatic system (and as well to keep it profitable over a long run). That's the thing you invest. The amateur level things you find in the net (like c2, etc.) are mostly worthless crap. The origin of the profit depends on the specific strategies your algos are following ...
The problem is not automating the trading, the problem is know what/how to trade in the first place, this is the hard part. So if you have something, you can automate it and it will work, but then you have to monitor because nothing works all the time. If you can combine all of this, you might have something.
some firms are hedging or putting on positions and do not care about a few ticks of slippage where as the automated programs are capturing those ticks 24/7
Here we go again.... http://www.elitetrader.com/vb/showthread.php?s=&threadid=255668&highlight=automated
That thread didn't produce any resolution about automated trading. Instead, it threw in a lot of doubt. I guess every trader will eventually touch upon the topic of automated trading. This is a path taken by some, doubted by others. I am not sure about the fate of those who took the path. I am trying to learn from their experiences.
Threads like this one are a waste. If someone tells you, yes, automated systems work, you'll ask for evidence. If someone tells you, no, ATSs never work, you'll ask for evidence. Why should anyone give you the evidence you desperately seek? That won't do a thing for their bottom line. Either you believe or you don't. That's the real bottom line.
Then why ask the question, when you already have your answer? More to the point, why post such a thread in the Automated Trading forum, unless you're trying to pick a fight?