Yeah, the key word there is "overoptimization", and I know what that means, and why not to do it. But in general, how feasible do you guys think this feedback loop is? Take a Pine strategy, tune and tweak it until the past data looks good, run it and make money? To me, it looks good, provided: You keep the strategy simple (that is, no overfit, performs in most market conditions). Well-defined (trade only these timeframes, only those days, only long trades). Not be too greedy (if your goal is 10% a month, do 10% a month and don't try to byte more). Allow for a good percentage of losing trades as long as the winning trades cover it up, e.g. 1:3 risk-reward ratio and 50% winning trades. Never goes down. In the video, you see at some point the strategy stops making money and starts losing money. If that happens, to me that's a sign that it's not robust enough and changing market conditions will topple it. Better less money but more robust to market changes. What is your experience guys with pine script and algorithmic trading strategies? Do they work for your goals? Do you tweak them often? What do you think of the above thoughts?
my hunch is algo trading has just as many problems as discretionary trading, just different problems but no less difficult to overcome.
Algo trading is purely automating discretionary trading. Unless you define discretionary trading as going with feelings rather than with specific rules. As VEGAS said, algo trading is no different than discretionary trading. Same difficulties, same problems, same issues to solve. The only difference is with the execution (manual vs automated). As a side note, I didn't spend 22 minutes listening to the video. Since ChapGPT came out, AI is the flavor of the month everywhere.
An algo could be programmed to execute a simple function... like "crossing the 200 day MA". But that alone likely wouldn't satisfy one's profit objectives. To program a really good and comprehensive "list" of strategies, would be EXTREMELY complex and difficult. Even if it were possible, not enough reward for the effort it would take.
Visavi the cover of the video, yeah ChatGPT is going to lure in a new generation of suckers unaccustomed to curve fitting.
IMV, the notion of an algo to deliver "superior profit for retail screen jockeys" (like us) is impossible! Somebody got something like this? We're all curious to know.
How about not super profit, but just any profit? Why is algorithmic trading a thing then if it's not possible to come up with an algorithm for your trading?
"Just any profit"? You think the market is so cryptic and difficult that "just any profit" is satisfactory for the effort so long as it's "automated"? I suggest you learn "Price TA". Its concepts are HUGELY successful... almost impossible to lose if traded well... HUGE profit potential... but, IMV, virtually impossible to transcribe into an algo. So... why "impossible to program into an algo"? LOTS of "setup" opportunities. (Somebody asked me one time, "how many Price TA setups are there?" I don't know, but I rattled off 30* from the tip of my tongue. Couple the number of setups as variables along with the fact that each "setup" can occur at any place in the price chart, and you have a nightmare of programming difficulty.) *"30 setups" are too many to watch for. To be a HUGE success in trading, you need to learn perhaps the "best half-dozen... the ones which occur most often and have the best r/r".
Isn't there a contradiction here? Price TA refers to using math to predict market - essentially modelling task. Algos are the same thing: models of the market. So, why do you say it's impossible to put math in an algorithm? In fact, why even differentiate between the two if they are the same thing!
imo a discretionary trader can take a trade based on a setup that the algo would never have taken because the parameters were not exact enough to trigger the trade. discretionary PA traders operate in zones essentially. remember other algos compete for the same fills so it changes "the look" so to speak of the market where a discretionary trader can still see "good trade setup" where the algo no longer will see it. same thing with exits this is just how i see it.