How much capital does your automated system trade?

Discussion in 'Automated Trading' started by travis, Mar 15, 2009.

How much capital does your automated system trade?

  1. >0 to <=10,000

    22 vote(s)
    16.7%
  2. >$10,000 to <=$50,000

    23 vote(s)
    17.4%
  3. >$50,000 to <=$100,000

    22 vote(s)
    16.7%
  4. >$100,000 to <=$250,000

    14 vote(s)
    10.6%
  5. >$250,000 to <=$1,000,000

    15 vote(s)
    11.4%
  6. >$1,000,000

    36 vote(s)
    27.3%
  1. travis

    travis

    Don't answer if you don't use an automated trading system, if you are only paper trading, or if, for any other reasons, you feel that you can't answer correctly.
     
  2. travis

    travis

    up
     
  3. travis

    travis

    up
     
  4. travis

    travis

    The way I interpret this poll, is that the majority of automated traders make money from trading, which is what I expected and also what I hoped (being one of them).

    Indeed, traders wouldn't be able or wouldn't be willing to invest this amount of capital (over 250 thousands dollars) unless they were consistently making money.
     
  5. I am considering automated trading based on a backtested formula I like and wondering if automated trading is reliable buying/selling at the programmed trigger points for the experienced here using auto pilot trading. TIA and best of success!
     
  6. 5of7

    5of7

    If you ever backtest on forex, especially in reference to optimizations, keep in mind that most brokers are market makers, not that they are evil, but it means that their quotes differ (as opposed to stocks and futures which are centralized.)

    Combine that with the fact that they draw from differing liquidity providers, so their quotes MUST differ.

    The problem we saw is that some brokers who play market maker a little much tend to have spikes and ranges that other brokers don't.

    So if your optimization looks for profits on those large movements, or worse asks for stops that cover them, your live results carry too much stoploss risk, or look for targets that may not come with your live trading broker.

    If we switched brokers (which we did a lot of) we had to go to great lengths to re-run our optimizations with data from the new broker. We just couldn't trust our old results. It sucked. We have lots and lots of strategies, so it really, really sucked.

    Recently we started collecting bid/ask forex data from raw quote sources (so no market maker fuzziness added). If anyone needs it, feel free to PM me.

    Short of that, consider optimizing from multiple sources, then take the most conservative cross correlated results (the dampest).

    Trader 5of7 @ TheCollectiveFX.com
     
  7. Looking to automate through Genesis.

    Need to know just the basics:

    Who supports them?
    What code?
    Not worried about cost.

    Also, how flexible is the software for options. I'm not just talking MA cross-overs here
     
  8. travis

    travis

    I am glad those 50 votes in the poll are showing that this is where the real consistent money is made - automated trading - and these posts also seem to assume that this thread is a natural place to get started with automated trading.

    I can tell you this much, before I began with automated trading, I always lost, consistently.

    In the past year, with automated trading, things improved dramatically. Despite the fact that without any attention or even awareness of money management, I reinvested all gains, and went through a drawdown that twice in a year brought me from 500% gains to zero.

    Now, after thinking and reading for a few months about money management, I am pretty much investing only half of what I have, trading half as many future contracts as I could afford, investing more in the best and non-correlated systems I have, and I feel this time it will work. I may reach 500% more slowly, but I won't go back to zero again.
     
  9. Thanks Gents,
    I will be trading stocks only so its good to hear automated trading is reliable as far execution of your triggers. Of course results depend on whether the triggers lead to profitability which back testing 2 yrs has done very well. Hopefully that will translate to actuality. All input is much appreciated.
     
  10. travis

    travis

    I would say this, but I am also reminding myself as I say it. You should become more prudent as your capital increases. If you start from a small sum that you don't care about, you can do anything you want with it. But once you get up to five times as much, don't do what I did, and don't consider that money like meaningless. I blew it because after making money so easily I didn't treat it as precious. On the other hand, if I thought that money was so precious I never would have started trading, and never would risked any money at all.

    Anyway, once you lose your whole capital a couple of times, and have to hold on to your regular job because of it, then you understand the correct balance between not caring about money (which I never did) and caring enough to use proper money management, something I ignored until now. Trading is a job, where, unlike most other jobs, the more you're driven to succeed and make money, the more you'll lose money, because of being impatient. That's why I developed a trading system - I was too impatient to wait for opportunities, and I cannot trade discretionary at all. I lose my balance within the first trade. But the unexpected thing is that now I still need to work on myself to let the system trade, and not interfere with it.

    Also I would suggest that since you're gonna make a lot of mistakes at the start (technical ones, too - software, hardware), if you're starting with real money (I wanted action and didn't bother to do any paper trading), start really small, because chances are that you will lose. If you start with a lot of money you can't afford to lose it, and then you can't trade properly, can't practice, can't push your limits. From the year I started trading, in 1998, I lost my entire capital about 30 or 40 times, but it was always a small capital of sometimes less than 1000 dollars and (without considering capitalization and what it later became) 4000 dollars at the most. If I had started with 100,000 dollars, I would have lost it once, within a year, and never would have traded again in my life. Instead, by being poor and being forced to have a small capital, I tried everything, I lost everything there was to lose, learning lessons from it, and only wasted less than 40,000 dollars in ten years of trading, which is only 4000 dollars a year, and 300 dollars a month.

    Finally, try to diversify as much as possible. By the end of this feat, I will have built about 30 different systems on 9 different securities. I think that is about enough. They all trade on different schedules and timeframes, that way I can use the same capital on all of them. So, even if they only made 100% return a year, I could sum up all returns together.

    Having said this, I should just be quiet, because I talk a lot, but pretty much everyone on this forum is better than me, at programming, at trading, at making money. I just need to write things down to understand them better, so I keep writing and writing.
     
    #10     Apr 3, 2009