Dustin, do you bang out ~100 trades per day like Red_Ink? You both maintain that what you do can't be automated. But I suspect that in reality you guys employ a set of rules many of which in fact can be automated resulting in profitable strategies. It is quite possible that the canned strats would be inferior to what you can do by eye, but they should work reasonably well nonetheless. p.s. I like to speculate
There's really no point of automating a profitable discretionary trader's trading. Most people are missing the point of the advantages of a discretionary trader, and the fact that people even consider trying to automate them tells me they don't understand discretionary trading. This also tells me that most of the guys think that there is some holy-grail trading model they can use as an ATM machine. Again, there's too many systematic traders who start because of their failure as a discretionary trader, who thinks their experience is the only truth in this industry. Anyways, humans adapt to their living environment better than any living organism.
Even though you're addressing Dustin, I'll speak about my own trading. My only set rule is don't lose too much money. If you can tell me how to automate that I am all ears. Once again, I'd love to automate my stuff but how do you automate 'mojo'?
let's take a stock that is trending up. let's say your strat is to wait for a pullback to buy. so, for entries you need: 1. identify an uptrend 2. define "a pullback" both can be coded because in your head you have some sort of rules to define an uptrend and some set of rules to define a pullback. of course it maybe impossible to code all the rules you have exactly because you may not be able to verbalize all the exact rules and how they interact with each other. BUT a subset of rules you use everyday should be quite easy to code. and this should lead to profitable strategies even if inferior to the complete Red_Ink's gut strat. what i am trying to say is that an important part of gut feeling must have clearly defined rules (likely very simple mechanical rules). as apposed to "i trade on gut feeling alone and there are not easily defined rules that could even partially mimic my trading".
Automated Trading? Grey Box? Discretionary? I can't understand how a reasonable systematic trader cannot distinguish and misuse the definition between the two terms.
This is, IMO, a very common mistake. In my experience implementing 80% of a strategy rarely results in 80% of the profits. More typically it results in outright losses.
Trust me shortie. You could sit by me for 2 weeks and watch everything. I doubt you or anyone else could code my 'strategy', because there is no strategy. If it could even be partially coded I would have coded it. I do what feels right and mix in a lot of discipline. It's best decribed as organized chaos. 100%discretionary, no 1 trade is like another. Mr 'Mojo' Risin'
Although I look for specific setups, I also get to know certain stocks over time, get an eye-to-brain feel for them and will often violate all my setup signals and put on a trade. A good example was Friday when I shorted a very strong up trending stock even though it already fell a full dollar just seconds from the open, covered at what should've been strong support, then shorted again because it "felt weak", and captured another 1.00 a share move down. How the heck would I automate that?