What is mechanical trading all about?

Discussion in 'Trading' started by OPC, Mar 4, 2003.

  1. OPC


    Dear brethren:

    While I myself feel more inclined to the discretionary approach, as it is the path I have taken from the start, I would like to know the way the funds' machines are thinking. I guess the rules applied to mechanical trading have a predictive value given the amount of money involved in the funds' operations.

    As far as I know, a mechanical system needs quantifiable technical devices. Hence the popularity of moving averages, expansion and contraction cycles, time cycles, the four-week rule, etc.

    It would appear that moving averages are primarily used for trend assessment and to determine overbought or oversold zones through their spreads. Expansion and contraction cycles and the four-week rule would be used to identify increasing momentum and trend strength through the breakout from established resistance and support levels; and time cycles would be used for timing purposes.

    In short, which do you think are the criteria used to assess a trend strength and whether more money will be committed to a given market? How is timing calculated? Are all the mechanical system continuous in nature, i.e., they are always long or short with additional criteria for scaling in or out? If so, which criteria?


  2. There is a trading strategy forum. here it seems that people just like to talk about any subject except serious one :D

    But since there are people who like to contradicts me perhaps they will post something. I won't post anything at the moment because I'm going to sleep soon.
  3. OPC


    I will post it there, by the weekend. Thanks for the feedback.