Which markets do you usually trade? What do you think about algo trading?

Hi traders,

First of all let me bring up this poll and yeah, instead of flooding, i wanted to bring them in a single thread!

I have been trading cryptocurrency and forex for a while. But FX & CC doesn't seem so reliable to me. Sometimes i have won sometimes lost. I can't say i was consistently making money.

I have also traded futures but futures is a bit risky for me as risk management doesn't seem easy if you don't have enough capital. Thanks GOD, CME brought e-mini micros.

I see that, if you use stop-loss, your random walk trading probability (coin toss trading) is less than 50% (46%-48%). I have read a thread here recently, another data-scientist claimed there's no winning strategy or it was something like that and he decided to give up. I totally understand this.

I also see that, trading options brings amazing opportunity. That's stop hunting / fishing. If you buy calls/puts, your risk is limited and you don't stop out which sounds amazing. I have never tried them yet but planning to give it a try as soon as i make my algo live.

Finally; I have decided to develop an algo for Stocks. Backtests gave me great results but past performance does not necessarily predict future results as we all know. Below you can find the screenshots of my algo. I know the first one looks risky as it has a huge drawdown but I'm okay to risk a small sized account. I can easily reduce the leverage to decrease the risk and you can see the results if i trade without leverage in the second screenshot.

I only have FAANG + MSFT in my portfolio.

Trading window - 2015-07-08 / 2019-05-01

Leveraged:


Without leverage:


Let me ask you something. Would you trade this algo if you were me? I know there's a lot of work and need to be optimise. But would you trade this?

Thanks

 

Forgot to mention. This is a long-only algo...! That's why I have doubts to trade it.

 

the algo looks like the market why not just invest and be done with it?

 

That's what I'm planning to do. Need to work on that a bit more! Actually it beats the SPY benchmark. This is good but again, i need to work on that a bit more.

 

set a stop loss based on some percentage like 2.5% off it's high so you don't get wiped out.

 

You're missing correlation to market. I can bet it's ~ 1.

 

I'm new to algo trading to be honest. Especially in stocks. So do you think beta being ~1 is something good? Sounds like, algo will lose money in bear market?

 

It's indeed

 

I agree with MarkBrown here. Work smarter not harder. The algo has about the same returns at SP500 index. Buy it every two weeks like us working folks.

 

Hi.. What do you mean by "buy it every two weeks?"