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Humans vs. Robots

ArdiFX
forex_trader_[136673]
Dec 04 2013 at 19:42
posts 852
I have been trading Forex for 5 years. In my country the Forex is not that famous so the closest thing I got to others traders was watching trading sentiment.

When I joined myfxbook I was suprised, mos of the traders don't trade manually but use or develop EA-s instead. About 85-90% of systems here are automatic system. I always thought it was the other way around.

I would like to have healthy discussion when manual and automatic traders share their experience.


Thanks
Ardit H.
FXRX
Dec 05 2013 at 07:47
posts 70
I believe that developing your strategy with an EA and then running the EA with periodic intervention is the best combination. Essentially, a hybrid approach. I think developing a strategy from only visual review and then demo testing is severely less thorough and prone to error. Have you ever thought you discovered an amazing strategy visually but then find it only works for 2 months?
You win some, you lose some.
frank
RedRhino
Dec 05 2013 at 08:18
posts 471
Trading manually is a tedious task that can mostly be automated. Most traders realize this at some point normally after trading fatigue and start automating their ideas as much as possible.
ArdiFX
forex_trader_[136673]
Dec 05 2013 at 10:14
posts 852
It makes perfectly sense to program an EA if strategy is based on indicators. Computer is tireless. But there are strategies that can not be programed, for example Elliott Wave Theory. Also I've seen some famous professional traders that claim they trade on hunch based on years of experience, I don't think think that can be programed too.
Siitari
Dec 05 2013 at 11:03
posts 111
In the case of trading, experience is based on visual observation(looking at the charts, I'm disregarding news and other stuff now) of changes on charts. If it can be observed, it can be measured. If it can be measured, it can be calculated and coded.

I argue that every trading method can be automated. It just needs the correct set of skills to make it happen.

Hunch in this case is nothing more than a sense of probable outcome. So basically it's only statistics.

That's how human brain works, it tries to (automatically)predict everything based on something that has already happened. Of course it is far more complicated than that. But the point is that sensing something, having a hunch or whatever, is based on previously happened stuff and predictions made from that by the brain(subconscious if you will). Brain is very good at that, it is doing millions of things simultaneously. Elliot waves rely heavily on pattern recognition which the human brain is basically made for.

Imitating the workings of a brain(perfectly or thereabouts) by coding is damn near impossible at the present time but it is not that hard to compile a set of rules and memory and make a program that swirls up probabilities from there and compares results to what's on chart to find similarities or patterns or whatever you want.

You just need the right person to do the math and coding. There may not be that many of them :)
Less effort, better results.
Thalantas
Dec 05 2013 at 15:24
posts 192
I know for a fact that equities are traded by over 70% by machines (equivalent to our EA except that they trade enormous amounts per nano-seconds).

I've seen again and again articles saying that these high frequency traders are taking over the FX market too. If it is true, then your theory about the brain unconsciously following the same patterns would be invalid. This fact would be interesting to be checked.

But generally speaking I agree about the fact that events keep on happening again and again. Look at Fibonnacci numbers, I've recently read that these numbers are found again and again in various industry/sectors!

I agree that a lot of strategy can be coded, but keeping in mind that there can't be 'one strategy to rule them all'. Best EA traders I know are the ones following the market as if they were trading themselves and switching between pro-oscillating EAs and pro-trending EAs.
A smooth sea never made a skillful sailor.
ArdiFX
forex_trader_[136673]
Dec 05 2013 at 19:57
posts 852
Thalantas posted:


I've seen again and again articles saying that these high frequency traders are taking over the FX market too. If it is true, then your theory about the brain unconsciously following the same patterns would be invalid. This fact would be interesting to be checked.

This was my biggest fear for more than one year. I tried almost every strategy but the only one that gave me a small edge over the market, and feel more comfortable about is Elliott Wave. My fear was that if computers take control over the market then the market will be more erratic and there will be more repeating patters.

The truth is that not only the human behavior and price action, but the universe and everything in it is made of the same pattern and sequences. No matter if 99% of volume is traded between computers, there will be 1% of humans trading and computers will hunt them. Also every human decisions and economic events will occur with the same pattern. So no fear.

Here's a beautiful documentary if someone interested on the subject:
John
jhenrikb
Dec 05 2013 at 20:37
posts 4
Starting out with forex as a trapped victim to 1 of the many EA scams, I now only trade manually profitable.

Not seen a single EA that can come close to my manual trading. Took me a while to learn price action, and im still no master.

Usually just trading EU 5 min TF, 5-20 pips.

About HFT, I'm personally not worrying about it.

Scalping thousands of trades in matter of minutes for a fraction of the market is just a strategy. Just as others are good at trading other strategies.

Like you said, patterns.

I trade the chart Naked btw.

Cheerio, good thread
ArdiFX
forex_trader_[136673]
Dec 05 2013 at 21:57
posts 852
Someone can misunderstand you.

You're saying you trade the chart naked, without indicators. You are fully clothed. 😄


I think there are a lot of traders that switch from manual to automatic. A few on the opposite. Thanks for sharing
MoneyCode
Dec 06 2013 at 08:03
posts 31
For the past 3 years, automated trading as a group, has had a declining equity curve while manual trading has maintained profitability. This according to Barclays systematic traders index.

The majority of automated trading championship contestants lose money.

Automation is more scalable. The weakness in automation is the temptation to build an aggressive equity curved strategy based on 1 instrument. As opposed to a robust system that will maintain consistency in OOS multi-instrument performance. Coming to terms with the value of robust, over flashy temporary equity curves is the key to strategies of the future.
MoneyCode
Dec 06 2013 at 08:03
posts 31
ahuruglica posted:
Thalantas posted:




The truth is that not only the human behavior and price action, but the universe and everything in it is made of the same pattern and sequences. No matter if 99% of volume is traded between computers, there will be 1% of humans trading and computers will hunt them. Also every human decisions and economic events will occur with the same pattern. So no fear....

Exactly. Unlimited variance and evolution exist in the market, just as in nature. View the recent dominance of automated volume in the market, as a perfect example of evolution of price behavior. This evolution makes old systems fail. Adaptive solutions whether manual or automated are the only answer.



PipGnostic
TheCyclist
Dec 06 2013 at 13:05
posts 724
@MoneyCode

Why can't you use multiple pairs in auto trading ? I run arrays of pairs, you can do very high volumes of work across many pairs. And you can do things that humans can't do. Work out the relationship between say 24 positions every 0.xxxx seconds. See if something needs to be changed and change it before you even knew the opportunity was there.

Look the problem with the EA's are that everyone tries to take a combination of hundreds of years old indicators and try and get the computer to sit and watch them. Ever now and then they fiddle the settings an viola, holy grail! Just to see it fail a few weeks later. That's because screen staring is not what computers are for or good at.

I promise you most of the advanced stuff doesn't even have GUI's. People run them in terminals for speed. Takes resources to fill a screen with lines. The fact is, the HFT guys, arguable the most successful traders in operation today, don't even know what they're trading.

Best way to use computers is for high volumes of small but consistent profits. Just bank,bank,bank...keep the risks small. So small it's not worth your time, but the machine doesn't care.
Dennis O. (dgaf)
Dec 06 2013 at 14:02
posts 57
Robots follow rules & trade with no emotions.
Sleep is for the weak
forex alert system (forexalertsystem)
Dec 08 2013 at 08:04
posts 101
Depends on how good the EA programmer is: below is a mature trading system. i recorded 2 days worth and compressed it into a short time lapse video. you will see it make a lot of live trades and make a decent amount of money in a short amount of time trading many pairs. simultaneously. this video below is a HFT system

                                                   
ArdiFX
forex_trader_[136673]
Dec 08 2013 at 21:52
posts 852
@forexalertsystem

No offense man but this is considered spam.
Dennis O. (dgaf)
Dec 09 2013 at 07:26
posts 57
@forexalertsystem Where are the rest of the results and how is your signal services tested and guaranteed is there any proof?





what is www.chapter322.com www.blackboxsignals.com www.centralpips.com forex/trading social.com these sites look fake.

Sleep is for the weak
forexci
Dec 09 2013 at 12:11
posts 7
The way I see it is that those who follow price action, whether it be following chart patterns (support/resistance, trendlines, fibs, candlesticks) or using their naked eye, prefer the subjective/interpretive element of trading.

Whereas those who follow indicators like the rule-bound element of it. A case can be made for each I suppose, and pitfalls are plenty with each method.

There is the complaint of how indicators lag - yet there are plenty of attempts to make indicators lag a whole lot less, though these attempts tend to add more noise in the picture. However, because it is easier to follow rules with indicators, they can be planted into an EA and quantifiably backtested. That is a big plus!
I Think, Therefore I'm Guessing
ArdiFX
forex_trader_[136673]
Dec 10 2013 at 21:25
posts 852
Interesting article on the subject from bloomberg. Worth the time reading:

bloom.bg/19fr6c9
Thalantas
Dec 10 2013 at 23:42
posts 192
Thanks @ahuruglica for this interesting article!

It seems like the machine business is struggling to find a good system, like we do here on a much smaller scale. The holly graal is very hard to find and there's no easy money!
The most stable traders I know are manual and have usually underwent strong DD once in a while... Some system here are profitable since a little while but it is a bit depressing to think that what we call 'a while' is nothing longer than a couple years on myfxbook!
Starting from there, it is hard to think that we can build up an alternative to a retirement plan if you constantly have to find new EAs!
A smooth sea never made a skillful sailor.
ArdiFX
forex_trader_[136673]
Dec 11 2013 at 20:33
posts 852
Hey Guys

I have an robot to sell but it's not that cheap. It's price is 1,618,382.50$



Damn, it looks like a robot but it is human. I'm not allowed to sell him but everyone can learn to trade like him :)
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