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Humans vs. Robots
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ahuruglica

Biedrs kopš Jun 28, 2013  852 ieraksti ArdiFX (ahuruglica) Dec 04 2013 at 19:42
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

Biedrs kopš Mar 01, 2013  70 ieraksti FXRX Dec 05 2013 at 07:47
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.
RedRhino

Biedrs kopš Sep 09, 2013  471 ieraksti frank (RedRhino) Dec 05 2013 at 08:18
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.

Know Your Risk Per Trade
ahuruglica

Biedrs kopš Jun 28, 2013  852 ieraksti ArdiFX (ahuruglica) Dec 05 2013 at 10:14
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

Biedrs kopš Jul 21, 2010  111 ieraksti Siitari Dec 05 2013 at 11:03 (labots Dec 05 2013 at 11:06 )
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

Biedrs kopš Mar 29, 2012  192 ieraksti Thalantas Dec 05 2013 at 15:24
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.
ahuruglica

Biedrs kopš Jun 28, 2013  852 ieraksti ArdiFX (ahuruglica) Dec 05 2013 at 19:57
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:

jhenrikb

Biedrs kopš Oct 04, 2011  4 ieraksti John (jhenrikb) Dec 05 2013 at 20:37
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

ahuruglica

Biedrs kopš Jun 28, 2013  852 ieraksti ArdiFX (ahuruglica) Dec 05 2013 at 21:57
Someone can misunderstand you.

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


I think there are a lot of traders that switch from manual to automatic. A few on the opposite. Thanks for sharing

MoneyCode

Biedrs kopš Nov 01, 2013  31 ieraksti MoneyCode Dec 06 2013 at 08:03
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.

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