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Does Mechanical Trading Bring Peace of Mind?

  • #21
  • Nov 8, 2006 3:40pm Nov 8, 2006 3:40pm
Quoting aparsai

There are days that you are tired, there are days that you are under the influence of alcohol, there are days that you are too happy to trade. On all such days you may screw up your system. That's why it's better to leave trading to a machine rather than to yourself.
I am working with Rob, too. This paragraph mentions why I like mechanical trading and appreciate your effort with writing such a nice EA.
BTW, do you have any backtested results of MT4 strategy tester for the system?
Making pips is easy, holding 'em is hard - Pipsopolis
  • #22
  • Nov 8, 2006 3:45pm Nov 8, 2006 3:45pm
Quoting sahamdarjoz
I am working with Rob, too. This paragraph mentions why I like mechanical trading and appreciate your effort with writing such a nice EA.
BTW, do you have any backtested results of MT4 strategy tester for the system?
Thanks very much.

I've already published the results for the USDCHF pair. Here is the link:
http://www.forexfactory.com/forexfor...83&postcount=2

Other pairs show very similar results.
  • #23
  • Nov 8, 2006 4:17pm Nov 8, 2006 4:17pm
Great job. One last question:
Do you recommand working with all pairs or pick one or two among the one you have?
Making pips is easy, holding 'em is hard - Pipsopolis
  • #24
  • Nov 8, 2006 9:06pm Nov 8, 2006 9:06pm
When's the last time your beloved EAs read the newspaper?
"The time to act is when others show signs of tire." --W.D. Gann
  • #25
  • Nov 8, 2006 9:07pm Nov 8, 2006 9:07pm
BTW, Aparsai, I've made some of my best trades under the influence of alcohol...
"The time to act is when others show signs of tire." --W.D. Gann
  • #26
  • Nov 8, 2006 9:08pm Nov 8, 2006 9:08pm
Quoting sahamdarjoz
Great job. One last question:
Do you recommand working with all pairs or pick one or two among the one you have?
I won't recommend anything. I myself prefer to trade all five pairs at the same time but it's up to you to decide. I suggest extensive forward testing to decide what to do.
  • #27
  • Nov 8, 2006 9:14pm Nov 8, 2006 9:14pm
Quoting dukeofdents
BTW, Aparsai, I've made some of my best trades under the influence of alcohol...
If it works for you good luck. I'm not against manual trading, or news trading. What I suggest is that if somebody is not a highly professional trader it's either better to stay away from the market or stick with mechanical trading.

Don't forget that most of novice traders lose money in Forex. If you made some money under the influence of alcohol it doesn't mean that others can do that as well or you may make wise decision under that condition all the time. But if a mechanical system works it's not biased by your physical condition.
  • #28
  • Edited 9:55pm Nov 8, 2006 9:17pm | Edited 9:55pm
Quoting dukeofdents
When's the last time your beloved EAs read the newspaper?
Mechanical trading is not everything. No wise person expects central banks trade foreign currency based on signals of an Expert Advisor, but don't forget that they use a group of highly trained professionals to make their decisions.

If by newspapers you are referring to news traing it is quite possible to design EAs for that matter. For example if you use straddling method an EA can easily take care of that without emotions being involved. I hope you do not deny the existance of emotions at the time of news release.

If by newspapers you are referring to decide what to do next, I doubt you've picked the right media to make your decisions.
  • #29
  • Nov 9, 2006 1:02am Nov 9, 2006 1:02am
The closest i've been to manual-machanical trading is the popular Box Play as taught by John Carter in "Mastering The Trade". It has very defined entry/exit/mm rules and it fits my style of not being in the market for more than a given session/day. One of the things that has helped me in my trading is experimenting for some time with setting up the "Box" during the Asian session (I'm Pacific time US), and placing the laptop (wireless LAN in house) on a nite stand with a pillow speaker and audio alerts on trend line / channel breaks with the entry/exit/mm mapped out before hand if there is an entry setup later on in the London session while i sleep. OK, so what has taken place so far is i've made considerably more % gains with this simple method and my "Peace of Mind" is really up there. . . since i set the trade and go back to sleep! I wake up with either the pips, or a stop. Either way the trade was good as it met the rules of engagement.

On the EA front, it is freaky how i can just let them do their thing after painstakingly backtesting and forward testing believing that with proper MM the account should be profitable. (Aparsai, i'm lovin the Pip Boxer EAs). Currently running just four EA groups in forward tests and run between ~ 5-7% a week gains not touching a thing. Though with some human touch some trades can be more profitable my tweaking the Limit (read breakeven or + if going against before trail stop kicking in).

: ) Thom
  • #30
  • Nov 9, 2006 7:23am Nov 9, 2006 7:23am
Quoting accrete
The closest i've been to manual-machanical trading is the popular Box Play as taught by John Carter in "Mastering The Trade". It has very defined entry/exit/mm rules and it fits my style of not being in the market for more than a given session/day. One of the things that has helped me in my trading is experimenting for some time with setting up the "Box" during the Asian session (I'm Pacific time US), and placing the laptop (wireless LAN in house) on a nite stand with a pillow speaker and audio alerts on trend line / channel breaks with the entry/exit/mm mapped out before hand if there is an entry setup later on in the London session while i sleep. OK, so what has taken place so far is i've made considerably more % gains with this simple method and my "Peace of Mind" is really up there. . . since i set the trade and go back to sleep! I wake up with either the pips, or a stop. Either way the trade was good as it met the rules of engagement.

On the EA front, it is freaky how i can just let them do their thing after painstakingly backtesting and forward testing believing that with proper MM the account should be profitable. (Aparsai, i'm lovin the Pip Boxer EAs). Currently running just four EA groups in forward tests and run between ~ 5-7% a week gains not touching a thing. Though with some human touch some trades can be more profitable my tweaking the Limit (read breakeven or + if going against before trail stop kicking in).

: ) Thom
Thom,

I agree with most of what you said. My intention of this poll was not to see whether mechanical trading is more profitable than manual trading or not. I was trying to focus on psychological effects of using automated systems. On the other hand I'd like to insist that manual trading could be profitable in long run only if the trader is a real professional.
  • #31
  • Nov 10, 2006 7:26am Nov 10, 2006 7:26am
Quoting aparsai

Now my question for you would be, how do you define and interpret a doji? Do you have a specific definition? If yes, you can definitly program it. If not, how do you guarantee that you are making a correct decision when you decide a candle is a doji?

Similar could be asked about hidden divergence, correct trend, etc.

If you leave such questions to a mechanical system you start with an assumption and then backtest it over time, then you'll get the best result based on your criteria.

Keep in mind that in a mechanical system a big candle - for example - is not necessarily defined by a certain number of pips. It can be defined relative to somthing else - for example the average candle size in a period of time. The time period and the relation to the average candle size are again defined by backtesting and use of optimization tools.

If somebody uses complex programming tools s/he can write flexible code that changes behaviour due to changes in market condition.
Are you a programmer?

Let's say I define a big candle as a candle that is 75% bigger than the average. What's happening when it's only 74.99%? By looking at the chart I can decide, with NO emotion, that it's or it's not a big candle. I can see a candle and know that is's a doji or not, i don't have to mesure it.

About divergence and hidden divergence please code it and let's speak after that.

The same with trend. Don't ask me rules. Look at the chart, figure out some rules that you think are corect and cover the reality 100%, all the scenarios and then try to code them. Let me know.

I don't think there are mathematical rules for everything. Seeing objective, without emotions, doesn't mean seeing in 100% mathematical rules, rules that you can put in an EA.
Try hard, think fast, die young
  • #32
  • Nov 10, 2006 7:54am Nov 10, 2006 7:54am
Quoting dof
Are you a programmer?

Let's say I define a big candle as a candle that is 75% bigger than the average. What's happening when it's only 74.99%? By looking at the chart I can decide, with NO emotion, that it's or it's not a big candle. I can see a candle and know that is's a doji or not, i don't have to mesure it.

About divergence and hidden divergence please code it and let's speak after that.

The same with trend. Don't ask me rules. Look at the chart, figure out some rules that you think are corect and cover the reality 100%, all the scenarios and then try to code them. Let me know.

I don't think there are mathematical rules for everything. Seeing objective, without emotions, doesn't mean seeing in 100% mathematical rules, rules that you can put in an EA.
We all know that Technical Analysis is more of an art than a science. You can't cover reality 100% even as a person. People see different patterns on different charts. If you review the analysis published by different technicians you can notice such differences.

As far as programming is concerned you can definitly program all these. As I mentioned you assume some initial settings and then you try to optimize them based on backtesting and forward testing results.

The question is "does it worth of effort?". I've seen so many different manual systems that do not convince me to be profitable. I won't spend 6 months on developing a complex application that doesn't work for me. For example divergence and hidden divergence are both losers to me.
  • #33
  • Nov 10, 2006 7:54am Nov 10, 2006 7:54am
If you have to trade that candle I really doubt that you look at it without emotion.

Quoting dof
By looking at the chart I can decide, with NO emotion, that it's or it's not a big candle.
-soso
  • #34
  • Nov 10, 2006 7:58am Nov 10, 2006 7:58am
Quoting soso_beton
If you have to trade that candle I really doubt that you look at it without emotion.
Salut soso,

I didn't say that. I can tell with no emotion if it's a big candle, a doji, a break out, divergence, cross or what ever. Why would I have emotion to call a candle anyhow?
Trading is different.
Try hard, think fast, die young
  • #35
  • Nov 10, 2006 9:09am Nov 10, 2006 9:09am
dof when one has a bias, conscious or not, for lets say long positioning then one will have a more or less distorted view of the factors (candles formations in our case) that indicate short positions. This is how the human psyche works, trading without emotion is not possible. Unless fully mechanical trading.

I'm not trying to put mechanical trading on a pedestal, in fact I trade fully discretionary, what I am trying to say is that mechanical (fully or partial) trading has its merit. And it surely brings peace of mind, at least some.
-soso
  • #36
  • Nov 10, 2006 9:27am Nov 10, 2006 9:27am
Quoting soso_beton
dof when one has a bias, conscious or not, for lets say long positioning then one will have a more or less distorted view of the factors (candles formations in our case) that indicate short positions. This is how the human psyche works, trading without emotion is not possible. Unless fully mechanical trading.

I'm not trying to put mechanical trading on a pedestal, in fact I trade fully discretionary, what I am trying to say is that mechanical (fully or partial) trading has its merit. And it surely brings peace of mind, at least some.
Soso,

You explained what I meant in a nutshell. When I presented the poll I didn't mean to suggest that mechanical trading is a tool to replace manual trading.

I was wondering whether those who has already practiced it felt peace of mind or not. I really did. I'm less concerned about fluctuations of the market. I just watch the results of the trades and either become happy or sad but never get nervous about an upcoming news or a change in trend. To be honest with you, nowadays I do not even check out the price of currencies very often.

The other question could be "Can we replace manual trading with mechanical trading?". I will post it as a new poll and then we can see the discussions around that. I'm quite sure there are a lot of folks out there - including you and DOF - to provide me and others with valuable feedback on that.
  • #37
  • Nov 10, 2006 9:45am Nov 10, 2006 9:45am
I just posted the new poll. Here is the link:

http://www.forexfactory.com/forexfor...ad.php?t=10068
  • #38
  • Nov 10, 2006 11:50am Nov 10, 2006 11:50am
I'm not against mechanical trading, I'm just saying that some things can't be coded. Or better, can be coded but not perfectly.
Is some cases you can't cover everything in mechanical system because it needs fixed values, or fixed rules, no SMALL amount of interpretation. I repeat small, so the results of an expert advisor would be way worse than the results of a trader that has a certain amount of experience, on the same rules, and when I'm saying rules, i'm not talking mathematical rules.

An expert advisor i think it's usefull to complete you, when you don't have time to watch the market and you don't want to miss entries. But not as an independent money machine, without your intervention.
Try hard, think fast, die young
  • #39
  • Nov 10, 2006 12:47pm Nov 10, 2006 12:47pm
Quoting dof
I'm not against mechanical trading, I'm just saying that some things can't be coded. Or better, can be coded but not perfectly.
Is some cases you can't cover everything in mechanical system because it needs fixed values, or fixed rules, no SMALL amount of interpretation. I repeat small, so the results of an expert advisor would be way worse than the results of a trader that has a certain amount of experience, on the same rules, and when I'm saying rules, i'm not talking mathematical rules.

An expert advisor i think it's usefull to complete you, when you don't have time to watch the market and you don't want to miss entries. But not as an independent money machine, without your intervention.
I can hear you. I think you mean that a professional trader - at least in some cases - can interpret the market better than a bunch of rules. Am I correct?
  • #40
  • Nov 10, 2006 6:06pm Nov 10, 2006 6:06pm
Quoting aparsai
I can hear you. I think you mean that a professional trader - at least in some cases - can interpret the market better than a bunch of rules. Am I correct?
Exactly, the rules are good, but not fixed, it the mathematical way. There are plenty of times when you have to decide. Not you, your experience.
Try hard, think fast, die young
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