At certain times in my journey I've vacillated on the benefits of algo trading versus manual trading. The benefits of algo trading are undeniable, in my opinion. Consistency. No need to be chained to a desk.
However I've also decided that even the best algo is necessarily constrained by its limitations, namely, inability to think. Even if you're using 'AI' it isn't really thinking, it's just making something like a decision-making process based on a trained model. It is one step closer to understanding than a 'dumb' algo but it's still not smart.
The problems with trading using your own human brain - are many, and much of it I've documented in the book thread. However, as many traders have stated in those books, generally the big money is not in algorithmic trading, and now I think I understand why. Since even the best algo can't do what a human mind can do, it has to go slower and depend on cycles to repeat or for market conditions to come back around to those for which the algo was designed to handle. Even if you trade with a stable of algos built for different circumstances, none of them can really 'go for the jugular' unless some specific set of circumstances are correctly identified and handled. However, real trading can encounter dozens if not hundreds of unique circumstances. You'd need dozens or hundreds of robots to handle them all.
The human mind, trained, can handle them all, or at least many of them.
So, with that in mind cast a glance at this equity curve - what you see is the pace of one algo, interrupted periodically by periodic market excesses, possibly even broker/LP attempts to confound the success of the thing. After each rising profit stage there is a spike or a flat period where the hurdle is overcome, and then the trading volume is increased and the cycle begins anew. However the last stage is where I tried trading manually alongside the machine. Unfortunately MT4 reports don't show profit over time, but this curve makes the most money in the fewest trades, and in the least time.
All of this to say I'm beginning to swing back to the notion that algorithmic trading might not be the final stage of the trader's journey. It is somewhat suspect after all, in that so many provisions are made for it by brokers themselves. They don't fear anything that can be created by individuals or small groups. They likely prefer the predictable and transparent trading processes that come out of EAs. Why should we indulge them? Well, if you have other things going on in your life, then it may be a necessary concession. However, if you are committed to this course and want to see the ultimate realization of the fruits of your labours, I'm begining to suspect it may be necessary to get your hands dirty, turn off the autopilot and take the controls.
Or is this simply the hubris of human nature creeping back in?
However I've also decided that even the best algo is necessarily constrained by its limitations, namely, inability to think. Even if you're using 'AI' it isn't really thinking, it's just making something like a decision-making process based on a trained model. It is one step closer to understanding than a 'dumb' algo but it's still not smart.
The problems with trading using your own human brain - are many, and much of it I've documented in the book thread. However, as many traders have stated in those books, generally the big money is not in algorithmic trading, and now I think I understand why. Since even the best algo can't do what a human mind can do, it has to go slower and depend on cycles to repeat or for market conditions to come back around to those for which the algo was designed to handle. Even if you trade with a stable of algos built for different circumstances, none of them can really 'go for the jugular' unless some specific set of circumstances are correctly identified and handled. However, real trading can encounter dozens if not hundreds of unique circumstances. You'd need dozens or hundreds of robots to handle them all.
The human mind, trained, can handle them all, or at least many of them.
So, with that in mind cast a glance at this equity curve - what you see is the pace of one algo, interrupted periodically by periodic market excesses, possibly even broker/LP attempts to confound the success of the thing. After each rising profit stage there is a spike or a flat period where the hurdle is overcome, and then the trading volume is increased and the cycle begins anew. However the last stage is where I tried trading manually alongside the machine. Unfortunately MT4 reports don't show profit over time, but this curve makes the most money in the fewest trades, and in the least time.
All of this to say I'm beginning to swing back to the notion that algorithmic trading might not be the final stage of the trader's journey. It is somewhat suspect after all, in that so many provisions are made for it by brokers themselves. They don't fear anything that can be created by individuals or small groups. They likely prefer the predictable and transparent trading processes that come out of EAs. Why should we indulge them? Well, if you have other things going on in your life, then it may be a necessary concession. However, if you are committed to this course and want to see the ultimate realization of the fruits of your labours, I'm begining to suspect it may be necessary to get your hands dirty, turn off the autopilot and take the controls.
Or is this simply the hubris of human nature creeping back in?
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