Clemmo's Trading Odyssey

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?

With 2023 shaping up to be one of the hottest years on record (again) this seems like a no-brainer carry trade. The masses (retail) are thinking Natty is down as far as it can go, but boy howdy, it sure doesn't look like it can go up, barring some unforeseen catalyst.

A familiar name at the top of the leaderboards today and if you read my journal you'll know why that's pretty funny. They haven't made a trade in nearly 70 days. The best way to get to the top of the boards and stay there seems to be to make one very large lucky trade and then just stop. That's also my casino gambling strategy, which I have used successfully, the first and last time I went to a casino over 20 years ago. I'm getting so old I can't be sure what year it was. After college but before I had kids.

I guess there isn’t much left to do but write the whole thing down. Hopefully I can live long enough to finish.

A good example of reflexivity in action. For the same reason that three point shots will never take over basketball, no individual AI is going to dominate trading.

A completely new crop of leaders since I last checked, with no familiar names. However I can plainly see by the graph profiles that the top accounts are using the “trade once then stop” ‘strategy’.

Everyone said this was going to be a very interesting week. Equities did get a bump but basically this is what the market expected.

Maybe the FOMC statements will set the world on fire but I doubt it. Whenever something is overhyped it tends to be a disappointment.

Whenever someone says ‘don’t worry’ or ‘smooth sailing’ you should be concerned. Especially when it’s you saying it.

My son’s basketball coach is encouraging another parent to buy gold instead of investing in real estate. It’s my first shoeshine boy moment. This, combined with the world gold council ads are a possible signal that commodities have topped. It might be tomorrow or a bit later but I’ll be watching closely for chances to be bearish.

I doubt the statement itself does much, but I'm eager to see the dot plot. When I checked last the odds still favor a July hike so any insight into that will move the market.

Triple Top?

I hate being right. What a snooze fest. Market moved more at the start of the month on the rumour of a skip. Maybe I need a squawk box or Bloomberg terminal.

Good thing I held off. Although this might be the place to start testing the waters?

This market needs a spanking but there are no adults in the room at the Fed. If they’re serious about containing inflation they’ll have to do something about the tumbling dollar but they’ll probably wait until July; so the masses will suffer as they always do.

Gold looking skittish, however making an initial foray during a US bank holiday would leave one somewhat exposed.

Why are bank holidays slow trading days anyway? No one actually takes the day off do they?

My AU short is now risk-free.

The decline may not hold if retail equity investors get jammed, being massively long and getting pummeled for it. However it might also paradoxically move against risk if retail tries to use it as a hedge during this dip.

Speaking of dip, it may turn into the extension of a genuine bear market if the Fed keeps its promises…which they might not.

I had an unusually good day (and week) and decided it’s time to make a withdrawal with a new broker. Naturally, that’s not going to be a smooth process.

First I must link my bank account but no matter what I enter in the account field of the withdrawal form I get an invalid IBAN message. I called my bank but they are mystified. They have no IBAN, only routing and account numbers.


The internet solves this mystery.

“Canadian banks do not have IBAN (International Bank Account Number) numbers. If asked for the IBAN number it is simply our Bank Number followed by your account number and your branch's transit”.

However now I must rely on the goodwill and bureaucratic efficiency of this broker in order to access my money. How much do you want to bet that withdrawing money from their business is NOT a top priority? I will be waiting days or weeks and going back and forth on the phone, not always in English either, before I can start waiting on the actual wire xfer. If it ever arrives.

I’ve said it before and I will say it again. The real risk in trading Forex is not with the market, it’s with the broker.

You can use the swift code instead ?

They want that too. It’s probably a matter of figuring out how to make a pseudo- IBAN number that contains my account number so their system can digest it.

However it makes me wonder; if their system isn’t setup to handle withdrawals to Canadian banks and they take Canadian customers, they must not be a very common occurrence.

I thought that it is one or the other.

If your Bank can't provide one then the broker will have to accomodate you, I would expect at the minimum.

Or are they expecting all canadian banks to accept their terms ?

What about transfer to your debit card ?

I would love to deal with a broker that pays out through Interac the way sports bettors do.

Unfortunately I don’t have any cheques. Who uses them anymore?? Maybe my bank can send me one.