Profitability is solely dependent on money management and discipline......
). Anyway, if we trade using an EA, then money management and discipline cease to be an issue. And if success is dependent upon waiting for only the most profitable setups (that's if we dare to suggest that entry might be important), then an EA again fills the bill, because it incorporates accuracy, consistency, and endless patience.No offense, AK, but I think it's fairly easy to disprove that textbook cliche.
Every EA (trading robot) trades according to money management rules, and with perfect discipline. If profitable trading was as simple as "enter any move, let profits run, cut losses short, risk only 1%-2% of your capital per trade, and apply perfect discipline", then developing a profitable EA would be a snap, and everybody would own one (which would doubtless have an interesting effect on the market
One counter argument is apparently that "the key lies with the trader, and not the system". Well, every trader has to apply some kind of rationale in making their entries and exits. If there are any kind of rational thought processes involved, that are being applied consistently, then that constitutes some kind of a "system". It's all very well to say that one "must understand the markets intimately", but every technical approach ultimately involves looking at patterns in price movement, and every fundamental approach involves looking at trends in economic indicators.
A similar argument is that profitable trading systems must be discretionary, and therefore supposedly can't be programmed. I'm afraid the latter part of that statement is simply untrue. Developing software has been my career since I left high school in 1979. It's not that difficult to make software intelligent enough to perform tasks like multiple timeframe analysis, pattern recognition, apply line studies, and even seek out trends in fundamental data. I've done it myself, and I've no doubt there are much smarter programmers out there than me (who'd like nothing better than to have a robot trader generate them an exponentially increasing passive income).
To provide any sort of long-term edge, discretionary trading has to be more than just lucky guesswork. Given that that's true, it's simply a case of the trader and programmer working through enough examples of what the trader looks for in a chart-based setup, to establish some programmable rules, and then gradually hone these rules - simply by categorizing further examples as either valid or invalid setups - into a system.
Another well-worn comment is that mechanical systems fail because they're inacapable of adapting intelligently to changing market conditions. Well, the underlying principle behind expert ("AI"-based) systems is their ability to gather new data, and adapt themselves accordingly. That's how they "learn". Adaptation is definitely not an insurmountable barrier.
And if analysis is an "art" rather than an accurate "science", does that mean that applying a less accurate - or less rational - approach is the optimal response?
What does all of the above ultimately tell me? That price movement defies any kind of analysis, and profitable trading is therefore nothing more than luck? Apparently it's not, because there are honest folk who claim to be successful. I congratulate them!
David
positive expectancy with a random data set!there are many ways one can build a method/system with positive expectancy, especially if you know your math and advanced statistics, and luck has nothing to do with it.
there are many ways one can build a method/system with positive expectancy, especially if you know your math and advanced statistics, and luck has nothing to do with it.
but it's difficult, so probably that's why some prefer to rely on luck then.
