Think Outside the Box

Thinking out loud on system, which I'm about to write on run in demo along side Manual trades for abit.


Variables required user modifiable ones.

1. Go Long / Short / Do nothing ( simple +1 , -1 ,0 deal ) when EA's cross.
2. Max and Min price, ie GBP breaks 1.9605 don't short above as likely bad, also don't short to much lower, so on a news Blip it doesn't short the bottom.
3. Close on Break down Yes / No, points before trade is left to run, drops back into auto take small profit, if set to YES. ( never let a profit turn into a loss )



Then the same again, for a Exit Strategy, which upon closing can be set to auto Reverse position or just close.


Sounds easy , should reduce errors and time needed to be starring at a screen.

I've come to the point in my short stent (spring of 2005) that i do better with a sort of discretional mechanical model. I'm not there yet, though focusing on one pair and one session is helping quite a bit. Getting the "feel" of the London Open and the Pound. Not saying that is idea, but that is what's working for me at this juncture.

OK, so man AND machine. I've been playing with the concept of manually (read discretion) entering trades based on a given model, and having the EA in MT4 manage the open and pending trades. All profits and loss are set in the EA and there is no hint of where these levels are at the broker end. Of course there is a downside to this. . . once connection is lost, or computer reboots, MT4 needs to be in the startup directory to reinitiate connection with the broker so the EA can continue to manage the trades.

After some quility time with the draft it does free up time away for life. Of course it's all in the manually entered trades quality that makes the profits in the end. The EA is just helping out with the emotions and giving one a life part.

One of the early questions that i had on the ManMachine Mix i posted in the FijiTrader Trading Psych area. There was a discussion that followed and the bottom line was that since "Making money is the basic purpose of trading" that including Robotics in one's model still makes it "Trading"... My question to the group was i was having issues in my ability to believe that having a "Bot" trade for you was actually "Trading"...! I don't worry about it any longer. If automation helps me have time for life and brings in the pips it's good IMO.

: ) Thom

Everyone is so obstinate with how they define mechanical. The problem with most mechanical based traders is that they don't understand what it really means. Mechanical trading is strict rule based trading, but that doesn't translate to set it and forget it. Although at times you may get away with this, its just not always good practice the way it is implied. Now set and forget meaning place your trades every day and go to the beach without even thinking twice, I just dont buy it unless you are just a true visionary, which is possible too - just not for me.

I personally have a system that is 50-50 with avg winners larger than average losers. On testing this system it didn't look worth the time to trade as the yield was not justifiable. Nevertheless I observed it and was able to determine based on non quantifiable, at least in a coding sort of way for someone of my ignorant coding ability, fundamental analysis, when in fact this system was more likely to succeed. These sort of discretionary views are what make any of my systems worth trading, and that comes only with the knowledge of all the intricacies of a system and how they are affected by external factors not coded in them - when are they strong when are they weak etc,etc..

People speak of systems that are robust and work across all markets. It does not exist without some kind of knowledge in those markets. You will never just hook up a system to the commodities market and make money with it long term if you don't understand it and tweak it and apply it when you should. I would imagine that most mechanical traders do in fact fail for this precise reason. Not that the system is really all that bad, just that they have worked a statistal system into an environment where its logic is no longer valid or probable.

That is why some lose money with the best systems designed, while others make money with only Moving Averages.

Just an opinion.

I never knew a female trader in my life.
The terms mechanical is quite broad. Tom DeMark is a mechanical trader too. He measures the charts with trendlines.

Very good topic! I've been trading a method that incorporates some fully objective rules, primarily the ones relating to money management and position sizing, and some semi-objective rules such as determining trend direction and position management which is a blend of objective rules and judgement. I've been evolving this method over the past several months and have been having good success with it. Maybe if I have some free time and the inclination I'll start a new thread to discuss it.

Bottom line... It's not the system but the trader...

It is 2007 - you need to get out more. Muriel Siebert was first women to have a seat on the NYSE back in the seventies. Many more since.

Tom DeMark does far more than trendlines and although you can say it is mechanical in a sense he doesn't use software to enter and exit his trades. He does suggest discretion within his parameters and that readers of his books find what inputs work for them. So it is a little of both really.