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Manual Trading vs Automatic Trading - Suggestions?

  • #21
  • Jan 9, 2014 4:11am Jan 9, 2014 4:11am
Hi Folks (1st post)

I am new to spot FX, but I traded futures extensively in the 1990s and for a time held a Series 3 license.

You have to be able to 'read' the market from just a bar or candle chart to have any hope of sustained profit. Why? Because the market is a non-stationary function. Not only do prices change, but the rules of the market itself change from time to time. That means that your RSI set to 14 bars may work great while the market is temporarily behaving like a 14-bar RSI expects. But as soon as the market abruptly shifts to another behavior model, you lose. Systems that cannot self-adapt will almost always lose. Unless you have access to the highly complex systems like financial institutions use, your attempts to make money from primitive moving averages and oscillators will likely end up badly. Been there, done that. You are fighting a war with sticks and stones.

Indicators are very valuable to provide context information that helps in your decisions, but you cannot ever rely on just indicators. You have to see what the market is actually doing regarding its interaction with support and resistance levels. The market will tell you what is up if you listen.

I recommend that newbies watch the market, on 1 min & 5 min bar charts, for a few hours per day for several months. Watch the indicators you intend to use, and observe how they behave when normal things happen and when strange things happen. Then apply those lessons to tiny real trades (0.01 lots). You have to learn to recognize patterns and read intentions from how the market moves, and there is no way that can happen IN REAL TIME without experience.

Good luck!
  • #22
  • Jan 9, 2014 9:17am Jan 9, 2014 9:17am
Algo and HFT definitely rule, but you gotta keep an eye on the system...... summing up all logic into a code is a great idea if it were even reality.
  • #23
  • Jan 9, 2014 9:26am Jan 9, 2014 9:26am
why you gotta keep an eye if it definitely rule? not quite logical

you keep an eye everyday? or 100 eye everyday? did you count?

Quoting Danny Maina
Algo and HFT definitely rule, but you gotta keep an eye on the system...... summing up all logic into a code is a great idea if it were even reality.
  • #24
  • Jan 10, 2014 12:40am Jan 10, 2014 12:40am
Quoting charvo
why you gotta keep an eye if it definitely rule? not quite logical you keep an eye everyday? or 100 eye everyday? did you count? {quote}
100 eye?? Now I have heard everything, I guess anything walking about with 100 eye belongs in the Simpsons movie or an alternate version of our universe. I wonder if 100 eye equals 100 arms and legs as well?

Moving on, keepin' a close watch on the markets - good idea and yes, the market is evolving and anyone who thinks it doesn't, needs to rethink their strategy. As for predicting the market accurately, no one's managed to do it yet to the nearest pip but the quest is still on. All said, manual trading is the only way to effectively trade in an evolving market..and that's why most EAs fail after a few months.
  • #25
  • Jan 10, 2014 6:56am Jan 10, 2014 6:56am
Quoting charvo
why you gotta keep an eye if it definitely rule? not quite logical you keep an eye everyday? or 100 eye everyday? did you count? {quote}
Because there is no bug free code,
  • #26
  • Jan 10, 2014 7:10am Jan 10, 2014 7:10am
Code can only be as good as the programmer itself
  • #27
  • Jan 10, 2014 8:27am Jan 10, 2014 8:27am
indeed, over years, i found for myself, a retail trader, the tons of efforts/time/energy spent on coding/debuging/eyeing EAs are very wasted compared to those on market itself

many times, EA traders think they are trading, not really, they are dealing with EAs instead of markets.

Quoting Forexnuts
{quote}. As for predicting the market accurately, no one's managed to do it yet to the nearest pip but the quest is still on. All said, manual trading is the only way to effectively trade in an evolving market..and that's why most EAs fail after a few months.
  • #28
  • Jan 10, 2014 8:28am Jan 10, 2014 8:28am
that's why i realise that one has to be manually profitable before considering an EA.

Quoting olympus999
Code can only be as good as the programmer itself
  • #29
  • Jan 10, 2014 11:53am Jan 10, 2014 11:53am
Good day everyone! My apology if I came to join this thread. Just a rookie question

Just new here in Forex Factory, still don't know how to start a thread. Hope you could guide me in here.

Need help... Is there anyone here have an idea where can I search for the financial events/news since 2008?
Thank you everyone! Have a nice weekend!
  • #30
  • Jan 10, 2014 8:17pm Jan 10, 2014 8:17pm
Quoting charvo
indeed, over years, i found for myself, a retail trader, the tons of efforts/time/energy spent on coding/debuging/eyeing EAs are very wasted compared to those on market itself many times, EA traders think they are trading, not really, they are dealing with EAs instead of markets. {quote}
LOL I know..used a few EA's when I was a newbie and yeah, blew my accounts all the way to hell. I guess its all part of the learning process, bottom line when a market is evolving, no single strategy will deliver results constantly. So opt for manual trading..
This is why most EAs require software tweaks every couple of weeks..
  • #31
  • Jan 11, 2014 8:36am Jan 11, 2014 8:36am
Quoting Forexnuts
used a few EA's when I was a newbie and yeah, blew my accounts all the way to hell.
Then it looks like you used the wrong EAs and you had no understanding of money management. It always amazes how many people blow accounts. Unless there is some crazy technical issue, blowing an account should be nearly impossible for traders with even an ounce of risk management understanding.

Quoting Forexnuts
I guess its all part of the learning process, bottom line when a market is evolving, no single strategy will deliver results constantly. So opt for manual trading.. This is why most EAs require software tweaks every couple of weeks
Please explain how the "market is evolving". I read this type of thing every day...how the market is constantly changing, but no one explains how it is changing. No one dares to define the different types of markets and how to identify when they change.

Some EAs have identified what the market consistently does and do not "require tweaks every couple of weeks". And they certainly can "deliver results constantly".

Automated forex trading is perfectly viable if you know what you are doing.
  • #32
  • Jan 11, 2014 9:30am Jan 11, 2014 9:30am
Quoting zznbrm
{quote} Please explain how the "market is evolving". I read this type of thing every day...how the market is constantly changing, but no one explains how it is changing. No one dares to define the different types of markets and how to identify when they change.
Ok. Are you familiar with GARCH? If not, check into it and you will see what I mean.

The market consists of prices which change, but these changes are affected by an autoregressive memory process. That means that the past has an impact on the present and on the future. But here is where it gets tricky. The specific correlation between the past and the present is, itself, changing over time. That means that the equation of the market moves around according to its own dynamics. This is called a non-stationary process, one where the parameters of the equation are moving too; and this results in very complex, pseudo-periodic behavior.

This is how the market is constantly evolving, and yet it is always the same.

The end result of this is that any system which is tuned to any specific periodicities will ultimately fail unless it is Autoadaptive. Such systems do exist, so I am not arguing with you on that. But most folks using moving averages don't have a prayer in the long term. Right?

My preference for manual trading is because I feel traders are better served possessing a more robust skill rather than a technology that might continue working years into the future. One can rely upon knowing the 'lay of the land' when technology fails. I believe the best choice is to learn to trade manually, to read the market, and then to add all the advanced technology you can find which helps in those decisions. If some decisions can be automated, that's fine too. But I think that there needs to be a fair degree of manual supervision and direction on all of this.

Just my preference. You do things entirely how you prefer, and I do hope you have great success in your trades.
  • #33
  • Jan 11, 2014 10:11am Jan 11, 2014 10:11am
Manual or automated both can work and both can fail, so ultimately it's up to the trader.

For me at present it's a lot of automation and a little manual. In the future I would like to balance both approaches, but that may take some time as it demands from me a better understanding of the markets than the one I currently possess.
"To hold, you must first open your hand. Let go." - Lao Tzu
  • #34
  • Jan 11, 2014 10:15am Jan 11, 2014 10:15am
zz, you are doing great!

but you are an excellent programmer, you had resources to develop your 'edge' - i believe it is a fundamental one -- as natural as market itself, and you understand trading.

so it is 'perfectly viable'

but usually, it is very hard to find one capable of merely one of three things above. in real life, the resources and skill to develop the robot are extremely demanding(hence only wall st can). hence, manual trading is the more direct route, for average joe. Having been profitable? then we can automate as many components as possible of the trading process.

Quoting zznbrm
{quote}Automated forex trading is perfectly viable if you know what you are doing.
  • #35
  • Jan 15, 2014 7:51am Jan 15, 2014 7:51am
Quoting zznbrm
{quote} Then it looks like you used the wrong EAs and you had no understanding of money management. It always amazes how many people blow accounts. Unless there is some crazy technical issue, blowing an account should be nearly impossible for traders with even an ounce of risk management understanding. {quote} Please explain how the "market is evolving". I read this type of thing every day...how the market is constantly changing, but no one explains how it is changing. No one dares to define the different types of markets and how to identify when...
That's funny, LOL. I make more $$$$ now, thanks to manual trading than I could ever hope to do with a working EA. I guess I am all in for manual and as for EAs, "no thanks, we are all loaded up, so go sell crazy elsewhere" would be by answer to any EA sales pitch..
  • #36
  • Jan 26, 2014 11:26am Jan 26, 2014 11:26am
After trying many EAs and consistently losing, I have finally turned the corner with simple price action and consolidation areas at S/R levels. I still use a script to place orders and position sizing and an EA for trade management but the decision to trade is now all manual. I believe that the most critical part of trading is to match a strategy to the market condition, an area where manual trading can outperform an automated system.
The trader IS the holy grail.
  • #37
  • Feb 25, 2014 3:11pm Feb 25, 2014 3:11pm
There is no EA that can work over time with out monitoring.
Like airplanes, they can be fully fly automated for all phazes of the flight but still a crew of at least 3 humans must be there to take care of extreme situation.

Now Imaging your automatic trader goes into extreme situation, while you are not around?

Bottom line, EA is risk unless you work for it. and if you work for it, why not work for better reward with self trading?
  • #38
  • Mar 4, 2014 2:21am Mar 4, 2014 2:21am
I think, there are no programs that are smarter of your brain, so only manual trading. I became a profit trader only with the help of my brain and technical analyzing and i hadn't used robots.
  • #39
  • Mar 6, 2014 8:42am Mar 6, 2014 8:42am
Quoting MichaelSmith
I think, there are no programs that are smarter of your brain, so only manual trading. I became a profit trader only with the help of my brain and technical analyzing and i hadn't used robots.
But robots can make you trading more profitable, isn't it?
  • #40
  • Mar 6, 2014 9:13am Mar 6, 2014 9:13am
absolutely no basis

why do you have such a concept?

i can tell you one thing, robots can trade faster than human beings, and that's it.

but being faster, doesn't mean more profitable.

on the other hand, wall st robots are very profitable, much more than you and me manual trading.

however, it comes with incredibly huge cost/resources. for a random example, to run 1 robot, a fund need to hire 2 ivy league graduates and build a trading channel/link. that alone may be half a million per year to run the robot...... go figure

do we have such resources? we 99.9999% don't!

so we'd better go manual. manual way is for average joe, normal retail traders.

if you are a genius programmer with tons of resources, then forget my crap.

Quoting aneah
{quote} But robots can make you trading more profitable, isn't it?
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