Automated trading...times have changed!

[MichaelAtlanta]

Hello guys!

I love all of the great information you all provide. I happened across the following article on the Internet. Although it is primarily about stock trading, the exact same can be said of Forex. Very interesting and informative:

Computer trading models crash from favor | Reuters

 

[Pharaoh]

Interesting.

I seem to recall that forex bots had a similar shakeout when the great Euro bull run ended in 2008. A lot of them were simple trend followers that bought EURUSD on dips. A lot of the metal trading robots also decided that only going long on gold was a smart strategy, until a gold correction triggered a margin call.

With the current unpredictability of markets, I won't say EAs and other forms of automated trading are worthless, but I will say that any that rely on a single trend following strategy and don't use hard stops are begging for a wipeout.

 

[ladytrader]

With the current unpredictability of markets, I won't say EAs and other forms of automated trading are worthless, but I will say that any that rely on a single trend following strategy and don't use hard stops are begging for a wipeout.

Yep, completely agree. Relying solely in automatic trading is suicide.

 

[TadS]

That is a very interesting article. However, I really do believe that automated trading has a place in any diversified trading system. There are ways to make sure that it isn't following a long or short bias and can work in a variety of market conditions. While these programs can still be very risky, with proper money and risk management principles they can be made into viable trading programs.

Still, a lot of time must be spent building an automated trading program and making sure you understand its pitfalls and limitations before investing any non-negligible amount of money.

 

[Rambo35]

That is a very interesting article. However, I really do believe that automated trading has a place in any diversified trading system. There are ways to make sure that it isn't following a long or short bias and can work in a variety of market conditions. While these programs can still be very risky, with proper money and risk management principles they can be made into viable trading programs.

Still, a lot of time must be spent building an automated trading program and making sure you understand its pitfalls and limitations before investing any non-negligible amount of money.

It boils down to the individual. I do not like automated trading which is why I do manual trading.

 

[elisab]

I agree with the article. The problem is that almost all the algorithms are based on historical correlations that have failed, for example gold and dollar, or bonds and shares.

 

[kamuta]

Yep, completely agree. Relying solely in automatic trading is suicide.

Market trading is just a game and not a most hard game... You must remember that programm already win human in chess game... The only thing needed for good algorithm is error-free trading/playing - this way I hope to build soon algorithm for most complex (as for me) game: poker...

 

[DitterPD]

Market trading is just a game and not a most hard game... You must remember that programm already win human in chess game... The only thing needed for good algorithm is error-free trading/playing - this way I hope to build soon algorithm for most complex (as for me) game: poker...

Good luck with that. Yes, there are poker bots for low stakes and you probably can make somewhat good robot for scalping small amount of pips, but there is a long way to go (if ever) to make an automated robot trader, who will beat the market. I just can't imagine such robot without constant human monitoring..

 

[johndz]

I read in the last yeras about automatic exchange and bots, but I think is risky, those who sells the bots say that is secure, but they say it for sell the software, I guess.
Its would be nice a perfect software that make the work and avoid loses.

 

[Jussar]

Very helpful article, probably the best thing about automated trading is the possibility to trade without any emotions that can associate with the manual trading.