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Home >> Stock Forums >> Automated Trading: click to get rich?

Automated Trading: click to get rich?

squarepusher said: "so, the newer programs like MetaTrader 4 actually run in scripting or programming languages. They also have the features, to be configured to run 'automated' bots or programs that pretty much do the work for you, based on the programmers desires. Check out what this one guy did with his program: [IMG]http://forum.mql4.com/c/codebase/2007/04/mt4report.jpg[/IMG] cool eh? expert advisers is the name for these automated programs, sign me up!"

newinvestor123 said: "So he made $10 billion with an automated trading program? I'll believe it when I see it..."

AlfredSokol said: "One big problem: there is no programming logic that can make winning trades."

squarepusher said: "well, actually that test data in the picture was shown on 'test servers' under test tube conditions, so in a real sever it would not be the same. Also, for those programs, there are several available now, and their track records is not perfect, but lots of them do seem to show overall performance above 50/50. The theory is if i human can do it, a machine can be programmed to do it. These things run off purely mathematical theories, they dont take into effect 'news' such as hurricanes, wars, or things like that. But, I am going to beta test some of these, on demo accounts of course, and see how I do ^^"

lil dickie said: "Can't hurt to test it. But I always think: if the program really worked...why would they sell it instead of use it to get rich? But I am cynical that way."

Pb3190 said: "When I see a lot of people getting laid off from GS and other big companies because they are being replaced by computers, then I'll give automated trading some thought. I too think that if someone had a working system for it, they would use it, not sell it. Winning methods won't work forever, so you would also need to be able to adapt your program when the time came. Or make so much money that you can retire!"

newinvestor123 said: "Corey has some experience with a trading program that he wrote - And it shows some real potential when backtested using historical information. I really don't think it would be that hard to create a program which could consistently make money, but to create one which will accurately take into account the news and related volatility is still a ways off. One day, I'll probably try to write my own program - But I wouldn't expect it to operate completely autonomously. It would require me to sit in front of it and monitor its progress, I'm sure, which would be fine with me..."

Pb3190 said: "I think it would be possible to use a program to find some long term holdings, but for day to day trading, not yet."

AlfredSokol said: "This is everyone's dream and this is why there are so many "long sales page" websites that offer this type of thing. [I]Put a program on autopilot and count the millions as they roll in.[/I]"

squarepusher said: "[URL="http://forum.mql4.com/"]Automated Trading Championship 2007[/URL] the 2006 had a $40k prize, this year its $70k. The fact is, most of the largest banks have computer systems that control their trading in some way or another, and they hire the most expensive Ph.D's, ext to consult. I think its possible if some nice programmer in Russia came up with something, it could be consistent. Also, there are some consistent programs out there, but they end up giving ~ 5-10% return a month, so you would be better off in the market or something else. But accuracy is improving all the time, so I expect to see something soon ... but for now, I have tried a bunch of them on practice accounts, and none are consistent, and most end up burning through demo accounts rather quickly. .. hopefully something can come and we can get in on it while its new =] im going to beta test some more later, but for now its wall street ."

AlfredSokol said: "Sure, companies with billions in assets to manage handle some of their trading semi-automatically. Makes sense. But for an individual buyer to use a program to acquire wealth wouldn't be as likely. That said: there is no harm in investigating, especially if they have free trials. You might hit the one that actually works."

Pb3190 said: "And if you do fine one that works, feel free to let us know! I would be interested in a program based only on technical and chart indicators. I think that method would work for short term trades better than a fundamental approach."

squarepusher said: "[QUOTE=Pb3190]And if you do fine one that works, feel free to let us know! I would be interested in a program based only on technical and chart indicators. I think that method would work for short term trades better than a fundamental approach.[/QUOTE] all of these 'programs' or EA (Expert Advisors) as they call em, run in MetaTrader platform [url]http://www.metaquotes.net/metatrader/[/url] you can download programs, and run them on demo accounts, so you can get a picture of how they work, also you can 'test' them quickly on like 3 years data if you want. if anything, a mix of EA's and human management may be an interesting strategy to go. I'm waiting to see the results of the 2007 Championships =]"

Pb3190 said: "I'll have to download that and demo it a little bit over the upcoming weekend. It sounds like an interesting idea, but I still think human trading will stick around for a while."

AlfredSokol said: "If you give the machines too much power they'll plot to get rid of US next :)"

sjerar said: "[QUOTE=AlfredSokol]Sure, companies with billions in assets to manage handle some of their trading semi-automatically. Makes sense. But for an individual buyer to use a program to acquire wealth wouldn't be as likely. That said: there is no harm in investigating, especially if they have free trials. You might hit the one that actually works.[/QUOTE] Sure there are several to test for free. I'm using them for years already on real money accounts, but still test several to find better and better. The ones I'm using now have 90% accuracy."

Pb3190 said: "If you don't mind my asking, what kind of annual percentage gains are you making with that system? If I was 90% sure picking a winning stock every time, I'd be trading most of what I had on it."

sjerar said: "[QUOTE=Pb3190]If you don't mind my asking, what kind of annual percentage gains are you making with that system? If I was 90% sure picking a winning stock every time, I'd be trading most of what I had on it.[/QUOTE] Some EA's make me consistent 10% a month. A part of the profit always goes to the programmer."

Pb3190 said: "10 percent a month would be an excellent return, If my funds end up that high on the year I'll be happy with it."

AlfredSokol said: "You have a lot more trust in a computer program than I do to actually use on to trade real money"

squarepusher said: "[QUOTE=sjerar]Some EA's make me consistent 10% a month. A part of the profit always goes to the programmer.[/QUOTE] can you upload some of your top performing EA's? i will check some of em out if you dont mind."

Pb3190 said: "I too would like to check them out, those kind of returns without all the research and time would be neat. Of course, that would make for a lot more free time on weekdays not watching the computer so much."

lil dickie said: "You still have to learn how to run the thing though. That takes time too :)"

Pb3190 said: "If the program could really make those kind of returns, I wouldn't mind spending a lot of time learning about how to use it."

squarepusher said: "[QUOTE=sjerar]Some EA's make me consistent 10% a month. A part of the profit always goes to the programmer.[/QUOTE] bump for SJERAR to share app for testing"

Heather said: "I think that its best to oversee what's going in and out. Computer glitches could make for a real headache."

Herry said: "[QUOTE=lil dickie;53108]Can't hurt to test it. But I always think: if the program really worked...why would they sell it instead of use it to get rich? But I am cynical that way.[/QUOTE] Logically true, if the program works well it will not for sale"

Corey said: "Just to clarify -- my experience is with Automated INVESTING platforms, which are much, much easier. I basically used Occam's razor to identify some key features about a certain universe of stocks, and created a screening mechanism. It does NOT, however, identify which stocks, and how much to buy of each, for an [B]optimally[/B] balanced portfolio (which requires fairly complex mathematics and what a lot of quantitative finance papers are about). Automated TRADING is typically the holy grail -- there is a lot of money to be made on leveraged e-minis and forex. Unfortunately, the speed at which these trades occur make them quite risky. But there are a few funds that utilize automated trading -- most notably Renaissance Technologies. In fact, I just got an e-mail from an analyst at a high-frequency quantitative firm. They exist -- they just are typically quite secretive and constantly changing strategies. They typically take advantage of short-term arbitrage situations. Though...these funds can only exist in a non-efficient market...so whether it is luck or skill depends on your outlook. But Renaissance Technologies' track record speaks for itself as far as luck versus skill... A lot of guys on this board use 'automated investing' more than they think -- they have automatic stop losses and requirements before they invest in a stock. They are screening processes, and could easily be automated. However, once you get into high-frequency, arbitrage and optimum portfolio situations, you start talking econometrics, stochastic calculus, martingale theory, and a whole lot of derivatives -- which is above most people trying to create 'automated investing strategies' using NinjaTrader or whatever those other horrible automated platforms are."

lil dickie said: "So all the trades are done without human intervention?"

Corey said: "Yes, especially for high-frequency funds, where the inefficiencies they are examining would disappear by the time human intervention appeared. High-frequency funds worry about processor speed, and most of all, bandwidth speed. When your biggest overhead is a 200ms transaction time for internet connectivity ... human intervention is just wayyyy too slow."

sjerar said: "[QUOTE=Herry;60831]Logically true, if the program works well it will not for sale[/QUOTE] Indeed the most profitable programs are nor for sale. The programmers always ask a part of the profit as long as you use it."

lil dickie said: "I can see them doing that. I can understand why they might sell a program if they got lifetime commissions. Then selling a million copies of the program would increase their capitalization for trading."

sjerar said: "[QUOTE=lil dickie;60942]I can see them doing that. I can understand why they might sell a program if they got lifetime commissions. Then selling a million copies of the program would increase their capitalization for trading.[/QUOTE] I think it's easier and more profitable to have their program running an a few hundred accounts then selling a million copies."

maxorelaxo said: "In my experience system trading can be very valuable, especially for a market as deep and liquid as the forex market. To say it can totally replace the human trader is naive - systems do that which the human cannot, and humans do that which the systems cannot. The difference is between technical trading and psychological trading. A system cannot produce the intuition that allows for "taking the pulse" of the market, and placing big directional bets based on events, shocks, etc... a well seasoned trader can. A human cannot accurately and consistently profit by perfect pattern recognition and exploitation of minor inefficiencies... a good system can. You still have to be careful which systems you choose to use however, you have to do your due diligence. I use a system called Avonko, which I would feel comfortable recommending to a newbie. I backtest extensively and demo test religiously before going live with any EA (expert advisor system), and I recommend everyone else do the same. I'm constantly looking for more good EAs as well, and if I find any valuable free ones I will be sure to post them here. Regards MAX"

Raindrop said: "[QUOTE=Corey;60853]which is above most people trying to create 'automated investing strategies' using NinjaTrader or whatever those other horrible automated platforms are.[/QUOTE] Hey Corey you have referred to Ninja Trader as a horrible platform. Can you please elaborate on your experience or opinion regarding this platform? Thanks."