The future of automated trading: round two - page 4
You are missing trading opportunities:
- Free trading apps
- Over 8,000 signals for copying
- Economic news for exploring financial markets
Registration
Log in
You agree to website policy and terms of use
If you do not have an account, please register
+1. If you compare trading with driving a car, travelling to Mars, flying interplanetary galactic spaceships, Formula 1 racing and other delights of life - it's nice and romantic, but not quite correct))))
Not correct because you have to work with very little information about the environment.
Having information about what each market participant will do in the next moment, it is possible to calculate the evolution of the system.
Having statistics of how each market participant acted before, it is also possible to ~calculate how he will act now (so to speak the answer to the previous question).
But we do not have this information, everything is put into a common basket, from which nothing can be recovered.
That's why the only thing we can do is to make models of the whole system evolution, and here we can't speculate, because small movements can be caused by the activity of separate (albeit large) players, and just to predict them with the available information is impossible.
Hence the seeming randomness of quotes.
...
And as for the fact that large institutions will always beat small ones, it is not always true (although more often it is).
A big company can hire a man who has proven himself to be knowledgeable before.
That's why many people who don't have such knowledge most likely will be beaten by the company. But at the same time it does not mean that the single player, just as advanced in this area can not do a serious project. At least until they learned how to connect directly to the brains of scientists working in the same team directly, there is always the problem of misunderstanding between comrades.
That is why a single person who has in his head all the knowledge you need may compete with a team of developers.
While the analogy with driving a car is interesting, it doesn't seem quite accurate to me. The question arises as follows: what is "flying into a ditch"? If trading using tick data this is a loss of some points, say 5-10 points. When trading using daily data - a loss of 50-100 pips. Everything should be commensurate with the value of the average profit. Here is my analogy. The movement of planets can be calculated at a quantum level with an error in picometer, and you can calculate at macro level by Newton's laws, with an error of hundreds of kilometres (the same "flying into the ditch"). The question is - which method is more accurate? We can easily answer - the first one. But if you are interested in two planets moving in hours or days, why bother with the Schrödinger equations for each particle of the solar system, if you get an acceptable answer by the laws of classical mechanics? The error (flying into the ditch) must always be compared with the target, i.e. we must talk about the relative error. In our case, we have to compare this error with the target profit.
I tried to show, using a machine as an example, what's in this theory of optimum control that it is based on. These are fundamental principles, the object can be anything. If you know something more correct in terms of mathematics, I will be glad to know...
I will try to explain from the other side, the one Rosh mentioned, that the future will change and that funds have liquidity problems. You will have it too, I wish it sincerely. Your future is when every day you work and take money away from the market, your deposit is growing. And gradually you are getting up to liquidity. Liquidity is not an abstract thing, but quite concrete. When you enter with 30 lots and the brokerage company squats ..... And each time it gets worse and worse at executing your trade orders. And when you start to argue with them, you get the phrase in response: "the rate of growth of your deposit has exceeded all imaginable limits ... you were transferred to manual quoting ...".
Your Stop Loss value is 100-150 pips, multiply it by 50-100 lots. Look at this figure, many successful traders have experienced it, they broke down and had crashes (that's what Gerchik says, since he's been mentioned here). Just sit down and think, can you personally withstand a drawdown of several millions? It breaks, it breaks and not in a childish way, when you realise that the drawdown exceeds the amount you have earned in 25 years of valiant service...
Z.U. While you are enduring this drawdown, I will roll over and take those 100-150 pips, who will be the beneficiary ?
I agree with gpwr, Urain, LeoV.
But want to dabble/expand. The comparison with car management etc, is not not so much correct, but not correct at all. Optimal control cannot be applied. And here's why.
Imagine a technological process consisting in filling a tank of water. This is a direct analogy with process control in manufacturing. In production (or a spaceship, driving a fighter jet or a formula1), we have full information about the control object (physical characteristics of the object (trading environment), the historical behaviour of the object (quotation chart)). A control action is performed on the control object (close/open the gate valve) to fill the tank. If you have opened in time/in_the_right_direction/to_the_required_volume, the tank is filled. If you make a wrong decision, the liquid flows out of the container.
The same happens in the market. The difference is (hence the incorrect comparison of Prival) that it is not only us who are trying to control the object of control (in fact, the movement of cash flow in the right direction-pocket). There are an incredible number of them, these sliders. From huge multi-cubic yardsticks to small faucets. The operator of each gate has only information about how the control object has behaved before (well, the properties of the object itself), but has absolutely no idea what the other operators are going to do.
What if you roll over and the market turns around at that moment? Do you flip again? And it reverses again....)))
The whole complexity and ambiguity of this situation is that we are trading in the future and we only know the past, that is, we don't know for sure, 100% how the market will behave in the future. If we drive a car, or a spaceship, or a rocket, we know its speed, its behavior, we look ahead on the road after all and with this information we may analyze what will happen in the next moment or what it could be and we may make some actions or conclusions to avoid unpleasant situation. In Forex we cannot look ahead. Only backwards. We only see the past. There is NO way to look ahead !!! )))
....
The same thing happens in the market. The difference is (that is why Prival's comparison is incorrect) that it is not just us who are trying to control the object of control (essentially the movement of cash flow in the right direction - into our pockets). There are an incredible number of them, these sliders. From huge multi-cubic yardsticks to small faucets. The operator of each gate has only information about how the control object has behaved before (well, the properties of the object itself), but has absolutely no idea what the other operators are going to do.
OK, let me explain from the third side. There, in the theory of OU, mathematicians have shown that to achieve the maximum (minimum) of the target function. This may be, say, the maximum growth of your deposit in a year (a year is a time interval of control). You need to know the FUTURE.
Knowing the future movement of quotations within 6 digits you personally can build a profitable TS? Now out of all the many profitable TS which one is better? which one is controlled once per hour, or controlled constantly? which of these two systems will beat the other? which robot is better? more profitable ...
You want to drive in a car that is controlled once an hour, go ahead, I can't stop you. But remember there is a better, a priori better, it's the one who drives the car all the time ...
Prival: Лично ВЫ зная будущее движение котировок с точностью до 6-го знака сможете построить прибыльную ТС ? думаю да. Теперь из всего множества прибыльных ТС какая будет лучше ? та которая управляется 1 раз в час, или управляется постоянно ? какая из этих двух систем победит другую ? какой робот лучше ? прибыльнее …
What if you roll over and the market turns around at that moment?
There's no way to see the road ahead !!! )))
In short we are all different and it's good for the market.)
Let's have more traders, rich and different!
More different today than yesterday, and more different tomorrow than today!
The more we sell, the better! No, that's from another movie!)
There is one "but". We cannot know the future movement of quotes. Therefore the conclusion is wrong. One does not follow from the other. Precisely because we don't know future quotes, much less to the 6th digit. )))
Yeah, we don't know. But running once an hour is suicide. Well here's a picture, a one-minute chart, an example of my trade here https://www.mql5.com/ru/forum/115584/page11 in more detail.
If I had worked on ticks I would have rolled over and made profit on all 4 trades.
If you worked at that time on ticks, you wouldn't have been able to do it (you would have lost once an hour), you would have taken a loss of 100-150 pips and that's it. There are principles of management. You know all about them, but you somehow convince yourself (((() that these laws do not work in the market, remove your blinders. Okay, I'm a fool, listen to a lecture Gertschik, and if he talks about a stop loss of 100-150 points, throw a stone at me (he has a minimum, the minimum possible) ...