Manual trading vs Automated trading - an open discussion
1. What about fundamental Analysis? Is this important? So far I have not found a need. As anyone done something with this and had success?
I do find fundamentals useful if you want to invest and not to trade.
Of course by fundamentals i mean Macro Analysis and not solely reading the economic calendar data which is the least responsibility of a trader.
2. Is there a "Magic Indicator" or group of indicators that will have lots of trades with low drawdown? I usually can get only one or another.
Magic indicators exist for instruments separately and there seems to be no magic indicators for some of the instruments.
3. Is AI going to solve this problem? I first thought so but my recent experience has me questioning if this is so.
Nothing solves the problem. We (as traders and not investors) are all on a statistical edge that may break at any moment.
4. What about multiple accounts, multiply brokers, multiple symbols. I am considering some serious diversification. All it takes is one software bug to wipe out your account. Again a recent experience. Has anyone seen positive results using 10 or more trading accounts?
Software bugs could happen with manual trading also... I believe a reliable bot is less risky(from bug point of view) than manual trading.
What are your favorite methods for manual day-trading and Automated software(EA) Trading?
In automated trading: I prefer systems with high reward ratio and low win rate.
In manual trading: I prefer starting with my preferred automated trading and TP manually based on market conditions.
1. Price action ( candle analysis looking at the "types" of candles) : Price action I use for verification of chart patterns e.g. a triangle pattern breaking out with a custom marubozu (where upper wick is always lesser than lower wick and body ratio comparing to wick is greater than wick ratio ). i also use it for verification when a level comes to retest a s/r after breakout e.g. a support turned into resistance, where after breakout of a support, price comes back to support level and resist from there with any candle patterns, e.g. bearish engulf then its additional confirmation possible only due to price action study.
2. indicators can be read from a chart, such as Moving Average indicators ( 5, 13, 50, 200 and 800 samples) - I avoid using any indicator including MA, however they work for trend analysis only but any strategy based on them is harmful.
3. Fundamental Analysis - Taking indications from the news to consider movements in the market - I avoid 100% however if i dont watch any news and my positions are opened i have to be careful, so i just expect that my position are not opened when there is a news because news can fail any strongest technical analysis too.
4. Money Management - properly setting lot size, stoploss and take profit based historical chart. - When i trade with high leverage, eg. 70x of account, then its not possible to do RM and MM, i take full risk 100% of account in such case, but cap is always small e.g. $100, but when account is $10k+, its not possible to trade a single time without using MM and RM risking max 1% to 1.5% of cap in one trade.
5. Emotion plays a big part in the decision making to enter or exit a trade. - Yes, Despite my high accuracy setup, which is backtested on thousands of swings of same instrument, I make mistake sometime due to emotion, and this is unstoppable. I just want to make sure that when i make such emotion based mistakes, i dont lose more than 2% of my capital. then any human error is acceptable. I know that since my method is mechanical, I manually do analysis of swings and candlesticks so I accept that i will make error 25% time, so i prepare for it before initiating a trade. But with experience human errors due to emotions can be reduced and may be within 10% but they can never be 100% eradicated.
In automated trading, programming an Expert Advisor you will generally using the following.
1. Price action is not real.... yu use live price data ( ie: per tick) : Any candle which is closed is studied for price action, Any open candle has no meaning in my knowledge and must not be used for analysis.
2. Indicators are the best form of making a decision for software. But I notice it does not read the charts the same as a human would. - I have seen many skilled developer who even coded me the complex task which i thought would never be possible, Inspiring from them I learnt coding in mql5 and its proud to say my system is 100% coded with complex things which i expected to be coded and its helping me 75% in mechanical analysis. So i commit it may read same chart as human could if a programmer is very knowledgable. Even psychology can be coded in mql5.
3. Fundamental Analysis - I have not implemented any kind of fundamental Analysis. Should I ? - I stay away from it as i am a day trader, but its a subject of study for investors who do not watch less than daily chart.
4. Money Management - The software I develop always has well designed money management methods - I can get the stoploss, take profit, calculate account size and risk very easily. - 100% It the heart of any system, without MM, strategy is baseless.
6. Software is a cold, calculating, no emotion machine. I get very emotional when I describe this heartless beast. - True, Software helps reducing emotion
Questions I am thinking about
1. What about fundamental Analysis? Is this important? So far I have not found a need. As anyone done something with this and had success? : It is important only if you are an investor and not a trader.
2. Is there a "Magic Indicator" or group of indicators that will have lots of trades with low drawdown? I usually can get only one or another. - If you seek any indicator which is developed by someone else, all your question are baseless. I expect the questions you ask are valid for a research analysts, not an explorer.
3. Is AI going to solve this problem? I first thought so but my recent experience has me questioning if this is so. - Maybe.
4. What about multiple accounts, multiply brokers, multiple symbols. I am considering some serious diversification. All it takes is one software bug to wipe out your account. Again a recent experience. Has anyone seen positive results using 10 or more trading accounts? - Yes, Choosing a good broker is always advisable otherwise even if there is a correct system is used in trading, a trader will always result in loss only, due to broker malpractice.
What are your favorite methods for manual day-trading and Automated software(EA) Trading? - Manual only.
There already are a few threads about this subject on mql5, you should search for it prior. But shortly :
1. Implementing fundamental analysis isn't essential but can be an added value depending on the strategy.
2. By law DD I guess you mean relatively to the profit, otherwise it has no relevance. Depends on the indicators and their use, which can be all or nothing.
3. A part of machine learning algorithms can already be considered AI, but it's a 0 sum game, you only win if you are better than the others.
4. Using multiple accounts, brokers has no point, doesn't offer any additional diversification except maybe if you consider slippages.
I personally feel better trading manually since my broker, <removed>, provides some of the best trading conditions, and using an EA is a bit expensive.
If you are a beginner, I suggest trading manually to understand forex trading before investing in an EA to do your trades.
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I am doing research on the methods used to trade and I thought I would open the discussion to all. Please provide me your thoughts if you like.
In day trading using manual method, you will likely use the following methods.
1. Price action ( candle analysis looking at the "types" of candles)
2. indicators can be read from a chart, such as Moving Average indicators ( 5, 13, 50, 200 and 800 samples)
3. Fundamental Analysis - Taking indications from the news to consider movements in the market
4. Money Management - properly setting lot size, stoploss and take profit based historical chart.
5. Emotion plays a big part in the decision making to enter or exit a trade.
In automated trading, programming an Expert Advisor you will generally using the following.
1. Price action is not real.... yu use live price data ( ie: per tick)
2. Indicators are the best form of making a decision for software. But I notice it does not read the charts the same as a human would.
3. Fundamental Analysis - I have not implemented any kind of fundamental Analysis. Should I ?
4. Money Management - The software I develop always has well designed money management methods - I can get the stoploss, take profit, calculate account size and risk very easily.
6. Software is a cold, calculating, no emotion machine. I get very emotional when I describe this heartless beast.
I think building software to do trading is a wiser use of my time than looking at a chart and attempting to trade throughout the night ( 10pm to 9am for me).
But the software is not always getting it right. For some reason the market is just too volatile for simple methods such as moving average, MACD, and RSI. You need to build software for alternative entry and exit conditions. It can get quite complicated and to the point where no trades happen at all. (Today I tuned one trading sequency that resulted in absolutely no losses, with zero trades of course. So the adventure continues....
Questions I am thinking about
1. What about fundamental Analysis? Is this important? So far I have not found a need. As anyone done something with this and had success?
2. Is there a "Magic Indicator" or group of indicators that will have lots of trades with low drawdown? I usually can get only one or another.
3. Is AI going to solve this problem? I first thought so but my recent experience has me questioning if this is so.
4. What about multiple accounts, multiply brokers, multiple symbols. I am considering some serious diversification. All it takes is one software bug to wipe out your account. Again a recent experience. Has anyone seen positive results using 10 or more trading accounts?
What are your thought?
What are your favorite methods for manual day-trading and Automated software(EA) Trading?
Christopher Pinter