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I will let Tom answer this too but I would like to also. Auto trading
takes the emotion out of trading. If you have nerves of steel,
believe your system implicitly and act immediately, you can manual
trade. I just can't do it. And you are not fast enough to catch the
price when the signal appears, if you are watching the screen ALL the
time. Then when you don't catch it right away what do you do? Wait
and miss the trade, right. The AT part makes the trade in a fraction
of a second after the signal. It has nerves of steel and no emotion.
Then there are too many times I think the market is going to do this
or that and I start second guessing the system. That is a killer. I
did not understand that until I had a long sting of awful trades,
quit trading and read Trading in the Zone but Mark Douglas, required
reading for the novice as is High Probability Trading by Marcel Link.
One point Douglas makes, and I can vouch for it, is that when you get
an idea about what the market will do it skews your thinking and you
will not see the parts of the chart that tell you to get out or not
trade. You only see what reinforces your belief system. I made a
really bad trade and reviewed it with my wife later. She is very good
at picking stocks, looked at the charts and said, "What the !@#$ did
you do that for??? Looking back after the emotion was gone I saw what
I did not see during the heat of the moment, all the other stuff that
screamed "Not here stupid!" Thinking you know what the market will do
often does more harm than good.
Your point about futures is true and part of the clue to using them.
When you are trading, small price moves make it hard for a system to
make money. People that try to trade a 1 minute chart have to have a
system that turns on a dime or the bid/ask slippage and commissions
will eat your lunch. Now if you use an hour chart the bars are larger
which makes it easier to catch a gain. Another reason is you can
trade with a lot less money. If you system is good enough to trade
stocks it is probably good enough for futures.
Don't get the idea that futures are more volatile than stocks. Look
at QQQQ and switch quickly to ER2, Russell 2000 e-mini. The charts
are almost identical and the % volatility is about the same. The
price range is very different. But you need a large price swing to
make money. The reason people use day or week charts is to get the
price range they need to make money. You can get that price variance
in a few hours with futures. So you can make the same money in a
shorter period of time using them, or lose a lot more if you system
isn't any good.
Writing an auto trading program is a LOT of trouble, is not easy and
you will need to dedicate a lot of time to write and test it and test
it and test it. What the market does in real time will surprise you
when comparing live trades to static charts or back test results
where you use ExRem to filter all the signals out and make the charts
all pretty. That doesn't work in the real world. You will get buy and
sell conditions you will never see and you have to anticipate and
manage them. To see what I mean watch a 1 minute chart when the
market is changing trends, where two MAs are very close and changing
many times a second.
And things don't happen immediately. When you place a order it takes
time to get a reply from TWS even when using MKT orders. They may not
even fill if the market is thin. Then it takes some more time for the
number of position to change, letting you know you really did trade
something. Your signal can send hundreds of orders during that time,
in only a few seconds, and you have to block them. When I was getting
started I let my system run, simulation account, and when I came back
an hour later it was long 300 futures contracts and was up 75,000.00.
Now why can't I make that mistake in my real account? But 300 futures
contracts? I can't afford that many.
I do sell a system that will trade one security. I use it with
futures but the auto trading part can be used with anything. Or as a
basis for your own work. Your system/indicators drive the AT part and
that has to work well or there is nothing the AT part can do to help.
Your system is the key ingredient and it has to be a good one, also
true with manual trading. The AT just places orders and manages the
status, does the trade blocking, allows you to set profit and loss
stops and talks to you when a trade is made or status is returned. It
can also send email if you are away from your system. Tom uses his
that way. The program is about 13 to 20 pages long depending on the
level of function and the indicator part is about 1.5 pages. Not the
one or two page example you see on the User's KB. Be ready to spend
the time to develop something that is fairly comprehensive or it will
not work well and you will get disgusted with it. It is a lot of work.
Learning to use it is the easy part. Once you get it working you can
start it and just watch it make money, or not. Mine was up $1800 the
other day using 1 futures contract, more than 200% gain, in a day.
Sadly it doesn't do that all the time. But you can make money using
AB.
Barry
--- In amibroker@xxxxxxxxxxxxxxx, "Louis P." <rockprog80@xxx> wrote:
>
> Hi professor,
>
> Is there a particular reason why you chose futures over stocks?
>
> And why do you use IB automatic trading if trading delay is not a
problem?
> It seemed to me that the more volatile a market is, the faster one
must
> buy/sell.
>
> I'm still thinking about trying IB automatic trading, but it just
seems like
> a hell lot of trouble to learn how to use it. Was it easy for you?
>
> BTW, you said Barry helped you to write the code. This must
help! ;-)
>
> Louis
>
>
>
> 2008/7/31 <professor@xxx>
>
> > 
> > Louis,
> >
> > Since I only make trades 3 specific times a day, I don't worry
about the
> > trade delay. I do use IB automatic trading. I have just finished
testing it.
> > I would watch my auto trade and then trade it manually. Now I am
switching
> > to auto trading completely. I had Barry write the trading program
for me. It
> > seems to work great. However, my trading part may have a problem
which
> > prevents a trade occasionally, but it doesn't prevent my trading
from being
> > very profitable. I only trade gold futures which as you know as
very
> > volitable.
> >
> > Tom
> >
> > ----- Original Message -----
> > *From:* Louis P. <rockprog80@xxx>
> > *To:* amibroker@xxxxxxxxxxxxxxx
> > *Sent:* Thursday, July 31, 2008 9:48 AM
> > *Subject:* Re: [amibroker] Re: Anyone actually making money?
> >
> > To Tom: Do you use IB automatic trading? Is it possible to test
such
> > feature? I find that intraday trade delay is a major reason why
I don't
> > make any money. If I was faster I could do better.
> >
> > Thanks,
> >
> > Louis
> >
> > 2008/7/31 <professor@xxx>
> >
> >> > Is it not obvious to you that some people�s personality
calls for a
> >> trading system, while others personality calls for a
discretionary
> >> approach.
> >>
> >> I think that is the best thing that I've read on this thread!
> >>
> >> I agree. I have found that I am too emotional to try day trading
because I
> >> make emotional decisions. That is why I developed an EOD program
to trade.
> >> When that was very profitable, I had my EOD program converted
to a real
> >> time program and auto trade. I use a dat/night chart and only
trade 3 times
> >> a day. Now I just watch to make sure the auto trade is working
correctly.
> >>
> >> Tom
> >>
> >> ----- Original Message -----
> >> *From:* tuzo_wilson <j.tuzo.wilson@xxx>
> >> *To:* amibroker@xxxxxxxxxxxxxxx
> >> *Sent:* Thursday, July 31, 2008 7:31 AM
> >> *Subject:* SV: [amibroker] Re: Anyone actually making money?
> >>
> >> --- In amibroker@xxxxxxxxxxxxxxx, "Jan Malmberg" <jan@> wrote:
> >>
> >> > Is it not obvious to you that some people�s personality
calls for a
> >> trading system, while others personality calls for a
discretionary
> >> approach.
> >>
> >> I think that is the best thing that I've read on this thread!
> >>
> >> Tuzo
> >>
> >>
> >
> >
>
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