|
PureBytes Links
Trading Reference Links
|
> I hesitate to prolong this discussion but I hate to see some of these
opinions go unchallenged.
>
> I trading system is just a computer program. It does what the code tells
it to do. If the code handles every situation that will ever occur, then
perhaps you could turn it on and let it trade "untouched by human hands".
But would you like to be flying in an airliner running on autopilot without
a human pilot? I wouldn't. Why? Because something may happen that the
programmer of the autopilot didn't anticipate and I would rather trust the
human pilot to take control in such situations.
>
> A good autopilot flies more consistently than does a human pilot, doesn't
get tired, doesn't stop for lunch, doesn't talk with the cute flight
attendant, etc., so generally does a better job in "normal" situations. But
in an emergency, I want a human in the cockpit. I totally agree with Chuck
LeBeau who wrote:
I don't think a trading system is remotely similar to an autopilot or as
mentioned earlier a grammar checker. These are attempts at accuracy, and
given time (a century or two), they will probably do these jobs faultlessly.
The fact that they all use computers is a red herring. The laws of physics
won't change if the autopilot is too good, nor will grammar be affected by
the success such a programme. But markets will and do. Markets don't need to
be understood, nor does a system need to handle every situation that occurs.
It only needs to give you an over all positive expectation.
I have, I believe, an advantage trading from this side of the world, in
that I sleep through the trading hours. Midnight to 8.15am. I have no verbal
contact with brokers and I have no idea when any report is due. This suits
me fine. Once only have I been caught in limit move against me (back in the
80's sometime) in OJ. I think the limit moves lasted a few weeks. If I
recall correctly, my account still was profitable in these weeks so I wasn't
unduly concerned.
I think price shocks are less of a problem than those caused by faulty
assumptions when designing a system. Firstly by market specific trading
systems designed on recent data, as if you get to have another go at the
same data. The worst of these, incredibly trade only the one side of a
market. For example, a long only system in a market that has just had an
historic bull run. (I wonder if my long only silver system still works?)
Also the idea that past data is a sample of a larger population, ie "the
future", is a pretty questionable one. Lastly most traders are dangerously
undercapitalised. An intra-day price shock move looks a lot different if it
is one of many positions in an adequately funded account of a properly
designed system, compared to a day-trader with $10,000.
Andrew D.
|