Why don't most traders believe in EA?

Beginner Questions
1

Most traders that I see on the net have very negative opinion about EA.

We know that trading system is systematic and even babypips says that we must be cold heart machine in trading…

So… this is the place for automatic program to handle the thing…

Nowadays we can make EA as we like even though it complex ( although it takes time and money to make it ).

There are some situations where we use discretion but those should be exception… compared with what we will get if we use EA ( the precise and discipline trading through it )… its not much of sacrifice.

So my point is … peoples say trading should be done in mechanical ways but they don’t believe in EA so they contradict themselves…

Or what they really mean is they can’t find the EA that they want or have no idea on how to get EA that work according to their trading systems ?

Sorry for the English…

2

When we say you should trade mechanically we mean you should not let emotions or outside influences affect your trades.
Create a set of rules, when you enter/how much/how long/what you do if it goes wrong, and stick to them.
Dont trade because everyone else says so, or bloomberg say so, trade when your rules say so

3

If we cannot put much effort in manual trading then EA are good that gives more than 50% win ratio. EA also caugt false signal and we have to face this fact.

4

I am one of the type of trader that do not believe in EA form of trading. I prefer manual trading because I control my trade and I make the best decisions for myself every time. Let’s face the fact, many I know that have used softwares to trade are still struggling up till now. Nothing beats when when you trade on your own and make the best decisions.

5

Most don’t like bots because they rely on discretion in their trading method. It means they haven’t got processes defined and chance comes into play. Or they simply don’t don’t know when to turn them off.

Remains me of a joke

Q. What’s the difference between a trader and a bot?

A. You only have to punch the information into a bot once!

6

Manual trading i think is the best form of trading because you can rely on yourself and capabilities. You also take decision and be able to react quick when there form of unplanned difficulties. The best success you can get is when you earn profit trading all by yourself.

7

And I can find good programmer to make EA based on that set of rules…

Even me have coded support resistance detection recently…

Detect pin bar, engulfing bar, two bar reversal ??? that’s damn easy even newbies in programming can do it.

In term of mechanical who can beat the machines themselves as long as the algorithm is right…

8

Yourself and your capacities should be defined in your trading plan. Along with your methodology, processes and procedures which include contingency plans for unplanned difficulties (what ever the hell that means).

If this is all defined why shouldn’t your system work as a bot. Maybe you rely a little to much on discretion as you are yet to define your processes.

9

You’ve missed my point. The OP had heard of mechanical trading and seems to have confused this with automated trading so I was explaining what mechanical trading actual was

11

I suck a programming compared to some people but I do have 3 years of university programming classes.
I do not trust any program over my own judgement. The software is just not there yet.

12

My trading is fully automated; according to my books, the last time I placed a trade manually was on December 14, 2013. I learned and started out trading as a discretionary trader. I did not even consider automated trading until I was consistently profitable trading by hand and I felt I had a good understanding of the market. From my experience, automated trading can be equally and potentially more profitable than manual trading (there is a reason why the amount of volume taken by algorithmic trading have been increasing every year). But like any skill, it does take time to build up your portfolio and infrastructure. There are also many things to learn in order to be successful (programming, strategy development, math and statistics, machine learning, trading in general, etc) which take time. But if one is patient and driven, automation is very much possible.

As for the determined naysayers, just let them be. I find it quite humorous when I read people saying automated trading is impossible while I’ve been steadily growing my portfolio every year because of it. :slight_smile:

13

EA’s are fixed programs and in a volatile market situation they will not perform according to your needs, so it s better to trade according to skill and knowledge.

14

Too hard for me to program an EA and have zero desire to waste time on hiring someone to do it for me.

The chief obstacle programming of my strategy would face is that data has to be drawn from many sources outside of the data feed from the broker. Some examples would be news events, upcoming announcements, chart reviews on propriety systems outside of the broker’s feed.

Could this be accomplished in theory? Certainly, a well funded and well resourced company such as Virtu could have a team code and test such a system in 3 to 6 months. As an individual, the programming is far beyond my capabilities, and financial resources.

15

An algorithm is only as stubborn as the trader who made it. :wink:

Machines can detect the smallest change in environment if you tell it to; even things our eyes cannot see.

It’s the difference between a seismograph and a man standing barefoot, which one do you think will detect an earthquake first?

16

I disagree completely with this statement.

All my trading is fully automated and the my strategy that I have programmed into my EA has to meet a certain set of rules for it to open a trade. My EA looks at all the timeframes from M1 to D1 in real time and works out the amount of buying and selling over x number of previous candles, and if the price becomes volatile and moves outside of this range, the EA picks up on this volatility immediately (<1 second) and doesn’t trade until the markets has returned to it’s previous momentum. Humans can’t trade this quickly especially in a breakout situation due to a fundamental news release.

Everyone talks about following the ‘smart money’, this isn’t some guy manually placing trades, this is an algorithmic program looking at the markets and doing the trades.

17

Let’s not diss the EAs, but don’t admire them either. :smiley:

In my opinion if somebody is interested in programming and can write a successful EA, that is nice.

But what I see mostly that people, especially newbies, are dreaming about the Holy EA, which has an awesome edge on the market, so they just turn on the computer before work, load the EA, and it makes a lot of money without them even understanding basic things about the market, and they can do their own stuff during that time somewhere else. That ‘magic pill’ mentality you know.

I tried an EA, which considered the best on this forum, even Robopip himself said, that this EA is the closest thing to the Holy Grail yet. I tried it, and it was sh*t.

Like it might have an edge on the market on the long run, but a lot of times it entered on clearly visible bad trades just because it can’t think and its criterias for entering were fulfilled.

So if somebody can make a badass EA from his badass strategy that is okay. Moreover I also think that smart money is moved by programs, not people. But 99% of the EAs are scams, people want to sell it as the Holy Grail, and people with the magic pill mentality will buy them, instead of putting the time and energy into learning the markets and to trade.

On the other hand, why successful traders don’t learn to program, and make an EA out of their strategy? In my opinion it is the same thing as I don’t let anybody else doing something, what is important for me, because I know, that I will do it with the most determination, and I can be responsible for my own mistakes. :wink:

18

The fact that 99% of discussions on Forex forums involving automated trading uses the term “EA” says a lot about just how much people actually know about it.

19

This I completely agree with.

Again I will use the example of Virtu, they do not use EA’s and there is a good chance some of their programmers have no clue as to what EA is, they program in robust true computer languages such a C and even down to pure machine code so their systems run faster.

Even though I do not use an automated trading system I have completely flow charted my trading system. This is an excellent exercise I can recommend to any trader, map out your system for every single contingency. If you are going to program it is a necessary first step and even if manual trading it removes the emotion, uncertainty, doubt, fear. In a given situation this is what I do.

If after a statistically significant number of trades there is a loss then I have no doubt it is the system that needs to change, not my luck. If it is working, then I get out of my own way and just work that flow chart like a robot.

I believe most traders do not follow the same rules with each trade. They see some piece of information or an indicator and believe … “Yes, but, this is different …” and they trade a new system every 10 or 20 trades. There is no way to evaluate what is working and what is not.

A streak of luck with a bad system is an account disaster waiting to happen. I believe that is why 90% fail.

I trade at the higher time frames so the speed advantage of automated trading is not relevant. But the consistency of automated trading is indeed an advantage. Having a disciplined, rigorously defined system evens out that advantage.

20

Interesting fact. 80% of all tick transactions are made by retail traders. 70% of all tick transactions are preformed by algorithmic trading (automated) so by my calculations that means about 87% of all retail transactions are made by a bot. Excuses such as I’m a descretionary trader or I like to be in control or responsible for my mistakes are just that - excuses. There is a common theme but. Buy a bot fro Rita Laska or Karl Dittman and you and your account will get burnt. Take the time ( and I’m talking years) to develop your trading plan and then convert that plan into an automative system and you will have a succesful EA.

21

It all depends on individual trading system. If you are comfortable with the price listing then you may go with EA but many don’t go at the same time as per some risk available. It all depends individually mate.