You make some excellent points, Kenny. After thinking it over I think the key thing to realize is that yes, EA’s [I]can [/I]work. The problem is that 95% of them don’t work (over the long term), and a new trader does not have the knowledge to tell the good ones from the bad ones.
So to reword my previous statement… I believe trading robots will not work 95% of the time for new traders, so I don’t recommend them to new traders.
Successful automated trading does exist, but truly good systems are neither for sale or posted publicly. If you want an insight into what goes into some of the institutional algorithms, have a look at the job boards for recruiting hedge funds; post for quants with knowledge of brownian motion, nuclear physics, actuaries et al. They’re worlds apart from the crud of a few moving average crosses and bollinger bands which you’ll see commonly knocked together in an EA and posted around the internet. I’m not saying complexity is the key to a successful strategy, but certainly thinking way outside the norms you see here is a essential.
If you think you can match up to their skill sets, automate away. If you can’t, stick to discretionary trading.
Are you exaggerating or are you serious about this?? Maybe I’m just not getting the joke… Surely they aren’t really hiring physicists as traders.
Absolutely serious, although don’t forget they’re not trading themselves. They’re brought in to develop trading algos. It’s a very, very lucrative business.
Don’t forget, automated trading has been around since the 80s - black box trading was reputedly behind the big 1987 crash. The level of sophistication has grown enormously over the past few decades. Simple systems like the turtles are now so quickly discovered, they don’t remain profitable for long at all…
Wow. You, sir, have just blown my mind…
I looked it up and they have a name for this, econophysics. Here’s an article on it if anyone’s interested.
You can even get a Ph.D in Econophysics at the University of Houston!! Anybody down there want to get one and help me get rich??
[I]Note to Mods: The link goes to Nature magazine, not a forex site. I hope that’s not a link violation…[/I]
have to add my dyslexic 2 pips!
[B]Quotes cut & pasted from a �Stanford Magazine� article.[/B] “As a Stanford freshman, in 1955, he was “completely buried,” flunking both French and freshman English before finding refuge in economics. It was only then, as a freshman, that he began to realize the full extent of his difficulty with written expression. English A was “a disaster,” he shudders, and French was like medieval torture. “To sit down with a blank piece of paper and write was the most traumatic thing that had ever faced me in life,” he recalls. “I had ideas in my head, but I could not get the stuff down. It was a crushing time”. [B]Charles Schwab[/B]”
So…don�t be surprised if we all wake up someday and find that [B]Rosy[/B] has developed a new and innovative auto trading system and owns all the best property on the monopoly board!!! LOL
Good point. Writing ability does not equal trading ability. We all seem to forget that sometimes…
Good find Phil! At least you were only floored when you found out, I remember being annoyed and gutted that the bar was that high…
It’s quite funny that mainstream economists “have yet to be convinced” - just shows you the massive chasm between real world and academia. Academics assume because there’s no published evidence then there’s little in it, forgetting that most edges rely on secrecy to maintain their profitability.
Still, it’s reassuring to note that big brains are still debating whether historical price action affects future price action. They should really get out of their offices more.