Leverage is a weapon of mass account destruction
@MattyMoney By smart I didn’t mean High IQ and lot of degrees. I meant people who are smart in trading world. People who are discipline in trading and can control their emotions effectively. You can call them Intelligent Investor.
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I’m sure I saw somewhere that statistically those in professions associated with having a high IQ in fact tend to do worse in trading than those not.
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Thanks for creating this great subject for folks to chat about, Mario.
I’ve been working with the MT4 platform for several years. I write scripts, indicators and Experts in MQL4, AND, I also trade naked charts. Robots are great X percent of the time. I find they need fairly constant attention to be profitable.
Just one example, you can build trading times into your bot and select only certain currency pairs and be profitable one month. The next month, the “mood” of that currency pair may change for a multitude of reasons, and, you’re back to “tweaking” your bot to be profitable again.
Neural nets are an example of AI that is constantly attempting to replace the “behavior” of the human brain in its learning and decision making activities. But, even neural nets require “tuning”. And, the human brain and mind are so gigantic and complex, man will be creating new neural nets to emulate themselves…well…forever.
When it comes to money management and risk, robots offer some assistance, however, the human thinker is required to keep those two items in balance, also.
We humans have been attempting to creatively replace the human brain, human organism and even the human mind (play God), with robotics, for as long as robotics have been around.
Something to consider though: the human brain, human organism and human mind are constantly evolving…automatically. The bots will have their electro-mechanical tongues dragging the ground in an attempt to keep up with that “human evolution” and CREATIVITY.
Kenny Rogers, an old country-western singer in the U.S. puts it this way in the lyrics of his song, “The Gambler”:
You’ve got to know when to hold ‘em
Know when to fold ‘em
Know when to walk away
And know when to run
You never count your money
When you’re sittin’ at the table
There’ll be time enough for countin’
When the dealin’s done
( Kenny Rogers - The Gambler - YouTube )
Though professional traders certainly are not gamblers, those lyrics ring true in trading successfully. And, they reflect something humans are great at doing.
Whether your “tool” is a robot you teach and tune, or, you play on the edge with a naked chart…trade on humans!
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Ok, I have spent the last many many months developing a trading engine in mql5 that has the capability of trading many different strategies on multiple currency pairs simultaneously. I realized this is as far as I can go with my Algo Trading journey; I hit a road block. I may have an awesome powerful trading engine; I don’t have an edge in the market. I started with powerful custom grid trading system where I finally figured out how to build a grid that won’t fail, BUT, because of the way it has to be built to withstand major draw downs it isn’t very profitable and I found it just isn’t worth it. I spent months trying to go down the Grid Trading path. Previously I thought if I have enough computing power with my back-testing I could just muscle my way to profitability, WRONG! That just leads to over-fitting and is the reason most EAs fail. Back-testing a EA is major topic in itself and would be several college courses on the science of it and how to do it properly. There is one person I follow that is an expert on the subject (you can find his videos on the Darwinex YouTube channel). The more parameters you backtest at once the more likely you are overfitting the sample size. Manual Traders have to deal with discipline and emotions, Algo Traders have to deal with the problem of overfitting their optimization and the strategy(s) programmed becoming obsolete as markets change. I started thinking, there are many Professional Manual Traders out there that don’t ‘muscle’ their way through backtesting the markets. I also started to realize how am I suppose to program a bot to be a Professional Trader if I’m not one myself yet! So what are Pro Manual Traders doing differently? Why do they not need to backtest thousand of permutations of their strategy which would take a lifetime to do manually? Here is the main point I found in an article about this:
Also, I follow a Professional Trader that is good enough to work for a prestigious firm. Many years ago he tried to have his system programmed. The programmer finally told him what makes your system work, is you. It’s my belief now that the most reliable traders is US! As humans we are best to adapting market changes; we are best at recognizing price action patterns. That same pro trader said there is one thing that a program cannot do and that is having that ‘gut’ feeling–the conviction of a trade. You can only gain that skill through time sitting in the chair…
“It’s only after many years of sitting in front of a computer screen watching price action that such a skill can really be acquired.”
So what am I doing now? I’m putting in my dues. I’m going to put as much time in the chair as it takes while also learning everything I can about how to be a successful discretionary trader first and algo trader second. Only then when I’m profitable will I start to attempt to program my bot how to execute my trading plan. So for me it’s an increment approach. I’m currently building my own custom order entry system that works best with my risk management plan and approach to trading. Then I’m going to program that system to manage my trades for me after I enter them. I’ll keep on adding to the system little by little, an agile approach.
In summary, my opinion, manual trading will never end, and it’s what anyone should do first–to gain skills and a solid foundation before attempting to Algo Trade. Also, after a lot of research on the subject I think a hybrid approach is best. Automate what you can, but keep the ‘gut’, the human element, the conviction part of it manual.
Also, don’t buy an EA. If you are interested in Algo Trading, learn how to program and do it yourself. Another quote from an article:
“If there was a piece of code that could extract profits from the market in every type of market regime, it’s very likely that the developer wouldn’t be selling it to you.”
If I ever get my system working after many more years to come of hard work, I wouldn’t sell it.
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By “emotions” I think you actually mean to say “psychology” am I correct?
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Pterodactyl2, Thanks for the great thinking and insights. Using bots as “assistants”…doing the heavy-lifting and repetitive “grunt work” is my idea of how to approach robotic trading. I’ve been working on the trade management idea myself. I build indicators to test my favorite algorithms, and after entering a trade, turn it over to a trade management system to handle all the post entry stuff and exit the trade. It seems like nothing beats the idea of building a successful manual trading process and then mimicking it with a bot.
Besides, manual trading on the edge of the market, realizing one second in the future from that edge is a complete unknown, is GREAT FUN!
The craft of automating a great manual system, mentioned by several of those billionaires in Jack D. Schwager’s “Wizards” books, started out by automating a well-oiled, successful, manual system.
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@MarvM3 , thanks for confirming we are on the right path by mentioning “…automating a well-oiled, successful, manual system!” Sounds like you and I have both come to similar conclusions in our Algo Trading Journey.
Analogy of a soccer video game developer vs a real professional soccer player (trading bot developer vs real professional trader)…
You might be the best programmer in the world, but you can only program something up to the knowledge you have on that subject. If that subject continually changes you better be able to change with it. If you were to program a bot to be a professional soccer player, how would you do that without actually been there tasting the grass when you fell to the ground, or knowing how to do a perfect corner kick—to give your forwards the best chance at scoring a goal? Statistically, a corner kick will give your team an ‘edge’ as long as you know how to do a corner kick! Can you bend it like Beckham 50% of the time, or can you barely kick it 10 feet? How would you know if you have never done it or are too scared to do it? How long did it take for Beckham to master his corner kicking craft? I bet years.
My thought is, like being a pro soccer player, it’s the same thing with trading. How will you know how to program the perfect execution of a trade or program an edge in the market (like how to kick a corner kick like a professional soccer player giving their team an edge at scoring a goal) if you don’t have experience doing it? Who do you want making the corner kick? The guy sitting in the stands that may be a video game developer for soccer video games (staying with the analogy, the trading bot developer) or the guy on the field that’s kicked 1000 corner kicks in real life? If the professional soccer player learned how to program just as well as the soccer video game developer who would you hire if you just started a soccer video game company?
EA developers that are just programmers (that have not put the time in the chair learning price action) are getting their butts/bots kicked by professional discretionary traders just eating them alive just
like a Pro Soccer team would playing against a bunch of soccer video game developers that have not actually played soccer. A couple of months ago, I realized I’m the video game developer sitting in the stands too scared to taste the grass. I’m now on the field, kicking the ball around trying to learn soccer with the hard realization knowing I have years of hard work ahead of me to make it to the big leagues before I can program a bot to go head to head with Manchester United (The Big Bad Banks).
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I would not touch a hyper volatile market. That’s just me 
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Libzii, yes, hyper-volatile…allows one some practical experience, using pterodactyl2’s soccer analogy, to get green teeth and get a good taste of the grass.
pterodactyl2, when I do test trading EAs, being an ancient programmer (7.8 decades on this giant mudball we all share and call planet Earth), I still use OOP techniques. So, I develop “algorithm chunks” that I can dynamically add to or subtract from the algorithm, while it is trading. I’m also building chunks of candlestick pattern algorithms I can experiment with…getting it closer to a real human trading on the edge of a naked chart and observing the patterns dynamically as they form.
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A single tweet from Trump supersedes all AI! 
EA works for a certain period of time, while the market is dynamic. Big banks we’re also doing manual to manipulate the market. I think the forum subject should be the other way around! 
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@MarvM3 That’s awesome! Yah, OOP is the only way to go; I spend a lot of time re-engineering MQL5 Russian code for ideas. Those guys are crazy awesome programmers. I highly recommend watching videos on the Darwinex YouTube channel about back-testing. IMO, a system should have such a strong edge that you only need to optimize a couple parameters like ATR 1x, 1.5x, 2x for your SL or which EMA you are going to use for your exit strategy. Another thing the guy teaches, the system should be based on some sort of price action not indicators. I also use a custom indicator to test pattern recognition code; I believe that is a good approach that way you can see how well it’s reading a pattern or not.
@Trader02, I think you are right. I watched a Youtube video about how banks manipulate market using something similar to IG Client Sentiment: Forex Trader Sentiment to know where people have their orders and then just knock them out of the market feeding off of Reversal Traders that still believe in the concept of Overbought/Oversold on the larger time frames in the Forex market. The banks will keep things trending for days as long as there is enough dumb money trying to spot the next reversal. We should all be momentum/trend traders in the Forex market because of this according to this video.
Lookup " Best FX Trading Strategies (THE Top Strategy for Forex Trading)" by No Nonsense Forex
It’s about how banks manipulate the market. The TOP Strategy is knowing who your enemy is.
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You can if you use the ATR indicator. Search for ATR by No Nonsense Forex on Youtube. I’m not affiliated at all with them.
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Manual trading will not coming to an end because market is the one who benefit most of manual trading.
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Yes you are right. Trading psychology is the most difficult part in trading. AL or robot can be good only if you can tweak it every now and than. Everyday market does not behave in a same way. That’s why human is needed.
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Well said. I learned this over some years playing a game with my two sons called Runescape. With a trading plan I amassed one billion coins over three years. I said I would do it in 18 months but it took 3 years. I did not visit the game as often as I had planned to. But for sure, the majority of people want it, want it now, and will pay a lot more for it than waiting a few days. That is why Amazon Prime is so successful. It’s that instant gratification need to be satisfied. And I think traders need to be exactly the opposite of the masses. And that was my deep preparation for my third return to the pursuit of (currency) trading at which I am determined to succeed.
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No matter what the market is always changing. Constantly having to change settings. I have a few of them and belong to special group where everyone is always sharing and comparing settings . I feel too many new traders are relying on EA’s and signals instead of learning Forex.
I decided after awhile I do better manual trading.
In my Opinion
TabiusLee
(I am a Scalper) 
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Automated trading has evolved significantly over the year but I don’t think that even in the future it will be possible to be profitable on the basis of automated trading alone. At most, I feel it will take a combination of both automated and manual trading to be successful.
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I don’t think manual trading is fully going to vanish, although trading bots are taking over. At least in the foreseeable future.
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Not at all, imho, and I’ve developed a pretty big automated infrastructure.
I think the issue many have is this obsession with technical indicators and the lack of proof of concept that comes with it. Imho it’s completely the wrong way to trade as a human.
The reality is to trade well as a human, you need to put some work in and understand the economy.
With Covid, we’ve had the easiest time we’ve ever had for making a lot of gains with Forex.
Off the top of my head, I’ll give some examples from the past few months (where I’ve gained much more than my system) which have lead to major wins.
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The news came out in April that the May futures contracts for Oil were going to 0$. The Brent crude at this time was about 30$. The stocks of WTICO were record high, capactiy was full all over the world. Any decent human trader would have put massive shorts on BCO and WTICO. The price dropped to 13$ at one point.
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Japan on a Sunday night in April announced a Covid emergency. The Yen was high at the time. The dollar was rising as a safe haven. No brainer to short the Yen.
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May (I think) the EU failed to agree the stimulus. Short the Euro. The following week (or so) they agreed. Go long on the Euro.
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Summer, US failed to agree stimulus and the USD weakened. Gold started rising as a consequence of the weak dollar and being the only safe haven left. Silver likewise, that was at a massive low.
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Few days ago Trump announced with Covid. Surely, surely everyone shorted the US30, NASDAQ, FTSE?? Probably not, maybe there was a falling wedge or the MAs hadn’t crossed. God knows.
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During May a production cut was agreed by OPEC. The NOK was very weak vs the USD and EUR. Go long on it, it’s oil related. Go long on BCO and WTICO as well.
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Start of September, Boris Johnson announced Brexit stalling. Short the GBP! Especially vs the JPY where it was high.
These are just off the top of my head, but I would say once a week there is always some news that shifts the market massively.
The issue many have is this obession with patterns on the charts and some kind of free ticket to profit. This is made worse by all the teaching materials that encourage high frequency trading based on indicators that if you properly backtest them (over ten years and thirty or so pairs) you’ll find don’t work.
So no, I don’t think it is near an end at all. I think it’s an excuse for humans that aren’t profiting.
Algorithms (including my bot) are good for short term small gains. Humans are better at sentiment analysis and longer term bigger gains.
I think anyway.
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