David:
Regarding bahasurf's question:
Is anyone aware of any statistical analysis of trade setups and their probabilities of follow
You responded:
As just a single example, you can have the perfect setups on your charts, and if the underlying market falls away from you, you may make a trade in the wrong direction. Happens all the time. Was the computer programmed to appreciate the overall dynamics of the market and the current economic situation? Did it factor in the morning reports of fair value, and the probability of an interest rate hike in two weeks? Doubtful! That is why trading will always be a human endeavor.
I beg to differ. Although the exact probabilities of success for various trade setup depend on precisely how that setup is defined, => it is possible to determine the probability of success for each trade setup. It is merely a matter of rigidly defining the particular trading system, then rigidly following the trading system and documenting the results.
I have personally traded a number of trading systems in an entirely automated fashion. I do not review or approve a single trade or order. Some of these systems have traded for nearly a year, with well over a thousand trades completed. With this high number of trades and long time frame being studied, I feel very confident in the statistical probabilities identified (and wealth created) by these systems.
Although I agree that daytrading is typically a "human endeavor", I can personally state with extreme confidence that automation is critical to my success. I believe that in 2-5 years, most successful daytraders will be relying on automation in some form. It's the future, and it's here to stay.
Good luck,
-Eric |
