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Strategies & Market Trends : DAYTRADING Fundamentals -- Ignore unavailable to you. Want to Upgrade?

To: marketbrief.com who wrote (2614)	8/10/1999 10:23:00 AM
From: Eric P	Read Replies (1) \| Respond to of 18137

I think that the desire to "automate" and "backtest" springs from the recognition that the trader does not have the ability to keep his emotions in check, and needs something "mechanical" or "foolproof" to keep himself out of trouble. Surprisingly, I agree with much of this. System trading is an excellent way to keep emotions in check, and although not 'foolproof', a well composed trading plan can do very good job of keeping a trader out of trouble. Automation is a specific subcategory of system trading, whereas the system is actually enabled to place buy and sell orders without human intervention. Automation is thousands of times more powerful than manual systems trading, since it allows the trader the ability to trade any and every stock simultaneously. Automation should be viewed cautiously, since it gives the trader the weapon to destroy his account with amazing speed (assuming he/she automates a poor trading method)! Automation is certainly NOT a "foolproof" way to "keep out of trouble". Meticulously studying my trading journal, intraday charts, and P&L sheets is the only "backtesting" I have ever done. This is something all traders should invest the time and effort to do. In addition, the trader can keep separate P&L statistics for each trading method he/she uses, to better identify which type trades have been successful and which have not. -Eric