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Strategies & Market Trends : Trading For A Living -- Ignore unavailable to you. Want to Upgrade?

To: CountofMoneyCristo who wrote (585)	6/27/1998 11:08:00 PM
From: Eric P	Read Replies (3) \| Respond to of 1729

Have you programmed market psychology into your platform? I doubt that you have, or that you could if you tried. There is no way to program into a computer the kind of experience a successful trader builds up over years and years. Why do you dismiss this so easily? Don't you agree that market makers are using very powerful computer automated systems? Actually, market makers began increasing their reliance on computer based systems as a result of SOES induced losses, when their old quotes were being picked off by "SOES bandit". Now that we must compete against their automated systems, SOES trading has become much more difficult to do successfully. Developing a system such as I have described is not far-flung at all. It is simply the application of an expert system. This is precisely what expert systems are designed to do: Program the knowledge and experience of "experts" (in this case, experienced daytraders) to execute decisions in the same way that they would have done, given the same data. My trading platform is incorporating the same expert system package for that is used at mission control for Space Shuttle launches, for control of satellites for Motorola, as well and being implemented for control and optimization at many of the largest companies in the world. There is no reason why implementation of an expert system would be somehow too difficult for daytrading. (If it will put people in space...) A trader is successful because he builds up a sixth sense that can detect a change in market sentiment a mile away, and then react on that knowledge instantly, which generally means overhauling one's entire trading strategy. Have you managed to program that? You are entirely correct that the platform I have developed will not be able to duplicate a system built on 'gut feel', intuition or a 'sixth sense'. Trading 'systems' such as these cannot be programmed into a computer unless the trader can begin to formulate his/her trading ideas into more mechanical rules. However, I would also argue that the trader, himself, would not be able to consistently trade his/her own 'system' if it is built on 'gut feel'. Finally, even assuming the hypothetical value of your platform, it would be impossible to publicly market because once many were using the same system it would naturally endure a corresponding decline in effectiveness. Assuming that a single system were being marketed, I would entirely agree. Any successful 'black box' system would become useless and unprofitable if many people begin using the same criteria for entry and exit. My trading platform will allow the trader to customize their own trading system based on their own knowledge and experiences. Those traders that have a losing system will certainly lose money. But those experienced and successful traders with a good understanding of the market will be able to use this platform to leverage their skills into more trades meeting their criteria, and with much greater speed and consistency. Assuming that a successful trader were able to define his/her system into mechanical rules, how could he possibly not benefit from the speed and power of automation. To compete with the market makers, I believe that automation is becoming more and more necessary. If we took personal decisions out of the markets it would be a boring and ultimately unprofitable business. I entirely agree. This is precisely why 'black box' systems tend to lose money for most people who purchase them. Their is value, IMO, for a trader to have access to a system into which he can program his own unique trading rules and ideas and have the computer mechanically execute HIS plan. How many times have we heard of people whose greatest mistakes were when they quit following their plan? I believe that personal trading decisions are best made after careful thought and analysis, not in the heat of a fast moving trade. The platform I discuss will not eliminate or even reduce personal decisions or the need for research and analysis. Instead, it will merely allow a trader to plan his/her trading at any time, THEN have the computer execute his/her plan precisely while the market is open. I respect your opinion and would welcome your additional comments and ideas. I do, however, believe that automation of a traders successful trading methods can be very powerful and enable the trader to increase their speed, consistency, volume and profitability. I also agree that this type system would not be useful for a trader intent on trading without a plan or based on some subjective 'gut feel' or 'instinct'. -Eric

To: CountofMoneyCristo who wrote (585)	6/28/1998 4:48:00 PM
From: Nazbuster	Read Replies (1) \| Respond to of 1729

Goldfinger, A trader is successful because he builds up a sixth sense that can detect a change in market sentiment a mile away, and then react on that knowledge instantly, which generally means overhauling one's entire trading strategy. I'm in the middle of reading several books on trading/TA to get educated. (Trading for a Living [Elder], Using Technical Analysis [Pistolese], The Technical Analysis Course Meyers, and The TAO of Trading [Koppel]) Your comment (above) is what worries me about the whole activity. Learning TA doesn't seem too difficult but does involve a lot of new concepts/formulas/methods which will take time to absorb. The problem is that many TA indicators can be misinterpreted with disastrous results! I frequently see these authors point to charts for examples of principles where earlier in the chart was the same formation with the opposite behavior following the event than the behavior used to illustrate the point. Are you finding that your "instincts" are guiding your trading or do you use more quantitative methods and rely on your "6th sense" only as an insurance policy?