What do you do to stop overtrading / manage trades? | Psychology and Money Management

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What do you do to stop overtrading / manage trades?

  #46 (permalink)

Miami, USA
Posts: 11 since May 2017
Thanks: 1 given, 8 received

Hi LittleFinger,

For sure as a quant you end up thinking about totally different types of strategies. A lot of the discretionary stuff I've seen and automated were actually price action related. That's doable, but not necessarily worth it unless you understand data mining and other stuff and can algorithmize automated discovery of strategies instead of trying to model the exact same thing the trader in question is trading.

All of this is to say - there are many, many ways to skin this particular cat. When you're a quant, you end up thinking about different ways - and in a way usually actually much more efficient ways - to do it. And when you invest your time into learning about all that stuff, you are all of a sudden not obsessing about whether the situation you're looking at should be treated as a signal for 15 different discretionary reasons or not. Make sense?


LittleFinger View Post
This is the obvious argument for algorithmic trading. No emotion, just stats. I fully agree with the argument here, but I think to transfer the average discretionary trader's strategy into algorithmic form would require an extremely advanced programmer. I am not a regular in algorithmic circles so I don't claim to know how advanced the average strategy is, but from what I have seen it is usually not considering as many factors as a discretionary strategy. So the allure to discretionary is the human brain's innate ability to handle a whole lot of inputs and output a logical instruction to the user. I think that in the time it would take for an individual of average intelligence to learn how to program to the degree required to automate an average discretionary trader's strategy they would already have mastered a profitable discretionary strategy.

How easy would it be to automate this:

Develop a directional bias on an instrument based on the news

Determine if that correlates with the story told by the structure the candles are forming.

How has this circumstance played out historically?

Does the T&S support the trade direction?

Where are we relative to volume by price?

Plus about 10 more things

I could describe the logic to link all of these things together into a trading system, but to actually implement that would be so daunting I don't know if the system would even work by the time I got it programmed.

I don't know everything, these are just my thoughts at the moment.

Please educate me

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