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Auto trading is only thing that conquered my darkside
If your entries and exits are not based on concrete rules, you will always or frequently be saying "I should have..." even after 100,000 hours of screen time, even after after 700,000 trades. If your entries and exits are not the same every time, then your entries will most likely be based on greed, and your exits on fear, and most of the time there is regret associate with those.
It is amazing how much clearer your analysis of the market is, when you don't have 20 contracts on the line. Your brain will actually play tricks on you - that resistance level will all of a sudden be 20 times as threatening. That support level will vanish, only to re-appear after you are out of the trade. That's why phrases like: I didn't see this... I should have done that... are regular in the vocabulary of discretionary traders.
Can you help answer these questions from other members on NexusFi?
Regret and self loathing, feeling of worthless followed by moments of shear exhilaration from the greed effect, conquer the world, high five, I am the man and a genius, the strut followed again by regret etc... on and on.
Sounds like emotional torture. Maybe should call it the "Trading Water boarding Method"
"The day I became a winning trader was the day it became boring. Daily losses no longer bother me and daily wins no longer excited me. Took years of pain and busting a few accounts before finally got my mind right. I survived the darkness within and now just chillax and let my black box do the work."
Actually that's a solution to a disadvantage of discretionary trading. You might even say you've been forced into advance limit orders by a drawback of discretionary ;-)
Anyway, plenty of my auto strats do advance limit orders...
I trade range charts, and my strategies place my entry orders in advance, before the trigger bar completes, because with range charts you know the exact tick where the bar will close.
First of all, it's not either/or. Some of us actually deploy various strategies simultaneously.
Second, it is clear you did not read the last sentence of my post. Different things drives the market at different times, and an agile mind is far better suited to adapt to the ever-changing variables to consider at a particular time than a computer. But if you're simply basing you entries/exits on different indicators based on price series, automation is probably the way to go.
When it comes to HFT and market making, the machine wins hands down. But as you move up in time frames, the value of intellect should become apparent.
On a third note, it seems that a lot of the readers of this thread see the world in black and white; Either you have a method automated or you are just guessing.
I'm thinking it is more of a natural progression, and nuanced at that.
First, you trade by the seat of your pants, ride the emotional roller coaster, try out different indicators, and blow out your account.
Second time around, you build rules for taking trades that perform well in the market, and also address your emotional limitations. You follow them most of the time, and do fairly well. But not as good as you can mark up a chart, according to your rules, would have done that day/week/month.
Then, you look to automate - thru the ATM, and ultimately thru a bot. Executing a strategy perfectly. And then fine tune the bot, when it does not do what it is suppose to do.
That is the stage I'm at. Reading the pitfalls and positives of automation here and elsewhere is helping me to fine tune my strategies to fit automation.
I think most pure mechanical traders do see the market as black and white it is just our nature. I think we also see any hybrid as a deviation from a system where you go into a black hole on being able to measure the probabilities.
I also want to clarify most of my comments on system trading revolve around day trading. I think the shorter the time frame the more essential a rules based mechanical system with no discretion becomes. In fact I believe strongly trying to day trade in a discretionary way will end badly at some point.
I think if you have a longer time frame days, weeks, months, years and do things like build options positions discretion can play a positive role. But those types of strategies give you plenty of time to maneuver like a chess game. You make educated guesses but usually get the opportunity to hedge those guesses and build wide positions that market can land and still make a profit. Where day trading is very unforgiving of any discretion.
"The day I became a winning trader was the day it became boring. Daily losses no longer bother me and daily wins no longer excited me. Took years of pain and busting a few accounts before finally got my mind right. I survived the darkness within and now just chillax and let my black box do the work."
In that sense, automated traders as guessing too then. They build a foundation, run a backtest and see the results.
They 'guess' some more and try different parameters or indicators and run another backtest. Results are getting better. Tweak a few more things. Another backtest. Oops...I had better results before. Take out that 'guess' and
try another new 'guess'. Backtest again.
Yup. That's how I see it. I think trading in itself is about taking educated guesses. If you cannot predict with certainty the outcome of an event, you are guessing. So, to that end every bot is continually guessing with every trade, the only thing is, those guesses are not random, they are based on historical statistical analysis and derived probable outcomes.
If I give a discretionary trader a setup that is guaranteed 80% winners, guaranteed !!! I will bet you, he will disregard the stats, and he will try to cherry pick the 20% losers out of the method. And that is what will make him fail with that method.
