Automatic Trading VS Manual Trading

Filed Under (Journal) by Casey on 25-05-2009

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My thoughts continue to drive towards automatic trading and manual trading.

The debate goes in such a way that manual trading will ultimately rule over automatic trading. A lot of the community believes that manual trading is the way to profit and not automatic trading.

Straining my brains to understand why? I believe the answer is this simple, the market is a one big dynamic organism. It changes, rules and variables and whatever not… changes. If you believe in past, present and future, cause and effect philosophy… then you will understand why forex or people who sells product or software on ways to make money put a disclaimer on their websites.

‘The past makes the present and the present makes the future’

So past performances earnings does not necessarily mean the same earnings in the future. That is what they are saying in their disclaimer.

Coming back… Manual traders have an upper hand. Because they are involve in the market directly, they can adapt quickly when the market changes. Robots are dumb programs that follows a set of guidelines… in IT words… a set of programing.

It will not be able to adapt as quickly as a manual trader would. It’s like watching a Star Wars movie where the Jedi slathering the droids by jumps here and there while the droid just charge forward and shoot….

In forex EA, the robot needs to be updated, change and move together with the ever changing market.

Sorry Bruno… but one of the reason why I really slack in backtesting is because of this. Backtesting results are base on past performances, they program the robot in such a way to fit past performances, with the assumption that past data feeds represents all or a period of market condition.

While it is a good indication, that the robot is working really well on past market condition… it does not however say that it will in the present or the future.

I want to quote my best experiences…. Ultimate Shark EA. I bought it because it’s backtesting was damn good. I even tested it myself… it was so good that I put it live. Then it took a turn… after one year. I backtested it again… and the result is this between 2008 and 2009
EA Shark

But at the time I bought it… the backtesting result was as such…
EA Shark

Note: This is the backtest result for Shark Build 3.16. The time when I bought the EA.

The robot was made to fit past datas… The past backtesting was done between 1999 to 1997 but when it was tested forward or rather rewinding back to the past between 2008 – 2009. It was like this in backtesting above. Obviously with the new Shark Build 5 the backtesting results from 1999 to 2009 would be like the second image above.

So what does it says… I can backtest, demo test or even live test all I want… But some facts would remain, you can not trust a EA fully into our present and future performances.

Having said that……… I believe that anything and everything is possible. With that general philosophy in mind, I need to find that WAYS to be profitable with automatic trading. Do what it takes to find that way… but obviously not at the expense of my acc balance.

Having grounded myself to reality, EA sellers can show the whole world with big numbers on their sales page… I will not be swayed because history and the present has or have not yet proven that any one person by using a particular EA has made MILLIONS trading automatically.

Don Steintz for example, uses both manual and automatic trading to help him expand his repertoire in forex trading. Plus selling his robot also does help him make more money….

He is a manual trader first, automatic second. I would probably take the backward approach…. automatic trader first… then probably manual trading second…. :) I guess that would be my ultimate goal….

I acknowledge that Forex EA exist and will continue to exist and improve… but I don’t rely on them.

Now I am going to reply to Rafael here… (he commented on my previous post ‘It’s a Matter of Principle ‘)

Rafael Cadosch says:
my question is the following> if theres is such a way to make money as easy as installing an EA, what will happen with the market? Imagine millions of people with same EA ? I believe the market with no be able to handle it. tell me if im wrong because i trade for 10 years, and I have friends making easy money with them !

I believe Onur mention ‘for some reasons there will be NEVER millions of traders with same EA’ the reason I believe is that at the end of the day, it is a human who controls the EA, so there will be emotion attached. If the forex EA made losses during that week… that EA would be in the recycling bin. While at the same time, another guy on the other side of the world might use it…. Or another genius will be trying to sell his new system to the world.

The market is just too dynamic to allow 1 million people using the same EA at the same time. Forex EA is too rigid, and with people still having emotions, they will have an influences whether a particular forex EA will be used on the market or not.

I also believe that ‘there is NO such thing as EASY money in this market, not at the long run’. Short term yes… probably… but long term… no… DYNAMIC is the keyword of the market…. It will not allow money to be given easily…

Try catching a moving train… not easy no….

Again, I acknowledge that Forex EA exist and will continue to exist and improve… but I don’t rely on them.

(To be continued…. maybe…. )

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