Automated Trading
Automated Trading: Contd…
By Marek W. Stupka | June 28, 2007
In the May’s post, I expressed my views on automated trading. Since that time, I received dozens of emails from traders who say they’d like to try it anyway…
All right, ladies and gentlemen. You gave me no choice.
I have decided to publish the recommended software applications and plugins for the automated trading in today’s post, even despite I sincerely doubt they will help you reach consistent profits. But one of the important elements of a trader’s career development is the phase when he (or she) experiences an urgent need to try several approaches on his (or her) own, before actually taking the proven, conservative stand of the professionals.
Last warning: You should read my previous post carefully before you do any of this. You should also trade ON THE DEMO ACCOUNT ONLY while you’ll be actually back-testing your automated trading - minimum number of 200 demo trades (preferably 1,000 demo trades) recommended…
If you really want to check the behaviour of a trading robot, either with your own trading strategy, or with somebody else’s, find the most effective and sophisticated software tools you will need for it below. Note that I, too, have once been where you are now, and it took many, many hours of my active trading time before I have: 1. Found the software solutions I am presenting to you here; 2. Fully tested all of the trading strategies I knew of with them; 3. Found out that automated trading CANNOT bring consistent profits over the long haul.
OK, if you’re still not convinced, here’s the list of the 3 most recommended software applications designed for deploying the automated trading:
1. Trade Station® (www.tradestation.com)
Trade Station® is believed to be the benchmark charting tool for professional traders whatever it is they trade: FOREX, commodities, stocks, stock indexes, options, futures, etc.. It uses many sophisticated software modules facilitating the best of strategy trading available for the financial markets today. I know about many pro traders who use Trade Station® and would not swap it for anything in the world.
Anyway, in the context of trading automats, Trade Station® also uses its own proprietary EasyLanguage® - a fully comprehensive programming language allowing its users to program their own trading strategies (even the complicated ones) using just simple English terms. The whole idea behind designing the EasyLanguage® was to capture any trading strategy exploiting the technical tools available within the Trade Station® by the use of plain terms, as if one trader would explain his way of trading to another trader…
If you really want to make your trading automated, this is the right software for you!
2. eSignal (www.esignal.com)
eSignal is a precise, reliable charting software. It is used by professional brokerage houses as well as individual investors. Unlike the Trade Station®, it does not integrate selected brokers for the desired fields of trading, t.m. you can chose your broker yourself (with the Trade Station®, you have to partner with Gain Capital if you want to trade FX).
Anyway, in the context of trading automats, eSignal provides you with its own proprietary programming language which is, unfortunately a bit complicated, since it is directly derived from the JAVA™ language. In addition, there are optional modules you must subscribe to separately in order to facilitate your trading robot. The obvious disadvantage here is that eSignal does NOT provide for the whole software chain. This means that you have to buy external software plug-ins to actually make your trading automat up and running. OK, here’s what you need: eSignal Premier or Pro, FX Datafeed, Direct-X software plugin, and an external software module to actually make eSignal compatible with your trading platform (e.g. www.ninjatrader.com).
This is a reliable charting software, but it gets quite complicated when deploying the robots!
3. MetaTrader (www.metaquotes.net/metatrader)
MetaTrader from MetaQuotes is a reliable, integrated software solution for novice to mid-level traders. One great advantage of this software is that it is free (for its most parts), and is designed as a full trading software application cycle. This means that you can find literally everything you need in here, from the trading platform to the trading server, from the mobile charting to the programming language. The only disadvantage of this software is the lack of that professional precision that you’d get with paid applications.
Anyway, in the context of trading automats, MetaTrader provides you with its own proprietary MetaQuotes Language. Very comprehensive, and easy to understand.
This is a FREE, mid-level charting software. It has all you need to build your trading robot!
Nota Bene: there are many other trading software applications allowing for programming your trading strategies, but these are the ones I tested and can recommend to you. Many of the others would have some sort of “wrinkle” here or there (e.g. CMS - very simplified and thus limited strategy programming, non-stable trading platform, etc.).
All right, I’d like to end this post at where I started it. I sincerely doubt programming a trading robot will help you reach consistent profits. Want my attitude depicted? Here you go:
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Automated Trading: Pros/Cons
By Marek W. Stupka | May 30, 2007
Some traders like to spend lots and lots of money on automated trading robots. They say they don’t have time to watch the charts all the time…
Yes, there are pros to having a nice little trading robot patiently waiting in the quietness of your home or office desk, and do all of the hard work for you. One of them is - stress-free life. Another one is - more time to do your job. Yet another one - tons and tons of easy money! And the list doesn’t end here…
But what about the cons? Well, one of the most utterly important cons undoubtly is that no such money-making machine has ever been devised!
Several days ago we’ve had a discussion at Gepard Investments, Inc. if it is a good idea to actually program THE CANAAL - one of my proprietary Trading Systems - within a trading software application designed specifically for this purpose (e.g. the Trade Station), and so to actually make our trading fully automated.
To put it simply, the results came out negative.
Let me give you reasons why I DON’T believe that (any) automated trading can bring consistent results.
One great legend of trading once said that “the trading robots can never be successful because there is an intangible element to successful trading”. And it’s true. Whatever your trading strategy, if you strip it down to a sequence of fully automated procedures, it just never works in black numbers. It might - for a week or two… But never over the long term.
Now, there might be trading software companies - and their sales reps - that would try to convince you otherwise. They would offer to you their “surefire” trading automats, supposed to turn your few thousands into few millions over just a couple of months. And they would put very exotic price tags on their products. The ugly truth is, actually, that the very essence of these software companies’ marketing efforts speaks against their own postulates.
Just give it all a serious thought. If there was a machine that can make you money, consistently and over the long-term, would they be selling it to you???
The answer is NO!! The more people knew about how the money is automatically made, the less would be the chances of success for such a moneymaker! The successful FOREX automat software developers would, in fact, do the very opposite – they would hide their powercomputers deep down in the underground of their office buildings, and they would put all their live savings (and even borrow every damn cent they would get from their friends, and form banks) to produce loads of that easy cash month-in and month-out…
Well, I believe you see now that trading automats producing consistent profits only exist in the traders’ imagination.
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