{"id":2803,"date":"2010-08-12T06:00:38","date_gmt":"2010-08-12T10:00:38","guid":{"rendered":"http:\/\/club.ino.com:80\/trading\/?p=2803"},"modified":"2010-08-12T13:05:57","modified_gmt":"2010-08-12T17:05:57","slug":"day-trading-and-automation","status":"publish","type":"post","link":"https:\/\/wwwtest.ino.com\/blog\/2010\/08\/day-trading-and-automation\/","title":{"rendered":"Day Trading and Automation"},"content":{"rendered":"

\"\"At INO.com, we regularly receive questions about completely automated trading or \u201cBlack Box\u201d systems. To shed a little light on these complex robotic trading systems is today\u2019s guest, Todd Mitchell, from Trading Concepts<\/a>. Be sure to comment with ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------<\/p>\n

I received an interesting e-mail today asking me about a particular futures trading system. The writer wanted to know if I knew of a futures trading system was fully mechanical and automated. I should point out that there are automated or \u201cblack box\u201d trading systems employed by large hedge funds and other large trading groups, but I have never come across a fully automated futures trading system suitable for individual traders seeking to day trade the futures markets.<\/p>\n

Of course, there are a slew of Forex robots on the market today, and the trading results from these robots have been mixed, at best. In my opinion, this type of question regarding futures day trading is the result of the spillover effect from the Forex trading groups. But I think that this request reflects an even deeper question being considered by new traders as they are entering the futures markets.<\/p>\n

What sort of question do you think I am considering?<\/p>\n

It's the old goose that lays the golden egg story. In my opinion, the great attraction of Forex robots is the lack of accountability the trader is forced to shoulder. After all, if you have a machine that simply works day and night to create money, why wouldn't everyone own one?<\/p>\n

The answer to this question is fairly simple, there are no geese that lay golden eggs and there are few Forex robots that consistently churn out fantastic profits. It would be a wonderful thing if there were trading machines that could consistently initiate profitable trades, just as it would be a great thing to own a goose that lays golden eggs. Unfortunately, day trading doesn't work that way because the market moves in a variety of methods and moods that renders low-cost trading robots impractical to produce.<\/p>\n

Nor are there any strictly mechanical methodologies that will consistently churn out an endless stream of profitable trades. No matter what methodology you employ in your trading, you will always be faced with subjective choices as to the merit of any trade under your consideration. At this point in our technological progress, we simply don't have a level of artificial intelligence technology capable of adjusting to the varying conditions that may exist at a given time period in the ever changing futures markets, at least at a cost that the average individual day trader could shoulder.<\/p>\n

And I am glad we don't.<\/p>\n

I have always considered trading a combination of interpreting formulaic indicators and personal judgment. Some call this form of trading an art, but I look prefer to view it in terms of a learned skill. I am an avid reader of technology and scientific journals and we are years away from developing the level of low cost artificial intelligence needed to effectively day trade futures markets. We have one of the most marvelous computing devices ever designed sitting atop our shoulders. Though I wonder if some individuals care to employ this marvelous device we refer to as our brain.\u00a0 After all, it takes time and effort to master trading a specified futures contract and we live in a society that values immediate gratification.\u00a0 Many individuals would prefer to skip the learning curve required to be a profitable futures trader.<\/p>\n

A combination of advanced technical indicators that have been developed in recent years and the power of our own brain is what has, in the past and will continue into the future, to be the most effective trading device available. Of course, developing your trading skills (or trading methodology) will take some traders a good deal of training to refine to the point where it is an profitable business venture. There is nothing wrong with this process, in my opinion.<\/p>\n

The idea of artificial intelligence machines picking every trade perfectly is something from Aldous Huxley\u2019s \u201cBrave New World\u201d, and not something I would relish. Imperfection and improper trading technique are part and parcel of learning the trading process, especially for traders in the early part of their career. It is the way we learn to trade. If we developed the technology capable of picking all trades as winners, the markets as we know them would cease to function. In every trade, there has to be a winner and loser. It is the very nature of trading. If every trade were a winner, there would be no need to trade.<\/p>\n

It's not a trading world in which I would choose to live.<\/p>\n

Best,
\nTodd Mitchell
\nTrading Concepts<\/a><\/p>\n

As a bonus to Traders Blog readers Todd is offering a crash course in the Trading Concepts trading method. Click here for more information.<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

At INO.com, we regularly receive questions about completely automated trading or \u201cBlack Box\u201d systems. To shed a little light on these complex robotic trading systems is today\u2019s guest, Todd Mitchell, from Trading Concepts. Be sure to comment with ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------- I received an interesting e-mail today asking me about a particular futures trading system. 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