Why does Automated trading never seem to work?
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Thread: Why does Automated trading never seem to work?

  1. #1
    This may answer why robots appear never to work for long on a live trading account.

    I was reading a thread yesterday for a simple break out egy and I noticed a remark by about testing robots and the apparent differences with demonstration results in comparison to live results:


    I've got a little bit of first hand knowledge about it, so I thought it may help to share.

    Earlier I started trading myself, I had a very interesting job that has allowed me to meet and interact with a variety of individuals in the top tiers of society across the globe (multi-Millionaires, Billionaires, politicians and a few sovereign state Monarchs). So although I am not from that group , I was fortunate enough to mix in these circles. By chance I have to know the owners of an online retail brokers based in Switzerland that some people on this forum could trade with.

    During a few discussions we have on to the topic of robot trading, and particularly MT4. At the time this specific broker was only beginning the process of introducing MT4 to their platform. A number of you that were around for a while will recall that not all brokers have always provided MT4, and a few appeared particularly slow to offer it. I was just beginning to take an interest in trading so I asked them why they didn't currently offer MT4 as it appeared to be the preferred choice that retail traders desired, and why it was taking so long to put this up using their system. Their answer shocked me and is why I have never and will never allow a robot of any explanation transaction for me.

    They clarified that some robots are really profitable, and the good ones would place them out of business. So before they could allow any automated trading take place in their platforms, they had to plan their own applications to have the ability to compete and interrupt the robots their retail customers used. The main reason it took brokers so long to integrate MT4 was since the broker's tech boffins had to configure it and tamper with it to ensure that when it finds a robot trading, it can cut in and control it to ensure it makes money. They basically had to rig the platform against robots, and this takes time to perform correctly.

    Such tampering and rigging doesn't need to occur with demo accounts, and this is why robots often seem to work fantastically in demonstration mode, and then crash spectacularly in live mode. Your MT4 broker is operating behind the scenes to counter your robot and make sure your money gets deposited into their accounts rather than letting you withdraw their cash into yours. A few of the well known”miracle overnight riches” robots which are available prolifically on the internet for a mere $100 dollars, have been thoroughly decompiled by the brokers and also have separate progr composed and set up on the platform to create a joke of these , (no wonder everyone wants a refund!!!) .

    It was clear to me and to them that robots can and do function. I actually know a hedge fund manager in Geneva who uses”robots” on high frequency to perform a massive percentage of their general trading to produce spectacular sums of cash (of course he is at real institutional level and doesn't go near MT4 or retail brokers). But provided that you are using MT4, it is almost certain that the game is rigged against you and your robot will eventually drain your account.

    This post is not my attempt to discredit robots or automated trading, but I believed it would be useful to a number of you on this forum that are either heavily involved with the programming and application of EA's, and also those of you who are expecting that a robot in MT4 is going to be the reply to your prayers. My understanding from people right in the heart of the retail industry is that they will do everything they can to ensure that your MT4 robot fails.

  2. #2
    Men, simply rethink what makes sense.
    1) Normally online Currency Market, your brokers must pass your order directly to the market. Even if they are originally your counterparty and may be unable to pass your order quickly enough, there'll be some orders they shed out of and others where they'll gain from. If they have a lot of liquidity providers, they should always be able to pass your orders instantly. There is a conflict of interest not to do this if they can. This conflict of interests is everywhere in retail Currency Market. To prevent this I propose some simple things:
    a) Only trade with a broker which you can trust. Who can you trust? This is quite difficult to figure out. Maybe collect some experience. Read the business report. Is there a corporate responsibility report? How is the management? Where are they controlled? What does this law look for?
    B) Attempt to print your sign (price and period ) AND your true execution (price and time) in a logfile via the robot. If price and execution time differ from sign to true execution too much, there's just some explanations:
    I) requote
    ii) higher slippage
    iii) price manipulation
    Of course, the first two are also manipulated. Confront your broker with this matter and force him to explain. Otherwise you'll hand this on to regularoty agency and to your lawyer. To get your money back then, would be hard. However this should give you a bit of benefit if you're dealing with a scamming broker.
    C) Avoid news trading.

    And then there is other things which should be taken under consideration.

    Once, I informed my broker about bizarre prices, they weren't able to explain how this happened and wished to have my account password. Of course I didnt simply hand it to them. In the end it didnt matter, because it was on demonstration. But I wonder why they should log on my account, if they can observe all information without doing this. Yes there may be an opportunity, that the regulatory obligations just forbid them to monitor my account pursuits and need to ask me for permission. And so they could pretend to follow along with their duties and continue to be able to have full access to account actions. I don't understand what situation is true. I must give you some notion of how this functions.

    Also intriguing considering (cluster) risk, do you know how gambling shops work? First the estimate the properbility of an outcome of an event B, like 10 percent (=1/10). Then they will provide you with a price for the results of event B say 9($ or ). The expected price of this event 0.9 ($ or ) for every 1 $ or you invested. So on average you lose. However it does say nothing of the legitimate outcome. The likelihood of B are 10 percent but can still occur. If to many customers bet on B, then the betting shops requires to much risk, irrespective of the expected value, irrespective of which outcome will happen. They simply understand, if B comes true (which will sometimes be the case)they might need to pay to a lot of customers. What they do is:
    a) They themselves bet on precisely the exact same event on precisely the exact same outcome at a different broker.
    B) They decrease the prices such as B through time for every additional customer gambling on B if there are too many of them.
    A broker does exactly the same. If there are too many orders at precisely the exact same time, they won't promise to give every trader the best price, so they requote. But if requoting happens to frequently, you might either have a bad broker or a scamming broker. So it may be possible that by pure randomness that your algorithm sends orders always when others do as well. You won't realise that online demonstration.

    The next thing I want to mention is all about market effiency. Imagine every trader on earth ( or almost everyone) trades exactly the same sign. They buy, when a sign happens. Who'll sell them for that sign? This simply means, if a robot or a system gets too efficient or overly profitable and everyone uses it, there'll not be any counterparty for that specific price. Perhaps not your broker, not a different trader. Not a liquidity supplier. So you won't get that specific price but a worse one (requote). Also, why if someone sell a well working bot, not use it for himself?
    Did you know that you can control statistics? I don't talk of changing single numbers in the statistics. I mean: When selling a well working bot, every seller will only present the time and timehorizon where it worked. They won't present you havoc in time, of course. This would be very suspecious. So they opt to present the statistical result of the exact same bot of the decades 2012-2013 (200% return) or 2015-2016 (50 percent ), whichever gives the best results. They won't show you both. You visit either 2012-2013 OR 2015-2016. Your brain wants to fill out the rest (2014-2016 in the first instance ). You anticipate your return to be something like 200 percent as you saw in the presention ( because 2015-2016 was not introduced ). You may think even when the genuine outcome is simply 150%, it is still profitable. On the other hand, the bot gave a yield of -1000percent in 2014. Would you still buy it, if you knew this before?
    In this last case, it isn't your broker's fault but instead your own incapability of judging statistics.

    Another thing is that we have this elitist perspective on people of the financial industry. Would you really think such a person would say anything like Yes it is true, there are people that can program robots which are cleverer than me /us. ?

  3. #3
    I prefer not to use any robots, they catch the control of our trades and we cannot make that much of that we were supposed to. Thus it is better to exchange manually than to by some robots.

  4. #4
    Automated systems fight since they are mathematically based, but traders are not computers. A trader can, and does, anything. . .whenever. The edge of an automated method is merely an edge to it. Each other trader has another edge and so anything can happen at anytime.

    Low ranges will generally cripple your account extremely fast. Whipsaw in a range will finish you. This is frequent during a trend consolidation levels, during 4Hr chart turns, and between the hours that the banks are closed in which you're investing in mono e mono.

    That all said, in my view an EA that indicates you to evaluate an entry is beneficial. An EA which will automatically shut for you is useful. Both of them are more like scripts in which you manually trigger them in accordance with your preferences.

  5. #5
    Most traders hurry to automated trading platform out of impatience and a powerful greed to earn as much money in a brief time however undeserving. I prefer to thoroughly learn my system and put it to use in a live account after refining it in my own demo.

  6. #6
    Quote Originally Posted by ;
    Most traders hurry to automated trading platform out of impatience and a solid greed to make as much money in so short time however undeserving. I prefer to thoroughly learn my method and put it to use at a live account after refining it into my own presentation.
    1. To start trading you want trading plan. (defines entrance,departure, size, etc. ). .)
    2. Such plan could be executed manually or by app. Program will constantly do it quicker, more exact, 24/7 and consistent. It'll avoid emotions, sickness, greed, feelings, etc.. . Auto trading might also be backtested unlike trading.
    3. There are many profitable systems (robots) and if trading plan is profitable with manual trading it would be even more profitable in auto mode.

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