Discretionary Trading vs Automated Trading

[DrEvil]

Thanks for the the answers guys. I'n my limited experience I find that on daily forex charts, a combination of classic price patterns and candlesticks are quite reliable. The problems I have are mainly trying to day trade by using hourly charts after receiving a signal on a daily chart ... the patterns certainly don't behave as well intraday. I am not at this point trading big enough to trade off daily charts. I find that I get a lot of information from looking at daily closing prices, which I assume filters out the day trading noise. For example if I can get a breakout of an congestion area on a daily chart, confirmed by a close on the daily bar, then I will always take a hourly trading on ideally a flag or pullback to a trend line, or m.a.

I agree that lack of volume info is a handicap, but isn't it a handicap for everyone? ... thus leveling the playing field?

I wasted months trying to figure out indicators and since I have removed them and focussed on price, I think I have raised my game. I hope I am on the right path.

Good trading!

[wsam29]

	Quote:	DrEvil
	The problems I have are mainly trying to day trade by using hourly charts after receiving a signal on a daily chart ... the patterns certainly don't behave as well intraday. I find that I get a lot of information from looking at daily closing prices, which I assume filters out the day trading noise. I agree that lack of volume info is a handicap, but isn't it a handicap for everyone? ... thus leveling the playing field? I wasted months trying to figure out indicators and since I have removed them and focussed on price, I think I have raised my game. I hope I am on the right path. Good trading!

You're helping (analyzing) yourself already and you don't even know it.

Day trading may not suit your personality. Don't force a style of trading onto yourself if it is not working. If you lose money, stop doing it. Remember what I said before, "in order to make money, you need to stop losing money" or somewhere along those lines. How you come to terms of stopping the "harmful" actions is up to you, but that is the key to being a net winning trader.

Level playing fields in FX, I think not, there are some who do get FX volume, you can spot where the "big money" is coming into the market to take your money. All volume does is confirm if there are players or not because if you get more volume in your direction, you have a pretty good chance your trade will work out. It's not a shoe in, but you will have the edge.

I am so glad to here you junked the technical indicators that are mathematical based. You definately are on the right path.

Just remember you will not succeed at this game if you quit.

[torero]

I think there is never level playing in every market you trade in, i.e. the locals will almost always be one step ahead of you, the market makers will always be one step ahead of you. Given, that forex is the same way. Volume is important but somehow I've managed to stay profitable without volume. One change or adaptation I've made from futures to forex is I scrutinize price action more, be more picky with S/R areas and relied on Fibs, Pivots more to really make sure the setup is overwhelmingly in my favor. Basically I made sure the breakout is TRULY confirmed before making that entry and stay away from ranges, trend-following specifically. All this without volume, a miracle in some ways. The other observation I've made is that my R/R ratio is high 3:1 minimum or I don't trade. Surprisingly this is what has made the equity curve climb. I've managed to get many 3:1 wins when it was a winning trade.

[TinGull]

I'm about to embark on implementing a semi-automated way of trading for myself. Basically, I need things to be as mechanized as I can make it, or else I may not take certain trades. My trades will all be based on Market Profile, and I'll basically just make my calls pre market, and setup my working orders so they're out there to get filled, and the odds are in my favor that the market will do as I plan on. Based on my analysis of the market I trade over the past while, the setups are pretty well defined. When the first setup fails and I lose some points, then I know right where the next setup will be to get that lost profit back and then some.

That's basically how I will be doing it for this entire week, and if it works in my favor, then I'll be doing that from here on out. I'm basically posting it up here so I have some accountability and know I need to follow through with it, instead of sayin...ah, nevermind. I can go purely discretionary since it's not making me much money, and thats what I love, right? not making money? ummmm, nope.

[Nick1984]

Well I would assume that most discretionary traders are such because they either a: dont know how to code and b: they love to have the "hands on" approach to their trading.

If you love to trade why would you take away the enjoyment of it through using an automated system?

Soultrader asked before what would become of discretinary traders as more and more ppl become reliant on automatic systems. Well I may not be a coding genius (i dont know diddly by the way) but i would assume that these systems are all reactinary in nature i.e. they react to what the market does. I wouldn't think an automated system could ever make the market move! If everything was automated 100%, where would the momentum in a market come from?

I migth be wrong about my analysis of automated sytems but in the end I think that yes there are still more discretinary traders and these people are the real market makers.

If you love to trade, and love the wheeling and dealings of the markets why would you contemplate giving that up in the first place?

Good luck on your trading mates!

[notouch]

I read somewhere that most of the liquidity on the NYSE comes from automated systems and the percentage is growing on Globex and Eurex. That doesn't mean the market will be untradeable for discretionary traders although the nature of the market will change as it always does.

[Nick1984]

really? Where did u see that?

I must not be able to understand how these automated systems work to well, cause I can only conceptualise them as bein 100% reactionary to what the prices are doing. In a market with low volume and price basically flat how would an automated system get the ball rolling?

If these systems are profitable in the long run, it's pretty interesting and I'd like to learn more about how one would go about setting one up especially if one is coding illiterate!

[Nick1984]

Another pertinent question that could be asked would be: Is automated trading likely to overtake discretionary trading in the future or make it obsolete?

Personally I can't see that hapenning. Very "terminator" to me.

[drk1t]

Sounds like some of you are looking for the holy grail of trading again. I'd love to have a box (software) that you just turn the crank and out comes the cash but it hasn't happened yet and I don't think it's going to. The markets change to much. What moves it today isn't going to do it in the same amount and the same way tomorrow. All I see in this magic software is another level of work and confusion. Instead of using our human brain for basic primary decisions I see it being used for making decisions of factors that may or may not make a difference, and those factors my change from plus or minus and in varying degrees. Gosh, I can programs to make programs just to establish values to put into trading software. The market is the market because of the human nature, when you can plug in all 8 billion people and their thinking at the time automated systems might have a chance. All this said, if anyone has one that works and will always work, let me know! I'd love to go drink beer and know the old computer is cranking out cash. Right now I'd settle for a program that would automatically do my taxes, use creative credits and deductions, print out receipts for them and guarantee I'd stay out of trouble with the IRS.

[Nick1984]

amen brother