Is 100% Mechanical Trading Possible?

[cowcool]

I am yearning for a 100 % mechanical trading system that is profitable?. Is this possible?

Thx!

[Tams]

I am yearning for a 100 % mechanical trading system that is profitable?. Is this possible? Thx!

the short answer is: YES










of course conditions may apply.

[sevensa]

Originally Posted by cowcool I am yearning for a 100 % mechanical trading system that is profitable?. Is this possible? Thx!

Yes, of course this is possible.

[Tams]

this is the trading process:

you monitor the price/volume movements,
(HH, HL? LH, LL? 50 Week High? at pivot point? reached support/resistence?, etc.,)

you analyze the price/volume behaviors,
(bounce off double top? break out of formed channels? stuck in congestion? volume increase with price? etc.,)

based on the above...
you can come to a decision on where you are in the bigger scheme of things
and what opportunities are available
(are you in the midst of a major up trend? in the midst of a minor downtrend retrace?)

you act on your conclusion -- how best to capitalize on the opportunity
(e.g. buy call? sell put? buy stock on margin? short ETF? enter a credit spread? long on buy stop? etc.,)


if you can quantify the above, you can mechanize your trading.

[JEHs]

I have not seen a "system" where you can say for certain, "if price does this, then I will do that" every time and have it make money. I would venture to say that most traders who have a "system" or "plan", have, as a strong element in that plan, their own intuition.
For example, you could look at Joe Ross's 123 and RH trading, and it looks good, but if you trade it every time, you will loose money. You have to have that little extra that says, "this is a good one" or, that one doesn't look so good, I will pass". I have seen many traders say, "Look, if price does X at such and such a level, then I will do Y and over time I will be a winner". I would look at the chart and say, why not when it did just that back here, why did you pass on that one? Sometimes there is a good answer, but often the answer is, "it just didn't feel right".
This make the whole concept of a "plan" hard to grasp. A "plan" implies having a set of rules you follow every time, but I think intuition plays more of a role then even the successful traders realize.
Trader Vic, in his first book, said he mentored 35 traders. Had them in his office, gave them access to everything he had including his watchful eye and detailed advice. In the end only 5 managed to be successful.
I know there are some mechanized systems that do OK most of the time, but I think here we are talking about trading at a human level.

John

[swansjr]

I run two systems that I've developed that are 100% automated in TradeStation. You can make money doing this. No system or trader makes money all the time but like any other form of trading, you are putting the odds in your favor.

I also do discretionary trading on the side. Actually, I 'm learning discretionary trading on a simulator during the market hours. I hope to actively trade non correlated markets against my automated systems for diversification.

[sevensa]

Originally Posted by JEHs I have not seen a "system" where you can say for certain, "if price does this, then I will do that" every time and have it make money. I would venture to say that most traders who have a "system" or "plan", have, as a strong element in that plan, their own intuition. For example, you could look at Joe Ross's 123 and RH trading, and it looks good, but if you trade it every time, you will loose money. You have to have that little extra that says, "this is a good one" or, that one doesn't look so good, I will pass". I have seen many traders say, "Look, if price does X at such and such a level, then I will do Y and over time I will be a winner". I would look at the chart and say, why not when it did just that back here, why did you pass on that one? Sometimes there is a good answer, but often the answer is, "it just didn't feel right". This make the whole concept of a "plan" hard to grasp. A "plan" implies having a set of rules you follow every time, but I think intuition plays more of a role then even the successful traders realize. Trader Vic, in his first book, said he mentored 35 traders. Had them in his office, gave them access to everything he had including his watchful eye and detailed advice. In the end only 5 managed to be successful. I know there are some mechanized systems that do OK most of the time, but I think here we are talking about trading at a human level. John

Just remember that just because you haven't seen something, or think something is not possible, does not mean that this is impossible.

Imho think this is a common misconception that people think successful traders are profitable because they use intuition or have some magical gift. Some probably do, but I would venture that they are in the minority. When I created a trading plan with strict rules, my trading turned around. When I don't follow the plan and follow my "intuition", my account very quickly tells me why I have a plan. I think having a solid plan provides you with much better odds to be successful than trading on intuition/gut feel/seat of your pants.

[Blaiserboy]

Originally Posted by swansjr I run two systems that I've developed that are 100% automated in TradeStation. You can make money doing this. No system or trader makes money all the time but like any other form of trading, you are putting the odds in your favor.

I am wondering if the systems have regular small losses or do they lose for a period of time, causing you to stop their application.

[BlowFish]

If you are going the full mechanical route it might be wise to run a couple (or more) systems on several instruments. This approach is more robust.

There is a bit of an art (so I am told) knowing when a system needs tweaking when it needs a rest (some stop working then start again) or when it needs retiring.

[swansjr]

Originally Posted by Blaiserboy I am wondering if the systems have regular small losses or do they lose for a period of time, causing you to stop their application.

My best system has losses like any other trading method. I would say it's regular small losses.

My other system I stopped trading recently because the results for the past year have been more-or-less a wash. I would like to refine it more or move on to another concept.