Are you optimising each transaction or are you an average trader?
At Expert4x we use the approach where we take a trading technique that has proven itself using a manual approach and then try to automate it as best we can.
Unfortunately, there are many aspects of successful manual trader experience and skills that are very difficult and even borders on impossible to automate. We recently quizzed a very successful manual trader and found 23 factors that he took into account when placing a routine trade. He did not even know about 14 of these factors because they had become subconscious tests he never realised he was using.
Aspects like:
- Determining the best and optimum price levels to place stops and targets based on the current price action for every specific transaction.
- Being able to decided which currencies to trade when there are 4 or 5 simultaneous trading signals
- Being able to decide when not to trade due to current events such as announcements, weekends, political events, holiday periods over the end of the year and April holidays. Or even knowing when to keep transactions open or not over weekends.
- The ability to make trading decisions in a mixed signal trading environment e.g. the long term trend not supporting the intended trade.
- Choosing between 4 to 6 currencies giving great signals
- And the list goes on…. State and phase of the market, recent trading record, market sentiment etc.
So how do all EAs automate a successful manual trading system
- They ignore most, if not all, aspects that make the manual trader successful (some mentioned above) and don’t even try to automate those.
- They average everything out. When optimising an EA the results are averages specific to the history used e.g. What is the average target or stop size that produced the best results. What is the settings over say 200 transactions that produced the best results (that is an average) etc.
- They ignore the fact that in manual trading every transaction is optimised whereas with EAs a huge number of transactions are merely averaged.
- The fact that history is unlikely to repeat itself is conveniently ignored
- this list also goes on and on…
Possible solution
So what is the answer. One possible answer is to a automate as much of the brainless part of trading and to let traders do the major trading decisions manually.
- So the EA could identify the mechanical trading setup,
- bring that setup to the traders attention,
- the trader can then ignore the proposed trade or adjusts all the setting to that particular trade (optimise the trade),
- and the EA could then manage the transaction on an automated basis.
- the trader could always interfere with the transaction at any time.
This way we are using the strengths of the trader and automation at the same time. We are optimising every transaction.
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