Automated Trading Systems are “Expert Advisors” or “Robots” that must be in your portfolio.

The days of manually trading are dead or at least they should be.  Automated Trading Systems are the present and the future of trading in Forex, CFDs, Futures, Options and even Equities.  Pretending otherwise is just foolish and allowing yourself to serve as prey just like the majority of retail traders.  If you are not trading with an Automated Trading System, it is time to learn how to build your own, copy the trades of someone with a strong track record and build a portfolio out of it.

Why are people manually trading and not adopting Automated Trading Strategies?

Not everyone is, but many still do.  That ‘many’ audience is comprised of retail traders.  The same audience that unfortunately subscribes to Signal Alerts to place trades from scammers that blatantly falsify their results and have an unverified track record.  So why are retail traders falling behind the times?  One is an auxiliary industry and the other happens to be the circumstances of the participants.  We’re going to focus on the former.

Educational Providers and Sources are anti-Automated Trading Systems

Educational Providers and Sources are against the following:

• Automated Trading Systems (Algorithmic Trading)
• Managed Forex (PAMMs, MAMs)
• Trading Signals (Copy Trading)
• Placing the responsibility on traders to manage their leverage properly
• Facts
• Being accountable for their educational material
• Brokers (the broker is the supposed enemy)
• Utilizing multiple strategies

Educational Providers and Sources thrive on:

• Retail Forex Traders’ gullibility
• Retail Forex Traders’ greed
• Retail Forex Traders’ money

They want to make themselves to be the only source where retail Forex Traders can go to and find a way to profit in a so-called rigged game (as they present it).  They want theirs and they want to continue the woes so that they can be the wise soothsayer.

They are worse than the scam artists because at least the scam that the scam artists presents results in a quick loss of money and the realization that the trader was hoodwinked.

Through exaggerations and false equivalences, they argue for their more archaic methods.  These sources and providers want traders to go into the market like it is an exam at school.  Otherwise, it is cheating and of course cheaters never prosper.  It’s a moral crusade and their war on Automated Trading Systems is hurting the retail Forex Market.

Are basic technical indicators, understanding how leverage works and paying attention to the news going to make one a profitable trader?  No, the trader is going to waste time looking at multiple screens and squinting while trying to balance out all of the information that they receive.  A simple demo account for one week is not going to prepare you.

You know who these educational providers are:

• They refer to their programs as ‘institutes’.
• They put out videos that give away 90% of their strategy anyway while the other 10% you can find out on forum from someone who regrets the decision.
• They publish books with flashy titles.
• They make grandiose claims.
• They want to mentor you for a fee.
• They write articles for page views leaving behind wreckage.

They have different methods, but they do not want you to automate your trades.  They want you to put in the sweat equity and get emotional, just so you cannot blame them.  They do not offer up real metrics for success.  Sound familiar?

Here are a few Anti-Automated Trading Systems talking points.  These are real arguments made.

“So, when somebody approaches you and offers you their new trading software, ask them why they are not on a tropical island living happily ever after.” 

This is a sarcastic self-congratulating comment from an article that seeks to put all Algorithmic Traders into the same pool.  The assumption about trading software is also that everyone is a huckster and that every Automated Trading System is marketed to make people rich beyond their wildest dreams.  That’s lovely, but there are plenty of Automated Trading System participants who have their full trading histories published and verified by a third-party who are happy to accept subscribers because the objective is not necessarily to make someone millions of dollars without trying.  Also, auto-trading software really should not be sold on a flat basis because the software development process is on-going well beyond the release.  Automated Trading Systems are really SaaS (Software as a Service) solutions.

Anyone making actual dollar-figure claims as far as returns on investment is a shyster.

“It is best to actually learn how to trade consistently before you make the decision to let a program do it for you.”

This is an actual line from BabyPips, which is pretty tough to stomach since they are targeting beginners in the first place.  Why is this is a nauseating line?  It comes after this is said a few paragraphs earlier.

“However, in the forex market, there is no such thing as a consistent market. Conditions are changing all the time.”

Trading consistently and inconsistent markets do not go together really well.  If you manually trade the same way with the same style of trading, you’re going to be burned in an inconsistent market.  Sure, you will have a good month or two, but the market environments change.  Volatility has a major impact on the market and maybe the consistent “system” that you have only works well when you spot bearish opportunities.  Manually trading means you’re making interpretations, untested interpretations.  If you are going to test them out, you’ll need to perform an actual backtest with a large enough sample of trades – you have to automate to eliminate the subjectivity.

They do waffle and acknowledge the above later in the instructional piece.  At least, they can be honest.

“Forex robots can be a great tool, but let’s be real -there is no perfect “one” that will work in all environments, all the time.”

That’s nice, but they offer no solutions or defenses.  So instead of an automated method of failing, let’s have a subjective and emotional person make the bad trades is the message to take away.

They prefer to leave the topic of Automated Trading Strategies (AKA “Robots”) under the classification of a Forex Scam and walk away.  Of course, the solution is to backtest with real ticks multiple automated trading strategies that deliver a consistent level of profitability.  Forward test the automated strategies to ensure that the trades are made as they are desired in as close to real-life environment as possible, and then place the strategies into a portfolio based on backtested results with proper allocations to be adjusted.  By the way, you’re not done yet as you are always in a software development process creating new programs and altering existing ones to adjust to newer market conditions.

How did they close their educational piece?  They chose to bury quants.  Good job.  By the way, not all quants are creating programs to place trades.

“The only way any computer program will ever be able to compete with the potential of the human mind in trading, is if (when) we develop true A.I. or artificial intelligence, which by most accounts is quite a ways off. Until then, your best bet is to rely on the best ‘computer’ of them all to make your trading decisions; the one between your shoulders. Your mind is your biggest and most powerful weapon in the market, make sure you develop it properly by getting a solid trading education that will help you build yourself into a skilled and successful price action trader.”

The good news is that the article from this education provider ended with this line.

The bad news is that this was a painful synopsis of the core argument made in the article.

The problem is that humans are not always good at making decisions and often make decisions subjectively based on analogy or interpretation.  Emotions and psychological traps are at work.  There’s no sense of consistency and the opportunity to test theories and execute upon them is extremely limited.

The individual making the quote steps out of his own depth when it comes to Artificial Intelligence and in the process diminishes modern day software, which is simply smarter than any human being because the software actually has the capability to learn.  Machine Learning is a feature of modern software and it is already being used rather effectively.

Sample sizes are small when executing trades manually and an approach during a lower volatility period of a few months may not carry over into a higher volatility period.  The idea of trading in a demo or low stakes environment to validate a trading strategy often leads to ruin and wasted time because of this.  The worst case scenario is that a lot of money is lost because the manual trader thought the strategy worked in a demo or with a little bit of money and put a lot more money into it.  There’s no analysis involved to get an understanding of how it would fare over multiple years, which would subject it to a multitude of market environments.  There’s no acknowledgement that multiple strategies can work at once and the approach is far too singularly focused on one account rather than doing what investors do, which is diversify holdings.  The easiest and best way to diversify in the Forex Market… automated trading systems.

Of course, “the solid trading education” would come from the provider who does not have any skin in the game when it comes to your trading.  After all, you make the decisions as a manual trading and every trade is on your schedule.  You missed the trade at work, at play or in Dream Land… that’s on you.  They just provide you with a so-called blueprint and go from there.  Of course, you have to shell out hundreds or thousands for their knowledge, but they give everyone the same blueprint and like an author to a book or a teacher for a class, they are not responsible for losses.  If you make money, they are to receive all the glory and recommendations.  They think they are God.  There’s an idea for trading educators, get the tax treatment of a religious-based entity!  They are certainly dogmatic enough.

Why are hedge funds, investment banks, boutique funds and insurance companies turning to algorithms when the ordinary trader’s mind who receives a so-called education is supposedly superior?  Is this something that Goldman Sachs, D.E. Shaw, BNP Paribas and others should know?

Think that these firms are putting all of their money into one trading strategy and hoping things work out for the best?

Automated Trading Systems carry so many benefits

Consider that with Automated Trading Systems (Algo Trading) there are options, capabilities and positive limitations that do not exist with manual trading:

• No emotions
• No interpretation
• Backtesting capabilities
• Proper sampling
• Portfolio creation
• Ability to use multiple strategies at one time
• Machine learning
• No botches of trade orders
• No need to monitor an app or terminal
• Strategies can be altered or removed
• Copying the trades of others to diversify
• No aimless experimentation with real money at stake

With Automated Trading Systems, the demo environment is a testing environment for software.  It can be used like a Sandbox!  When you have it working like it should, you eventually will have a soft launch with less at stake due to actual interaction with a real market environment.  Bugs and fixes are made so that eventually there is a full implementation.  In the wake of full implementation, there will be maintenance and updates of the software.

You’re not really a trader anymore when you create your own Automated Trading Systems, you’re a software developer using a programming language to execute trades.

Of course, if you have an Automated Trading System or if you want to trade others’ Automated Trading Systems and have your risks reduced while experiencing strong returns, you can consult with Freevestor to have a FREE Forex Portfolio made for you.  Every portfolio is customized to meet each client’s needs and goals.  Let’s talk about your goals in a Free Consultation, but first you should get our Free Report.  Read over the report and let it be an introduction to this new path of investing in the Forex Market.  No wonder we’re called Freevestor.

The post Automated Trading Systems Have a Not-So-Surprising Enemy appeared first on freevestor.