If Forex is so lucrative then why many people are not interested in this?

[vzhig]

I think it's time to clarify some things about computerized trading systems.

PanMarcepan, indeed some of the best humans like Kassparov are better than best computers. However, most other humans who are not professional chess players would loose a chess game to a computer. As most of us here who are not professional Forex traders would trade much worse than a good computerized trading system. So Pete's system doesn't have to trade as a pro who takes into account all the news and stuff and adjusts strategies on the fly. It merely needs to trade better than an average Joe, and if it'll still make profit, it'll be invaluable.


Pete, I don't share your fear for marketmakers profits. Before they'll start to loose their profits professional traders will appear who will trade against your system and will try to fade it. It's known that any profitable system deteriorates when too many people start to trade it. First slippage increases, then guys with deep pockets outsmart and fade system traders. That's why big computer system trading firms like D.E.Shaw, Renaissance Technologies, etc. keep their systems top secret.

For those who are interested, I suggest reading the book "The Predictors". It's about the creation of a successful system trading firm, Prediction Company, which works for UBS. You won't find any info about their trading strategies in it, but would get a feel what it takes to develop a portfolio of good ones. In short, a bunch of PhDs working like crazy for several years. But then, they've created a professional trading system and retired to observe it trade with, probably, millions in their pockets. So, Pan, DeepBlue's of trading are out there, and may be Pete has a hold of one.

Good trading everyone!

[PanMarcepan]

Vzhig, Yes indeed.

Your post has very valid point.

So I clarify myself that my comment was not related to Pete’s system but his statement only:

“The system, which adapts to various market conditions, is more effective and more consistent than a live trader, has the ability to make more calculations and better assessments of the market faster and more accurately than a live trader, and has no emotion”

…and I’d be glad to discuss this statement but will be out of the original subject.

I’m not aware of D.E. Shaw nor Renaissance co and will research this topic. Thanks for sharing, you gave me some work to do.

I don’t totally negate the system effectives. I personally know a successful trader who trades the system many years and yes, he’s up.

But let me ask you a question,…

When the system is idle or loosing (drawdown) a few months in a row, would you continue to keep it running?
Even you are convinced 99% of effectives of your system would you continue using
It when your capital is at critical tolerance level?

He does
Here you go its human effect again.

I said chess to compare computer vs human. Chess is a game of strategy and calculations, that computer should easy win. It doesn’t.
The special program designed only for Kasparow took more space then WinXP operating system and the bets were in millions of dollars.


Unlike chess, the market is a living form of nature. We don’t need to be a genius to understand it. If we focus on systems, we’ll never get close to it and will never understand…how simple it is, indeed.
Simplicity is the key issue and can open hidden door. We are to sophisticated these days and rely on computers too much forgetting these are tools only to make a life simpler not more sophisticated.

The Titanic sank because was too big size not because of waves or hit by iceberg.
You could easy raft a hand made Kayak along with him having more chances to survive.

Kind regards,
Pan

[peteuk]

Hi Jason
Keeping it simple is my pholosphy too, but this software doesn't know the meaning of the word

Pan oh Pan!
How's it going Pan?
Like vzhig says, the Garry Kasparov's of the world are few and far between, how many chess players can memorise that number of games, and even with his amazing skills he got into some difficulty.

This system doesn't take into account market sentiment or what Greenspan or Trichet say, it has no opinion and is completely unimpressed by news or views, and that is where it has an edge. It trades on what it actually sees, and compares that to what it has seen and makes a calculated projection. Whereas humans form an opinion on where the market will go if there's an interest rate hike, the system will only be interested in what the market is actually doing compared to what is has done previousy and what it is likely to do in the future. Technical analysis, which is what the system is based on, is pure numbers, and number crunching, statistics, projections based on historical data, assessing strength of those projections, analysing, monitoring, and comparing market conditions, hundreds of calculations a second, are all performed more accurately and more efficiently by computer than any human. Another advantage is that silicon chips have no emotion.
Agreed, a top class trader would probably knock the system for six, but how many Buffet's or Soros's are there among us?

Hi vzhig
You're absolutely right of course, and I guess that's the most valid reason against general release to the masses. I never thought for a moment the thing would work, you know what it's like, I saw it as a challenge and a project, like a dog with a bone I couldn't let the idea go. The more obstacles it threw up, the more determined I got! I'm no PhD, but there's some pretty sharp IT guys on the job. I can well believe there are already systems in existence, I rarely have an idea first, and an automated trading system based on TA is so obvious.
Thanks for the book reference, I'm going to try and get hold of a copy if it's still in print.

Cheers All

Pete

[PanMarcepan]

Finally Pete,

Hi Pete,

Thanks for sharing, always appreciate.
Yes, the computer will do more calculations per second then humans. I can’t dispute this statement. How accurate it is we may experience here and I’m glad to be a part of this discussion.
I haven’t been following MT and occasionally visited the forum in the last few weeks.
Hmm.. ? may be more then few times.
I don’t mind to try it, why not?
I assume you’ve spend lots of time developing and you
didn’t fell off the pumpkin wagon yesterday so I’ll pay for the evaluation period. Just EM me.

Cheers,

[csaunders]

Well glad to see Pete's return has sparked some healthy debate - Pete you seem to have that affect...

Since I am a Developer you would think I would be punting using Computers as a means to make money and make trading decisions - although for me it is impossible to put in programming logic how I trade. Maybe my "system" is not really a simple cut and dried methodology which makes me such a sceptic. How would you program gut feel? How would you as Pan says take key market events into consideration - 9/11 perhaps?? I don't think you can stick to any system come hell or highwater - discretion or human intervention is inevitably part of it and when this happens you corrupt the system - deviate from its original trade. Once this happens, will you do it again... or stay hands off...mmm

The thing is Pete news key event etc can have a marked impact on the market and swing things around totally and make the market act like it shouldn't(or at least as your system expects) Will you system be able to make that kind of jusgement call. Lets say the Fed decides to increase interest rates at what point will your system decide - oops time now to go long dollar after being short for the past few months - after you've taken a 300 pip loss??

Handsoff system trading could be successful - maybe you can prove me wrong although when guys like Richard Dennis goes bang (after OK admittedly making very good money for a good few years) then I become skeptical.

Anyhow like I said good luck with your ITS venture - the markets are great at the moment for making money with good volatility maybe you can make a few traders very wealthy.

Cheers,
Cliff

[PanMarcepan]

Cliff,

You don't want to include an extreme events in your system.

The system should play the averages.

But simple as bell is that EURO hits the highs on December for example and is week during the summer periods (June, July) Have you calculated this into your system?
Have you ever wondered why it goes this way?

Regards,
Pan

[csaunders]

Sure Pan although how does your system decide extreme is extreme - history perhaps of movements after extreme events - although rules of the past are there to be broken.

Nope can't say I have noticed your observation - will look into it.... any "consistent behaviour" to make money interests me.

Cheers

[PanMarcepan]

Cliff,

Too many recommendation firms were ringing about EURO making new highs in December way before (3-5 weeks). You didn't need to have a system to recognize it.
It was a pattern developed by humans. The trend was so strong that even important events couldn’t break it (Example: Saddam capture).

I don’t have any system by the way ....nor anything to offer.

just joining a discussion.

Regards,
Pan