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

[peteuk]

Originally posted by csaunders

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

Gut feel can, and often does, lead to losses as well as gains. How many times have we all exited on gut instinct only to watch a further 100pip move, or entered a sure thing and then watched as it reversed and took out our stops. On the other hand we've all got out in the nick of time on the same instinct and been glad we did. Inconsistent, that's what gut instinct is, an unreliable and inconsistent emotion. Agreed, automated systems will often miss major moves caused by fundamental events, but the other side of the coin is it will miss the major moves against us. It has a specified criteria to meet, and if it's not met it doesn't trade, it err's on the side of caution, never second guesses, and has insurmountable confidence in itself, as well as being consistent, there are no equity spikes to get the adrenaline pumping! Let's face it, an interest rate hike for example can be good this month and bad the next, and there is often no way to predict the way the market will view it or react to it, all we can realistically do is guess. Guessing is in essence gambling. The system neither guesses nor gambles, it trades what's actually happening and protects it's operators' equity by using appropriate stops and a fail-safe system which protects against sudden moves against an open position.

When I first looked at the beta version and watched it trade there were times I said 'no way!' as it longed what was so obviously a short, obvious to me that is, and I'm embarrased to say it proved me wrong. Long it said, long it did, and long it was!

Thanks for the posts and the opinions guys, I need to hear as many negatives as possible, I myself am looking for a reason why it shouldn't work.

Have a great day people!

Cheers
Pete

[rezo_s]

Just my 2 cents here - as I am reading this post and seeing how useful it is - like it a lot. and although we are off the topic, we got into something interesting here.

Robert, Pete, Cliff, everyone...

Well, from the start I would like to clear what is my point: I belive computers are stronger than people, despite lack of intuition and some other aspects. therefore, I belive automated system can and may be very well profitable but I still do not belive in fully automated trading. Although I dont know how to react to 100% statement. I do not recall who mentioned it, but being 100% correct is 100% impossible. I belive only in one 100%: deth is for 100% - everything else is questionable (maybe even deth is not 100%...). whenever I hear 100%, it makes me smile - its too strong of a statement.

it was mentioned that only few people like Kasparov can beat the computer; I say that soon, even he will be defeated. Why? because at the moment, even though processors can make 3.000,000,000 calculations per second, if we translate it into chess game, it can still calculate not more than 15-30 possible combinations of game to develope (I dont recall how many exactly), because each move has 100s or more of possible continuations of the game...so at any given moment, computer knows not as far as human due to experience and flexibility of human brain.

But even with this little possibilities of computer nowadays, there are still very few people that can beat it. Its a very big question, whether there will be a man that can beat computer when instead of 3Ghz we will have processors with 30ghz...

Without computer calulations, we wouldnt be able to see the indicators calculated automatically with change of every tick...

And one more thing about system and computers that was mentioned here: the inability to take into consideration the fundamental events. I think it is totally unnessesary. The basis of technical analysis is that there is no need in fundamentals, and that even those factors are already in the price action...

As for me personally - I am still against beliving in fully mechanical system, and even though my trading is based totally on technical analysis, I am trading on combination of my own judgments + the system. I would say my trading is more of discretionary and less systematical.

Why I dont belive in 100% mechanical? maybe because despite my young age I am still a conservative approach trader. Maybe I am afraid that its possible I dont know, but I tend to agree with our Dear Pan that market is much more than chess. It is a live and breathing organism, which is represented my hundred, thousands and millions of traders, financial institutions, banks and so on...

I dont know,

just another 2c

Rezo

[csaunders]

Hi Rezo & Pete,

Interesting posts and I do have to agree with some statements and disagree with others.

One thing I have to disagree with is the statement that one should simply ignore fundamental events - the market discounts expectations not actual events - how can it, since it doesn't really know what the outcome is going to be - only make an educated guess and discount accordingly.

Further lets say your system fires a buy just before an interest rate announcement that 50% of economists predict will stay put and the other 50% expect a hike - hmmm - do you take the buy signal???? And if so with what kind of stop - different to your usual 30-50pips??

Points to Ponder.... I'll have to say if my system fires anything before the Fed makes a decision - I'll blissfully ignore it.

Anyway I've added my two cents - plus some extra change.

[Toccata]

Pete and all

I couldn't reply to your new thread "Intelligent Trading System" so will reply here as this one is getting VERY interesting.

There have been comments about ignoring (or not!) fundamental data. I always ignore as surely this is built into the price action - e.g. the price will do something extraordinary on good/bad news and I don't believe that you can predict this action - sometimes it will do exactly the opposite to that expected.

I think Pete is on the cusp of something very special and I do hope that he is able to launch the product - my only caveat is that I would like to understand what it is doing even though it will be automatic. I've already told him I want to be his first customer!

I too have a mechanical system (probably nowhere near as good as Pete's) which works on forex and index futures such as s&p. I have three issues though:
1) It is 'simple' so I am always asking myself is it too good to be true?
2) It works 24hrs which makes it impractical to trade manually - too much stress as I need to sleep!
3) I haven't automated it and don't know how to.

What am I saying here? I think it is absolutely feasible to build an automated trading system which is self adapting to the changing volitility of the market and which is profitable.

What I don't know is this - if such a system becomes commercially available what will it do the the global markets? There is also an issue with 'availability' - if you are trusting this 'enigma' for your livelihood, can you really rely on a laptop on a remote connection connected through an API to a brokers system and beyond? There are lots of points of failure here so can you trust it?

[rezo_s]

Well, I would still claim that anyone what uses technical analysis and wants to make deisision based only on TA, should ignore fundies as good as the one is able to. Me, for example, unless I exidently hear about news coming out, I dont even know when is the news and what is the news to come out. I remember some facts and days when I was using Fundes, and I know for example that on fridays there is a jobless claims of Us annownced and things like that, but usually I dont even look at the calendar. Many times I can give an example of entering before the news, or day before the news, and holding the position over and after the news - news and expectations are taken into the price action - only if there is avery strong mismatch it may be bad. But those who know what the smart money is, will understand why am I standing on this point of view. Smart money make technical analysis theory work most of the time in addtition to just expectations. Smart money is much more that expectation of masses. If technical indication is matching the sentiment - nothing can be better that that... ok, I will be telling too much now

GL,

Rezo

[bearprofits]

Someone please enlighten a dumber than the average bear. If the position is taken that FOREX is a zero sum game, and if in time, everyone trades using these computers - who wins and who loses?

Basically we are talking about a kind of FOREX AI, artifical intelligence, that is able to read or adapt to changing market conditions. Would not all AI systems adapt instantaneously? Are some systems smarter than others?

Where does this all end?

I don't want to sound the pessimist, I wish Peteuk all the luck in his new adventure, but in the long run I think we will all be back to square one, Heads long tails short.

p.s. Thinking about the ever increasing and evetual barrage of super computers controlling currency markets, is it possible that the speed of transactions would be so fast that entire fortunes could be won or lost in nanoseconds?

Would this be a universal stalemate or meltdown?

The only winning move in this game would be no move at all, just something to ponder...............

[vzhig]

Basically we are talking about a kind of FOREX AI, artifical intelligence, that is able to read or adapt to changing market conditions. Would not all AI systems adapt instantaneously? Are some systems smarter than others?

yes, and big money firms constantly compete with each other in this area

Where does this all end?

It doesn't

p.s. Thinking about the ever increasing and evetual barrage of super computers controlling currency markets, is it possible that the speed of transactions would be so fast that entire fortunes could be won or lost in nanoseconds?

again, from what I've heard, it sounds like it's already hapenning among the big guys, not in nanoseconds, but in seconds, as they move huge amounts with huge leverage through the very liquid forex market

[vzhig]

Toccata, I have a lot of experience in writing automated systems, so I could help you if you are still interested in automating your 24hr system. Email me.