Automated Trading Experience

Experience sometimes brings us to some intriguing conclusions. Throughout my trading career I have come across many different types of trader and trader profiles. By trader profiles, I mean the different characteristics that 'build' a trader. I have seen boastful traders, proud traders, cool traders, anxious traders and even those that are very calm. However, I have been able to separate a wider sense that encompasses many of the trader characteristics: psychology.

I have personally observed a few traders with great potential fail simply because they could not handle the decision making process of a trade. They would fail to take a trade. They would rush into trades. They would close trades too early either by not letting their profits run or they would move their stops to brea keven with no logic behind it.  They could not simply follow the plan.

I myself have made many mistakes as such and still make them from time to time. 

The idea of lack of discipline is widespread in the trading industry and is one of the main reasons why most traders fail. 

I have never been a big fan of automated trading. The thing about the widespread majority of automated systems, EAs, Robots or however you like to call it is that they are composed of complicated math formulas rather than a well thought mechanical system in which, from time to time, there can be human intervention. Most mathematical formula based EAs, have a breakpoint and cannot be regarded as a healthy investment means in the long run.

On the other hand, if one has a sound trading plan, has logical places as to place the SL, where/how/when to enter the market as well as a TP level and all this can be translated into an automated system, than I tend to believe that one might get the upper hand: the discipline and psychological aspects of trading will be left out.

The market has artificial intelligence and no place for emotions or sentiment. Period. Be on the wrong side, lose money and the market will not be merciful on you: It will take your money and won't give it back to you.

Therefore, the counter weapon for that is to also use artificial intelligence through a sound trading plan thus leaving all kind of emotions outside.

Also, I came to a personal conclusion that trading is game of averages. You will win some, loose some. However, if you can land an average high  enough so that profit is sufficient as to counter the risk involved, than you are in business. I believe that automated or semi-automated systems can help us achieve these goals and with less stress.

By this, I don't mean that you don't have to do your work every day. On the contrary, this means that you have extra inputs as to provide extra room for improvement in your own trading system. Also, some decisions are there to be made such as: reversing a position or not? Should I be in the market during heavy news days? If I am in the market during te news, is it prudent to reverse?  and so on...

Cutting it short, I decided to 'migrate' 4 of the trading systems I use into automated systems. The first one is up and running but filled with small bugs. Therefore it is still not fully operational but operational enough as to provide a general idea.

The system has been up and running (forward testing) from the 24th and it was down for a day (the 28th). It has been able to rightfully increase a $100k account by more than 1% just in these last few days (actually just 4 actual trading days) . Needless to say that backtest on the system provided impressive results as well.

If you are interested in following the beta version of the system just click on the link below:

http://www.myfxbook.com/members/maurosandrade/ftt-18-4-stand-set/154655

Too early to congratulate my programmer or the system itself. However, I can call it a good start.

Cheers and Happy trading to all.

#EURAUD Intra Year Trade

I missed this oppotunity on this double-bottom most-likely to take out the whole years range north. As price is channeling sideways covering the whole years price action, it could even become a triple bottom giving us a possibility to enter a third touch of the lower trend line.

Another possibility is to enter at the break of the upper line of the channel.

Perfect double bottom so far. Can become a triple bottom. A position north can be established @ the bottoms third attempt or at the neckline break.

#ES and #EDJI Technical Pictures

It seems like we are going to see some more slide in the equity markets pretty soon.

The S&P 500 e-mini is showing the index inside a triangle formation in the 30-60 min time frames. The main diagonal is pointing up. Therefore it suggests it being a continuation pattern.

Pretty much the same can be said abot the e-DJI. We could see the future index as low as 9750 points sooner than expected.

I wouldn't be surprised to see further yearly expansion south since the Dow changed the main move of the year to down last week. A good extension is expected.

The e-DJI consolidation: 9750could be within range pretty soon.

ES 30 min chart: further slide is also expected.

#AUDUSD Long Term Outlook

This pair has perhaps the most exciting technical picture at the moment.
After reaching historic highs, the aussie reached and bounced from a trend line (to the pip) observed on the weekly/monthly charts. Just draw a line connecting the highs of 2004/2008/2011. On the other hand, I also ask you to draw a descending TL extending from the lows of 2004/2008 and projecting on. This should be enough to give you the idea of a broadening triangle that most-likely will turn into a diamond in the future.
There is an RSI divergence on the weekly chart that only confirms a MACD divergence that has a must-reach target of 0.9536. However, we should see this pair trading much lower in the following years.

On the daily/weekly chart, PA broke an ascending channel formation and now found support at a very interesting trend line that can be drawn from the low of 2007, the low of dec. 2010 , the low of the current year + yesterdays low. A next approach to this trend line will most-likely mean the kiss of death and the aussie will resume its path down.

So I guess it's very likely that we shall see an Australian Dollar, much, much lower in the following years.

Once again, time will tell.

The daily chart showing the rising channel as well as the trendline that extends from the low of 2007. Price stopped its temporary descent right @ this trend line.

The weekly chart: a bounce towards much lower levels is expected. This broadening formation might turn into a huge diamond.

#EURUSD Outlook (Diamond Pattern)

After some time drifting up and down, it seems that the Euro has finally shown its face. The pair is inside a diamond formation that will most-likely break south and will double it current short-term downtrend.

It took some while to form this one, but all the other formations seemed to be too obvious.

Also, price is currently trading very close to the lower border of an ascending channel that extends from the low of June, 2010. A break (very likely) will send this pair towards the 1.2300 area.

I still maintain my projection for an EURO below parity for the following years.

#ES and #EDJI diamonds

The e-mini futures for September for both the S&P 500 and for the Dow Jones have very similar pictures.

They both have been trading for some time now inside a diamond formation that can be observed on the daily/weekly charts.

The ES one demonstrates it has penetrated the lower right side and will most-likely head down with a minimum objective target @ 1127 points. However, I truly believe it will head much, much lower.

The EDJI has not been broken yet, however it will probably take out the right side lower trend line very soon. The minimum objective target for e-DJI is @ 10376 points.

The e-DJI is also developing what could become a huge diamond on the monthly chart. In this case, this index could go down towards around 9000 points in the following years before it picks up some  long-term bullish momentum again. For this level to be reached, it could take some 2.5-3 years. But it seem a very  likely scenario

Here are the charts.

The ES showing the diamond formation on the daily chart. The MOT is around the 1127 area. However, it could go much lower.

Similar picture at the e-mini DJI. MOT is the dotted line. Prices could go as low as the 9000 points in a few years time.

#USDJPY Small Diamond

After providing downtrend action during this week, it seems that we will see some bullish action for the Yen.

Spotted this one earlier today and was witing for confirmation. Lets see what happens.

A diamond on the hourly charts. Some bullish action could be seen sooner than later.