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What's Your Opinion on EAs and How to Approach Them!

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  • Post #21
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  • May 21, 2021 7:04am May 21, 2021 7:04am
  •  capm
  • Joined Dec 2020 | Status: Member | 190 Posts
Ah, what a fascinating topic! Can’t help dipping in.
I am sure many of you will know my position on the subject. For the very few still in the dark it goes a bit like this:
Mechanical (algo) good, but usually not great, as many nuances of Price movement are too difficult to code. (I can see the storm coming on this! )

I won’t go into the technicalities (the perils of optimisations, the dark matter of back testing, the demo vs. real, etc. etc. etc.)
I would like to comment on general philosophy, if I can. Trivialising a bit: on one hand you have the coders and on the other the traders.

The coders (usually a rather arrogant bunch, in my experience) think that everything can be coded, including my dog’s farts, provided they have the “right input”, which is usually a mathematical formula. If I do not give them the exact rules for my dog’s farting, it’s my fault and my problem. Fair enough.

The traders (usually a rather arrogant bunch, in my experience) think that they are applying an obvious set of "rules" that makes a lot of sense to them. They can “tell” when their dog is about to fart. They can see it from the position of the ears, or from that guilty look…whatever. And can’t understand why the coders “do not get them” and instead go about asking for formulas for dog’s farting! How weird!

My opinion is that they are talking about different ideas of what trading is about.
One group is acting on data and mathematical formulas. This has many advantages. It gives a scientific rigour to the results, as these can be properly analysed via statistical methods and give more confidence on consistency, provided they know what they are doing, and that one assumes that the future will mimic the past (a very big assumption, but, still, better than nothing or chicken entrails.) This “scientific” approach also prefers “universal rules”: a catchy E=mc^2 that encompasses everything. Writing billions of formulas to “explain” something is counterintuitive. The problem is that that “something” (price movements) is usually rather complex.

The other group is applying some form or “art”, developed over months and years of observation, study, experience that form its convictions, sensitivity and adaptation to the cycle of trading. Of course it uses rules, but they are a sort of “guidelines” and can be by-passed by someone who “knows better” in this or that circumstance. This group usually can’t explain everything they do in order to take a trade. They are good at driving their cars. They are hopeless at explaining, in rule terms, what they do when they drive their cars. Also, paraphrasing what Shouma and others pointed out, traders do not drive 24/7. And if they need to drive more than 7 hours they start behaving differently, and in the rain they drive differently, etc. Algos can’t cope with all these variables, but at least they are not subject to the vagaries of human biases and weaknesses that cripple traders’ performance.

When these 2 groups meet there is always tension.
So, where does this leave us? I do not know. Perhaps they should keep talking and find a compromise that works for both?

And I leave you with one interesting thought: the super famous Medallion and Renaissance funds’ Jim Simon and his group were not traders at all. They were scientists who knew nothing about trading. Still, at some point (they already made several millions, though) they tried to incorporate some traders' views. A good omen for a compromise? Perhaps, but I would not bet my house on it.
 
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  • Post #22
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  • May 23, 2021 2:23pm May 23, 2021 2:23pm
  •  HeyYou
  • Joined Apr 2015 | Status: Member | 1,753 Posts
what's better than science... ? gut feelings ? rumors ? information ?

what makes you think that your strategy is going to work without backtesting it (automated or not)... and why ?

I think if you trade stocks it's good to look at the news... maybe FA couldb useful to trade FX too.. but gut feelings... LMAO
 
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  • Post #23
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  • May 31, 2021 7:55pm May 31, 2021 7:55pm
  •  ccrkk10
  • | Joined Aug 2020 | Status: Member | 46 Posts
Quoting RickM
Disliked
I have worked with a team of 8 traders to develop Algorithm's over a four year period where we tested well over 50 different trading strategy's. We also had access to professional coders who maintain a Algorithm only prop firm in our city so we had a good learning base from which to build profitable EA's. I would say around 6-8 EA's proved profitable during this period but can I lay it all on the table and be honest. Best EA's were price action setups with the best being inside bar breakouts. The most popular indicator in EA's seems to be the Bollinger...
Ignored
Hello RickM,

I'm just curious about the inside bars since that was the first set up I used when I got into trading. Which timeframe performed best for them from your testing?
 
 
  • Post #24
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  • Jun 1, 2021 1:56am Jun 1, 2021 1:56am
  •  yani38
  • Joined Nov 2016 | Status: Member | 748 Posts
Beat idea, IMHO, is to read what you can, look at what is being said by the 'Majority'. Then, if you have the experience and foresight, interpret it, compared to your own skills, which come only with experience and basic market instinct, which cannot be acquired, you either have the ability or you don't. Newcomers beware, the so called 'indicators', or 'prophecies' of where the market is headed mean nothing. Feel the market, live with it for a long time, and yes, weigh up up the advice of indicator analytics, but in the the end, only your own ability to sense and act accordingly will determine your fate. An interesting read back, thanks.
"Don't Shoot Me I'm Only the Piano Player"
 
 
  • Post #25
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  • Edited 2:47am Jun 1, 2021 2:35am | Edited 2:47am
  •  rockit
  • Joined Oct 2013 | Status: Member | 917 Posts
Quoting cgorton27
Disliked
So guys as the title describes what are your views on algo trading with EA's and managing potential risk.
Ignored
If you can make your algo intelligent and self learning (talking artificial intelligence (AI) here), something like AlphaGo Zero or AlphaZero it can work.. Otherwise very likely not. So best is you are proficient in both - trading and coding AI.
..
 
 
  • Post #26
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  • Jun 1, 2021 3:00am Jun 1, 2021 3:00am
  •  RickM
  • Joined Sep 2015 | Status: Member | 2,139 Posts
Quoting ccrkk10
Disliked
{quote} Hello RickM, I'm just curious about the inside bars since that was the first set up I used when I got into trading. Which timeframe performed best for them from your testing?
Ignored
Hi ccrkk

Anytime frame that's not M15 - H1 - H4 because big player's manipulate the closes of these candles.
Try H2 or H6 but don't open any trades after the early New York open.

I would seek small take profits depending on the time frame you choose.

Cheers
Trading thin liquidity at the boundary of the charts
 
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  • Post #27
  • Quote
  • Jun 2, 2021 2:09am Jun 2, 2021 2:09am
  •  Olgatrading
  • | Joined May 2021 | Status: Junior Member | 5 Posts
The good thing about EA's is that they remove human input. The bad thing about EA's is that remove human intuition.
 
 
  • Post #28
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  • Jun 2, 2021 9:56am Jun 2, 2021 9:56am
  •  ryuryu
  • Joined Apr 2020 | Status: Member | 1,796 Posts
Guys, I think you are using robots incorrect. The purpose of the robot is not make things faster that human can do. For example is it possible to place entry and TP fast on 28 symbols at once? No, it is not possible for human, but it is possible for robot. Is it possible to catch imbalance for 28 pairs checking the conditions after every tick received? No, not possible for human, possible for robot. Is it possible to calculate global profit and close all the positions at once? No, it is not. But robot can do it for sure. Do not use big truck to deliver one ice cream. But use it to deliver heavy things or tons of ice creams at once. Also do not use F1 car for that, it is for competition, use trucks, they are created for delivery purpose, but they are not very fast.

All I see on market are tons of EAs that just execute trades using indicators (ma cross ma etc). Or just martingale and grids. This is not what robots are for. For example is there any EA that use dynamic lot size? Nope. Is there any EA that can close in loss if current day loss < previous day profit? No. And so on. That's why "EAs are not working". By the other side all the manual strategies found use strict rules for entry and exist. So they are not working too, because if code them they will not. So what's the difference? Ah, magic. Luck. Oookay. Let's rely on feelings and luck and wait for magic.
Observer effect
 
 
  • Post #29
  • Quote
  • Jun 3, 2021 12:36am Jun 3, 2021 12:36am
  •  Olgatrading
  • | Joined May 2021 | Status: Junior Member | 5 Posts
Quoting ryuryu
Disliked
Guys, I think you are using robots incorrect. The purpose of the robot is not make things faster that human can do. For example is it possible to place entry and TP fast on 28 symbols at once? No, it is not possible for human, but it is possible for robot. Is it possible to catch imbalance for 28 pairs checking the conditions after every tick received? No, not possible for human, possible for robot. Is it possible to calculate global profit and close all the positions at once? No, it is not. But robot can do it for sure. Do not use big truck to...
Ignored
I agree. EA's can assist in managing trading operations like dynamic lot size, auto trailing stop, and alerts. They just can't think for themselves, and therefore, they cannot make subjective decisions like us humans.
 
 
  • Post #30
  • Quote
  • Mar 25, 2022 1:43am Mar 25, 2022 1:43am
  •  DonFF
  • | Commercial Member | Joined Nov 2014 | 2,252 Posts
Quoting capm
Disliked
Ah, what a fascinating topic! Can’t help dipping in. I am sure many of you will know my position on the subject. For the very few still in the dark it goes a bit like this: Mechanical (algo) good, but usually not great, as many nuances of Price movement are too difficult to code. (I can see the storm coming on this! ) I won’t go into the technicalities (the perils of optimisations, the dark matter of back testing, the demo vs. real, etc. etc. etc.) I would like to comment on general philosophy, if I can....
Ignored

EAs themselves are not profitable

Its the use of the EA that is either Profitable or not!

So just take the worse EA ever seen or made and you can make it profitable......The question is HOW
 
 
  • Post #31
  • Quote
  • Mar 25, 2022 10:02am Mar 25, 2022 10:02am
  •  hazelj80
  • | Joined Nov 2008 | Status: Member | 616 Posts | Online Now
yes its all in how the person who wants it programmed uses it EAs only do what you tell them to do.
 
 
  • Post #32
  • Quote
  • Last Post: Mar 26, 2022 6:53am Mar 26, 2022 6:53am
  •  KnifeS2
  • Joined May 2020 | Status: &#3844; Balanced Trader | 678 Posts
In my opinion EA are very good if one know when to use it, you can't use a martingale EA when the market is trending. It is as if they were a football team, you need to understand when to deploy a certain player.

I personally use only "Trade Manager/Trade Pannel" that help me place TP and SL.

Remember it's only my personal opinion, i'm not giving financial advice.
My entire life in one sentence: it didn't go as planned, and that's ok.
Multi Currency All Time Return: 213.2%
 
 
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