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The Myth of Automated Day Trading Systems
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Other Articles by this Author- Posted: 12-05-2008
There is a widespread rumor in the financial community that successful day trading can be manually programmed and automated to produce vast profits for minimal work and input on the part of traders, providing a regular and consistent income by simply setting up a system, clicking a button to turn it on, and walking away.
This is NOT true.
I myself am just one of the many victims of this ?automated trading system? myth. In 1996, I strongly believed that a trading system like this was possible, and I wasted four years of my life trying to automate and computerize trading.
I programmed dozen of strategies, I used TradeStation, MetaStock, and OmniTrader, and I read countless books and articles on systems trading. I researched automated trading solutions and talked endlessly with other traders, always trying to find the edge I was missing. I stayed on this path for four years, only to realize in the end that I was chasing the nonexistent Holy Grail of trading.
Simply put, finding success with automated day trading systems is impossible.
Think about it for a second:
Markus Heitkoetter is a 19 year veteran of the markets and the CEO of Rockwell Trading. .
Computer technology can tell a trader if a particular trading strategy will be profitable or not without risking any money. Therefore, there is no excuse for losing money in the forex markets.
Computer technology can also be used to develop trading strategies by locating a re-occurring price pattern that once it forms, it does one of two things, either it does A or it does B, but it does A consistently 3 times more often than it does B.
A trader can take the above info and turn it into an automated trading strategy as follows.
FOR A LONG ENTRY INTO THE MARKET
Condition 1 price = re-occurring price pattern
Condition 2 price = entry price plus 100 pts.(profit target)
Condition 3 price = entry minus 60pts.(stop loss)
IF condition1 then buy 6 contracts. (Long entry)
IF condition2 THEN sell 6 contracts (exit trade)
IF condition3 THEN sell 6 contracts (exit trade)
I have personally researched, tested, and developed a day-trading, currency strategy. My strategy requires 40k to fund (to which only a small percentage is at risk on any single trade).
I do not have 40k, but it is my intention to form a 10 member-trading cartel with each member contributing $4400.00 to fund the strategy. The only way I’m going get traders to join a trading cartel is to let them paper-trade my strategy free of cost and obligation for 30 days.
If you were one of a 10 member trading cartel on Jan. 1, 2008. Your weekly avg. profit would have been $568.00