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Using an automated day trader to generate income

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Re: Using an automated day trader to generate income

#91

Post by steveplace »

mixmax wrote: post #34
matt1 wrote: post #15

I have no idea what that guy is talking about with double moving averages and what not, but I'd bet that a few simple IF/THEN statements could have produced similar results over the same period of time. Say it hand done well, would you go an invest a few thousand dollars using the IF/THEN algorithm? On a similar note, say this guy did lose his $3500. Do you think you'd be reading this post on how to automate day trad…

using past performance to estimate future performance simply does not work This is not always true. I had a theory a few years ago that went like this: The price of a stock is a direct function of the perceived price of the company multiplied by a risk factor: The more risk the less the stock is worth. On the day the yearly report is publicised for a company the risk is big just before the publication because nobody…

That risk you speak of may not be discounted in the price, but rather in the implied volatility. You'll see that after major earnings reports/announcements there is an IV crush on the options board.

You can game this by looking at historical IV for pre-earnings and see if the current is over/under. You can then sell straddles or strangles if you think the price will stay in that area.

It's even better for GOOG because they always release earnings right before options expiration, so there's a ton of voodoo going on in their price.

Re: Using an automated day trader to generate income

#92

Post by kingkongrevenge »

mattmaroon wrote: post #77
mixmax wrote: post #48

Earlier quoted context omitted.

Yes, in that respect it's like physics - by measuring you are altering the experiment. The volume on the day the reports came out was quite heavy, but if you had bought a substantial amount of stock it would certainly alter the market as you say. The point is that I'm pretty certain there are holes that will allow you to look at historic data and make statistically good buys - but you have to look where noone else is…

There's so much money to be made in the stock market (most of the money on Earth) and so many people searching for that data with so much resources (including math PhDs by the hundreds, some of whom I know) that looking somewhere nobody else is is virtually impossible. You're much better off focusing on your career and buying ETFs. And thanks!

forex dwarfs global equity markets.

Re: Using an automated day trader to generate income

#93

Post by volida »

mattmaroon wrote: post #75
Brushfire wrote: post #68

Earlier quoted context omitted.

Its hardly a suckers game if you know what you are doing. I know prop traders that make huge bank essentially daytrading on the forex and others. Sure, its highly controlled gambling, but you of all people should realize that its not a losing game for everyone. If anything, its just a suckers game for small timers -- like all other gambling.

Any sufficiently volatile form of gambling has big winners. That doesn't mean it's +EV. The markets (especially forex, from what I hear) are such that even if it were impossible to outperform the broader indexes, you could very well know multiple people who did so over a period of years or even decades. See Fooled by Randomness for a more detailed explanation.

if you open 1 lot in your life and sell it and outperform the market, yes that's random. If you open more lots and your success rate is higher than 50% then you can't really call it random. Playing random in forex kills you.

You can treat it as gambling yes, but it's not.

Re: Using an automated day trader to generate income

#94

Post by blasdel »

olefoo wrote: post #55
apstuff wrote: post #43

boolean TraderAnxiety(boolean mktStatus) { if (mktStatus == FALLING) { Sell(); return true; } if (mktStatus == SURGING) { Buy(); return true; } if (mktStatus == FEAR) { Loathing(); return true; } if (mktStatus == OVERMYHEAD) { UseProfanity(); return true; } return true;

Your `boolean` has 4 values? Most languages I am familiar with require booleans to be either TRUE or FALSE, although I have met a few where undefined or NULL are possible values.

Yes, there are four boolean values, at least electrically: zero, low, grey, high.

Re: Using an automated day trader to generate income

#95

Post by mattmaroon »

volida wrote: post #93
mattmaroon wrote: post #75

Earlier quoted context omitted.

Any sufficiently volatile form of gambling has big winners. That doesn't mean it's +EV. The markets (especially forex, from what I hear) are such that even if it were impossible to outperform the broader indexes, you could very well know multiple people who did so over a period of years or even decades. See Fooled by Randomness for a more detailed explanation.

if you open 1 lot in your life and sell it and outperform the market, yes that's random. If you open more lots and your success rate is higher than 50% then you can't really call it random. Playing random in forex kills you. You can treat it as gambling yes, but it's not.

You can win more than 50% of wagers even over fairly large numbers if you're -EV, especially if you're only slightly so and the variance is large. And with tens of millions of people attempting to do this between forex, stocks, futures, etc., it's a virtual certainty that one could find a large number who have.

Again, read Fooled by Randomness.

Re: Using an automated day trader to generate income

#96

Post by wildwood »

ruby_roo wrote: post #17

Heh, so this has piqued my interest. I have absolutely no experience in online investing/day trading, although I'm pretty sure a lot of you are veterans. Any books you'd recommend to a programmer with day trading aspirations?

Anything by Van Tharp. He trains traders at all levels for a living. My personal favorite is "Trade Your Way to Financial Freedom".

Re: Using an automated day trader to generate income

#97

Post by wildwood »

sdfx wrote: post #32
matt1 wrote: post #15

I have no idea what that guy is talking about with double moving averages and what not, but I'd bet that a few simple IF/THEN statements could have produced similar results over the same period of time. Say it hand done well, would you go an invest a few thousand dollars using the IF/THEN algorithm? On a similar note, say this guy did lose his $3500. Do you think you'd be reading this post on how to automate day trad…

I think the no-arbitrage principle comes into play as well: If there is an (easy) set of rules that you can follow to make money, then there are enought people to act according to these rules so that you can't win anything. Seriously, this simplistic view of the market is just a threat to your hard earned bucks. There are historical prices available at finance.google.com. Backtesting your strategy before playing arou…

How high to you have to jack up a) the number of people who believe in this principle, and b) the number of simple ways to make money (possibly multiplied by the number of available markets), before this principle is no longer true?

Re: Using an automated day trader to generate income

#98

Post by volida »

mattmaroon wrote: post #95
volida wrote: post #93

Earlier quoted context omitted.

if you open 1 lot in your life and sell it and outperform the market, yes that's random. If you open more lots and your success rate is higher than 50% then you can't really call it random. Playing random in forex kills you. You can treat it as gambling yes, but it's not.

You can win more than 50% of wagers even over fairly large numbers if you're -EV, especially if you're only slightly so and the variance is large. And with tens of millions of people attempting to do this between forex, stocks, futures, etc., it's a virtual certainty that one could find a large number who have. Again, read Fooled by Randomness.

I think it's a combination of factors luck, knowledge, practice, that ultimately their result may be called random.

However my opinion is that Forex is not gambling. In wagers to win big you must either combine different bets with odds that pay as someone predefined. If you combine more, the need for luck increases. If you bet a large amount of money on high paying odds then again you need luck.

In contrary, foreign exchange you just trade the currency according to your prediction. The only way to automatically lose the negative lot is going off your margin. To win big, your prediction doesn't need to go against the odds like a soccer bet for example.

But, I will check out that book. Thanks

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