Monday, 22 April 2019

Algo Trading and the HUman Touch

The title of this post is taken from an article Mrs EL found on LinkedIn here.

2019 saw another shift in the way that markets are trading. Algos are more persistent than ever. When I look at the detailed order flow we now have access to I can see them in action. They can't hide any more.

However, it means that our algos have to be a lot more complicated. We had been doing well with the ELgos until early this year as we could draw a straight line through performance dots and make a nice profit most months. Then the next change happened and it was back to the drawing board.

We had been running our ELgo machine and created a new ELgo every day, taking the last few weeks of data and creating a new ELgo to trade the next trading session.

This doesn't work any more.

To create ELgos with low draw downs we need to run our ELgo machine for three distinct daily data sessions every day. This is impossible to do on a continuous basis in the time available  for other users as it would be a 24 hour operation. And I don't want a job.

There is a good solution, probably better than the original ELgo. It's HYBRID trading. I've been writing about this for years now but it looks to me that Hybrid is the best way to go as hybrid trading a single market has a return on capital is much higher than a single fully automated trading algorithm - I can earn in a week what an algorithm can make in a year as I can manage risk better and use my capital more effectively.

But there is a very big downside: I have to sit there and manage the trade.

Hybrid trading has a fairly structured methodology:
  1. We have designed and programmed an ELgo that I "arm" when I see a picture in the market coming together. by "arm" I mean that I click a button that tells the ELgo that it should instantly put on a trade when the conditions I have programmed are fulfilled. 
  2. The moment that those conditions are true, an order shoots out 
  3. As the order fills a series of targets and a stop loss appears on my chart at specific risk-reward locations. I then decide whether there are better places to put those targets and stop based on the order flow I saw and drag them there.
  4. I can then go an have lunch or whatever although if I stay I can move those targets and the stop as conditions change.
  5. In a couple of hours trading the DAX in the morning, take abreak til the ES, Gold or Crude is ready and I can trade another hour or so and then I'm done.
But I do have to be there some of my day. Fully automated trading was a way to be free of the screen but it looks like I can't do it for the time being. We are continually working to find something that will free us from having to spend more than a few minutes a day in front of the screen and will alert you guys when that happens. Meanwhile, "ching ching" with hybrid ELgo. Its Algo Trading with the Human Touch.



    no se puede tener todo en esta vida
    que menos q echarle un vistazo de vez en cuando
    al market, master
    por lo menos hasta conseguir los objetivos diarios
    trazados, despues a descansar, a seguir estudiando y/o
    investigando o a hacer lo que mas nos guste jjjjj

  2. Are you planning on making this hybrid algo available ? I know the EL method because I have all the previously released CD's...would love to just buy the algo and manage the method hybrid style.