Episode 56: Turning Your Discretionary Trading System Into a Mechanical Trading System

by robbooker on June 20, 2012

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Are you interested in developing an automated trading system? If so, Episode 56 is especially for you. Rob Booker is joined by trading blogger Jennifer Thornburg to discuss the challenges of turning a discretionary trading system into a mechanical one.

In this show Rob asserts that even though many people think they have a rule-based trading system, most people don’t. Rob and Jennifer discuss why traders try to fool themselves into thinking they have a rule-based system, while addressing the disparity between what we think we’re doing and what we’re actually doing.

Rob and Jennifer answer the following questions: What’s the first thing you might do in order to turn a discretionary trading system into a mechanical one? What should you look for in a programmer — and what things should you watch out for when making your agreement with a programmer? How can you protect your trading system from being taken by someone who is programming it for you?

Rob also gives you a ballpark range of about how much you should spend per hour to get your programming done, and he also lists a number of items that you should pay an attorney to help you protect.

If you’re considering your very own automated trading system, then Episode 56 is a must-listen!

Follow Jennifer Thornburg on Twitter: @JenTho3

{ 2 comments… read them below or add one }

Michal June 22, 2012 at 9:04 am

Great podcast for me as I’m programming trading systems professionally since 2006 (I’m programming myself since 1984). I’m trading myself too so this makes me an ‘ideal programmer’.

One remark about copyrights. There comes somebody which says: make me a robot which sells when MACD crosses 0 down and buys when it crosses up. And he wants exclusive copyrights just for 100$. Well, it cannot be done. Note that the trading idea here is trivial however, my basic template which I use for building EA has about 700 lines of code which handles trade execution, error handling, spread jumps, etc. You cannot possibly expect that I will give a customer with the MACD holy grail copyrights to my code which took me many years to develop. Therefore, when a customer wants copyright from me then he is in fact more expensive and worse off. Because I do not include any of my algorithms in the code. He/she must reinvent all wheals them self.

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Michal June 22, 2012 at 9:12 am

Protecting trading ideas from ‘stealing’ by programmer is very easy. First of all, almost all trading ideas which I get for programming are worthless. This is because most of people concentrates only on entry leaving the rest on very basic level. One of my best robots trading robots, which I use on my life account, can be freely copied here. The robot opens trades when touching a trend line which I draw manually on daily charts. It is very profitable when you know how to draw trend lines.
This is in fact another item which is frequently misunderstood. Even in your podcast you describe a trading robot as something you put on your account and go on holidays when it makes you reach. This is unrealistic, programmed robots, which IMHO are correctly named expert advisors, should only help you cutting down the work load on tedious tasks (like waiting all night till the price hits support/resistance).

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