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Discretionary traders do not have the time advantage. They have to trade many years to get the same insights that an algorithmic system can spit out within an afternoon.
Making selfmade insights is very helpful to get a good understanding about what works and what doesn’t work. With automated trading, it is like in real life. One year you have a very nice summer, in other years the weather might be bad. An automated system just does what it is told to do, and it will not violate the trading plan because of emotional reasons, nor will it do revenge trades.
My version of your first programming example would allow you to watch a relevant output that will be automatically drawn and refreshed on your chart with every price change.
Sometimes you want to exchange buy and sell signals to prove that a reversed signal is a market disadvantage.
Whenever I manually tried to do the opposite of what I thought was necessary, the price did the opposite of the opposite. Let’s imagine you have traded the RSI for the last five years. How do you know if there is a better version?
Especially in automated forex trading, one question comes up very often: what if there is a limited number of possibilities and combinations to consider? And your computer can do that for you, even if you have a device that is several years old. There is a kind of thinking that is very human, and it is called Heuristics. Heuristics are an abbreviation in thinking to save brain calories.
Whatever you want to trade, make a decision and do a back test.
How are most trading systems sold? Everything is positive, and you will see images of bundled dollar bills, attractive young women on sports cars or big yachts. That is not what reality really looks like. Don’t believe that! A lot of people try to improve things that do not work very well, but I learned that I rather prefer to improve the things that do work. Today I do everything from my home office, and now I know that I have been very lucky.
To find a good combination, I need to do a lot of backtesting. Random entries are a good way to find the optimal system settings, because in 100 back tests you will get 100 different results. When I started out, I had no idea what I was doing, so I listened to the free advice that the financial industry provided. Risk does not only mean a bigger opportunity, it also means an increased problem if the setting is too high.
The only reason to buy or to sell something on the markets is to make a profit, at least for me.
Emotional pain often leads to the fact that one does not stick to the on trading plan. Nevertheless, we have to cope with crisis situation somehow.
Ulysses told his crew to tie him up to the mast of his ship and to seal their own ears with wax to avoid the temptation.