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If you want to prove or disprove that something will give you a real market advantage, just do the opposite to prove a disadvantage.
I don’t have any emotional reasons why I picked this or that currency pair, at least most of the time. You could also decide not to trade, and maybe you should, because trade trading is not for everybody. But as long as you are trading, you need to set the sail according to the wind. What would be a good decision for an account size that is ten times as big? How do you know that?
To make an educated guess, you need a reference.
The one thing that I am most excited about trading automation is the opportunity to do a back test again and again.
It took me a while to figure out, but my first profitable system was indeed a bollinger bands system.
You can expect good and bad times, but after extraordinary good results, it will return to the average expectancy.
A small change, like a floating type variable for risk settings can make such a big impact for the results.
Market conditions might change and what worked for the last trading year might not work for the current trading year.
All the important things must be taken into account when designing your own automated trading system.
If one kind of entry would be a real market advantage, you should be able to measure that. And you should be able to also prove a market disadvantage by doing the opposite.
Why should you try to do something that any computer that was sold in the last ten years could do better? While most people focus on the entry signal, it is more about what you do after the position is opened. There are several ways to use stops. For example, you could use a fixed stop when you open a position.
Let’s talk about the false conception that people have about automated trading systems. Okay? They think they can predict the future. Even if you are smart enough to make your own trading rules, you will be able to bend or break your own rules at any time.
I think that you can greatly increase your chances when you remove your own emotions from your trading system.
There are not so much fairies around these days, but it remains a good question: if you could wave a magic wand and get the results you want, what would it look like?
At some point in time, I started to build some small and simple examples with just a few lines of code, those examples could do only one thing, like calculating the profit or the loss. For a trading account, profits feel better than losses and that might cause greed and fear. Then it gets emotionally dangerous. If you change something, you might achieve a result that might be different from the previous one.
From time to time, people ask if they could do this or that with an automated trading system. The answer to that question is often yes, you could do that.
It is possible to find the things that do work. If you do the necessary testing! In most cases, you will find that common sense does not help.