Monday, October 01, 2007

Automation, OddsMaker, and Expectations: Lessons Learned so Far

We are not only software makers, we are our own Guinea pigs (kinda like those hairclub companies).

Fully automated trading recently arrived to the suite of Trade-Ideas tools. We do this by first implementing a strategy created and backtested via The OddsMaker. Then we execute the strategy rolling forward via an API (Application Programming Interface) connected directly to the broker dealer. Our software, called "The Robot" sends market orders to buy, takes profits when needed, and manages risk with stop-loss orders.

Observations: Critical to be in the Top Right Quadrant

What does that mean? Stop and read our post that explains the meaning of this image.
  1. It is critical to create a strategy that has both a high win-to-loss ratio as well as a big difference in winning trades versus losing trades.
  2. Make sure that the strategy is one that you can actually follow. In fully automated mode we have the benefit of computer based executions, but with traders who use only The OddsMaker without the automated trading, it is difficult to follow a strategy that calls for an entry into 10 stocks in the same minute. Please consider all of these things when designing systems.
  3. Risk management ensures survival. Odds attempt to describe a probable outcome with certainty - but never in absolute terms. Each morning compare your previous day's results with The OddsMaker results we've just added overnight, see if there is big difference and if so, try to find out why. Remember that we are here to help. If you are using a strategy and your results are not what you are expecting, STOP. Talk to us and let us help you figure out where there is a problem. One on one training is available.

1 comment:

art said...

Hi,

This article is good and informative.

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