Why do many people devote themselves to the business of programmatic trading after doing subjective trading for a period of time?
To sum up, programmatic trading has these three advantages, which cannot be achieved by subjective trading:
Reduce the pressure of staring at the market and emotional interference (the external market also needs attention)
When the market is super, human emotions cannot beat the fixed trading model
Copy successful trading patterns
Other advantages: Use statistical advantages to find opportunities, speed up strategy development, make transaction scale efficient and systematic, and reduce the process of blind failure.
Because practice has proved that no matter how successful a trader is, there is no guarantee of what will happen before exiting the trading market, and the trading process will repeat many times. There is no effective trading system that guarantees winning under any circumstances in the market. Only when the appropriate trading system is used at the right time can the maximum benefit be obtained.
Everything in the world has advantages and disadvantages, and the same is true for programmed trading systems. There are three main reasons for its inherent defects.
First, the trend-based trading system and the oscillating trading system form a programmed trading system. Generally, the signal sent by it is used as an important reference and the program is written based on technical analysis. Its technical indicators can only measure or calculate market prices and describe market changes, and cannot be the cause of market changes.
Second, technical analysis follows price changes and also lags behind price changes, so the trading signals issued by the model system based on technical indicators will definitely lag behind the starting point and end point of the trend.
Third, there are strict restrictions on the use of the trading system. In the forced trend, the trend-based trading system can play its role, but the effect is not obvious in the oscillating market. However, the oscillating trading system can only play a role in oscillating market conditions. In the development of the market, the trend market and the oscillating market are not carried out alone, but alternately in the market. Therefore, in the early stage of the transition of the trend that is difficult to distinguish, there will be inevitable losses in the specific trading system.
No system is absolutely perfect, and we are not gods. If a trader can accurately grasp the timing of entering and exiting the market, wouldn't investing be easy? In fact, the most successful investors in the world cannot do this. All we can do is to grasp the general trend of the market and get out of the market before the market reverses.
A trading signal without failure is unreliable, and a trading system without any "noise" is also unreliable. Therefore, when we regard the first two wrong transactions just mentioned as the cost and price of capturing the third big market signal , it is not difficult for you to understand. I think there is nothing wrong with losing money when trading, but missing the market is an unforgivable fatal mistake! A successful trader is the one who has confidence in the follow-up signals and executes decisively after consecutive failures.
Give up forecasting, give up fear, give up greed and joy, everything is determined by the trading system to enter and exit the market. And never give up after setbacks, because success is the last-minute visitor. Investors generally ask questions about price trends in the following two forms: 1. People with long positions generally ask "Excuse me, will the price go up?"; 2. People with short positions generally ask "Excuse me, will the price go down?" For such questions, one of our core concepts is "not to make any predictions on price movements". We only react to price changes. We abide by the trading principles, and we do what the system says. If the market proves you wrong afterwards, just modify your trading system. The trading system originally needs to be trimmed and perfected in practice, and it is impossible to have a system that is always effective and universal.
The establishment of a trading system is humanized, but the execution of the system is impersonal in a sense. Following the computer's trading instructions is a mechanical, monotonous, boring, and lonely job that requires traders to have great patience and will. Holding a huge order volume for a long time and experiencing violent market fluctuations for a long time will often put a lot of pressure on the emotions of traders, which requires traders to use a strong will to suppress their strong desire to close positions. It is truly mechanical, unwavering, 100%, and uncompromisingly executes every instruction issued by the computer.
For investors who are not determined, if they encounter the above two traps, they will artificially intervene manually. Usually this happens when there is a loss. Because of the strong desire to recover losses, it will fall into a vicious circle and cause irreparable losses. Compared with human subjective consciousness, computer execution is much easier. Abandoning too much useless thinking and insisting on implementing one's own strategy is the reason why programmed trading is becoming more and more popular.
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