This afternoon I got a first-hand experience of how beneficial it can be to incorporate computer code in my trading routines, even if it leads only to partial automation. This came about by a trading signal that my code generated whilst I had completely missed it when looking at the chart with my own set of eyes at the end of a long day.
This led to me attempting to code some strategies which quickly ran to several hundred lines of code – I figured the more complicated, the better, right? Well, thankfully in the last few weeks I managed to write some simple code to help trade a strategy manually and with some discretion, although hopefully at some point I will be able to fully automate it and let it trade by itself.
In any case, what I wanted to share, is that the code is starting to pay a lot more benefits than I had expected. I have tested the code carefully and most of the time it sees setups when I would like it to see a setup.
Am starting to get into a routine whereby I scan 20-30 charts every four hours to check for setups, and then I cross-check that against the code that is running on my TradeStation platform.
Today was an instance where I did that at 5pm in the afternoon, by which time I was trying to juggle several things and was starting to get tired from a long day of work. After I cross-checked the 4H chart for Cable (the GBPUSD exchange rate) I was surprised to see TradeStation give me a short-signal. I had manually looked at the Cable chart and had noted the volatility it had experienced during the day – and even though I spent a couple of minutes looking at it, I had not realised that the chart was actually meeting my 5-point setup criteria. I had to do a double-take and then quickly realised that the code was giving me the signal that I had instructed it to do.
The code was doing a better job of quickly analyzing the chart in the way I had told it to, and was not being worn down by trying to multi-task or by tiredness.
As a picture is often more meaningful, here’s what I looked on my MT4 charts – and didn’t see a setup.
And then I looked over to the TradeStation chart, in which my own code is running, and had a short-signal at the start of the new 4-hour candle. Note the area marked as ‘A’ below shows on/off signals for each of the 5 components of the setup. The chart also shows the current price, by which time the trade is, this time round, nicely in profit:
Having confidence in the tested code, I promptly executed a short trade. An hour and a half later the trade is nicely in profit – though that’s not the main point of this story – the trade may well end up as a loser – I expect 50% of my trades to be losing trades – the main point of it is that I benefited from having spent time writing the code and then incorporating that code in the setup-scanning process.
This reminds me of the stories of the importance of having check-lists – such as for pilots under pressure, or doctors in the surgery room – trading is not life-threatening as in those situations – but it definitely pays to have check-lists, and even better if it has been automated!
Thought this might be a good experience to share with the trading community.