Very few traders can successfully control hope, greed, anxiety, fear and panic in their trading; letting those emotions leak into their trading decisions. Automated trading systems don’t have an opinion and don’t have emotions – they stick to a programmed set of rules no matter what is happening around them, providing the discipline and patience required for a more objective and reliable approach to trading.
While it is largely impossible to test how your gut feelings and intuitions about a market would have performed in the past, automated trading systems can easily be back-tested using historical prices to see how the system would have performed (hypothetically) if it had been active in past market environments. While there are limitations to back-testing (chief among them that the code was prepared with the benefit of this hindsight), we would still rather see how the current algorithms worked on past prices than not having that data point when considering an automated trading strategy.
Given the limitations of back-testing, we also forward-test each trading strategy -running the strategy in real time on live market data . This out of sample test can help confirm the effectiveness of the trading strategy on today’s market climate and expose any problems inherent in the code.
|Real Money Fills
While back-testing is nice to have, and forward tests help confirm a strategy is viable – knowing how actual investors are doing on a trading strategy with real money is the most valuable piece of data, in our opinion. The iSystems platform by TradingMotion tracks the buy and sell prices (the ‘fills’) for each and every user for each and every trading strategy on the platform, showing subscribers the best fill price received, worst received, and average price across all accounts following a trading strategy. No more questioning if what you see on the website is what you’ll get. Users are guaranteed to be within the best and worst prices, and while sometimes you may get the best price, and sometimes the worst – more often than not you will be right around the average price due to the orders being sent in random order, resulting in actual performance over time lining up with what you see on the platform.
Automated means it runs automatically, without the need for you to be glued to the computer so as to not miss any trade setups or exit points. The trading strategies are programmed to react to price movements and place orders to enter and exit as needed. All you need to do is activate a strategy, and it will run day in and day out until you deactivate it, doing the hard work for you. You can monitor your performance, make real time changes to your portfolio of strategies as needed, and the iSystems platform by TradingMotion will automatically do the rest, giving you accurate information on your fills and account status, leaving human error out of the equation.
Trading strategies come in many different shapes and sizes, some preferring to pick market tops and bottoms, others coded to ride the daily trend, and everything in between. They also run on over 40 markets spanning different countries and asset classes, with everything from Euro Bunds to Corn to the e-mini S&P futures. The the iSystems platform by TradingMotion allows you to study, compare, and choose from many different trading strategies to create a diversified portfolio with various developers, markets, and strategies. Such trading of a portfolio of uncorrelated trading strategies can help reduce risk and potentially lower drawdowns.