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Automated futures limitations of trading


#1

could you specify what limitations I would be facing if I sought out an automated trading platform?
thank you kindly.
Ted


#2

Hello Ted, and thank you for your question. Could you please be more specific as far as what you mean by “limitations”?
Do you mean from a methodology stand point, or the limitations that certain platforms have? Again, the more specific you get the better we can address that.
Matt


#3

If you can address the structural and methodical part, that would be of assistance.


#4

After a whole year of developing my own system, all I can say is that automation and its limitations come from the knowledge limitations of the developer. If you lack knowledge of automation concepts so will your system. However, The key advantages to automated systems, are execution speed, flawless execution (for systems properly designed & tested), instant access to an “infinite” amount of information (historical, different markets/instruments), hopefully a good use of the statistical aspects of trading, and the ability to diversify & scale one’s trading (multiple markets, multiple strategies, 24/7) beyond what’s possible to a discretionary trader.


#5

for the longest time I would argue that a skilled trader in front of a computer who can observe a wide range of both fundamental and technical factors simultaneously can make more informed and better decisions than an automated trading system. There are so many various opportunities that present themselves to a trader each day to make money, and most of these will involve different factors and correlations – which themselves change over time. So it really is prohibitive for a trading system to be aware of all these opportunities and have ways to trade them.

So for an automated trading system to have a positive expectancy, it really has to identify a simple, repetitive opportunity, that it can continuously exploit. These types of opportunities are a lot scarcer than people think, and can be eliminated if too many automated programs target the same opportunity.


#6

When you trade long enough you really begin to understand it is really about probabilities. Intuition or feel is a losing game in the end. In my opinion the only real way to consistently use and measure probabilities is systematic trading. If you develop a system the best way to insure it is executed is to automate it. There are many more limitations and problems with trading that come with having to try and execute both from a psychological and speed perspective. So I don’t see any limitations as almost any system can be programmed.


#7

In your experience, what methods could be automated and what methods could not?


#8

Anything that has triggers or rules for getting in and out can be automated.


#9

How trustable are automated trading platforms? Can they deliver similar results as compared to manual ones, or do they have an edge over other platforms?


#10

Any platform that could deliver automation features, could also deliver discretionary features.
The development and automation of a method from a discretionary method depend on the skills of the trader.
Platforms just deliver features for automation or discretion, they do not create the success per se.


#12

My argument still stands, experienced traders manually trading will obviously make better and informed decisions than a robot