Automated Trading Systems- Has Anyone Used These?

#1
I came across two 'automated trading systems' via google search.

Both are built on top of AmiBroker and work for Nifty futures and positional trading

Has anyone used any of these? :listen: The performance report suggests that even while making only about 30% success in calls, the profit potential is very high just by managing the risk amount (by strict stop losses).

Please give your opinion/review in case any of you have used these systems or know more about them.

one is called ACE Nifty Futures Trading System

the other is Nifty Positional Trading System

both are fairly costly.

Any review/opinion/suggestion will be gratefully received. :).
 
#2
Alchemist/ Man4urheart,

please share if you have developed/used any such automated systems in the past.. wanted to see if the claims on profitability are achievable before i try one of them..

thx
 

vasa1

Well-known member
#3
...The performance report suggests that even while making only about 30% success in calls, the profit potential is very high just by managing the risk amount (by strict stop losses). ...
Again, while waiting for man4 and Alchemist's replies ....

The part in bold seems scary.
 

man4urheart

Well-known member
#4
Alchemist/ Man4urheart,

please share if you have developed/used any such automated systems in the past.. wanted to see if the claims on profitability are achievable before i try one of them..

thx
If there system works so well! why sell it boss, keep the goldmine to themselves!

Why are not these guys self trading it and enjoying the profits!

I used the pivot system in 2008 and made 38000 in bear market! But it is so dynamic that all the time new rules popped up because market conditons are so dynamic.

The logic which works for 3 months no guarantee will work in next 3 months!:marchmellow:

I will suggest don't go there!
 

Alchemist

Administrator
Staff member
#5
Why are not these guys self trading it and enjoying the profits!

The logic which works for 3 months no guarantee will work in next 3
Those are two very important points.

Firstly, if I have a system that gives me just 20% returns per year, I will quit all my work and become a full time trader.

---------------------------------------

Also, most systems work in patches.

They work for some time and once market conditions change, they stop working.

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Take for example a simple system based on moving averages.

The trader goes long with price goes above 50 EMA and the trader goes short if the price falls below 50 EMA.

This system would do wonders in a trending market.

However, once the trending nature of the market is lost, the system will give multiple buy and sell calls around the same levels.

See the chart below:

It is based on the system that I have mentioned.

Red graph indicates equity of the trader.

An investment of Rs 13743 on 1st January 2008 would have turned into Rs 22726 on 28th January 2010.

(Brokerage and rolling costs have not been considered).

 
#7
Thanks for your replies..Does help put some perspective.

few questions..

1) say one developed a system with few technical indicators. Would the number of people taking action on the recommendations of the system affect the success of the system? will it diminish the chance of prediction becoming correct or increase it?

2) As alchemist's & man4's example suggests, it is then possible to design a system to work in your favour at least for some length of time or at least during trending markets. So it should keep working as long as you tweak the system as per the changing times say once or twice a year perhaps?

3) if you look closely at the performance reports of one of the systems, the system made wrong calls and triggered stop loss at 70% of the time and got it right only for 30%. Still by limiting the possible loss to close to 1%(i assume by using a tight stop loss) the system builds the equity over large number of trades. The key is that the right predictions should make higher percentage returns than the stop loss %.

number of trades = 112

Winners =32 (28.5%)

avg profit % = 3.8%

losers = 80 (71.4%)

avg loss % = 0.9%

net profit % over 112 trades = 119% of initial capital.

in other words, 7 out of every 10 trades in average was a loss making one-but importantly limited to the amount of stop loss.

now the question is, should it not work for any TA based system(pivot or MA or any such) as long the risk management is taken care of in a similar way ? I didn't understand the part where you said it will work only for a short term- Why would an established technical pattern stop working - say 50 MA after a while?
 
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#8
automated systems are used by big guys as this article shows

http://blogs.zdnet.com/Burnette/?p=1727&tag=nl.e019

The average individual trader is pitting his wits against some sharp and sophisticated computer program on a day to day basis in identifying trends and patterns.

One is subjected to all the human fear and greed and everything in between. Other is ruthlessly mechanical and mathematical in execution.

:pcguru:

little wonder who comes out bleeding. :stickyman:

I think its better to use the computer than to fight one.

The below article is informative.

http://www.jurikres.com/faq/trading.htm#keys
 
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#9
I don't get tired of this, do I?

I am reading a book "Beyond Technical Analysis: How to Develop and Implement a Winning Trading System by Tushar S. Chande, PhD" (John Wiley and sons)

"The most important reason to use a trading system is to gain a "statistical edge." This often-used term simply means that you have tested the system, and the profit of the average trade—including all losing and winning trades—is a positive number. This average trade profit is large enough to make this system worth trading—it covers trading costs, slippage, and is, on average, likely to perform better than competing systems. "

"The statistical edge is relevant to another statistical quantity called the probability of ruin. The smaller this number, the more likely you are, on paper, to survive and prosper. For example, if you have a probability of ruin less than, say, 1 percent, your risk control measures and other measures of system performance are typically sufficient to prevent instant destruction of your account equity."
 

vasa1

Well-known member
#10
I dont get tired of this, do I?

I am reading a book "Beyond Technical Analysis: How to Develop and Implement a Winning Trading System by Tushar S. Chande, PhD" (john Wiley and sons)
In a lighter vein ... You've stopped going on about automated trading :D.
 
#11
This is a major issue which have faced major controversy in US, from the very fast and large number of trades done by the large I-Banks of the like of Goldman Sachs.

There are many dedicated forum/blog about individual attempts/projects on Automated Trading in India.

The main point is you can check your system on historic data on Markets for last 6-7 years, but to convince users that it will repeat the same performance for coming years and to make them subscribe to this is a big task.

Another thing related to this is the Quant based funds. These are in vogue in US and other developed markets but yet to catch up here. There are Quant based funds in India too, from Reliance for example, but they haven't caught up with the top performers.

I believe for all of us here, we are mainly Investors looking for a decent return from equity. So, if we can have a stable automated system giving us 15-20% a year, many would happily leave their investing woes and subscribe to such a fund/system.
 
#12
If there system works so well! why sell it boss, keep the goldmine to themselves!

Why are not these guys self trading it and enjoying the profits!

I used the pivot system in 2008 and made 38000 in bear market! But it is so dynamic that all the time new rules popped up because market conditons are so dynamic.

The logic which works for 3 months no guarantee will work in next 3 months!:marchmellow:

I will suggest don't go there!
I agree with you, but to add to this point I would suggest to be in touch with the service provider and keep the information and knowledge about the system updated. This seems a prudent decision.
 
#13
Trend following system

Trend following systems are always better for medium to long term investors even though they produce lot of whipsaws during consolidation periods.

Simply follow SMA (20), MA (20), Wilders(20). When the close crosses above them, a buy is triggered. When the close crosses below them, a sell is triggered.

A buy trigger can further be strengthed by adding volume criteria. Say if the volume on buy is greater than average volume of last 5 days.

Use a trailing stop loss by following the following criteria.

Lowest Low of last 5 days or recent trough which ever is maximum by ignoring extraordinary spikes if any.

Hope it helps.:five:.
 
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Atiker

Active member
#14
Trend following systems are always better for medium to long term investors even though they produce lot of whipsaws during consolidation periods.

Simply follow SMA (20), MA (20), Wilders(20). When the close crosses above them, a buy is triggered. When the close crosses below them, a sell is triggered.

A buy trigger can further be strengthed by adding volume criteria. Say if the volume on buy is greater than average volume of last 5 days.

Use a trailing stop loss by following the following criteria.

Lowest Low of last 5 days or recent trough which ever is maximum by ignoring extraordinary spikes if any.

Hope it helps.:five:.
How is this post related to discussion going on in this thread ?
 
#15
How is this post related to discussion going on in this thread ?
Automated systems simply buy or sell signals leaving no room for human interpretation. This also does the same. So, I thought it would add to the thread.

If it does not fit here, please suggest a thread where can I post it.
 
#17
Automated trading systems deny you the freedom to interact with your account and be in full control of your trading account. In the first place, before buying any sytem, ask yourself why it is being sold. If it is such a goldmine as the seller suggests, why sell it then instead of using it to make money?
 
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