The Myth of Automated Day Trading Systems

Looking for some fun? Whatever you do, Don't Click Here!

There is a widespread rumor in the financial community that successful day trading can be manually programmed and automated to produce vast profits for minimal work and input on the part of traders, providing a regular and consistent income by simply setting up a system, clicking a button to turn it on, and walking away.

This is NOT true.

I myself am just one of the many victims of this ‘automated trading system’ myth. In 1996, I strongly believed that a trading system like this was possible, and I wasted four years of my life trying to automate and computerize trading.

I programmed dozen of strategies, I used TradeStation, MetaStock, and OmniTrader, and I read countless books and articles on systems trading. I researched automated trading solutions and talked endlessly with other traders, always trying to find the edge I was missing. I stayed on this path for four years, only to realize in the end that I was chasing the nonexistent Holy Grail of trading.

Simply put, finding success with automated day trading systems is impossible.

Think about it for a second:
If day trading

could be automated, why would Meryll Lynch, Goldman Sachs, and other large financial companies spend millions of dollars every year in salaries for traders? If anyone should have a handle on systems trading, it should be the big-shots in the industry.

If day trading could be automated, we would soon have computers trading against computers, and trading would cease to exist since there would be only ONE price. This is equivalent to chess: if you have computers playing computers, then there is never an actual winner.

Stock prices rise and fall based on human emotions and human perceptions. It’s not economic reports that move the market – it’s the reactions of traders TO a report that move the market.
Again, it took me four years to come to this conclusion. It took me four years to realize that there’s only one thing that can give you an edge in the market: experience.

Now, don’t get me wrong. You need rules. You need a strategy. You need discipline. Automated trading systems can provide you with all of these things, or at least simulate these things. But there’s another key ingredient to success that automated trading systems
will never be able to account for, and that’s experience.

Experience is essential in everything you do, whether you’re a toddler trying to walk, a child learning to read and write, a college student studying a foreign language, a professional starting a new job, or an athlete mastering another skill.

When it comes to trading, you need a trading strategy, you need rules on when to enter and exit a trade, and you need to establish how much money you are willing to risk. But once you’ve got the plan, you need to execute it. And only experience will help you there.

It’s like approaching a traffic light that just turned yellow – sometimes you brake at the light and sometimes you decide to go for it. But how do you make that decision? Obviously you don’t make the same decision EVERY time you encounter a yellow light. Why? Because no situation is exactly the same as the ones before. You rely on your experience of former situations to lead you to the right decision in the current situation.

The same is true in trading – no trade is exactly like the trades before or after. When it comes to trading success, you need two essential components: a plan AND experience.

It’s not a problem to establish a plan, but the only way to gain experience is by actually trading, even if it’s just on paper. I like the saying, “Practice makes a master,” and it works really well here because it applies in trading, too.

So don’t make my mistake. Instead of spending years trying to pinpoint the Holy Grail of automated trading which doesn’t exist, sit down and focus on gaining the experience you need to find TRUE success. Invest in trading education. Study your trading charts. Practice trading. Learn through trial and error. In the long run, gaining the confidence and experience you need to be successful will be far more rewarding than a fruitless search for automated trading systems.

Markus Heitkoetter is a 19 year veteran of the markets and the CEO of Rockwell Trading. For more free information and tips and trick how to make consistent profits with online trading, visit his website www.rockwelltrading.com.

Article kindly provided by UberArticles.com

Topics: Investments | Comments Off

Tags: day trading and trading system, Investments

Article Citation
MLA Style Citation:
Heitkoetter, Markus "The Myth of Automated Day Trading Systems." The Myth of Automated Day Trading Systems. 15 May. 2008. uberarticles.com. 24 Apr 2012 <http://uberarticles.com/finance/investments/the-myth-of-automated-day-trading-systems/>.

APA Style Citation:
Heitkoetter, M (2008, May 15). The Myth of Automated Day Trading Systems. Retrieved April 24, 2012, from http://uberarticles.com/finance/investments/the-myth-of-automated-day-trading-systems/

Chicago Style Citation:
Heitkoetter, Markus "The Myth of Automated Day Trading Systems" uberarticles.com. http://uberarticles.com/finance/investments/the-myth-of-automated-day-trading-systems/

Recent Articles in 'Investments'

Quit Smoking Permanently

By Chris James

Quitting smoking is not an easy thing to do. Anyone who has tried, even if they were successful, will likely say it was extremely difficult. There are a variety of ways to try and quit smoking. If one way is unsuccessful try another. Quitting smoking as soon as possible is imperative to your health and the health of those around you. Before beginning any non-smoking program be sure to discuss it with your doctor.

The First Three Days After You Stop Smoking

By Darren Warmuth

Regardless of which option you choose that you feel will assist you to stop smoking, the first three days are the hardest. This is when the physical symptoms of nicotine leaving your body is felt the most. Common symptoms such as irritability, feeling sleepy or fatigued, and that slight headache that never seems to go away, are all common symptoms of withdrawal.

Dealing with the Other Difficult Parent

By Dr. Noel Swanson

Q. I have a stepdaughter who is four years old. Her real mother whom she visits on weekends is in and out of jail; she has 86 felonies. Each visit leaves the child distraught; she gets depressed and sinks into her shell.

Some Facts about the Magic Stop Smoking Pill

By Darren Warmuth

You may be one of millions who get trapped by catchy ads of 'magic pills' that can cure you of your smoking habit without any effort. It is all tall talk. There is no such wonder drug. So, don't wait for miracles to happen, and start making an effort to get rid of your smoking habit.

ADHD - What It Is & How To Recognize It From Your Child's Behavior

By Dr. Noel Swanson

ADD and ADHD are two abbreviated terms that refer to children affected by particular behavioural problems. ADD means Attention Deficit Disorder while ADHD is Attention Deficit Hyperactive Disorder. Children are diagnosed with these conditions when they exhibit unusually difficult behaviour at home and at school. ADD/ADHD is believed to affect up to 5% of school aged children and is more prevalent in boys than in girls.

Make Money Using Article Submission Service

By Brad Selers_

Article Submission services are programs that submits articles to as many directories as possible and in the least amount of time. The system by which article submissions are made at lightning speeds is called spidering. A spider is a program whose primary function is to search for similar directories over the web and causing an article to appear in them.

How To Write A Great Article In 6 Steps

By Brad Selers_

Anyone who regularly reads newspapers, papers and goes online will have read several articles. These can be used in many different ways. Some articles are written purely for information purposes were others are used to market websites and goods. Understanding how to write a great article can be difficult even if you are a seasoned pro. So why not take a look at the 6 stages which will enable you to learn how to write a great article.

Uber Articles {Über (ger) adj. above, beyond }