Does automated trading and technical analysis work?

Following on from the discussion at:

https://strategyquant.com/forum/topic/3255-portfolio-doing-well/

I thought I would create a new topic. 

I anyone wants to share views on this (does it work, here’s the proof) please do.  There’s no right or wrong answer, let’s keep it open minded and as scientific as we can.

Any links to myfxbook verified results appreciated, doesn’t have to be your own system, just something that proves real money is being made by traders over a number of years. My personal view is it can’t be done by using historical prices alone, you need an edge outside of just number crunching past data.  It needs to know the market sentiment now, and what’s happening in the near future.  Any ideas along these lines welcome.

If technical analysis alone worked, we’d be falling over forex millionaires down the pub. All I see is people getting rich selling courses and books and software.  If you ask where the rich forex retail traders are, they have all mysteriously gone silent on some exotic beach, never to reveal their success.

PS it isn’t about bragging, it’s about showing that money can be made consistently, over a long period of time, without daft drawdowns or long stagnation, using automated trading.

I will look through the links later, many thanks for posting. 🙂

PS. Collective results:

These are hypothetical performance results that have certain inherent limitations.

 

Past results are not necessarily indicative of future results.

These results are based on simulated or hypothetical performance results that have certain inherent limitations. Unlike the results shown in an actual performance record, these results do not represent actual trading. Also, because these trades have not actually been executed, these results may have under-or over-compensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated or hypothetical trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profits or losses similar to these being shown.

In addition, hypothetical trading does not involve financial risk, and no hypothetical trading record can completely account for the impact of financial risk in actual trading. For example, the ability to withstand losses or to adhere to a particular trading program in spite of trading losses are material points which can also adversely affect actual trading results. There are numerous other factors related to the markets in general or to the implementation of any specific trading program, which cannot be fully accounted for in the preparation of hypothetical performance results and all of which can adversely affect actual trading results.

Sorry, but they don’t count. I can’t pay the bills with hyperthetical results, demo account, backtesting.  MQL5 has hundreds of EA’s that can take a demo account from $1,000 to $1,000,000 in a year on a demo account.  None have shown the same results in live trading, because they rely on certain factors, like having a stop loss move every millisecond, with no slippage, that can’t be done on a live account

The myfxbook link is not verified:

A green tick next to the ‘Track record verified at the very top of the account is an indication that the information provided by the account holder matches what the brokers submit to Myfxbook. It means that the displayed trades, deposits and withdrawals have been confirmed by the broker. It also means the account is real and not just a demo.

 

You could at least dig for more than 2 seconds, all the systems have real-life data just spend 5 seconds to investigate or am I expected to do that?! 

 

 This strategy has placed 3,991 trades in real-life brokerage accounts. Hide AutoTrade data

 

How to see live brokerage trade data

Below, just click on any of the  icons. This will pop up a window showing you who is trading this in a live brokerage account, at what trade size, and what prices the trader received. This will allow you to compare broker data to the hypothetical results you see below.

 

Again, so what? Where’s the live 3,991 trade results? What did these live 3,991 trades make in profit and what was the drawdown?  How many Ferrari’s did it buy the owner? 🙂

I don’t know Collective, so if there’s some startling linear equity curve of real money made, please let me know.  All I can see is “hyperthetical” results with big warning everywhere that these are nonesense fairyland backtests.

PS I will actually pleased if you prove there’s money to be made trading a live verified account, believe me.

Also, there lots of traders on ZuluTrade trading demo accounts with good results.  However these traders make their money from the followers with real accounts by “stealing” pips from them as commission.

When you look at money made by the followers on live accounts, they mostly lose money.  Great news for the demo traders, brokers and ZuluTrade, but again doesn’t give much faith in live trading the strategies….

The actual trade data is there but requires a MINIMAL (seconds) amount of effort to obtain.  I can only lead you to the water, I can’t you force you to drink it.   🙂    

Treat me like a friendly idiot, show me the money! 

PS, again real money, not pretend money. Money that can pay the mortgage and not money from “followers” via commission whilst the system traders risks nothing with “hyperthetical” results or demo accounts….

If I see some real money, I will go out and celebrate the good news.  🙂

I’ve been a member of collective2 since 2008 and if you want the proof I can assure you it is there.  Anyway, I’m done.

You would think that proving retail traders are making real money, consistently, without long (months and years) drawdown periods would be simple, and people wouldn’t get all huffy when someone asks?

I will hope someone show’s some verified proof soon. 🙂

0. http://www.myfxbook.com/members/autotrade/wallstreet/95290

1. “If technical analysis alone worked, we’d be falling over forex millionaires down the pub.”  –  i thing how many biases just found in short quote …

2. Proof? There are many successful funds, CTAs which are profitable many years ( and many of them not)

3. Look here: http://www.ssrn.com/en/for research 

4. Momentum, Mean reversion are well known confimerd anomalies which works many many many years

5. Yes holy grail does not exist. But this i knew 10 years ago ( with all due respect 🙂 ) So main question is: When strategy fails?  and what to do after …

0. Is interesting, though PF close to 1 is not inspiring.

1. 🙂

2. funds, CTA’s are not retail traders.  Who knows what advantages, market data, brokers they have available. 

3. Again research does not pay the bills.  Are these clever people now millionaire’s through retail broker trading? 😉

4. Yes, theoretically it all makes perfect sense. SQ should be finding these in a few hours, we put them on a live account, sit back and relax.  Job done. 😉

5. Does not exist, so do we have to put up with failing systems, lost money.  If so, is it worth the time put in? If it isn’t going to make good money, why not just put money into a tracker fund or invest in property and make money that way?  What’s the big attraction to retail trading? 

i have no real account with long history, sorry mikeyc

but you can look at attached picture, there is breakout strategy example, based on TA

i have no real account with long history, sorry mikeyc

 

but you can look at attached picture, there is breakout strategy example, based on TA

Hi Patrick,

Doesn’t really show such strategies are robust or profitable long term.  They’ve been known about for decades, so  If such strategies were reliable there’d  be lots of myfxbook strategies showing good returns over the last N years. 

We know there’s the concept of breakouts, trend trading, range (revert to mean) trading, scalping in quiet market conditions, trading economic news events, and many other techniques, but surely there must be proof that such strategies actually work for the retail trader on live broker accounts for several years?

Cheers,

Mike

mikeyc: “Doesn’t really show such strategies are robust or profitable long term.”

I can imagine that the accuracy, or may be better term, the success of generalization of a data set (at any resolution: week, day, hour, etc) depends on the size of this set.  If it is to big (to many data points) it may be of marginal value or perhaps successful for a relatively short time.  Obviously, if it is to short, generalization may be impossible.  I imagine that it (i.e. the size of a data set) could be one of the parameters subjected to search / optimization.  Do you know if this is done? 

I’ve looked at lots of commercial EA’s on review sites, they seem to fall into the following categories:

1. Total scam with fabricated results, only works on demo account.
2. Grid/Martingale that will blow up your account in days/weeks/months depending on luck.
3. Were profitable for a while, now in big drawdown and/or losing money.

Now, assuming that vendors both big and small are using automated tools and well known strategies, there should be some profitable one out there going back at least a couple of years….

It is admirable how much energy you give in finding out that eas are not working. May be if you use half of that energy to proove the opposite, you could celebrate…

Scientists have spent many years and billions looking for the Higgs Boson.  If it doesn’t show up soon, they will have to rewrite physics.

I’m coming to the same conclusion with retail forex trading, at least with technical analysis (past prices as input) alone, if it worked, there’d be verified proof. 

Why?

If I could show consistent profit over several years, with low drawdown I could not only make money trading, but also with managed accounts and providing signals.  So it would pay me to advertise my success.  People would pay to follow me.  I could write books and make money lecturing how to do it.  Big money.

So my current conclusion is retail forex trading is a zero sum game.  Sure you might have an edge for a few months against the market, but your system will give it all back “when the market changes”.  You don’t know using TA when the market has changed, and by the time you figure it out you are in deep drawdown and have to close at a loss.

It’s a painful conclusion for me, I’m praying for some proof the effort is worthwhile.  In the meantime I’m looking at other approaches and non-forex trading…