General Trading Chat

[vivektrader]

Non discretionary is mechanical.

 

[Pradeep Narayan]

Mechanical Systems use one or more indicators and generate signals based on pre-defined logic. If the process of signal reception and order execution is without human intervention - these are called automated systems. Indicators need not be charting indicators, but can also be calculated levels.

Discretionary Systems use Indicators and Human Intuition to generate a trading signal.

 

[amitrandive]

 

[tradingstudent]

Very basic question - don't laugh @ me

- What's called mechanical system - my understanding is anything that
is not automated is mechanical i.e. all of us are doing mechanical trading
only

- What are the systems being discussed here called - like
- vpl/vph,
- pratap's method
- SH 315 method
and other's

know its basic dummies question - but still asking for clarification and learning

Hi Fundoo,

In my opinion, mechanical trading is:

The rules of the trading system entry, exit can be put on paper with clear cut explanation.

Random Example is:

Going Long:EMA Cross over of 3/100 on 15 Minute Time Frame and entry on next candle.

Going Short: The reverse crossover and entry on next candle.

Profit Taking: No partial booking. Holding positions signal to signal.

The above system is clear, cut and dry. people have to take the calls blindly:

Today Rbi cut may be there, chinese market seems to be weak, so i will skip the long signal etc etc...--> Are not to be entertained.

Discretionary:
The opposite is discretionary is where trader's thinking is involved during real time and adapting the entery/exit is discretionary.

Random Example: Today huge red candle in Bank Nifty and it was ferocious. Experienced traders who trade their own system but sees the opportunity and since they have seen such things in their background could conclude that there is panic and take a short and exit qucikly.

My view is anything that can be put to paper and fixed is termed as mechanical trading.

Now automation is different subject:

It is possible to automate a system that has defined rules like the ema cross over i talked about. I feel it might be possible to automate even a discretionary system using machine learning, predictive analytics etc as you can compare the eveolving patterns with myriad of past data..

 

[copypasteaee]

I was just looking at performance of a mech trading system.....it has a great equity curve.....but on closer view I found that it has some losses of 15-25 % per trade.....one really needs rich( and foolish) father-in-law to trade such system.. Cannot even think of touching such great systems...wont disclose the name...

Smart_trade

My views are different ST da. I have done both kind of trading i.e. discretionary as well as mechanical. (i was part of team blue at TSF so very well know IDF-VPs and all that stuff). Considering your experience with trading and the number of years spent on trading,you can always say that the performance of mech systems is mediocre as compared to IDF or the other systems you are using. BUT for a newbie trader for whom the target is remaining positive, mech trading systems are not bad,provided he has thoroughly back tested the system. By backtesting i mean running bar replay and not through afls back testing.

Further i would advice to newbies to stop jumping from one TF to other, one script to other when their system is giving chop-zone.

 

[Smart_trade]

My views are different ST da. I have done both kind of trading i.e. discretionary as well as mechanical. (i was part of team blue at TSF so very well know IDF-VPs and all that stuff). Considering your experience with trading and the number of years spent on trading,you can always say that the performance of mech systems is mediocre as compared to IDF or the other systems you are using. BUT for a newbie trader for whom the target is remaining positive, mech trading systems are not bad,provided he has thoroughly back tested the system. By backtesting i mean running bar replay and not through afls back testing.

Further i would advice to newbies to stop jumping from one TF to other, one script to other when their system is giving chop-zone.

No in fact I am saying that there is a great need of 100 % mechanical system which requires no human brain to trade and clear rule based trades.So many will be happy making 100 points per month...and there is nothing wrong in that ....but then it has to be "just see these 5 things and no further"...I have seen that in an attempt to boost the performance and reduce loosing trades, and I have worked with a few so called mech systems originators and then they say that "you should have seen 6th,7th and 8 th parameter also and then that system becomes useless....if there are 8 parameters , define them and then dont say look at 9th and 10 th parameter also...

So if you know a few 100 % mech syst, start new thread, many here would love to learn...

Smart_trade

 

[copypasteaee]

No in fact I am saying that there is a great need of 100 % mechanical system which requires no human brain to trade and clear rule based trades.So many will be happy making 100 points per month...and there is nothing wrong in that ....but then it has to be "just see these 5 things and no further"...I have seen that in an attempt to boost the performance and reduce loosing trades, and I have worked with a few so called mech systems originators and then they say that "you should have seen 6th,7th and 8 th parameter also and then that system becomes useless....if there are 8 parameters , define them and then dont say look at 9th and 10 th parameter also...

So if you know a few 100 % mech syst, start new thread, many here would love to learn...

Smart_trade

left back teaching long ago as people unnecessarily criticize without knowing the facts and sometimes it hurts. But as far as my experience is with trading: method is just to give edge to a trader, rest every thing is MM, trade management and psychology of the trader which makes him successful.

 

[tradingstudent]

Real story of rich father in law :

When I was starting as a struggling trader, we had formed a group...each moth everyone will contribute Rs 500 and we used to get trading and MM books from USA,UK through someone going there....

One of us was continuously making large losses and his family was disturbed...his father-in-law was a big textile tycoon and he was coming from London so we told him to get one trading book saying that we will pay the cost in INR....

F-I-L arrived and we checked up with him that he had bought the book costing some Rs 5000.....our trader friend was missing for last few days....we went to father -in- law's row house to collect the book and making a payment to him....father in law asked " what do you all do ?" we said we trade.....he brought the brand new book and put it on the ground in his backyard and put petrol on it and burnt the book in front of our eyes...

He later on told us that he supported our friend's losses but the losses were continuous and our friend started torturing his wife out of frustration of trading losses.....he said I dont want similar thing to happen to your families and that is why I am not giving the book to you , I am burning it in front of your eyes....

We have no right to disturb our wife and kids as they have done nothing wrong...it was an eye opener for all of us....

Smart_trade

Old memories. Back when Smart Trade was still a tiger cub. :thumb:

 

[copypasteaee]

Do you know why i am copy paste? Because my all trades are copy paste of previous trades which my system is giving. No deviation what so ever from system and i am more than doubling my capital every year post taxes. As the amount has become considerably large so i may not be able to do this in future although.

 

[Smart_trade]

left back teaching long ago as people unnecessarily criticize without knowing the facts and sometimes it hurts. But as far as my experience is with trading: method is just to give edge to a trader, rest every thing is MM, trade management and psychology of the trader which makes him successful.

You just post the system and backtests.....I have tried to work on a 100 % mech system with low DD but was not very successful in my attempts.....either they have very low hit rate or high DD and it becomes difficult to trade them...my failure I am sure.

I wont name the forum but in one forum we tried to develop simple 100 % mech syst making 150 points in a month...but same story...look at 8th,9th and 10 th parameter.....and next time look at 12th ,13th and 14th parameter

Smart_trade