Trading Robots: From An Instinct To Algorithm Part 1
What is more effective on financial market: an instinct of the trader or algorithm of the trading robot? Financial expediency is here criterion on which work of the trader and algorithm of the trading robot differ.
There is an opinion that between knowledge of the trader and results of its work in the market there is no correlation present. The pier, absence at the trader of knowledge of economy, mathematics or a technical expertise doesn’t prevent to succeed it. The trader considers himself in the market in a role of the hunter. He uses only correct tool for “hunting for the market” as an instinct. Say, only the instinct also can work at interpretation of “the hunting economy» under the name of financial market.
It is necessary to find out only the instinct of “the market hunter” it is much more effective. For this purpose it is required to find efficiency of this instinct of the trader and to make it with accuracy is difficult enough. And here it is possible to give an approximate estimation. The Long experience of British bookmaker company IG Index shows that 95 % of market hunters lose and only 5 % of hunters achieve success. Hence, approximate efficiency of an instinct “the market hunter” constitutes 5 %.
What disturbs effective trade?
For effective trade on financial market to the investor stir two circumstances. The first is the constant aspiration to use an instinct of the market hunter and the second is continuous attempts to predict the future prices for financial assets.
Nonprofessional investors persistently try to change experience by an instinct of the hunter. The reason for that is greed which is shown in the form of constant discontent with the incomes. Instead of deeply studying the market, the investor needs to posses specific features which are ostensibly inherent only in him. Having imagined himself as rather successful hunter, the nonprofessional investor receives the necessary dose of adrenaline which gives him confidence of correctness of the judgments about behavior of the market. The result is that the market learns the inexperienced investor by his own heavy losses.
Earning money on trading and giving forecasts of the prices for financial assets is not the same. In the market there are oscillative motions of the prices with casual length. For the person it is not allowed to foresee what prices through will be in the fixed time interval and to predict that the market will grow sooner or later it is simply absurd.
What the system should be based on?
For estimation of the trading system it is necessary to find its steady parameter. Profitableness of trading activities in that parameter isn’t as last successes of trading system a guarantee of the future profits. In its basis should lay the certain function depending on profitableness of system. Only then it is possible to say that the system will give us profit and only then it is possible to receive an estimation of this profit.
For those who want to participate in forex trading must start from learning the basics of this market to make sure you do not have problems with this industry.
There is another option – you can hire experienced traders to do this job for you – read more about forex investment here. Also make sure to search for the info in a good forex book.