The Trader’s Journey

 

 

If you are like the majority of people out there then chances are that you came across day trading through a retail portal. You may have seen a programme on television which showed a trading floor buzzing with activity or read about a trader who had recently made an obscene amount of money on a trade. Perhaps you knew someone who worked for a hedge fund or investment bank. Whichever one of these it was, the end outcome was the same – a seed was sown in your mind suggesting that you could become rich through the financial markets.

 

Trading Places….

 

My first introduction to trading was watching the movie “Trading Places” with Eddie Murphy. Remember the scene at the end? Basically, the Duke brothers were buying Orange Juice futures on the expectation of a bad harvest. Billy Valentine (Eddie Murphy) and Louis Winthorpe on the other hand were short as they knew the harvest had been good so were expecting the price of orange juice to fall. Prices indeed dropped and Valentine and Winthorpe made a ton of money in the process while the Duke brothers lost everything! I was fascinated by this for a long time and kept wondering what had actually taken place. Hence a seed was born!

 

Phase 1: The Starting Point

 

The most important part of the journey is knowing why you want to be a trader. Why do you want to do this in the first place? What do you want to get out of it? Is it just a money thing? Is it a passion? Is it something that has been at the back of your mind for a while? It’s crucial that the reason why you’re doing this is much more than just money. The reality is you might not make money for some time so you need something deeper to keep you motivated during those times. The most successful traders I know are people who simply love the markets and are perpetually fascinated by trading. For them it’s not even a job but a passion which they live, breathe, and eat every day.

 

Your why…

 

Every trader will be tested and the difference between success and failure can come down to your reason why. Remember 95% of traders fail so in order for you to be in the top 5% who make money, you need to think differently and starting with a rock solid reason why you’re trading is key. If someone says “I want to do this so I can make a lot of money” I know that 12 months later this person is likely to move onto something else. If on the other hand they say something like “I am fascinated by the markets and believe I have what it takes to be a successful trader. I want to provide the highest level of income I can for myself and my family and am ready to do whatever it takes to make it happen.” then I know this person has thought things through much more seriously.

 

Phase 2: The Initial Period

 

The initial period is where bad habits are normally formed. This is the first 6-12 months where you will typically spend countless hours reading forums, trading articles, books, strategies and eventually trading. Make no mistake, trading is addictive and you could easily spend 10 hours in front of a screen without noticing it! Most people at this stage will be looking for the Holy Grail or some magic trading strategy which will make them instant millionaires. Your trading results will be mixed at best or very poor on average – you will either be losing money and not understanding why or just feeling like you don’t get it.

 

Is It All About Strategy???

 

Most traders in the Initial Period are strategy focused and spend their time searching for the perfect strategy. You get an email telling you a new strategy has been released which is giving 30% return a month and you jump on it. You soon discover that this is just a marketing gimmick and struggle to make money from it consistently. You then come across a forum where someone is describing their trading strategy for free and willing to help other newbie traders. This person sounds experienced so you drop everything to follow him/her. A few months in and you are still struggling to understand what this person does and how they do it as they apply a lot of discretion that you simply haven’t yet developed.

 

This cycle of searching for something new, finding it doesn’t quite work, then searching again and being disappointed over and over can go on for years. It only stops once you realise that you need to learn how to do this properly from a professional. It will probably involve you paying for a proven system or some training so that you can develop an edge rather than looking for shortcuts.

 

Phase 3: The Trial – Give up or Continue?…

 

The third phase is the trial period. This is where you are tested to see how badly you want this. Is it just a get rich quick scheme you’re looking for or are you willing to put in the time and effort required to master your craft? What if this takes you many years? How long and how deep are you willing to persist until you get your prize? It is at this stage that many people give up, they spend a year or so trying to figure the markets out and eventually decide they can’t do it. They then tick trading off the list of money making ideas they tried and move on to the next thing.

 

Earn Your Stripes!!!

 

What a lot of people fail to realise is this – trading takes years to master. I don’t know a single person who trades profitably who did so in a short period of time – it just isn’t realistic. Why? Because you need to understand the business you’re in. Every time you trade you are basically competing with someone else who is willing to take the opposite side of your trade and so you need to ensure you have an edge. How can you expect to take on the big banks and institutions who have more money than you and more brain power to throw at the markets without dedicating a proper amount of time to the craft yourself? Now obviously I’m not saying that you won’t make money for years and years, but I’m just highlighting the fact that you need to treat this business seriously because the big boys you are up against take it very seriously.

 

Phase 4 – Realisation – I can do this!

 

Phase 4 is make or break – it is where you start to believe that you can actually do this and start seeking professional guidance and direction for you to emulate. This can be in the form of a system like EnigmaSignal which does all the work for you, or via mentorship from another reputable organisation. You need someone to show you what to do, how to approach the markets and which strategies to use so that you can develop an edge. You also need to know how to handle profits and losses, risk management and trade management so that you can experience consistent profits. If you are in this position then it’s just a matter of applying what you learn diligently and correcting your mistakes on the path to trading mastery. You will then realise that the only thing holding you back from trading success is YOU!

 

You Don’t Have to go it Alone

 

The reason why most traders give up is because they try and do it all on their own. They don’t want to spend money learning how to do it properly and they listen to all the opinions and comments of others on forums telling them that they just need to keep applying themselves and they will eventually succeed. This is dangerous because if we study how traders become successful it is always as a result of learning from someone well experienced and never by trying to figure it out on their own. I’m not saying this to sell our software but simply stating the obvious – going it alone will lead to the highest chance of failure because you don’t know what works and what doesn’t. How do bank traders become successful? By going through a comprehensive training programme without which they wouldn’t be given a single penny to trade.

 

Phase 5 – Mastery

 

The final phase is Trading Mastery, where you are now able to confidently navigate the markets and finally able to make money consistently month on month. You are now at the point where you can take some profits out and spend it or pay bills with it or simply reward yourself! You are positive about your trading career and are happy about the future. You feel a sense of fulfilment at having achieved your dream of being able to support yourself or your family from your trading income. Even if you are not rich yet, you can see that all you need to do is trade with a larger amount of capital to get to your financial goals. Imagine what a great feeling that would be and how you would feel to be in that position!

 

Constant Dedication…

 

Trading Mastery requires constant dedication and accepting that you will be a lifelong student of the markets. You might be trading short term for income, long term for capital growth or swing trading.Whichever approach you adopt you know the type of trader you are as well as your desired short and long term outcomes. You accept that trading is a business and you take this business seriously. You look forward to trading with larger capital and may have even been approached by investors who have followed your progress and are now offering you capital to trade on their behalf. You accept that you will need to remain disciplined and stay humble in light of your increasing successes because you understand that your mindset is your most powerful weapon. You spend the majority of your time working on your psychology which is the hallmark of every seasoned trader.

 

Over to you….

 

Where are you on your journey? Which phase are you currently stuck in? Hopefully this article gave you some insights into what you need to do to progress further and advance towards your goal of successful trading! If you need any help with any aspect of your trading then simply get in touch with us as there is nothing we love more than helping other traders to become profitable! You can also find out more about our auto trading systems which are delivering consistent profits to our traders and allowing them to realise their financial trading goals stress free. Email us as info@enigmasignal.com or visit us at www.enigmasignal.com.

Trading Chart: The Dax on a Daily Basis

Artificial Intelligence based systems are often thought to be aimed only at day traders. Nothing could be further from the truth as far as we are concerned. EnigmaSignal operates just as well on DAILY charts as it does on shorter time frames. Here is a simple example. The German index, the Dax, has been a wonderful trading zone for us on a daily basis for the past three months. As you will see from the above chart we have adopted a very simple strategy here. We’ve been taking LONG trades with a CONSERVATIVE profit and a WIDE stop. Why is that? Well, just like on the hourly timeframe, the signals are likely to be correct in excess of 90% of the time, but you must give the trade “time to breathe”. What does that mean? It means EnigmaSignal will calculate a stop that is calculated to be wide enough to give the market time to reverse. Just like an oil tanker at sea, markets take time to stop and reverse.

But look at the profits made. 98 days, 3 trades, 0 losses… 756 points in the bag. At only $10 a point that’s $7650 profits banked, or put it another way on this one simple strategy alone… a 150% payback on an annual EnigmaSignal license. And that’s on ONE trade. Simple. Why is it simple? Because there is nothing for you to do as an end of day trader other than placing your orders for the next day and move a stop. Time taken? 5 minutes per day. If we add up all the moves made in these trades we have a total of 15 moves. At 5 minutes per move that’s75 minutes or put another way $6000 per hour worked. By anyone’s standard that’s great money. Nothing complex to learn. Simple. Effective.

What’s not to like about AI trading the EnigmaSignal way?

Ready to give it a try for yourself? We’re offering a 30 day trial for USD $99.

The Quants are Coming!!

Recently, a report was pushed that stated that Goldman Sachs has replaced 70% of their day traders with Artificial Intelligence based systems and is now recruiting more programmers than traders for its day trading offices. Wow! Let that sink in for a moment – if such an established institution is doing that, then the rest are not far behind! What will this mean for day traders going forward and how do we compete?

Day trading is under threat from technological advancements just like any other profession. We have seen how the technological revolution has replaced countless jobs in traditional sectors such as Manufacturing, Retail, and Services. This meant that low skilled jobs began to be replaced by robots while many medium skilled jobs became semi-automated. This led to layoffs in these two categories, however, highly skilled roles remained unaffected as they were too complex for machines to replicate. That was until now!

A Highly Skilled Profession

Trading is a highly skilled profession that requires multiple qualitative and quantitative informational inputs to make a single trading decision. Information is analysed, interpreted and reacted to by traders in different ways which leads to widely differing outcomes. This is further compounded by which market a trader actually trades as well as their risk profile and trade management method. Two traders can get the same information, react to it in the same way, even put on the same trade but get totally different results because their personalities are different and therefore how they manage their trades will be different. One trader may risk more than the other, another may exit the trade at a different price than the other and so on.

The above complexity is what traditionally made it difficult for machines to compete with humans. Mastering this complexity would require machines that could think for themselves, be self-aware of their own performance, and be adaptive to changing market conditions.

Enter Artificial Intelligence…

The last decade has seen massive strides forward in Artificial Intelligence and Machine Learning. We are able to build more sophisticated computers than ever before, with capabilities that were once thought impossible. We can now create machines that literally think for themselves. It is possible to create algorithms that self-learn so that their performance improves over time without any human input. Traditionally quant trading systems were focussed on speed of execution, beating other market orders and placing their orders first. This was powerful when combined with identifying large orders. For example, a large buy order might enter an exchange, such as NYSE, for a particular stock. A Quant might detect this large buy order and proceed to identify the stock and sell it to the large order buyer for a small profit – all within a split second.

Another Quant might use speed to enter an order ahead of anyone else, especially if they expect an imminent change in price. For example, let’s say there is a major economic announcement which is expected to send the markets crashing. While regular traders are busy pressing sell buttons, a Quant system could identify this bearish sentiment and enter a short trade faster than anyone else, thus benefiting from that extra point of movement by getting in early.

It’s All About Speed

Goldman Sachs until recently was a master of the speed game – otherwise known as Latency. Now, however, they have the ability to perform more sophisticated forms of trading thanks to their investment in Artificial Intelligence and algorithmic trading starting to pay off with everything from commodity trading to currency trading and futures trading to day trading stocks. Being endowed with very deep pockets means they can recruit the smartest PHD mathematicians and Quant developers to create more sophisticated trading systems. While these certainly beat retail traders in terms of speed of execution, it is difficult to say the extent to which they outperform traders in normal trading as the details of what they do is kept highly secret. We can make an educated guess, based on their past strength in Latency, but they will dominate the lower time frames such as sub 1 minute to 15-minute time frame charts.

Higher Time Frames

Where traders can compete with the Quants is on higher time frames such as 60 min charts and above, particularly the daily timeframe. The reason for this is that the higher time frames do not require speed as an advantage and so allow enough time for a human trader to analyse the markets, identify a trading opportunity, and execute a trade on par with a machine. It may take a machine a fraction of the time to follow this process, but nonetheless, a human trader can achieve the same results since time is not critical. By contrast, speed is critical when trading the lower time frames as it impacts more measurably on the profit and loss of a trade. This tells us that we can have a chance to compete against the Quants by working on higher time frames.

Up Your Game

Another way we can compete with the Quants is to gain access to very sophisticated trading systems which use Artificial Intelligence and day trading rules at their core, just like the big boys do. Although this can be expensive and more suited to the serious trader, computing power and program sophistication have made quantum leaps in the last decade making it more accessible than ever before. Companies who develop these AI trading systems build a team of PHD level mathematicians to create trading models and strategies, Machine Learning specialists who can add Deep Learning to the trading models, and experienced traders to fine tune and monitor the application of theory to practice.

Development takes a lot of time… at least 12 months of continuous development before a system will begin to start to work. The next 12 months will then be spent fine tuning and training the AI. This sounds like a lot of work, and you’re right, it is. This is why you find large teams of PHD mathematicians and programmers working together in multiple teams in large investment banks. This is exactly what we have at EnigmaSignal, as it truly takes a team to develop something that works.

Artificial Intelligence in Practice

The screenshot below is a screen capture of our system in action. It was set to auto trade the S&P 500 long on the 24th of August, 2018. It took 4 trades and won 2. The interesting thing is that it ended up with a profit of 64 ticks over the 4 trades despite 2 of them being losers! It entered a long trade on a break out of an identified resistance zone and trailed the stop loss until it got stopped out later in the day. Our Machine Learning is now starting to suggest better entry and exit points for future trades as a result of the many trades that it has taken and analysed. What this means is that we will be getting increasingly tighter entries and exits resulting in gaining more profits per trade just by listening to its real time suggestions – very clever stuff indeed.

Trading chart August 24 2018

Conclusion

As more and more Algorithms are used to trade the markets we will only have one of two choices; join them or beat them. Ideally, we want to do both – join them by building our own highly sophisticated algorithms and Quant trading systems and beat them by trading on higher time frames. This trend will only continue its pace, so retail traders need to adapt or die. If you wish to have access to cutting edge algorithms then get in touch with us here at info@enigmasignal.com. You can also visit our site to book a demo at enigmasignal.com/webinars and download valuable resources that are normally reserved for students of our online trading academy, for free today.

EnigmaSignal Trading Chart September 3 – 7, 2018

EnigmaSignal is a unique artificial intelligence based trading software. It works on all timeframes for just about anything you can trade. In this example trade, the time frame traded is hourly and we are trading the S&P 500 US Index. This is a timeframe that we see being used by many of our members who work full-time and use EnigmaSignal to generate a really nice second income.

What we have here is the chart for the last week.

Five days trading and four trades selected by EnigmaSignal AI and then traded automatically. That’s the beauty of the AI approach. It will trade like a human trader, but more reliably – without you having to spend all your time in front of a screen. All of these trades were made in my account whilst I was in Costa Coffee. Now of course, you don’t have to let EnigmaSignal trade automatically and in fact, we have many people that prefer to use it for high probability signals that they can then choose to trade themselves. Why does that work so well? Simple. There is no interpretation of the signals. The Artificial intelligence will interpret them for you, and simply show you the results.

This series of trades generates a superb 1938 ticks of profit. That’s a pretty amazing return for someone risking only £1 / tick. £1938. And the time taken? No more than 15 minutes per day to check the strategy and make sure that everything is set for the next 24 hours. EnigmaSignal is simple to use, and our complete training package covers everything you need to know to make EnigmaSignal trade according to your rules. Most of the complexities of trading are taken care of by the Artificial Intelligence software, which controls your risk and “thinks” about trades hundreds of times per second so that you don’t have to.

Ready to try EnigmaSignal for yourself? Get started today with our 30 Day Trial for USD $99!

Semi Versus Fully Automated Trading

Last week we looked at the benefits of using an algorithm to trade versus trading manually. The overall message was that an algorithm will outperform any manual trader as it does not suffer from emotional attachment to a trade and will flawlessly execute its trading plan. In this article we compare semi automated algo trading with fully automated to see the pros and cons of each approach.

But why?…

The first question which you may be asking is why have a semi automated system if you have a fully automated one? Well, the answer is control and preference. A lot of people will find it hard to trust an Algo to do all the trading for them and instead prefer to sit in front of screens and watch as it trades…and probably be tempted to tamper with it as it does so. Although this seems silly, it comes down to psychology. If you are struggling to trust your system then the only alternative is to work with your psychology and find a way to feel in control without interfering with its performance. How do you achieve this? Simply by setting up an extra step in your Algo that requires you to confirm a trade before it takes it.

To leave or not to leave…

Can you sit back and let your system trade for you without interfering? Are you constantly tempted to intervene? Do you adjust your stop or your profit target or skip a setup altogether because you second guess your strategy? In that case its best if you start off with a semi automated solution rather than a fully automated one. What you need is to build a control panel into your Algo so that as soon as it identifies a trade it pops up a box asking for confirmation to take the trade. At least in this instance you will feel you’re in control while still adhering to your Algo.

Easier transition

Can you sit back and let your system trade for you without interfering? Are you constantly tempted to intervene? Do you adjust your stop or your profit target or skip a setup altogether because you second guess your strategy? In that case its best if you start off with a semi automated solution rather than a fully automated one. What you need is to build a control panel into your Algo so that as soon as it identifies a trade it pops up a box asking for confirmation to take the trade. At least in this instance you will feel you’re in control while still adhering to your Algo.

Another important reason for having a semi automated solution is that it is an easier transition from manual trading. Going from manual to Algo in one step is quite a jump. If you are used to being in front of charts, placing a trade, watching it, etc. then you will struggle to have confidence in an Algo where you effectively do nothing while it trades for you. What are you going to do with all of your new found free time? Traders often are trapped into feeling that they need to do a day’s work to justify their earnings.

We are all used to the “hard work” mantra and although we know Trading is totally different from any other business out there, we still approach it as though it’s a conventional business. It is unconventional to earn more in one trade than what most people see in a month especially when you consider that the time you put into that trade may have been minutes or hours rather than a full month’s worth of hours! So if you need to feel like you have “worked” then a semi auto solution may be best.

It’s all about efficiency

Isn’t it strange that we normally look for efficient ways to run our businesses yet in trading, the majority of retail traders still trade in the least efficient manner possible i.e. manually? Considering how sophisticated Algos have become now because of Artificial Intelligence it is baffling that most traders still choose to trade the old fashioned way.

Nowadays it’s possible to automate your entries, your risk management, trade progression and many other aspects of trading. So instead of having to rely on calculating how much to risk on a trade manually, you can create a script that calculates what percentage of your account to risk on a trade the moment you hit the buy or sell button. Let’s say you went long and wanted to trail your stop loss every 10 points or below the low of every bar that moves in your favour then you can create a script that does that and switch it on as soon as you are in the trade. In fact even if you want to do your analysis and trade execution manually, you can hit a button to take over from the moment you enter a trade to manage it to a profitable outcome.

One size doesn’t fit all

The overriding message we want to get across is that when it comes to using Algos, one size doesn’t fit all. The best option is to have a fully automated system which also has semi auto options built into it so that if you wanted to use it in that mode then it allows you to do so without having to build a whole new system altogether. The biggest asset we have as traders is our mindset, so It’s very important to find a system that fits your personal trading style until you are comfortable transitioning to a fully automated trading solution.

At EnigmaSignal, all of our trading is run by Algos so it’s interesting when we come across traders who don’t trust Algos totally and prefer to trade manually. What’s interesting to note is that these manual traders are very happy to have a semi automated solution take over a trade once they pull the trigger. I’m pretty convinced that in several months time these guys will want to fully automate their trades once they see it managing their trades efficiently.

What does a semi auto solution look like?

The screen shot below shows what a Semi Auto Algo looks like. It is taken from our main Enigma Algo platform that we run and we built this feature so traders could choose whether to take the trade manually or to auto trade it totally. The menu allows us to customise any settings for a trade such as stop loss placement, targeting and so on. It also allows us to click a button which says “Auto Disabled” to turn it into Semi Auto mode. All a trader needs to do in this mode is hit the “Enter Now” button to take a trade once it sets up. The stop loss and the trade management will then be implemented by the Algo automatically.

Semi automated algo trading system
In the above image, there is a green bar circled at the bottom right section of the chart. This was a valid long trade which would have been entered automatically or flagged up to be entered manually.

One other benefit…

One benefit of semi auto trading is that it allows you to apply discretion in your trade selection. Although discretion can be a bad thing normally as it means you are just reacting to the market without a plan of action, some traders want to be able to skip setups if they feel there is a valid enough reason to. This may not be a bad idea if your Algo is not sophisticated enough to identify changing market conditions and skip certain setups as a result.

You have to remember that it will take a long time and a great deal of sophistication to create a profitable Algo. It took us over 18,000 hours of development over several years to create the Enigma System that we now have, so it’s easy to understand that most people do not have this amount of time or a large reserve to fund such development.

Conclusion

We still maintain that although we have outlined the benefits of semi auto trading, having a sophisticated enough Algo is by far the better option. In the meanwhile, the semi auto option can be a stepping stone. On the other hand it is also fine to give people a choice rather than force them to adopt one approach or another. The main goal of trading is to make consistent profits, so whether you do this in a fully or a semi automated way, just get going with it. If you are looking for institutional level Algos to complement your trading then get in touch with us at info@enigmasignal.com or visit enigmasignal.com to find out more.

Ready to try EnigmaSignal for yourself? Get started today with our 30 Day Trial for USD $99!

Algo’s and Psychology

They say the hardest aspect of trading is psychology. If you have been trading for a while then you will verify that this is indeed true. Trading is such a mentally driven business that two people can have exactly the same strategy but apply it in totally different ways and achieve completely different results. The question is why, and how does having an Algo help?

Before we dive deep into the topic let us consider the perfect trader. This would be someone who has:

1. A strategy which gives them an edge,
2. The ability to execute it perfectly each time regardless of winning or losing streaks, and
3. The capacity to evaluate their performance objectively.

Now the question is how well do you match up against the above 3 points? The honest answer is most likely “not very well”. The reason for this is that it’s extremely difficult for any human being to remain unaffected by their trading performance. Someone may experience a winning streak in which case they will start to believe they are above their own system or rules and start to deviate from them. It’s human nature! They might get overly confident and start over risking on each trade for example. Someone else might be experiencing a losing streak and then be tempted to abandon their trading approach altogether or not take valid setups due to fear. Does any of this sound familiar? We’ve all made these mistakes, the question is why?

We’re Not That Good…

The answer is that we are not machines. No matter how many times we reinforce the age old maxims of “follow your rules”, “trade what you see”, “take every setup which meets your rules”, “don’t be short term focussed” etc, it is incredibly hard to remain unaffected by our profits and losses. We are emotional beings at the end of the day and almost all our decisions are made emotionally and then justified through a process of rationalizing. This manifests in several ways. Trader A may be doing very well and decides to increase his position size. Chances are that he will be more greatly affected by the outcome of this trade as it will have a higher amount of profit or loss than what he is used to. Put yourself in his shoes. Let’s say you experienced 2 losing trades in a row – how will you be feeling? Nervous? Cautious? What if another setup presents itself – will you take it automatically or will you hesitate to pull the trigger in case you get another loss? What if this next trade loses, how will you really feel? Upset? Angry? Tired? And now another trade sets up – how likely are you to take it? Let’s say fear kicks in and you don’t take the trade, choosing instead to watch what it does. The market moves exactly as you predicted and to top it off moves so well in fact that you would have recouped all of your losses. How would you now feel – pretty exhausted and frustrated! This emotional rollercoaster is what 95% of retail traders go through on a regular basis.

Emotional Control

How does having an Algo help? For a start it has no emotions, hence it will execute every trade which sets up exactly as outlined in its trading rules. There is no fear, no greed, no hesitation, no second guessing – basically none of the flaws of human traders. This total objectivity is what gives Algos an edge over humans. The caveat is that the Algo needs to have effective trading strategies and strict risk management built into it. There is no point having an Algo that doesn’t have an edge as all it will be doing is executing a strategy that doesn’t work.

Algo or Quant systems (synonyms) are becoming increasingly more sophisticated. With the advent of artificial intelligence and deep learning, it is now possible to build complex trading systems which can replace human traders. In fact experts predict that the number of human traders in professional firms will reduce dramatically over the next decade due to the proliferation of AI based trading systems.

Algos Trade Perfectly

Let’s see how Algos perfectly address each of the 3 points we highlighted earlier:

1. A well developed Algo has a proven edge because it is able to quantify that edge by going back over Billions of data points to identify repeatable patterns in price behaviour and model these effectively going forward. This means that you should be able to know the percentage success rate of each setup and overall strategy before placing it. This is infinitely superior to a person doing this manually.

2. The ability to execute a trade perfectly each time – an Algo will take every setup in accordance with predefined rules. Some Algo’s have rules which can be altered while others are fixed. Some Algo’s can have advanced risk management such as reducing positions size during a losing streak or having a maximum loss threshold to stop trading if reached. The point is that every aspect is objective, so if it doesn’t take a trade it’s because there was a logical reason why it didn’t, as opposed to an emotional reason.

3. The capacity to evaluate performance – our Algo’s at EnigmaSignal have the intelligence to analyse the trading tendency and performance of every trader using our system. This allows for meaningful statistics such as knowing how far price moves against a trader before moving in their favour (helps with stop loss placement), identifying the maximum distance that price went in their favour before turning (to fine tune targeting), and many other useful features. The EnigmaSignal Algo allows you to learn more about yourself as a trader and how you really trade versus how you think you trade. Any Algo should allow you to evaluate your performance meaningfully and then you can use the results from that evaluation to improve yourself as a trader.

Example

Here’s an example of an Algo beating a human trader technically and psychologically. The chart below is a trade that one of our Algo’s took on the DAX market. It identified a short trade setup and took the trade without hesitation. It then trailed the stop loss strategically until it got stopped out –netting a whopping 72 points reward for an 11 point risk trade! A fantastic outcome! A human trader would have been tempted to exit the position much earlier at 20 or 30 points profit as this would have been a great reward for the amount risked. Just imagine how difficult it is to be nicely in profit but to sit tight and do nothing because your rules stated you need to trail your stop loss? Let’s say you are 40 points in profit – would you really be able to sit there and do nothing? What if you’re 50 points in profit – everything in you will be screaming “take the money!!” and in all likelihood you would ignore your rules and go with your impulse. If you had done that then you would have missed out on the full profit potential of the trade and set a bad precedent that breaking your rules is acceptable.

Example of algo trading out performing human trading

Conclusion

So there you have it – a brief overview of why Algos are superior to humans and also why they help with trading psychology. The point is that if you don’t have to experience the emotions of trading then there is no psychology to manage. If your machine is doing all of the trading then you will not be held back by any emotions of fear, greed, uncertainty, or hesitation. The only psychology needed is how to stay committed to your Algo and not interfere with it.

If you are looking for Algos that deliver consistent profits regardless of market conditions, as well the peace of mind you will receive by not having to manage your psychology, then enquire about EnigmaSignal. Attend a webinar or get in touch to find out more at www.enigmasignal.com. Our Algos are built by Mathematicians, Data Scientists and Deep Learning experts with a combined trading experience that spans multiple decades.

Ready to try EnigmaSignal for yourself? Get started today with our 30 Day Trial for USD $99!

Algo trading whilst I sleep and code. It’s here.

Today is a landmark day. It was the first day that I was completely happy to go to sleep at 10pm and let EnigmaSignal Autonomous Trade (TM) run the account for me. Of course, I had set the parameters. Low risk at $10 a pip. Moderate aggression on trade, conservative stops.

I woke up to two nice little trades but “only” 50 pips ahead. OK sanity check time.
Mmmmmm mmmmmm. That’s the life for me. Algo trading. And chilling.

EnigmaSignal Quant Trader (TM) releases soon after 4th July. We’ll keep you informed.

flatline. verb. fail to increase; remain static.

The headline is the dictionary definition of flatline.  In trading terms, it is about right.  That’s pretty much what most markets did today.  I watched none of them as I was busy coding a few enhancements to EnigmaSignal “Quant Trader” (EQT).  Yes, we have a name for the product.  That’s what we have built, a personal quant trader.  A Quant Butler if you like.  Personally, I’d like it called Joe 90 after a hero of my youth (see video below). Brits and Aussies will know why.  Americans probably not so.

The great thing was EQT kept working for us.  Right now we have two nicely profitable algos coded and we have another 4 ready to go.  All well tested and now running with real money.  Anyway….todays trade of the day comes from our HTF50 trade type.  Thats Higher Time Frame (scenario) 50. 

Long and detailed set of rules behind it, but it delivers. 

Usually 2-3 small losses a day and a nice winner.  With a risk/reward setting for us of 2:1 that means it delivers a consistent 50 ticks a day (25 forex pips).  That’s 6525 pips on an annual basis, which we like very much.  And that’s from one trade type.

I ended up as a late entry trade but still delivered 150 ticks or 75 pips.  A nice $570 profit with a maximum risk of $133.  Quite happy with that as a risk-reward.  Notice the stop chases up the trade.  Fully adaptive to market conditions (and also configurable for aggression levels).

The real key?  Would I have taken this trade?  I don’t think I would in all honesty.  I wouldn’t have taken the two losers either, but they totalled 11 pips so no big deal.  In fact, I wouldn’t have traded today and would have been $570 worse off for it. 

As from 10pm UK time, I will up our individual trade limit to $200k on forex and 4 futures contracts.  Two trades at a time but asking EQT to monitor 10 markets.  Something I know a human cannot do (and neither can a scanner!!). 

As ever, happy trading.  I will keep you informed of progress.

Meanwhile, enjoy Joe 90.

Why Oscar Wilde would have made a great algo trader

To paraphrase Oscar Wilde, trend-following hedge fund computers know the price of everything, but the value of nothing. This means human investors who focus on value over the long term, rather than price trends, should always be able to profit.

I would agree with that.  But I’m not interested in the long term value of stocks or currencies or commodities.  I’m a trader.  I want to make my return then take my profits and move those money into other investments like property.  

I have traded manually for years at home.  You may ask why when I have worked for banks and hedge funds. Why?  Because the computer power needed to algo trade effectively 10 years ago was over $100k.  Now I am doing it on a water cooled PC that just cost me $4k.

And the results are spectacular.  Full auto trading.  100% machine based trading.

Today for example from Midnight to 4pm UK time the EnigmaSignal auto trader had made 90 pips on GBPAUD alone (see below).  By 9pm that was 150 pips.

How much screen time have I spent doing this?  Zero.  Read that again.  Zero screen time.

Sure I had to set up the parameters.  That took me a couple of hours.

Parameters like:  move stop to break even. minimum profit target, risk: reward ratio etc.

But now I have this strategy set …. the machine will execute the strategy ruthlessly and without emotion.  When I saw a couple of these trades I wondered how in the heck it had taken them.  I could see the setups were good, but I would never have taken them manually. 

And so as we move flat (another parameter for the end of the US markets) I am over 160 pips to the good or put it another way $3200.  Will all days be this good?  Maybe not.  But this was just one currency pair.  

For the first time ever I now feel we truly have the power to deliver a personal algo trading machine for every trader.  To allow you to achieve consistency in your trading to a level that most traders have never seen.  It’s a trip.  Existing users will be upgraded free of charge.  new users will be able to lease or purchase the product.  

For now, the testing continues.  Real money.  Real trades.  Nothing at all is hidden.  Those of you who know the address can screen share and watch it live.  Those that have done so already are ready to be upgraded today!! 

Be patient.  We’re almost there.  We have everything running on Sierra Charts.

Soon we hand the algos over to our Ninja Trader platform programmer.  

By end June we will be live on Sierra and Ninja.  They have the power to handle the complex math.  MT4 is just not up to the job.  Other platforms we will consider in due course.

And finally.  Remeber in all of this, the human is still in the loop.  The machine trades YOUR orders.  Its just trades faster, without emotion and it always follows the rules.  You still need to fit the system to your personality and risk profile.  That’s why all new EnigmaSignal members will still have the opportunity of 1:1 coaching and a complete boot camp course.

At EngimaSignal we dont just backtest the trades.  We backtest the traders.

And another long delay to the blog … but its been worth it

Deep apologies.  I have just been crazily busy on the main project for us right now – the Ninja Trader and Sierra Charts ports.  Plus a sneaky bit of trading along the way of course.

Let’s cover off the trading first. That’s easy.  Today was a good day – and its still not over yet as all these positions here are live.  A cheeky little $4000 (£3049) profit on a few positions.  Look below here though and you will see exactly why I am so happy with this trading.

So why am I so happy?  because those positions were all auto traded!!  Yes, AUTO traded. 

I was asleep when the GBP position was taken, which made it even nicer still.  And I was away from my desk when this little puppy was taken too. 

This is EXACTLY as the trade is drawn on screen at the moment (I may change it).  The risk is calculated, the target is.  NOTHING on this chart is manual. 

No trade is taken when we don’t have at least an 87% chance of making the trade work within 4 time periods.  So far in the last 24 hours, we have traded 26 times on an incredibly choppy GBP/USD.  twenty winners and six losers.  Average win is 20 pips.  Average loss 5 pips.  That makes me very happy.  It took trades that I would not have taken, that for sure.  Which is actually good.  Especially on a choppy day. 

Not long now for the release, and frankly I can’t wait.  I think we have something very special here and with only 500 memberships available it’s going to be fun to have a closed community of traders. 

We will be developing new trade types all the while and making it work for everyone.

In the meantime, thanks for you rpatience and apologies I’m not bloggin that often.