Monday, October 15, 2007

Caution taken while Auto Trading

One of the first things that I considered while formulating the basis for my automatic trading platform was risk. How would I place an order and not have to worry about my Internet connection or computer causing problems. I figured that I would let TWS do the risk management.

Using bracket order, I can send my orders to TWS and then on to IB's system. While my "system" is running here at home, the bracket order is continuously updated to move the stops and profit target. I don't really like trailing stops, so I don''t use them... for now. The worse that can happen under this scenario is that I get taken out of a trade. The second worst is that my profit target gets hit while price is moving up and the target has not been adjusted upwards.

I haven't been able to go a full day yet without some sort of bug or problem with the code, so I think this approach has paid off. It's only a paper trading account for now, but one day, I hope to have the auto trading working allot better.

Please participate n my poll on the left side of the blog page.

Sunday, October 14, 2007

The System, and auto trading

I have my system pretty much tuned for end of day and 1 hour FOREX (foreign exchange) charts. Why Forex? It's none stop data almost all week long, with no gaps (hardly). I started out using FOREX data just for testing, but lately I have traded it with success, although small success. I haven't gone full bore yet.

I have also been writing code for auto trading Forex through Interactive Brokers TWS platform, using Amibroker. I currently have a P3 laptop set up doing just that all day long. Windows Debug is also running, logging everything that happens. IB offers a 'paper' trading account, I'm using it for testing.

Technical analysis is an important part of my trading plan. To ensure I honour my stops, I figured that a auto trading platform would work well. It would not only get me in at the right time (defined here as buying based on signals and not emotions), it would also get me out on a stop that is pre-defined, without my second guessing. Since Forex is very liquid, placing stops on IB's TWS does not concern me. The stops aren't place at the typical levels either.

One of the things I had to do when setting up the auto trading interface was to draw out a block diagram, a decision tree. I go long and short (no up tick rule either). I discovered that there are many different things to watch out for while planning this out. Something as simple as exiting a position when I get a reverse signal, what to do?

I'm not ready to go live with the auto trading interface yet, but I have gone live with the system on a end of day time frame. In the coming weeks, I'll be posting screen shots of the system, as seen in previous posts, but tweaked with some new things on the screen.

To help me develop the system and auto trading platform I have been using Yahoo groups and Herman;s website,, a great resource.

I'm interested to know how many readers have ever tried Forex and what their experience with it was?


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