All too familiar crossroad/trade-off

OANDA:EURUSD   Euro / U.S. Dollar
Let's be honest: who doesn't want a magical computer program that runs on your computer and tells you the future price of your favourite ticker, be it EURUSD , GBPJPY , BTCUSD , XAUUSD . More so a automated trading strategy that runs in the background 24-7 and will trade away.
Let's also be realistic: if someone has the code that can do this, they most likely won't share it, at least not for free. Somehow, in the past few months, I had this thought that I could just, you know, use Google to find such kind of code.

Surprisingly though, I learned a lot during this doomed-to-fail process. Not that I am currently making easy money in the market. Rather, now I understand why some common tutorials you'd find online may appear to work but will NOT work and what it might actually take to build a balanced profitable trading system.

When we talk about the secret behind becoming consistently profitable, there's actually no secret. A technical indicator may pop up in your mind that they may have secrets that make them consistently profitable. But no, the professionals are just like you, we are all human subject to the same stimulus in the market, fear and greediness.


The sole reason or one of the main reasons that I have taken it upon myself to start writing and posting ideas is to share my most up-to-date understanding with those of you who are also interested in computer assisted trading and to also lay out the many other inter-linked subjects trading related in the hope that someone can benefit from these ideas in some way/shape or form.💡

I myself personally have reached a crossroad/trade-off where I am not able to automate a strategy as I have no coding skills but that didn't stop me from compiling and using indicators, making them talk to each other, creating chart templates that fit a certain style/way of trading whether it be trend following/reversion you name it and in general having more of a methodical rules based approach to entries/exits.


After all these hustles, I decided to take a step back and revisit an initial assumption: there is some underlying correlation between future prices and past prices that can be learned by a machine. The school of technical traders would probably agree with this and it is likely for short amount of time, the price action is indeed momentum driven.

Nevertheless, once the news on companies or macro economy kicks in, things can go very wild. Unfortunately, price dataset's do not directly contain such information per se, but the future price will certainly depend on when certain news becoming known. Many often get blinded by the short-term, just one day the market rises/drops 1%, the whole crowds become fearful. Bad news and good news are always in the market, when people are fearful, they will look to the bad news, while the opposite for the hopeful times, they will look to the good news.

So here is the trade-off. It is more likely that you can use machine learning to capture the momentum of price actions on a short time scale. But you need to have high accuracy and make trades frequently to make meaningful money. Alternatively, if you build a model that accounts for news mentions and provide an okay prediction, say a few days into the future, you can also be rich pretty soon. Both are hard problems to solve. As you might have expected from the very beginning, making money is hard.


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