Algorithmic Trading Strategies in several markets

What can you gain from an automated trading system? Is it any better than tossing a coin? Contrary to common belief a computerised trading system based solely on technical analysis can spot a reliable number of good trades

How can that be? First of all let s be selective. Not all instruments that you find to trade are profitable. That s in fact a bonus because you have a limited amount of capital to trade with therefore you have to be quite specific about what you choose. Individual stocks especially those with a small capitalization are to be left alone unless you have insider knowledge. Indices and very large stocks behave well under the scrutiny of technical analysis. Even better still futures are found to be the best. Recently a rare metal such as platinum provided close to 100% returns in just 9 months. Imagine doubling your money in one year. (We re talking about April 2010 here).

A trading robot doesn t care about a company balance sheet (or what is left of it after the creative accountants have done their magic on it.) As the old saying goes: Everything you need to know is already factored in the price! An automated trading system doesn t fidget whether or not to be in or out of the market. It is constantly in the market reversing from long to short and back again. It does not give in to market emotions but it does take advantage of big swings in the market by being bold enough to change position early in a move.

You might think such a trading robot is the prerogative of big hedge funds who can afford to hire hordes of computer geeks. Not so. There is such a system available for a small subscription fee. Trading Pal publishes their results daily. It operates on a 9 months rolling window of data. For each instrument traded a chart and a log of trades with a tally of profits and losses is available.

Even though there is still quite a choice of instruments to choose from people tend to trade in an industry or market they know about. They mentally recall the last high or the last low over the last 6 months. Nevertheless comparing your own trades with what Trading Pal came up with can be quite a wake up call to the shortcomings of your own ad-hoc method (If you can call it that when all you do is give in to your emotions.)

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