Algorithmic Trading System – 7 How to avoid the disadvantages of being a hope trader


Hello and welcome to this video, it will help you to improve your algorithmic trading results in the next 12 months.


In the last video we have talked about what will help you to really improve your ability to make good decisions for your trading system.


In this video we will talk about the disadvantages of being a hope trader.


Christopher Columbus is still seen as a hero, because he discovered a route to America.


Today we all know that he probably is one of the worst navigators of all time, because his original destination was India.


He missed his destination by several thousand miles and if his ships had been taken by a storm, nobody would even talk about him.


Hundreds of other explorers might have been better navigators, but we never heard their names, because they have not been as lucky as Christopher Columbus.


Today, with GPS and everything Christopher Columbus would probably be arrested by the coast guards, because of his bad navigation skills.


Today each kid can use a smartphone for a hundred dollars or less to exactly navigate to any destination in the world.


Would you still try to use Christopher’s equipment and try to reach the other side of the world with a paper map and a fragile sail boat?


Probably your answer is no.


But do you find yourself sitting in front of your screen, waiting for a single trade to become a profit or a loss?


I think for most people the answer is yes.


I know that my smartphone is a better navigator than Christopher Columbus.


And I know that any 10 year old computer is a better trader than me.


I have tried manual trading in early 2013 and I had really bad results.


A few trades were profitable, a lot of other trades were losses.


Looking at a bunch of candles, trying to find out if the price is going up or down is like trying to navigate your car by looking into the rear mirror.


If you find yourself hoping that a particular trade becomes profitable, you are probably still what I call a hope trader.


Hoping that something will work out is not a good strategy, in my opinion.


I prefer to use something more dependable so my systems are based on fundamental laws.


I will explain that later.


For now, please believe me that there is no way to foresee the future.


No magic entry signal will produce profits on a consistent basis.


But entry signals are exciting, so that is where everybody is looking.


I need to admit that some entry signals work better than others, but this is not what will make or break a good trading system.


And if you find yourself in front of your screen, hoping that a particular trade will become a profit, you probably have a lot of room for improvement.


If you hope that a particular trade will become a profit, probably that position is too big for your account size.


If you are still hoping, probably you only do a few manual trades each week instead of a few hundred automated trades in an hour.


You don’t have to hope that you can tie your shoes, because you have confidence that you can do it.


The reason is, that you have successfully tied your shoes several thousand times.


If you are a good musician, you have the confidence that you can play the right chord, only rookies hope that they can do that.


In my eyes hope trading is a sign for a lack of confidence and practice.


And if you find yourself hoping for a profit, algorithmic trading is probably the cure for your trading results.


In the this video we have talked about the disadvantages of being a hope trader.


In the next video we will talk about how to survive financial disasters.