(this is part 2 of the Algo-Trading Journey series)
The biggest advantage of a rule-based system is that it can be backtested and verified that it works (or doesn't work) BEFORE blowing up your account and losing all your money. 💸
Trading With Knowledge And Intuition
If intuition was so great, 90% of retail traders wouldn't be losing money.
Even better question: to whom are they losing money?
To institutions.
And institutions have thousands of developers building algorithms designed to:
- perform under pressure (because algo feels no pressure)
- exploit trading behaviors (like panic trading)
- detect patterns that repeat over and over
- etc.
Also, your "intuition" is very hard to test.
Who knows what you would do in some situation 2 years ago:
- what would be your state of mind
- what news would you read at that time
- what would draw your attention
- who influenced you at that time the most
- and so on and so forth...
However, without testing, you have NOTHING.
Well, nothing except the hope you won't lose all your money. 🤦
Performance Consistency
How many people find success trading on their demo account only to start consistently losing on a real account?
Too many to count.
Emotions impact behavior (this is beyond obvious).
So even if you have good performance... even if you're very profitable on a real account... what happens when...
- you have one bad day when you're sick
- or you had a fight with your spouse
- or got into a minor car accident where your brand-new car was severely scratched
...what happens then?
Do you wipe out all the profits from the last 12 months?
Or worse?
My conclusion is this: allowing emotions to touch your trading account can only end in disaster.
What's Next?
I plan to post my progress here on dev.to because I find it fun... and I enjoy it.
If you want to join me on this journey, then I suggest you:
- follow my profile for more updates
- bookmark this article for future reference
- and like this post, so more people can see it
Now let's go and conquer the market :)
Will
P.S. here are some cool resources:
1. Best Programming Language For Finance
2. (FREE) AI For Finance Tutorial
3. Starter Code For Bot Building
Top comments (0)