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| ForexSAM - Man Vs. Machine | |||
Mechanical trading, or trading purely by computerized buy/sell calls signal for signal, is most likely no different from nighttime instrument-flying of an airplane. The rule in both is that you must trust the instrument, and not the judgment of your own. Disoriented pilots often report their extreme reluctance to follow the instrument reading even though they themselves may be misjudging the ocean for the sky. Likewise, in trading, mechanic systems routinely buy, sell, and hold positions beyond the comfort levels of human traders. The sizes of profit and loss generated by emotionless robotic methods are also frequently beyond the levels of typical human tolerance. Unless a robot is hired to operate a robot, the mechanized trading systems are simply too “inhumane” for most traders to handle. This is because logic thinking man tends to override emotionless machine which is designed to overrule human feelings. When it is man operating machine, the latter is often blamed for the failures of everything, not that it has to border on any truth. There is another reason of technical nature, which renders mechanized trading systems practically inoperable for average Joes. That is, the lack of “pureness” of data input. Due to countless factors from power outages to computer speed to data misquote, the data feed that runs a trading system may hardly remain uninterrupted. Hence, when the data is refreshed or replenished with a full backup, it is very possible for the system signals to alter their time and price level of occurrence, sometimes disappearing or even reversing themselves altogether. By the similar fashion, a million users of the same trading system operating on a million various sources of data input can very well produce a million different signal indications. It is not really a garbage-in-garbage-out problem, but it is close to it.
This along with a few others is the
reason we at ForexSAM.com do not literately use mechanic
systems as a cattle of labor to fetch riches in and out of
the market. Rather, we rely on them mainly for guidance
of trading posture, since they are programmed to “sense”
the change of wind in the marketplace, or to spot and
catch trending movements of price actions. For making
entries and exits, we utilize exclusively human inputs
of intelligence, acumen, experience, and technical
know-how to recognize and identify the most probable
support/resistance prices to seed in buy/sell positions.
Finally, a safety net in the form of RRR (risk reward
ratio) rules will always be in place to safeguard
against any failure that may still occur in spite of man
or machine’s best efforts. |
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Please email your
ForexSAM Hosts with questions or comments. |
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