I have read comments about many members using automated systems for options, so I want to know if a person who has no such system, can do options manually? I have come across some people here in this forum and elsewhere who are doing it manually, but not all of of them don’t do it on a large scale, those who are doing manually are experienced, so perhaps they don’t need a system, or can create one if need be.
Also, how soon would you think there will be a complete takeover by algorithms and code, leaving no chance to do manually, if it happens.
I have been learning about options for a few weeks now and practicing intraday without any positions, and compared to my very first trade, I got accustomed to the speed and volatility on a 5M chart, and I think I can continue if the current status quo remains the same, but as technology advances, this wont be the case.
In investing, or even with momentum trading, there is no need for any automated system, as there is no question of time decay and there is no unexpected volatility, excluding some small stocks or certain situations. There are people that I am familiar with who manage multi crore PF from a mobile. But I don’t know about derivatives segment.
I asked someone this question, he told me his view and suggested me to open a thread.
What is automated can be done manually also. But if you have done manually for a fair amount of time you would realise that manual is difficult especially if you have another job, personal commitments where you need to devote time. Also more the screen time required to execute the strategy more is the impact on your health. Besides chances of making execution errors, overtrading etc is way more with manual compared to algos.
Globally algos account for 70-80% volume. Algos would be 50-60% in India. A complete takeover may not happen. But eventually more people would appreciate the benefit of auto and go auto.
Market keeps surprising you. Market is dynamic and status quo if any will not be perennial. Also the real punches on chin would be when you trade with real money over a fair number of trades.
Automation is done to save time and prevent mental and physical fatigue. The underlying trading philosophy is not the reason to go auto.
Doing things manually would encourage me to take more actions per strategy than I should be.
Automation helps me execute more strategies than I can manually. How else can you mix 10+ strategies (including slight variations of same strategy). This is crucial for returns, consistency and drawdowns.
I do take some manual decisions sometimes and interfere (like deciding around 3pm if I should carry trades over).
These days I consciously walkaway from the screen when trades are on, and peek every now and then. There are times when I notice current action and cringe and then walkaway, otherwise I tend to see too many supports/resistances and what not that encourage me to take action that actually impede my results (proven).
Having said all this, many are profitable doing things manually too - but most aren’t cut out for that mentally. And yes - Its best to do things manually for the first year imo.
I don’t use readymade platforms to execute strategies. I prefer coding my own and run stuff on my computer (with backups of backups of hardware, software and internet connections). I need more control and privacy. I don’t trust anyone.
only items that are repeatable can be automated. you still need manual intelligence to create the algorithm.
on that front there are more than 50+ lakh software professionals in India but very few breakthrough coders. so its not that easy to create a code to factor in all the trading conditions and fully automate it.
if 100% of traders automate then none will make money as the markets will be 100% efficient.
since you have a software background you should seriously try algo and better it in each scrum.
i do 100% of my trade manually now, but i try to shortlist things that can be automated
Me too, i ended up coding everything on my own use python libs as base - backtesting/charts/execution. All deployed on Linux + laptop. Cant even get myself to use AWS type machines so far, perhaps irrational.
That said, trading manually should always be possible as t7 said. First question to ask is what kind of rules you have in your plan? If they cannot be put into logical steps that you cannot code it
.
I find this style to be very difficult to master, just too much work. How will you know that your plan works? You will need to backtest things manually bar by bar through lots of data. If you can do it, get a real edge, and gain confidence in that edge, then yes - nothing wrong with trading manually. People do that, guy i learned from also does that, even in options ( backed by data too). Index Options are very liquid, no particular reason why you cant trade that manually.
Algos will not take over completely, there will always be space for discretionary traders - just play the right game ( cannot compete in speed with HFT). And i think, that the best discretionary traders with skill and experience, probably can do better at a single system level vs systematic. Just guessing, plus i think most traders in MarketWizards tend to be discretionary ( from what i have heard).
I have come to realize that i don’t want to trade like this, esp not actively. I much prefer to work when i want to, rather that to work everyday without fail, which is what is needed to trade manually. Secondly psych issues are much much much easier to manage if i am not involved in day to day trading. Those are the advantages along with ease of backtest. But you can only backtest what you can code for.
Simply put in there are two parts of Automation-1. Execution 2. Signal . Its practically impossible to automate all the conditions and risk on off approach also you have to recalibrate your model as markets are dynamic. All the big funds more or less change there models every month or quarters.
My experience, i try to put execution and signal saperate ,lot of my signal and execution has be solved by sensibul but still i few signals automated but i try to keep some asspects manual( Risk on off approach)
Just what i started with and what i am used to. Very high volume in options is a recent development. Options has extra complexity too, and i chose not to deal with that in the beginning.
I did not really plan to trade options for long time, but now looking at how deep orderbook is in weekly, i will have to work on it. But first i am going through things that i can easily implement, edges that i already know. That should allow me to keep compounding for few years atleast.
