by Robert Buran
Automated Trading from Home
similar to what banks and hedge funds do
I have been trading for a living from home for about 25 years and entering most of my trades manually, but what about AUTOMATED trading from home? This is indeed now possible and is fairly easy to do with automated trading software that you can run on a desk top personal computer. First of all what exactly is automated trading? Automated trading is sometimes called algo trading. Algo means algorithmic. In mathematics and computer science, an algorithm is simply a step-by-step procedure for doing calculations. A simple algorithm for stock trading would be to buy a stock when the three day moving average goes from below the twelve day moving to above the twelve day moving average.
In order to get that trade executed with a broker and have true automated trading execution we must program trading instructions that include all the variables such as the price at which to buy and how many shares to buy. And to qualify as fully automated trading we must use some kind of electronic or computer platform so that this trade is executed without any human intervention.
I am a trading system pro and can write just about any stock trading algorithm using TradeStation Easy Language ™. In fact I have some of the best automated trading systems around. Please see Automated Stock Trading Software. And so then by using the TradeStation software platform it is fairly easy to make a trading strategy fully automated for executing all stock trades with a broker.
This technology is relatively new for the stay-at-home stock trader. But the trading industry has been doing fully automated trading longer. Automated stock trading has been widely used by investment banks, mutual funds, pension funds and other buy-side (investor-driven) institutional traders for some time.
Financial researchers estimate that over half the trades in the US stock market today, in 2013, are fully automated and are executed by algorithmic trading programs.
But fairly recent advances in software technology make it possible for anybody with a computer to do fully automated trading from home. You can do at home exactly what the banks, pension funds and hedge funds do. Why let all these institutions make all of the money? You can do it yourself and not pay someone to do it for you.
Automated trading vs manual trading
Making trading decisions can be stressful and I have argued for a long time that there are many advantages to letting the computer do your thinking for you. Computers do not get flustered in fast markets and can execute many orders with lightening speed. Computers function without emotion and are fearless. These are just a few of the advantages of automated or robotic trading.
In early 2012 I started trading a couple accounts with the TradeStation 9 computer platform and it has been a real eye opener for me. But for starters I would like to say that I have no business relationship with TradeStation Securities and I get no kickbacks from them of any kind for referring customers to them. My comments here are nothing more than my opinions based on my own work with their company and with their software, TradeStation 9.1.
One beef that I used to have had with this company was bad data. With older versions of TradeStation, that I use to post charts on the web site, the data was stored on the hard drive on your computer and when there was bad data it was possible to correct it immediately. However, with TradeStation 9.1 the data was not on your hard drive; the data was on their server in Miami and one had to wait for THEM to correct it. This used to create all kinds of problems for me as a systems trader. I preferred the older versions of TradeStation that allowed me to correct my own data.
Well I am happy to report I no longer experience this difficulty. I do not know what they did, but in six months or so of trading I have yet to have a problem with bad data and TradeStation 9.1. As far as I am concerned bad data is no longer an issue with TradeStation Securities. Problem Solved!
Let us look at some of the things that can be done with TradeStation 9.1 when trading my algorithms using this software. Although I have been working with TradeStation for over 20 years I am basically writing this article for people who know nothing about TradeStation.
First let me tell you about the thing that I like best about TradeStation 9.1 and the thing that puts it heads and shoulders above all previous versions. With this software I can run any of my systems or strategies on full automation. I can easily do automated trading from home using nothing more than my desk top computer. By full automation I mean that after loading my systems into TradeStation 9.1 and setting up the charts, I can, if I wish, let the computer do all the trading for me. This means several things for me as a trader. First of all it means that I do not have to sit in front of the computer while I am trading; the computer will execute all the trades and if I have my speakers turned on, every time a trade is executed an automatic voice will say “order filled”. So if I want I can go golfing while the computer is trading I can. Or I may wish to trade overseas markets all night long while I sleep. In the morning I can be confident that the computer has flawlessly executed all the trades.
Are automated trading fills any good? Do you see a lot of slippage, that is a large difference between the system price and the actual price? My studies with real time trading would suggest not at all. I have kept spread sheets on this for several months and am happy to report that slippage with automated trading is quite minimal; the fills are in fact almost instantaneous with the system price being hit. Whatever tiny slippage might be incurred is more than offset by flawless trading. You can be a total novice and still after having me help you get this all set up, you can be trading exactly how I trade without making a single mistake. You do not have to worry about trading discipline and fear of “pulling the trigger”. You can fall asleep and let the computer do the work for you.
This is a screen shot of the TradeStation page dealing with fully automated trading (Click image to enlarge):
You can see that the system we have automated is highlighted and has been applied to the market GOOGLE (GOOG). Note also that we have set the system up to trade only from the long side, but we can change this with a click.
But the most important part is the check marks at the bottom. The Generate strategy box in combination with the Automate execution using account with confirmation TURNED OFF means that our orders will be sent to the trading desk automatically. If we set the box to TURNED ON the system will generate the orders but will prompt us first and will not execute the order until we click a prompt that yes we want to execute that order.
I do not use this last option. I trade exactly as this screen shows and I let the orders go automatically to the trading desk.
Another great advantage of trading with TradeStation 9.1 is the ability to test all systems and track system performance with all stocks. TradeStation Securities has a data base that is unequaled by anybody and with just a few clicks of the mouse one can test 100 years of market data in less than an hour. This is a fantastic research tool and is great assistance in choosing the right strategies and right markets for maximum profits. This is just a little example of this testing capacity (Click image to enlarge):
This shows a chart of the market EXPE. This is a trade we actually took in real time at the end of May 2012. The chart shows where we bought the market and where we sold the market. But the trade list window shows us exactly what we did. We bought 40 shares of EXPE on 5/19 at 43.37 and sold 40 shares on 6/1 at 46.07 for a profit of $108.00. The trade list also shows that we have a net profit in EXPE of $1,208.60 trading 40 shares of EXPE over a given time period.
With TradeStation 9.1 you have the advantage of almost instantly checking the system performance in any market for virtually any time period. With TradeStation 9.1 you do not have to trade blind.
If you are totally unfamiliar with TradeStation Let me show you some screen shots of pages I use every day to do my real time trading (Click image to enlarge):
The above page is my main page and is what I watch most of the time. If I want to switch from this page I click one of the tabs at the bottom. For Example #1 AAPL-APC displays the markets AIV, AMD, AAPL, ANR, AMGN, APC, ADSK, AIG, and AV and to each of these charts I have applied one of my systems and set it for fully automated execution. I am presently trading 72 markets.
Down at the right hand bottom of this work space I see this:
This tells me how I am doing at any given minute of the market day. It shows that I am presently about break even with my open positions, but that I have closed out positions for this same day worth $146.65 after commissions.
If you turn on your speakers with the automated trading every time an order is executed you will hear an automated voice say “Order filled”. But if you want to see all NEW executions on any given day you just have to click the average price tab to see(Click image to enlarge):
From this we can see that we have sold, that is taken profits on four positions, NOV, NWL, ZAGG and F on the same day we are looking at it.
TradeStation offers endless brilliant and graphic displays and ways of looking at the markets we are trading:
In the above trade we have going in HP we can see clearly not only where we bought 40 shares, but we can see where our profit point is, 47.94, represented by a red line on the chart.
Here is a real nail biter in KSS. After establishing a nice profit objective on Friday the market appears to be retreating from the red line on Monday (Click image to enlarge):
Fortunately the market did regain its momentum and we did, after some white knuckle time, reach our profit objective.
This shows just a tiny slice of what this powerful software can do for your trading. But working with the greatest software in the world can also save you money. You do not need to buy this software. You get it to work with when you open an account with TradeStation Securities. And you can open an account with as little $5,000. AND you get your data free as well after paying exchange fees.
But there is another dirty little secret about TradeStation Securities I do not think many traders realize. Their commission rates are rock bottom especially for the small trader. You can opt to pay commissions on a penny per share basis rounded up to the nearest dollar. So for example in the above examples involving only 40 share trades the commission rate is 40 cents rounded up to a dollar going in and out or a total of only two dollars per round turn. You just can’t beat that anywhere and furthermore I think TS Securities is now letting you trade the first 60 days for free. So when you add up the benefits of the best trading software in the world, plus nearly free data, plus rock bottom commissions, it is hard to justify going with any other brokers.
By the way again I am not employed by TradeStation Securities and I get no kickbacks for making these recommendations.
BUT if you do open an account with them using my trading package there is a lot I can do for you. You do not have to struggle alone and in the dark. I can hold your hand if need be and get you set up so you are trading exactly like I do. I can give you a list of good markets, suggest systems that fit your finances and trading style and help you set up every market and chart. And you can call me or E-mail me anytime because I am trading with real money the same systems and markets that you are. When you are in trouble I am in trouble and when you are making hay I am making hay also.
In any case I consider TradeStation 9.1 and TradeStation Securities a fantastic way to trade my systems and strategies. All of my materiel is 100% compatible with TradeStation 9.1 and furthermore I can give you all the technical support you need, for life, when working with my materials and TradeStation 9.
In any case I consider this automated trading system software and TradeStation Securities a fantastic way to trade my systems and strategies. All of my materiel is 100% compatible with TradeStation 9.1 and furthermore I can give you all the technical support you need, for life, when working with my materials and TradeStation 9. With this software it is possible to trade just like the hedge funds do and do fully automated trading from home.