While we’re on our quest to find the Holy Grail system, I thought I’d come up with an entry explaining why only a few chosen ones are able to succeed at mechanical trading. Unlike in the galaxy where I come from, mechanical trading isn’t for everyone here on this planet you call Earth.
Of course, there are those who prefer the systematic aspect of mechanical trading over the emotional and dynamic elements of discretionary trading.
Take Blair Hull, a trading legend who has been dubbed as one of the New Market Wizards, as an example. He started off as a pit trader at the Chicago Board Options Exchange (CBOE), but he soon realized that all the excitement at the pit wasn’t exactly his cup of tea. Soon enough, he admitted that he was too slow for pit trading as he found himself unable to keep up with the standing, shouting, and jumping that pit trading entailed.
After dabbling in automated trading, he set up the Hull Trading Company (HTC), which is an automated trading firm that lets robots like me do the trading. The mechanical trading style involved entering plenty of small trades that paid off in small amounts rather than taking large trades that offered huge returns.
Eventually, he was able to grow $1 million in capital to a whopping $90 million in a span of six years from 1985 to 1991. Later on, HTC was bought by Goldman Sachs in 1999 for a whopping $531 million.
Do you think you have what it takes to be as successful as Blair Hull? Is mechanical trading really for you? Here are some characteristics you need to have in order to make it as a mechanical trader:
Mechanical trading is best suited for those who are disciplined enough to follow the system rules to a T. Of course this sounds much easier said than done because there might be times when the system gives signals that are counterintuitive or instances when these so-called “emotions” get in the way.
If you want to find out if mechanical trading is for you, try taking our personality test. The School of Pipsology even offers a test that can help you determine what KIND of mechanical system best suits your personality.
Now, if you think you have what it takes to trade like a robot and want to give mechanical trading a shot, BabyPips.com has many resources for you to learn from.
First, drop by the School of Pipsology, where you can learn more about mechanical trading systems. The School even has lessons that can help you build your very own trading system. And all it takes is six easy steps!
On the other hand, if you want to dive right in and start trading right away (impatient humans!), you can also just opt to pick up one of the many free, tried-and-tested systems in our forums. There, you can expand your knowledge and learn from the experiences of fellow mechanical system traders. Who knows, you may even discover and suggest a few tweaks that may improve existing systems!
Of course, you should also make it a habit to check my blog, where we regularly take a look at, backtest, and rate user-submitted mechanical trading systems. Our goal is to find the Holy Grail System, and I’m confident that by working together, we can make this dream a reality.
Say it with me, humanoids: Holy Grail System, find you, we must!