My Journey to Fully Automate My Trading: What I Learned After a Month Into Fully Automated Day Trading on TradeStation

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I still remember the day I launched my automated trading – sitting tight in front of the screen waiting for something to happen. And then suddenly it is already a month since the launch. Time really flies!

Over this month, I actually learned quite a few interesting things that many you will find useful.

TradeStation Second Login

First trouble I ran into was that once the automated trading went live the account is logged in 7/24 from my trading server. So, if I need to develop new strategy or code on TradeStation I have to remote login to the trading server. That is not a good idea because bad coding and human mistakes can interfere with the live automated trading strategies. It turned out TradeStation can provide you with a second login id. The trick is to use this 2nd id only with the sim account so that it does not interfere with the real trading account.

As long as you do not need real-time data on this 2nd login, there is no extra data fees. I now work happily on my laptop with TradeStation this way. It is a very nice discovery.

Fills are Not as Bad as I Thought

Since I am converting my existing models developed on my proprietary platform into TradeStation, I thought latency is going to be an issue. I am pleasantly surprised that it is not the case. Fills are timely and no real slippage.

It makes sense though.

First, the day trading strategies I converted to TradeStation so far are not my HFT ones. They are slower and just need reasonable execution speed. In the past, internet stability and speed were big issues. Hence people like me did highly customized work with co-location servers near / at the exchanges. From the results so far, those concerns are no longer an issue.

Second, infrastructure has improved so much that order routing at retail brokerages are now much faster as well. So, unless you are really into HFT space, retail day trading in this era is pretty level with the institutions.

Latest Generation Computers are Overkill

TradeStation and many other retail trading platforms used to require serious computing power just 5 to 6 years ago. That is no longer true thanks to the improvement in hardware over the past few years.

You can just pick up a cheap 2nd hand computer with Windows 7 Pro for trading for as low as $300-$400 Canadian dollars. It is less than $300 US dollars. The most important thing is to get a quad core CPU so that Windows can run smoothly alongside your trading platforms.

What’s Next

I am converting next set of trading strategies now and plan to incorporate that by end of April. For the first set of trading strategies, I ended up having a complete framework ported over to EasyLanguage. This time, another framework will have to be converted too. I plan to release all these useful code libraries in near future. I just need to figure out how to do it properly.

For example, I don’t see a decent set of functions providing information like holidays and FOMC meeting schedule on any trading platform. But it is critical to know these things even for a normal trader. This is a fundamental tool for building reasonably robust trading strategies yet it is nowhere to be found.

Maybe all the pros are keeping these tools to themselves. Just kidding.

My Journey to Fully Automate My Trading: Peaceful Launch of My Automated Trading on TradeStation

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This past Monday, Feb 25th, I finally managed to get small part of my automated trading strategies ready for live trading on TradeStation. It was one hell of a long journey to convert my algorithms from my custom trading platforms onto a retail broker platform. I learned a lot from the process and gained incredible insights into some many areas in trading that I thought I already know.

As the Chinese proverbs say,

The journey of a thousand miles begins with one step –  Tao Te Ching, Laozi

千里之行,始於足下 – 道德經, 老子

The moment I decided to move onto this path, I know it is going to be a huge commitment on my part to get to the finish line. So many obstacles and road blocks making this project such a huge challenge. I just looked up my blog posts and found that the earliest post about my intention was back in March 2017. That was two years ago.

I was so overwhelmed by the difficulties that I kind of giving up to write about the progress. There are just so many issues to tackle in various areas of trading making it hard to decide on what to write about. I did not write about it but I do keep notes on everything. That’s my habit all these years. I even recommended the practice to all traders in my writings all the time.

This is not the end of the journey though since my goal is to convert multiple sets of algorithms into live trading strategies that work on various retail platforms so more work has to be done.

I am very glad that I have chosen to walk down this path. At this point of the journey, majority of the technical issues are now taken care of. I am at a happy place to say that the rest of the journey will focus on more strategic development of my automated trading. I will have time freed up to catch up with writing about this amazing experience.

I am setting up a page in my blog for this series finally,

http://thelawrencechan.com/my-journey-to-fully-automate-my-trading/

Enjoy the show!

On the Road Soon. Meet Up and Gathering Anyone?

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I expect to hit the road next week. I will be going to Hong Kong and Singapore to meet with my business partners and give out talks about the markets and trading. My schedule is not as crazy as the last few trips. So, here I am letting you all know that if you are interested, we can meet up in Hong Kong or Singapore.

It does not need to be all intense discussions about trading and market directions. We can just chill and get to know everyone.

It will be fun!

Busy Busy Busy … Waiting for 2019 in Excitement!

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I have not posted for a long while here in my own blog. Feel kind of guilty for being so quiet. Here’s an update of what is going on in every front.

The Site Update

DaytradingBias.com has finally got its long deserved update. It is now mobile friendly and ready for the next level of client support. I am very happy with the result so far. I have in store big plans for the site in year 2019. I will announce the new services and products when they become available.

Trading Success Blueprint 2nd Edition

My trading course Trading Success Blueprint has been very well received since its launch. Many long time premium members sent me feedback that something important is missing from the manual. I hear you all and I have just completed three new sections to the manual for its second edition release. Once they are edited properly, it will be made available to everyone who bought the first edition.

In fact I am turning TSB into a live project! I am offering lifetime update for free to anyone who purchased the course. I am also making available a special support area online so that users can download strategy code and other things much more easily. And third edition of TSB is already planned. It will fulfill another request – a forex day trading strategy example.

My Fund

My work on my fully automated fund is 99% ready. I have decided to launch it sometime in January. It is very difficult to port trading strategies created in NeoTicker into various trading platforms. So much of my time was wasted in recreating the multiple timeframe framework in these other platforms. Right now I have everything necessary to move forward with this project.

My Trading Service

A version of the trading model will be made available through brokerages. I will have more details once I have completed the process. For those who expressed interest in the past and present asking me to manage their money, I am very flattered. I think this will be the best way going forward allowing everyone to participate. Due to liquidity issue, the model will be released with strict control on the number of contracts I will allow through the brokerages.

Yet to be Named Course on Advanced Trading Strategy Design using VIX

For those of you who want to learn more on how to create these trading strategies I am using myself, I am still working on the course right now. It is already longer than the 2nd edition of TSB excluding those appendix stuff. It is like an extension of TSB with focus on how to design trading strategies suitable for day trading purpose. I also provided an in-depth look into VIX and its leading properties for swing trading and day trading. It will be the next most important course for anyone interested in building their trading career.

Workaholic? Maybe …

Over the past 2 years, due to various reasons from computer issues to platform glitches, many of the projects I am working on were grind to a halt. Well, by pushing things forward slowly with patience, the efforts finally pay off. It is very exciting to see so many things getting through the finish line at the same time.

So Many Things Finally Done, So Many More Things to Get Done

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Last few months has been the most productive ones over the past two years. So many projects that have been stuck were finally completed. What a relief!

For one, my book The Art of Chart Reading is now finally published at Amazon. Thanks to everyone who support the book this week, I am proud to announce that, as of this Friday, it is the Top #1 book at Amazon in Investing and Investing Basic categories and also being one of Top 20 Nonfiction books. It is a great start for the book.

The paperback version of the book is still being worked on. If all goes well, the paperback edition will be available by end of this month.

And the site The Art of Chart Reading Online is also in development. It will take a lot more to make it good for the purpose I envisioned.

On DaytradingBias.com side, the move to the new direction has finally started. It was planned at least a year ago but almost everything that could go wrong, did. Although the process has started, it is not even half way through.

It is great that the Trading Success Blueprint is finally completed. It is the grand summary of my knowledge and experience in mentoring traders over the past 20 years. From now on, I have a reference that I can point aspiring traders to if they want to build a trading career the right way.

Yet, the trading signals and trading tools that I have planned to release have been delayed for so long. I could not just roll them out without proper testing. Due to the frequencies of these trading strategies, they do not happen everyday. I need to make sure they are working correctly. It is not only necessary. It is a responsibility as well since people will put money on the line based on these tools. Thus, I have to be patient and get them ready one by one.

On money management side, the process of fully automating the trading has started too. However, it was the most eventful two months we have seen in a long time. Be that North Korea related matters, or all these explosive news about Trump, they swing the markets hard. All these happening while I am manually testing these strategies. It is a huge challenge for someone like me because I created these trading models.

The golden rule of mechanical trading is to follow the rules exactly. But being the creator of the models made me want to override them. After the fact, my interventions worked 9 out of 10 times. But the 10th time is a disaster. In short, if I had followed the rules completely, the performance will be about the same as what I have now. Being 20% better with all the crazy maneuvers is not worth it.

Again, a lot more to do to complete the transition.

oh well, challenges make life interesting.

Surprisingly Smooth Transition into Windows 10

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I spent the past two weeks setting up a new laptop due to the unfortunate event that my original laptop being crushed in the plane while I was traveling back to Canada. Since I do not need my laptop during this period of time, I can use my desktop computer while setting up the new laptop slowly. The experience with the transition from a Windows 8 laptop into Windows 10 is, surprisingly, good.

The Incident

I use a backpack when I travel and my laptop is stored in the part for which thick protection foam is there all around it. I thought it is safe from physical harm. I could not be more wrong this time though. First my backpack was moved away from the overhead compartment where I put it due to someone else having a huge luggage forced the flight attendants to move luggage around to accommodate that. My backpack was moved somewhere else before i can even try to grab it back.

By the time the flight was over, I tried to locate my backpack. It was squeezed down under two hard surface carry on trolleys. I thought it should be alright because nothing bad really happened to my laptop ever through all these flights over the years. I could not be more wrong.

When I arrived home, I found a corner of my laptop was totally crushed. Amazingly, the laptop is still functional and boot up fine. The catch is that two of the ports I needed most are no longer usable.

A hard lesson learned – never store your laptop in a soft shell container.

Finding a Replacement

I am never comfortable with new versions of Windows. I wrote about that many times over the years. Microsoft is infamous in destroying compatible with everything from hardware to software with new versions of Windows. My experience was so bad I never buy a new computer with new versions of Windows. This time, however, I have no choice.

Microsoft has determined that they cannot continue to support their older versions of Windows. Windows XP and the major disgrace Vista are now discontinued from normal support. Windows 7 is still supported but probably not for long. Hence, it is very diffficult to buy any new laptop with older versions of Windows.

First, I would not want to buy a laptop with Windows 8 ever again. That leaves me with only Windows 10 to choose from. I thought, what the heck, Windows 10 is around for sometime already. Everything should be working fine now. Is it?

The Transition

It is not that easy for a road warrior to switch to a new laptop. This is especially true for professional traders. We have so many applications to install onto a computer, it takes a lot of time to get it done. This time around, it took me like a week to have all the necessary configuration done on Windows and the essential applications installed. The more auxiliary applications can wait.

Core applications like Microsoft Office has to be installed. I am very glad that my Office Enterprise 2010 still works on Windows 10. There was a point in time that Microsoft tried to force everyone to use the stupid Office 365. As a paid customer, I seriously cannot accept their proposition that I have to pay up again, as a subscription, that has no added value to my need. As far as I recall, I have been a paying customer of the Microsoft Office software since I was studying in university. Microsoft has to give me a very good reason to pay for another upgrade.

Many other applications are not working well on Windows 10 due to the Smart Scaling issue. That includes quite a number of trading applications. Smart scaling is the changing of pixel density dynamically so that the display device can show you things that you can really read. Given the laptop I get has 4K resolution, if the application is displaying its content using the pixel based method, it will be so small that I cannot see what is displayed at all.

Luckily, Windows 10, after several updates, has find a way to resolve this issue by offering multiple compatibility display options. I got two trading platforms working but one is still in trouble. I will not name names here. I think it is better I report the issues to the developers and see if they manage to come up with anything like a workaround or a quick new release to address the issue.

My Impression

I like Windows 10 a lot on this new laptop. Well, part of the reason is that the new laptop is very impressive on hardware basis alone. On the other hand, Windows 10 gives me a much more comfortable feel in terms of control and flexibility. Windows 10 is delivering what Windows 8 intended to do but failed to do so – a new paradigm without sacrificing the core power of Windows over platforms like Macs. Windows has always been a workhorse type of platform and it is the favorite platform for businesses and large enterprises. Windows 8 deviated from that (so did Vista) and it has been part of Microsoft’s painful memory since.

The truth is that I have to make a lot of adjustments to my usage routines from the last laptop but I am happy to make the transition this time. Unlike last time when I was forced to switch to Windows 8 and took the plunge to change all its settings to mimic Windows 7, I am happily learning to work within the new Windows 10 workflow. Part of this obviously thanks to all the software companies making the transition easier by having Windows 10 compatibility taken into account. The other part is that Microsoft learned from its users what has to be done to make Windows 10 functional.

Email Server Down

Those of you trying to reach me through email have to wait until my team finish repairing the email server.

Looks like hardware problem so until the faulty hardware is replaced I am stuck on web access to my email which can be a pain in the neck to actually find the real emails to response to.

My guess is that it can take another day or two.