How to handle the relationship between programmed transactions and existing trading systems?

The relevant traders I have come into contact with myself are as follows: The first type of person is the old futures, who has a long experience of non-programmed successful profit-making before, usually a technical flow trading system based on subjective judgment. After choosing to try to program, try to implement or partially implement their existing trading system, usually with the help of others to implement or improve; or directly use commercial indicators and models. The help of programming to them is mainly reflected in controlling their own human weaknesses. Whether the indicator signal or the trading model is good, it becomes a set of auxiliary decision-making systems for him, usually inseparable from his own subjective interpretation, and often stays in the stage of manual or semi-automatic order placement.

In my opinion, this kind of programmed trading is the skin of objective trading, and subjective trading is the bone. Of course, this is not to say that this is bad; but whether it is good or not, it is often unable to break through the limitations of his original subjective trading ability. If he turned out to be a superb subjective trader, then the effect of using programmed trading must be excellent. If his original trading ability is average, then the effect of using programmed trading is also mediocre. This is because in his subjective interpretation and screening of signals, it brings new technical problems and human problems. Semi-automatic trading naturally gives him the opportunity to make mistakes, and the degree of resolution of this problem is usually not much different from that of pure subjective trading. But the program signal is objective after all, and it can really borrow strength in the ocean of uncertainty. After a long period of practice and running in, the final effect will definitely improve rather than regress, and the degree of improvement will gradually increase.

Can this problem be fundamentally overcome? I think it is still more difficult. Subjective judgment at the execution level of the transaction is bound to make the historical consistency of the transaction impossible to achieve, and the backtest has no substantive meaning for such traders, at most psychological meaning. That is to say, such trading systems should still belong to subjective trading systems in essence, and the inherent limitations of subjective trading systems will naturally depend on the nature of their subjective trading. This problem is "in the womb". On the other hand, it is precisely because the systems they use are usually not entirely developed by themselves, and the knowledge structure of old futures usually lacks the necessary theoretical basis for research and development, testing, improvement, and trust programming, so programming is always just a tool role and cannot enter the core of the trading system.

This is like a person who has just come into contact with rock climbing. He may often wonder whether the ropes, silk locks, and rock plugs can withstand his fall, and his hands and feet are part of himself, and he naturally trusts them. What psychological feelings will the result bring? When he is hung in the air by tools, he is very unreliable; and when he has the opportunity to grab his hands and feet on a certain platform, he is only reliable. Unless,

1. These tools were built and tested by him, just as mountaineers and explorers did during World War I and earlier.

2. They choose a certain brand and model of tool under the guidance of their trusted experts, and they have also experienced it several times.

3. After having the opportunity to watch others use a variety of different brands and models of tools in a variety of different usages, they have gained a great deal of indirect experience.

4. Although they do not build their own, they have enough knowledge of mechanics, mechanical knowledge, metallurgical processing, material technology, etc. After knowing, such as stainless steel, how many diameters are required to obtain how much load-bearing; hard aluminum, how much load-bearing corresponds to how many diameters; the effect of the proportion of copper, magnesium, silicon in hard aluminum on performance, etc., then with this knowledge, he can choose to trust these tools based on his understanding of commercial materials. Only under these four premises, I estimate that they can relax and hang on the tools to drink coffee and listen to music to sleep. That is to say, to truly convince themselves to trust these tools as much as they trust their own hands and feet, there are prerequisites, and it is impossible for every trader to achieve this transcendence. I myself first had the prerequisites of parts 3 and 4, and then got the prerequisites of 1, benefiting from the influence of friends, but overall it was a process of self-conscious and self-learning self-suggestion. At present, I no longer have the question of which is better or worse. No one will be torn. Should I keep my left hand or my right hand, right? It's all my own hands. Wouldn't it be better to work with two hands?

Traders who view programmatic trading from an instrumental perspective often experience the following back and forth: curiosity and experimentation with new theories → high expectations → disappointment → abandonment or denial. The less involved in the development and testing of programmatic trading models themselves, the lower the degree of trust; but another result of lack of understanding is that the more easily they are confused by the appearance of other people's propaganda and testing, the greater the gap in future expectations will be. Therefore, such traders engage in programmatic trading, which is more like a fad, and it doesn't take long to give up this new tool or switch to something else, or they just cherish their own subjective judgments. Finally, they leave behind a sentence like "'No sword in hand, no sword in heart' is the highest state".

This way of using programmatic trading is essentially the same as people who watch MACD or KDJ trading, except that they no longer use MACD, but use a modified, custom indicator. They pay attention to subjective screening and filtering of instructions in different situations, so their most advanced attempts are only semi-automated. Some people estimate that the funds used in semi-automatic programmatic trading currently account for 90% of the total amount of funds in programmatic trading in China. I don't know if this figure is credible, but the person who said this seems to be familiar with semi-automated trading.

The second type of person is a novice, or an immature trader who has not yet made a long-term profit. They want to find a breakthrough in programming and find the Holy Grail. They have the courage to accept and try any method that may make money. But in fact, engaging in procedural and engaging in subjective trading are the same. Successful people in this industry really cannot be achieved by the general public with a passion for making money.

The bottleneck of their unsuccess is often not the positioning of the program is too low, but the limitations of their own potential or the constraints of their character flaws. But if someone leads or happens to be on the right path, there is still hope to reach the industry average. But because their understanding of any concept is not deep enough, they are very easy to be swayed by other people's opinions in different directions and lose themselves. Or they are too eager to make money and take the initiative to jump back and forth in different directions, wasting time.

Such people, if they have good mathematical and logic training, or programming training before entering the market, if they have read those classic books on trading and deeply understand and implement them, they are still likely to succeed quickly; or they will take the initiative to skip the subjective exploration stage and go straight to the path of objectification and programming. Among the traders who survive, many may already have some of the characteristics of successful traders, and the missing piece is just what objective trading can make up for. This is a match made in heaven. There is no need to learn how to make money with subjective trading first, and then learn how to objectify and program your own system.

The third group are radical opportunists. They are not torn by their own successful subjective trading patterns. They are just as brave and thorough with new things, but they are not fully committed to trying them. For them, programming is not so much a tool as they see everything, along with their own subjective set, as a tool. They tend to be smart, knowledgeable, able learners, and often find themselves in positions where they can easily access new things. Because it is too easy to make a choice or try, and because they do have excellent understanding of the tools they are trying to understand quickly in a short period of time, and they do have excellent observation that makes it easy for them to be correct when screening, they are also less concerned about the adequacy and historical consistency of the system's testing.

Just like the equipmentalists among explorers, they will trust the equipment, but they will be more likely to update the equipment at every turn, and even last month they said how good this is, but this month they have replaced it. But they still have something in common, that is, they will have "objective opinions" when choosing equipment - often looking at technical parameters. The way of looking at food orders is actually a shortcut to avoid boring research and development and trial and error. There is also one thing in common, such people have a certain financial foundation. Because they advocate how fast and easy it is, analysis and research and development are carried out hastily, but many real-world attempts have a bottom line of funds, and they need to pay some tuition and spend some academic hours. A person who is concerned about the cost of living has a hard time maintaining a good attitude when trying. When trying, they need to spend more effort to convince themselves.

But if you are not so smart and knowledgeable, this mentality constitutes an obvious impatience, which is not conducive to continuous growth. In fact, I personally tend to prove that I have this ability first, and then consider the meaning of shortcuts. As long as you have this ability, then any ready-made indirect experience can be discovered and integrated into your understanding of trading. The only thing you can't do is the amount of resources your location can provide. This is true of programming, and so is fundamental trading. From the perspective of making money, opportunism is not impossible. However, from the perspective of research, the real academic bull has not really taken this path.

To sum up, the path of programmatic trading is related to one's knowledge structure, IQ and EQ potential, theoretical foundation, personality, and previous trading system types. Growing programmatic traders tend to prefer one of the above three categories. But I don't think these are true programmatic traders. I don't think a true programmatic trader is based on the premise of abandoning the original subjective system. In fact, the most ideal way is to combine subjective and objective, which in theory can provide the best environmental adaptability and flexibility. But with my own practice, I feel that this matter is unimaginable when I don't have enough understanding of the market and trading.

Of course, there is a kind of subjective and objective combination that is relatively simple, and it is easy to imagine: it is to turn the subjective judgment of the original technical form or the subjective judgment of the indicator signal into a program, which is basically a replacement - as long as there is a good programming platform and a programming language with strong expression ability, it can always approximate the recognition of the human brain through artificial intelligence methods. When this is done, it is not a combination of subjective and objective, but a computer judgment that replaces the judgment of the human brain. Because this programmed process does not generate new transaction logic, it is nothing more than a flow from technology to technology. The difficult thing I am talking about is the marriage of two heterogeneous systems, which produces new offspring. However, even if it is fundamental, even if it is psychological expectation analysis, it can also be achieved by artificial intelligence methods, but the human and material resources, data channels and theoretical basis required have a higher threshold. In fact, foreign countries have already begun to practice, such as searching for news on "Twitter" to obtain trading guidelines. It seems that a similar "news fund" has come out. This is actually a subjective trading used to simulate the subjective trading of listening to news and analyzing market psychological expectations to trade, but it is still very primitive and imperfect. At present, especially for individual traders, they can only rely on the combination of subjective and objective, rather than artificial intelligence replacement.

The key to a true programmatic trader is to trust the program, and the premise is to understand the program. I think it definitely takes a process - time and practice. The practice is not always fun.