Speculating in the markets is hard. The psychological and intellectual challenges of producing good trades are immense. Unlike, blackjack, roulette, checkers or chess trading is an open-ended game, which, for now, is the only thing that gives us an edge over the machines.
As inimitable Matt Levine of Bloomberg notes, “The computers won: DeepMind built a program called AlphaZero that learned chess on its own by playing against itself without human input and was the best player in the world within 24 hours. For good measure, it also learned shogi and Go the same way. “The Age of the Centaur is *Over* Skynet Goes Live,” is Tyler Cowen’s headline: A computer is now better off learning these games on its own rather than working with humans.
You will continue to read articles about how Steven A. Cohen or Ray Dalio or other big famous investors are trying to program computers to think like them, but: Why? You wouldn’t program a chess computer to think like Magnus Carlsen; even if you succeeded perfectly, your Magnusbot would get demolished by AlphaZero. In domains like chess and Go, the computers can figure things out on their own, and the humans just get in the way.
Investing is, of course, different: It is not deterministic, market regimes evolve over time, humans need to provide the data, etc. AlphaZero is not going to go off and master the investing game in the next 24 hours, despite having “alpha” right in its name. Still, it feels like special pleading to say that just because markets change over time, only human intelligence can really master them. It’s not like humans have any obvious innate talent for spotting market inflection points or whatever. They have just played the game a lot and learned from their experience some rough ways of spotting patterns. That’s what the computers would do too, except maybe better.”
That may very well be the case, but profitable edges still exist, especially for relatively slow frequency, limited scale setups that retail traders tend to exploit. While the big players are engaged in an increasingly futile arms race, we as little guys like us can still collect crumbs off the table that can more than feed our needs.
Still, although retail traders now have access to extremely sophisticated technology for essentially no cost they use that technology badly and often the technical mistakes that retail traders make create bigger problems than poor analysis. I can’t count the number of times I hit the wrong button, resulting in a losing trade I never meant to make which in turn destroyed my focus and ushered in a vicious cycle of more losing trades as I tried to “make it back.”
So without much ado, here is my list of 3 stupid mistakes we don’t have to make in MT4.
1. Enable Auto-trading. 99% of all errors stem from just forgetting to turn the system ON! Make sure the button is green before running any EA on MT4
2. Make sure the buy/sell panel is set to the smallest size of 0.01. By Default, MT4 sets the size to 1.00 which is 100,000 units. There is no worse feeling for point-and-click trader than to click on bid or offer and realize that he has just bought/sold 100,000 units when he meant to only do 1000.00
3. DO NOT Close out your MT4 platform with any EAs still attached to the chart. Make sure that all the charts are wiped clean and set to your default view. If you don’t do this, the moment you re-open the program it will begin spitting out whatever buy/sell orders your EA has programmed and you will spend the next few minutes scrambling to close out unnecessary losses.
There are probably a million other rules that we should keep, but these are the three of the most egregious mistakes that yours truly has done, so learn from my mistakes and avoid the totally unnecessary losses.