Here is an update on all the upgrades, in depth explanation how does the BOT chooses its trades and under what conditions are conducted System and Algorithm trades. I don’t mind to have it all open here and I am not fearing someone copying it as it is protected by a law as well is not that easy to implement. Those who follow – know how much effort, time and resources were invested in it and we finally have all the sides covered.
In order for the BOT to search and identify trading opportunities – I have to decide which of the 3 Chart Behavioral conditions have to be filled and activate the BOT to search the pattern:
1. The occurence of 4 consecutive expiry times (30 minutes, or 1 hour) ending in an opposite directions of the price movement on the same asset within either 30 minute or 1 hour expiry times. In our terminology – Alternation X 4. In that case – the BOT will choose the same direction as the last one and compare it with Fundamental or Technical analysis of that asset to assess the feasibility of the positive trading result within the expiry time the alternation happened with. We have changed the previously continuing alternation after statistically proving that for Algorithm trading purposes – that approach bears the best results. Alternation X 4 is only for Algorithm trading and will not be used for system trading. In order for me to decide to order the BOT to take that pattern of search and identify – certain market conditions should appear preceeded by a proven Fundamental analysis result (Technical analysis). That means that every trading session will begin with 2.5% (of the bankroll) trade size and if lost – will increase itself to 7.5% the next trade and 22.5% in case of two losses. The trading Session will stop after that and will not trade the 67.5% the bankroll trade.
2. The occurence of 3 and in some assets – predefined by me – 4 consecutive expiry times (30 minutes, or 1 hour) ending up in a price movement in the same direction. We call it One Direction X 3/4. In that case the BOT will choose the opposite direction to the direction that was repeated and will seek an objection by Fundamenta or Technical analysis and in case there will not be any objection. The objection process is initiated if previously entered manually as one of the two forms of analysis. One Direction 3/4 is for both – System and Algorithm trading purposes while in case of algorithm trading – will also stop at 22.5% and won’t go any further.
3. In this pattern the BOT finds it’s trades based on similar market conditions statistically occurred in the past and the trade size is 5%. The pattern is good for the system as well as algorithm trading system just that during the algorithm trading, the initial trading aize will be 2.5% of the bankroll. The rest will be like in a previous chapter. We call this pattern Statistical Pattern and it will be the Default Pattern. It is good for stable market behavior and will be chosen by me accordingly.
We have invested an effort and time reverse engineering the trading process by searching through trading history on all assets using half an hour and an hour long trades. We ran different scenarios with different time spans back. We correlated the financial calendar related events as NonFarm Payrolls etc. to identify the precise influence Fundamentally and Technically within 24 and 48 hour windows. We figured the scenarios which will not have 4 consecutive losing trades to protect the algorithm trading.
Another important if not the most important aspect touched technologically was rapid response development for the trading positions entered. The most important aspect of improving the BOT functionality is conducting the “next” trade immediately after the previous one when using the algorithm trading and responding to loss. We made lots of mileage on that subject as one of the reasons – as I previously stated – of different outcomes of the trade with the same asset and with the same expiry time was a lag time occuring between entering the trading positions of the first traders in the line and the last ones. As the number of traders have increased rapidly -so did the number of the trades the BOT had to conduct and reducing the lag time between the trades taken became our number onne priority at that time. The Spot (SpotOption is an overall platform provider for the group of brokerage brands the BOT is connected to) API was able to accept 300 orders per 3 seconds from all the brands and including all kinds of orders including registration or just a page refresh – so that was a universal issue as we saw it and although Spot has been very cooperative on the matter and increased the numbers of orders per 3 seconds – still the issue will always be there. Creating separate packeges of traders leading to creation of Alpha Traders Group has helped a lot, but lag time will always occur. The other way to deal with it was toughening the trade entry criteria for the both to reduce the negative effect of price differences. Overall – there is no absolute solution. But there is also another side to that coin as in some cases the price difference seemingly negative at the beginning has become positive as the asset price at first went against the BOT chosen direction. The third way of dealing with that issue was putting the limits for the BOT which if surpassed – the BOT would go through the list of the traders without taking a trading position and will enter it only when the price is within the allowed boundaries. That has resulted in some traders being passed on by the BOT and they stayed out of trading altogether.
We have consulted with the developers of the major high frequency trading platform provider firms and they too have the same issues with trading in line but the effect there is less visible.
More to come about what is scheduled and how the licenses will be registered and officially owned by you