# Automated trading or point and click?



## timeless (12 January 2013)

Hi,
I am thinking of starting ASX share trading and I am not quite clear about the ability of trading using an automatic system of your choice.
It seems quite clear in forex where many brokers allow various software platforms as well as API so the traders can fully automate the process.
All I see for ASX brokers in Australia is that each one has their own software or most likely web based tools.
Am I not seeing something I should?
On the other hand, one may think of intercepting any web based interface with some smart software and pretend to be a mouse and eye and a keyboard. Is that what people do to automate trading, or we just have to sit in front of the screen all day and click.
For example what are the trading tools other than ones indicated by brokers I could use with Comsec, Westpac or E-Trade. I cannot find this kind of information on those sites.

May be it is burried somewhere at the bottom of the propaganda.

I know what you are saying about the risk of letting amateur software to manage money you are short of 
Any comments would be highly appreciated.

Cheers


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## FlyingFox (12 January 2013)

timeless said:


> Hi,
> I am thinking of starting ASX share trading and I am not quite clear about the ability of trading using an automatic system of your choice.
> It seems quite clear in forex where many brokers allow various software platforms as well as API so the traders can fully automate the process.
> All I see for ASX brokers in Australia is that each one has their own software or most likely web based tools.
> ...




I might be wrong but you may not find many people doing any automatic or semi-automatic trading here. 

As to the question of API, I did come across some API used by brokers and exchanges but in the US so I am pretty sure they exist. However it is not expected that retail investors will use an automated system so it may not be easily available or cheap.


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## timeless (12 January 2013)

FlyingFox said:


> I might be wrong but you may not find many people doing any automatic or semi-automatic trading here.
> 
> As to the question of API, I did come across some API used by brokers and exchanges but in the US so I am pretty sure they exist. However it is not expected that retail investors will use an automated system so it may not be easily available or cheap.




Thank you very much for your reply. This is what I was suspecting looking at Australian sites. I wonder why this has to be different to Forex?
Cheers


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## FlyingFox (12 January 2013)

timeless said:


> Thank you very much for your reply. This is what I was suspecting looking at Australian sites. I wonder why this has to be different to Forex?
> Cheers




Not an expert on this but forex trading tends to be much more dynamic, liquid and volatile. Also don;t expect large changes (> 5% per day) and really don't have long term trends. Therefore easy to automate and needs to be.

Not the case with equity. Plus , this is only opinion, you will get many more retail investors in equity than in forex.

Anyways atleast Interative brokers have an API, google it.

P.S would be interested in what you had in mind.


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## Trembling Hand (12 January 2013)

timeless said:


> All I see for ASX brokers in Australia is that each one has their own software or most likely web based tools.
> Am I not seeing something I should?




You need to look at Interactive Brokers API interface. Extremely powerful. From simple Excel API to Ninja trader or Amibroker interface or even a full FIX engine (150 traders per second!)



FlyingFox said:


> I might be wrong but you may not find many people doing any automatic or semi-automatic trading here.




Yep you're wrong. There is a few here doing Automatic trading outside the FX market.


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## tech/a (12 January 2013)

Trembling Hand said:


> You need to look at Interactive Brokers API interface. Extremely powerful. From simple Excel API to Ninja trader or Amibroker interface or even a full FIX engine (150 traders per second!)
> 
> 
> 
> Yep you're wrong. There is a few here doing Automatic trading outside the FX market.




Really?
There are people trading automated algo's here?
I'd have thought they would be more vocal on the topic.
I think Andy Gibbs trades and makes them up professionally.
No he's not here.


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## timeless (12 January 2013)

Thank you all of you guys for immediate valuable response.
So in summary summary:

1) Interactive Brokers provides multiple IPIs  (using DDE or ActiveX), C++, Posix C++, Java, and Visual Basic 
2)E-Trade, Comsec, Westpac do not seem to have one
3)No info about any other brokers in Oz to offer API
4)IB API appears quite good
5)I am tempted to set up an account with them
6)there are some guys in this forum doing automated trading with ASX stock

Unknowns:

1)Cannot find clear pricing on IB site for Australia general water shedding on low cost only
2)Not sure if API comes at an extra cost
3)They do not have contact email to ask, only a phone
4)Their website runs like a dog on my computer even there is no trading 

So my next question is IB a good provider in Australia? 
But this is probably for a different thread.

Thanks


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## FlyingFox (12 January 2013)

Trembling Hand said:


> You need to look at Interactive Brokers API interface. Extremely powerful. From simple Excel API to Ninja trader or Amibroker interface or even a full FIX engine (150 traders per second!)
> 
> 
> 
> Yep you're wrong. There is a few here doing Automatic trading outside the FX market.




Apologies. In my defense I did say *many* and not *any*


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## FlyingFox (12 January 2013)

timeless said:


> Thank you all of you guys for immediate valuable response.
> So in summary summary:
> 
> 1) Interactive Brokers provides multiple IPIs  (using DDE or ActiveX), C++, Posix C++, Java, and Visual Basic
> ...




There is a python API as well. 

I hope the smiley face next to Visual Basic didn't mean your planning on using it


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## Gringotts Bank (12 January 2013)

timeless said:


> Thank you all of you guys for immediate valuable response.
> So in summary summary:
> 
> 3)No info about any other brokers in Oz to offer API
> ...




3) Yes, there's Spark Iguana and also Paritech offering APIs for automated trading on the ASX.  Both costly, especially Spark's.  
6) Not sure about that.  I'd doubt anyone other than institutions are using it for the ASX at the moment.  Maybe some of the guys at Spark are into it.  Auto-trading on markets _other than ASX_ is far easier, because people are already doing it.

One day, someone will come out with something like this, but for Aus stocks.  Amazing technology.  http://www.trade-ideas.com/


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## FlyingFox (12 January 2013)

Gringotts Bank said:


> 3)
> One day, someone will come out with something like this, but for Aus stocks.  Amazing technology.  http://www.trade-ideas.com/




Nothing stopping them from doing that themselves here. Can't speak for these guys but it is generally not as amazing as it seems.  Doesn't mean it can't/won't make you money. 

The really amazing stuff never gets sold to the public


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## timeless (13 January 2013)

FlyingFox said:


> There is a python API as well.
> 
> I hope the smiley face next to Visual Basic didn't mean your planning on using it




Not VB in particular, It was positioned at the end of the lot. I don't mind VB when it comes to quick and dirty prototyping right from Excel worksheet. As long as there is any API there is a chance to automate some operations, in particular detecting events of interest. I will try to explore the info provided in responses and see where we are at. 

Where is that Python API available? Have not seen it mentioned on IB.


I am really happy with the feedback and attitude of you guys.


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## Trembling Hand (13 January 2013)

Actually I think I may have confused the situation. My response was to Auto trading outside of *FX*. Which the answer is yes there are a few here doing it. And yes there is an Aussie broker you can use to do it.

A more detailed response about doing it on the ASX would be yes you can do it relatively easily  and cheaply (IB broker and plenty of cheap goodish software to bolt on) *but you would be wasting your time.*


If you want to go down the path of a short term auto trading system the idea of doing it with ASX stocks is just madeness, IMO. Use the Index futs market and lose a huge amount of complexity, gain constancy, depth, small tick sizes, super cheap brokerage and an R:R setup thats probably close to a factor of 10 times in your favour.


I simply have no idea why anyone trades the ASX.........


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## white_goodman (13 January 2013)

Trembling Hand said:


> I simply have no idea why anyone trades the ASX.........




because of the lack of margin credits I get with stocks...


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## FlyingFox (13 January 2013)

timeless said:


> Not VB in particular, It was positioned at the end of the lot. I don't mind VB when it comes to quick and dirty prototyping right from Excel worksheet. As long as there is any API there is a chance to automate some operations, in particular detecting events of interest. I will try to explore the info provided in responses and see where we are at.
> 
> Where is that Python API available? Have not seen it mentioned on IB.
> 
> ...




Sorry about the VB jibe. In another life I trained to be a software engineer and some of those prejudices will forever remain lol. You should use whatever your comfortable with and gets the job done.

The Python API is a third party open source product. Don't know how good it is or how well maintained it is. 

Also for testing purposes you can get free data from yahoo finance etc. I think they do have ticker data.


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## CanOz (13 January 2013)

FlyingFox said:


> .
> 
> Also for testing purposes you can get free data from yahoo finance etc.




Yahoos data may be fine to test an API, or other functional aspects of a trading system but for backtesting i would not use it. Use a clean data provider such as Premium Data.

CanOz


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## FlyingFox (13 January 2013)

CanOz said:


> Yahoos data may be fine to test an API, or other functional aspects of a trading system but for backtesting i would not use it. Use a clean data provider such as Premium Data.
> 
> CanOz




I am interested to know why this is the case?


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## timeless (13 January 2013)

Trembling Hand said:


> ) *but you would be wasting your time.*
> 
> If you want to go down the path of a short term auto trading system the idea of doing it with ASX stocks is just madeness, IMO. Use the Index futs market and lose a huge amount of complexity, gain constancy, depth, small tick sizes, super cheap brokerage and an R:R setup thats probably close to a factor of 10 times in your favour.
> 
> I simply have no idea why anyone trades the ASX.........




Since I am a beginner in trading I do not quite get what exactly you need to do, and what are the risks and technicalities, however I appreciate your point of view. I may need to start with something simple first.
Statements like "lose a huge amount of complexity, gain constancy, depth, small tick sizes, super cheap brokerage" look incredibly attractive. Losing time is not in my menu (note my screen name) and I have to focus on that what you have just said. 
Could you please point me in the right direction by throwing a few links?
Thanks


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## CanOz (13 January 2013)

FlyingFox said:


> I am interested to know why this is the case?




Its not considered quality data...here is an explanation from Richard Dale. Its biased but its still true. Richard owns Premium Data and they are en excellent data provider in my view. I've been a client for almost 8 years.



> It's not just the accuracy of the price data that is the issue.
> 
> Good ASX data should have all official ASX dilution factors and corporate actions applied to the database automatically. Dilution factors arise due to various corporate events (stock splits, consolidations, rights issues, demergers, mergers, capital returns etc).
> 
> ...




Cheers,


CanOz


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## CanOz (13 January 2013)

timeless said:


> Since I am a beginner in trading I do not quite get what exactly you need to do, and what are the risks and technicalities, however I appreciate your point of view. I may need to start with something simple first.
> Statements like "lose a huge amount of complexity, gain constancy, depth, small tick sizes, super cheap brokerage" look incredibly attractive. Losing time is not in my menu (note my screen name) and I have to focus on that what you have just said.
> Could you please point me in the right direction by throwing a few links?
> Thanks




Algoritms to trade the local futures markets can be written on NinjaTrader, Amibroker, Multicharts and probably a few more. Amibroker is probably the best for beginners, and is one of the fastest backtesting. 

All of these interface well with Interactive Brokers. 

Its all pretty easy. If you have an IT background then you could have a system up and running in a few months i would think...at least walking forward.

OR you can always lease a system...

Capstone Trading Systems

Joe Krutsinger

Cheers,


CanOz


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## Trembling Hand (13 January 2013)

timeless said:


> I may need to start with something simple first.
> 
> 
> Losing time is not in my menu





Mate I'm afraid to say it but time is pretty much what you have to spend in order to make ANY progress. This place is full of people who are at various stages of the journey. Non get there quickly, most never get there in spite of amassing years of market "knowledge". Seems strange but its true.

To specifically answer your question about why the ASX is a waste of time to automate a system here is a few points in no particular order,

1. Out of the 2000 odd companies more than 1500 are less than $1.00 more than 850 are less than $0.1 So you can scarp all of them to try and trade bots on. Tick sizes are just way to large as a percentage to allow an algo to trade automatically on a short term basis. The R:R is just not in your favour.

2. There is only 140 companies over $5 bucks which gets you closer to decent tick sizes to enable you to not have to pay a huge price to cross the spread.

3. Of those 140 companies above 1/3 of them have a daily range of less than 1% on any given day. Very likely to be stuck trading something that isn't going to move once your in.

4. High cost of trading ASX stocks. They just are not for short term trading.

5. High cost of scanning the ASX on an intraday basis.

6. ASX stocks often come into play and then die days latter. Any pattern you will be chasing in a particular stock will soon not be there by the time you pick it up.

6. I could go on for hours but really if you want a short term system thats going to be robust and based on repeatable patterns the consensus is FX and futs.


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## FlyingFox (13 January 2013)

CanOz said:


> Its not considered quality data...here is an explanation from Richard Dale. Its biased but its still true. Richard owns Premium Data and they are en excellent data provider in my view. I've been a client for almost 8 years.
> 
> 
> 
> ...




Thanks. Valuable info.


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## FlyingFox (13 January 2013)

Trembling Hand said:


> Mate I'm afraid to say it but time is pretty much what you have to spend in order to make ANY progress. This place is full of people who are at various stages of the journey. Non get there quickly, most never get there in spite of amassing years of market "knowledge". Seems strange but its true.
> 
> To specifically answer your question about why the ASX is a waste of time to automate a system here is a few points in no particular order,
> 
> ...




Great info and reasoning. Thanks.


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## tech/a (13 January 2013)

> to be robust and based on repeatable patterns the consensus is FX and futs.




All anyone whose interested in Automation need know.


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## timeless (14 January 2013)

Trembling Hand said:


> Mate I'm afraid to say it but time is pretty much what you have to spend in order to make ANY progress. This place is full of people who are at various stages of the journey. Non get there quickly, most never get there in spite of amassing years of market "knowledge". Seems strange but its true.
> ....
> 
> 6. I could go on for hours but really if you want a short term system that's going to be robust and based on repeatable patterns the consensus is FX and futs.




Thank you for the valuable summary. I do realise that gaining right skills and right choice of trading activity given budget and analytic skills are the keys to minimise the Time To Reward (TTR 

I was initially leaning towards forex but got discouraged by many posts all over the world claiming that once people become remotely successful in their trades, they start magically losing due to slippages and other obstacles clearly  "out of control" of service providers whether Swiss Banks or smaller operators. So if dishonest practices kill trades on the top of nearly random patterns and interventionism of big players, I saw no chance of success. 

I was trying to find solid evidence that small traders can make profit in Forex, but all in vain. Found some serious research in stock market only to learn that about 1% individuals succeed in Taiwan and also small percentage i US
but no equivalent reliable research in Forex. Believe that any research published on less that 1 % success rate in Forex would kill multi-trilion dollar business so there are forces that make sure this would never be funded and published.

I was hoping the Australian stock market being less of a current trend could provide more chance of profitable trade. I see from your summary that it has its problems worth considering.

So once again thank you and all people here for dedicating their time and experience to teach me something I should know before risking any money and wasting time.
Cheers,


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## Trembling Hand (14 January 2013)

timeless said:


> I was initially leaning towards forex but got discouraged by many posts all over the world claiming that once people become remotely successful in their trades, they start magically losing due to slippages and other obstacles clearly  "out of control" of service providers whether Swiss Banks or smaller operators. So if dishonest practices kill trades on the top of nearly random patterns and interventionism of big players, I saw no chance of success.




Mate thats just BS.

Losers are always the first to claim "dishonest practices"..... LOL its a market.


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