Algo Expectations

Trading fully automated is quite different from both discretionary trading and hybrid trading. In this case, I am referring to the amount of profit per contract per month.

While as a discretionary trader I might make, say, $2,000 per contract per month, That would be say an Average Trade of $100.

As a Hybrid trader I may be able to replicate that same performance and maybe even better it.

However, as a fully automated trader, I would be happy to have an Average Trade of $25 per contract per month.

The advantage of the fully automated trading is the way that I can leverage my skills. As a discretionary trader, I am trading one market. My profits are limited by the amount of risk per contract I am willing to take and the number of hours I am willing or able to spend fully focused in front of my workstation.

As a hybrid trader I can be a bit more leveraged and trade two markets at the same time.

But as a fully automated trader I can leverage myself and trade as many markets and contracts as I have capital for.

I had 5 markets that I was trading fully automatically today. Gold was the best performer and the ES was the least best. The other markets were the Euro (6E), Light Crude and DAX. By having that diversification I achieve a smooth upwards equity curve. Funnily enough, none of the markets lost money today.

Nowadays, I trade a mixture of discretionary, hybrid and fully auto. I run longer term positions using option strategies.

There are two schools of thought: put all your eggs in one basket and really watch the basket, and diversify. The choice is partly dependent on available capital.