Steps to Build a Hands Off Automated Trading Machine - Feedback Please

[whirl 10]

Hey Guys! New to the forum and have been reading a lot. I have been working on a few strategies and ready to build a Hands-Off system and wanted everyone's feedback.

When I say Hands-Off I really mean to leave the computer and let it do as much as realistically possible. The best way would to build a system as self repairing as possible.

 

1. Computer - To not be cheap and try to save a few hundreds that can cost you thousands later is unacceptable. Buy the best hardware you can afford.

A. Performance - best processor, max ram to do your calculations. However, would it be a good idea to buy a high end 3d video card? I figure these video cards meant for high end graphics and games, don't really help much on 2d trading apps, and in addition require a lot of power, and may overheat the case. Better to buy a stable non sexy 2d card?

B. Reliability -

a. Buying the absolutely best computer case possible, w/ multifans and possible liquid cooled. The last thing I would want is to be in a big trade and have the computer overheat because I was too cheap to buy a good case.

b. RAID or Disk Mirroring? - Hard drives DO burn out and crash. Buy reliable brands, AND if you install this, even if 1 hard drive crashes, you system is still running on the backup hard drive. It's not too expensive to buy an extra HD.

2. Power outage - You can't prevent a blackout, but you can prepare as much as possible about how your system can handle it. A Battery UPS is a must. Preferably a bigger one that can still get you of trades for a few hours if need be. Are there some software out there, that can send you a text message to your cell phone if this ever happens? Connect your cable/dsl/fios modem/router to your UPS as well.

3. Internet connection: I have had problems w/ cable provders that loses internet connection for minutes to hours. Totally unacceptable. I always have a backup, either cable and dsl, or fios etc. Those w/ multi input broadband routers are a must. That way if cable goes down, dsl picks right up.

 

4. Software/Broker : This is probably where I need the most help. I've read that Tradestation will disconnect and auto relogon if your internet goes down for minutes/hours. What if you leave your computer, and don't know internet goes down for an hour, then it comes back up, but TS won't autologon? Totally unacceptable.

Does anyone know what would be the MOST reliable, autotrading software/broker combo that doesn't crash, or can self logon and continue if you temporarily lose internet connection? Ameritrade is also horrible, it seems to have problems at least once a month.

 

In an ideal world we can all leave the computer alone, and although is may not be 100% realistic, I think if we have a lot of these things in place, I can probably feel comfortable leaving it a few days at a time, especially if these things have the ability to send me a text in case something goes wrong.

 

Please give me feedback of your experiences. I figure we can all help each other out. What I would really like help on, is the best software, that can automatically recover from an internet disconnect, and strong enough to not crash and put my paramters in.

 

thank you

[daedalus 10]

Most of the systems that are running on their own are done on servers rather than home computers and have redundancy.

[calamitychris 10]

Whirl, if you are looking for reliability and redundancy(hardware and internet), then I would consider a hosting service with a solid datacenter. There are plenty of good ones out there and they are relatively cheap. If you go this route, then you can access your trading platform anywhere via remote desktop or even VPN from your iphone if you're a nerd like me. This is more practical and a lot cheaper then shelling out a bunch of money for a home trading workstation IMO

 

I would consider a beefy workstation for strategy testing and the like, but for implementation, stick to a hosting service.

[BlowFish 10]

What the previous posters said, consider a hosted environment once things are tested. There is also a product called 'strategy runner' (that I have no first hand experience of) that allows you to develop your strategy with a PC app and then have the script run on a brokers server (provided they support strategy runner).

[natedredd10 10]

I discretionary front ran a short term brake out short trying to "livermore" a FX bucket shop yesterday with a bullshit FX account on eur/usd...

Why? Seemed better than waiting for the obvious play of trying to grab the bounce off resistance...May as well exploit the profit takers and false breakout traders because it was a +EV bet because of how small the stop could be there...

So how would i basically build an "expert system" off that setup, even knowing what I THINK I know over variance and luck..not a clue...

Textbook machine learning algos are really bad here, even if you could have all the data, but you wont..

good luck..

Don't get down though..any problem less than this is really dull...even if you fail by 90% you can still probably make more than a "job" if you give the inevitable enough time..

[whirl 10]

Thanks for the responses. Can anyone recommend some good places to host my autotrading algorithm? Strategy Runner, sounds interesting? Do they do only forex? Anyplace else that is reasonable pricing and ease of access?

thanks in advance again

[daedalus 10]

Forex Hoster | Specialized Forex MetaTrader and Expert Advisors VPS Hosting

[ZOSO 10]

Steadfast Networks :: Chicago Web Hosting, Dedicated Servers, and Colocation

[natedredd10 10]

You are obviously going to want to code to FIX...if that isn't the last step in the decision though..don't know what to tell you, other than you are deluding yourself.

If we could all be "rich" we would all be poor relatively speaking...Literally if I told ya, I would have to shoot ya.

[sappjason 10]

I run my own fully automated trading system. It's been running since early 2008. I have a 1U rack mount server with dual processor 3 GHZ (dual core), 4 GB ram and two small 200GB hard drives (with external drive for backup), running 64bit Windows Server 2008. I run my system in a small co-location facility in Maryland and I pay $150 per month for my co-location service.

 

I also pay $75 per month for IQFeed real time data and $20 bucks per month for a FREE End of Day Stock Quote Data and Historical Stock Prices subscription for eod data.

 

I use Interactive Brokers and developed my entire system in Java against IB's TWS API.

 

My system trades only US Equities and does around 13 round turns per day. I blow through around $35K in commissions per year.

 

With all of that said, the last thing to worry about is your PC strength, hard drive size and video card.... Your #1 priority should be developing a positive expectancy, consistently profitable trading system. This step (and nothing else) should be your sole focus for AS MANY YEARS as it takes.... Trust me, this step alone, many never achieve....

 

 

Jason

[bharatk8 10]

Is it safe to opt for hosting?I mean What are safeguards required to protect secrecy of your system/strategy when you host it?

I run my own fully automated trading system. It's been running since early 2008. I have a 1U rack mount server with dual processor 3 GHZ (dual core), 4 GB ram and two small 200GB hard drives (with external drive for backup), running 64bit Windows Server 2008. I run my system in a small co-location facility in Maryland and I pay $150 per month for my co-location service.

 

I also pay $75 per month for IQFeed real time data and $20 bucks per month for a FREE End of Day Stock Quote Data and Historical Stock Prices subscription for eod data.

 

I use Interactive Brokers and developed my entire system in Java against IB's TWS API.

 

My system trades only US Equities and does around 13 round turns per day. I blow through around $35K in commissions per year.

 

With all of that said, the last thing to worry about is your PC strength, hard drive size and video card.... Your #1 priority should be developing a positive expectancy, consistently profitable trading system. This step (and nothing else) should be your sole focus for AS MANY YEARS as it takes.... Trust me, this step alone, many never achieve....

 

 

Jason

[robertm 10]

You can host your own server in a brokers back office as another solution (most of them support Strategy Runner or have a solution for you). Only for speed execution freaks usually. You'd have to check with them about server access etc. If you are technical enough you could monitor the logs yourself and put a remote management card in it (it'll even do hard reboots for you). Ask around with brokers that you are using and they should have more info, finding the right person to talk to is sometimes an issue (they put you to the tech team, then they put you to the sales team, who tell you the don't do it, then you eventually find the guy who works in a dark room without a nametag and only a stapler that can do it for you).

 

Just have a robust well tested system first before you bother burning through hardware/hosting cash, they aren't going to make an unprofitable system profitable.

[UrmaBlume 10]

I run my own fully automated trading system. ......... I run my system in a small co-location facility in Maryland and I pay $150 per month for my co-location service..................

 

I don't get co-location in Maryland - why not where the exchange is? I thought the whole purpose of co-location was to reduce latency?

 

UB

[robertm 10]

A hosted service has a higher uptime than your clunky home PC and internet connection. The have redundant pipes, power, etc.

[UrmaBlume 10]

A hosted service has a higher uptime than your clunky home PC and internet connection. The have redundant pipes, power, etc.

 

Some of us have dual pipes/power and don't run PCs at home - so again, why Marlyland and not where the exchange is?

 

UB

[robertm 10]

everybody with a phone has a dual pipe these days lol.

 

I wouldn't imagine latency is an issue for 13 round trips a day on equities, it all depends on what you are doing.

[sappjason 10]

I lease rack space at a co-location facility so that I have zero power outages and 100% internet up-time. For me, it has nothing to do with low latency as I'm not doing any kind of HFT. During the past year, I had one interruption and it was during an evening for about 5 to 10 seconds.

 

When I first started this ATS, I ran it at my house, but you would not believe the silly stuff that happens at your house when you really want to achieve zero interruptions from 9:30 to 4:00. Here are a few of the more laughable things that happened to me when I ran my ATS at my house:

 

- I had a hamster chew my phone line (I used DSL).

- Verizon switched my phone number (without my consent).

- A bulldozer hit a power line while doing construction in the field behind my house.

- My son unplugged my power strip to plug in something of his own.

 

The moment of clarity that lead me to finally move my PC out of my house to a facility was when I missed out on being able to close my positions at the appropriate time. This small problem (that happened at around 2:00ish in the afternoon) caused me to miss out on $4300 of unrealized gains. Needless to say, this simple mistake would have paid for 3+ years at my co-location facility. So, eventually, the math was a no-brainer.....

 

At this point, the amount of money this has saved me can now probably pay for the next 30 years of my co-location fees....

 

Jason

[BrianE 10]

Still sounds like a cart and horse issue.

WHEN you have a system with a positive expectation and you can get it to make sufficient trades, use some of your profits to establish a safe back office and let it run there. Until you get to this plateau, spend all of your knowledge capital on getting your system to that state.

[robertm 10]

Still sounds like a cart and horse issue.

WHEN you have a system with a positive expectation and you can get it to make sufficient trades, use some of your profits to establish a safe back office and let it run there. Until you get to this plateau, spend all of your knowledge capital on getting your system to that state.

 

Dude, have you tried living and trading in Florida? By the time you spend all that money on UPS's, Geni's, security, fireproofing your (what, basement?), hosting is by far the cheaper option. Especially since you'll be moving around a lot spending your hard earned money.

 

It's just not required by most people, those who need it know the costs pay for themselves.

[BrianE 10]

If you're moving around a lot, what more do you need, other than a laptop? Why get into the costly infrastructure before you have a positive expectancy system? Design, backtest, forward test, pilot - then host.

[robertm 10]

Obviously. Otherwise it would not be economically viable.

[ratrader 10]

I have not read all the comments so do not know if all or part of the following has been covered...

1. I, personally, would not feel comfortable with completely unattended trading. I tried it, with my own systems (using TS)... perfect is testing... anything but in live environment. TS could not give me a satisfactory explanation why the differences. Each point they brought up had been addressed in the system code.

2. Regarding the technical side of your post.. there are services that will lease space on there servers, at least for trading futures. The servers are on the exchange floor thus removing interest connection issues and your need to define what the server should look like etc.

 

Hope the comments help.

ratrader

[novicetrader 10]

First if one wants to relocate outside his own house/work area, the issue of strategy code being plagiarized arises, which can be avoided by encrypting the strategy code proper leaving the execution part open,well co-locating ones server with the exchanges has its advantages like reducing the latency , but then would the cost associated would be appropriate for an individual non-institutional type trader?

anyway , the whole process is about reliability rather than cost alone.And yes the edge of one's system with all the positive expectancy etc, would take care of all the costs in due course.So if the system is a profitable one anything can be worked out.

And still baby sitting would be required at times with the full auto mode.

[Jermonte 10]

I have an automated trading system. Well, I wouldn't call it automated trading. It's more like an automated research, alert, and trade senario program. I enter the orders according to my output. I don't know if I could make the jump to full automation. I would like to take the step from manual entry to auto order entry. Then leave the "Transmit" of the trade to the user. I use Interactive brokers and my work is done in VBA, EXCEL, and ACCESS. Where did you find the code blocks or language to get your software to interact with Interactive Brokers TWS. I use Interactive Brokers. (Side Note: I think they are best broker company around.). Let me know if you can help me.

[max8ion 10]

That is really interesting practical question, thank you for posting it!