Sentient Trader is about to be released to the world! For my first few posts to our brand-new blog (thank you Tenacity) I thought I would copy some posts from the original Sentient Code blog that I started in May 2008 (two and a half years ago). I hope that these posts will provide some historical context to the project for those who are new to the Sentient Trader phenomenon.
Here is the first post originally published on 30 May 2008:
I’m not a blogger – let me just put that out there right up front. I have always rather scorned the concept of making a diary “public”, but I have had an epiphany of sorts and have realized (I guess about 5 years after everyone else) what the value of a blog is, and what I hope to achieve from this blog – I want to share my ideas, and find someone or perhaps some many to talk to about them. As my wife’s eyes glaze over whenever I mention my software project, I reckon it’s about time for me to find some other(s) to talk to about it.
In August of 2005 (almost 3 years ago as I write this) I started working on a personal project which has become the subject of this blog – I decided to create software for use in trading (of stocks/ shares/ forex, you name it) which would be able to replicate all (or most) of the thought processes that go into an approach to trading that intrigued me (I’ll discuss this trading approach in detail in a later blog). I know that’s a tall order, or at least I have realized over the past 3 years what a tall order it is, but I believe I am beginning to realize the dream, and I feel the need to share the project with others who might be interested.
Because here’s the thing: I have tried a good many of the trading software packages out there, and I have been disappointed with most of them. The “black box” software has never appealed to me (so to be fair I’ve never given it a good run) because I’m the kind of person who likes to make my own decisions, particularly when my own money is on the line. And other analytical packages I have found frustrating because either:
- They are purely “charting packages” some of which allow you to design your own indicators. These are great for what they are: they are like the word-processors of the trading world – they deliver fantastic looking charts, but their greatness rests in the hands of the user! I want to create something that is beyond a tool.
- Or, they are software packages that go one step further and analyse the data according to some or other theory, but then take no “responsibility” for that analysis, by which I mean that there is no continuity from one day to the next. One day the software will be predicting a bull move, and the next day (after the market crashes heavily) the software happily tells you that it was predicting a bear market all along. How often have I agonized over a trade, finally taken the plunge, pulled the trigger, bought the stock, only to lose money and the accursed software has no memory of the false prediction it gave.
I’m a little obsessive. I have tested many software packages by stepping them day by day through the data – and I have yet to find one that really works consistently across all market conditions and several markets. And yet in my (fairly extensive) reading on the subject I have come across at least one theory about the movement of stock market/currency prices that really seems to make sense, and which should work. And hence the project that is the subject of this blog – to create software which will be able to:
- Analyse the stock market according to “the theory” – I will be writing much about the trading theory the software uses later.
- Make “intelligent” trading decisions, in terms of:
- Trade entry (buy and sell signals)
- Trade monitoring (including the facility to “know” why the trade was initiated in the first place)
- Trade exit – selling (or covering short) at the appropriate time and price.
- Furthermore, the software should have some concept of continuity over time (in other words if an analysis changes it should recognise that fact!)