To Join a Trading Automation Group?

Someone I met in years past at the Nashville PHP User Group (he's rather more well-known than I am, to be sure) tweeted:

Any of my programming tech friends interested in trading automation? Looking for other folks that have similar interests to buddy up with in a Slack channel and share ideas, brainstorm and nerd out about tech and trading.

My thumbs immediately started drafting a reply, but as I reached 200-some-odd characters, I stopped, reconsidered, and deleted the whole thing. My enthusiastic "yes" had almost become ... "no."

Some History

I traded stocks and stock options full-time for three years, from 2002 to 2005, after working 12 years for a NASA/Defense contractor. I'd traded some futures options off and on (mostly off) since the early 90's. During my full-time trading stint, I wrote technical analysis tools, primarily for my own use, that operated on open-high-low-close-volume data in CSV files, eventually even writing - in Visual Basic, believe it or not! - Monte Carlo simulations of numerous trading strategies to prepare for worst-case scenarios. I programmed into my spreadsheet charts all the indicators you would've read about at the time.

Maintaining the software taught me a lot, but it also made me realize I was duplicating effort that had been done better several times over by other people, teams of people that could move faster to build better technical and fundamental analysis platforms, analyze and trade quicker than I could, a lone developer/trader with early 2000's hardware and residential internet. I had two internet providers so I could switch instantly if necessary, and my day trading routine included dry-runs of dialing the trading support hotline, giving them my account code, identity phrase, and instructions on getting all my open positions flat, just in case I totally lost connectivity.

I ended up using charting analysis software for my stock / options trading, and it made life so much easier. The annual price was tiny compared to the time saved writing and testing software. Was the point to trade, or to write software to trade?

I drew state transition diagrams of the various states a trader can transition through in a position (monitoring for a signal of interest, preparing to go long/short, being long/short, trigger for moving a stop, and several more). There are more meaningful states than one might imagine at first glance.

I made a trading plan template that I filled out for every trade; it included a review section with questions that taught me not every trade that ends up profitable was a well-executed trade. I didn't program this state/indicator/position sizing-based decision-making into my tooling for automated trading, because I knew the foundation I was building upon wasn't firm enough for that. For one thing, the trading platform at the time tied into a spreadsheet on your computer (no API existed then), which made me say, "no way." More important, I knew I was wasn't ready for automated trade execution with our family's money.

I'd be in a better position to do that today, but what I did then was move to swing trading, which better suited my attention span, research interests and abilities, and general temperament. Day trading was positively exhausting (which is why smart, or big/institutional operations automate it!). And the most profitable trading was, for me, boring. That was a very important lesson; get your entertainment in some other way, not trading. In my opinion, if you're on a trading team, and your strengths are research and not execution, that's perfectly okay; everyone should play to their strengths. If you feel exhilarated after a profitable day, and depressed after a losing day, you need to step slowly (quickly?) away from the computer and re-think what you're doing and why you're doing it.

But although I implemented decision-making triggers into my custom swing-trading tool (still in Visual Basic, ha-ha!), I still hadn't implemented automated trade execution. Because ...

Into the Rabbit Hole, and Out

... in three years, I'd gone kind of deep. Scary deep. Few things will teach you more about yourself than trading your own real money that you expect to live off of. Trading, and the personal lessons it was teaching me, eventually consumed all my thoughts. I filtered everything through the lens of trading; one way or another, everything that happened around or to me triggered analogies to trading, analogies which I constantly voiced to my poor spouse. It was not an easy time for her, not at all. Trading was the only thing I talked about. This paragraph could be its own post, but I'm deliberately keeping it brief.

I stopped cold turkey, learned PHP, hung my shingle as a web freelancer, eventually got hired by my largest customer (Zend), and avoided trading until well, even now, in a way. I'm more what I'd call an investor than a trader. I want to make few trades, at the extremes, and let them play out. Wait until something obvious is staring me in the face, then make a move, and wait until it's time to close it out. That's my tendency, anyway. The reality, more often than not, has been to continue pouring myself into my employer's work, until I had no time to think about anything else.

There are several financial opportunities I've let pass by, knowing perfectly well it was time to act. 2008/2009 was a perfect time - if you were still employed, along with several other "ifs" - to enter the markets. I knew it and expressed my opinions to several people at the time (the very week the stock market hit a major bottom). One person told me later how much money he'd made in plain old index funds, based on his acting on my opinions and advice on how to safely enter with riskable funds.

But I myself hadn't acted, keeping myself busy with work, and still fearful of how obsessed I'd previously become with "trading." I acted in neither January 2015, discussing the opportunities presented by the price of oil with colleagues at a company meeting, nor in the Spring of this year, 2020, when it was clear to me, looking at my little patch of XLM I'd been airdropped, and my tiny position in Bitcoin, that the rubber band had once again been stretched to the point where everything was unjustifiably underpriced, the point at which people had given up hope and forgotten that a day in the future will look very different than the current day looked.

Fortunately, by May, I'd taken some action, and have continued, though still sporadically, since then. My approach to the day job was still largely the same, but it's changing. I'm changing. I see it more and more, as I've entered the cryptocurrency markets, less worried about the particular Rabbit Hole I'd gotten myself into nearly two decades ago. Though, I'm keeping a watchful eye.

I'm still willing to put a lot of thought into planning and executing trades, but I want to play to a mid- to long-term strategy. I know full well how much money disappears to the commissions, spreads, slippage, and fees of the active trader. (If you're more of a market maker, working the spread and volume, good for you; not so much the game for me. In stock/futures options trading, if you're caught making a market, and you're not registered to do so, you're in big trouble. I don't know anything about cryptocurrency options trading rules.)

Decide, Already!

So, my answer to the original question is a tentative "yes", a definite "maybe". I might be exactly the sort of person this group does not want. I've been in software development long enough to know a phrase like "trading automation" could mean a few different things. I'm happy to share what I learned, to learn from others smarter than myself, and to help build tooling that people find useful. My attention is largely in the cryptocurrency space, and on how blockchain technology can be truly useful to people, promoting decentralized control and mutually cooperative self-reliance (yes, I said what I meant, and meant what I said). My programming efforts are likely to be in that space, though automation is useful in several contexts with respect to trading.

I'll contact him, and find out what he's looking to do. Automation can be a solution to several problems with investing and trading, but it comes with potential problems, too. When it comes to active trading, there be certain dragons I wish to avoid, lest I, running from them, trip into a rabbit hole.