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Welcome to the Alternative Investments Experimental Blog!

Increase your knowledge about alternative investments!
This blog mainly focus on stock market-alternative investments such as forest investments, land investments, property investments, hedge funds, forex investments, and other interesting ways of making money.

I analyze and buy alternative investments with my own money. This gives you fun reading and a guideline how to invest your own money in alternative investments by following my success and learning from my mistakes! :-)


Sunday, February 24, 2013

My personal experience from stock market trading robots, auto-trading

In my last blog I wrote about my experiences from forex robot trading. In this post I am writing about my experiences from using two stock market trading robots. It all started in in early 2012 when I was searching for companies providing stock trading robots and I found the company Autostock (http://autostock.se/homeold).



I bought the stock trading platform product Nordnet Autotrader (that I intended to use for both robot trading and my own “manual” trading), which Autostock has developed. With the platform came a free trading robot for one year, “Coda OMX” (trading OMXS30-index). I decided to invest in one more trading robot, “Adagio” (stock futures and ETN trading), to get a better evaluation of Autostock. The results were stunning from both robots when I started with them (about nine month ago), but since then the results has gotten worse. See pictures below. Good to know is that some of the historical data had been back-tested by Autostock.


 
Picture above: Adagio-results (http://autostock.se/produkter/adagio)



Picture above: Coda OMX-results (http://autostock.se/produkter/coda)

Because of bad results from Coda OMX I was allowed to change to Coda DAX (robot trading on the German stock market) for a few month ago, as Coda DAX had performed better than Coda OMX. Also, after last summer I changed the product Adagio to ACDC because of not satisfying results.



Picture above: Coda DAX-results (http://autostock.se/produkter/coda-dax)


Picture above: ACDC-results (http://autostock.se/produkter/acdc)

How the trading robots are set up…
So how it worked was that the trading platform needs to be installed on your computer (or on a server). Then Autostock sends you an access code for the robot which you use to install the robot on the trading platform. Some configuration is also needed on the trading platform. There are instructions for this, but you can also get support from Autostock. Once this is done, the robot needs to be connected to an account where you have your money. After this the robot can start trading on the stock market with your money from your account.
 

What was my verdict for this robot trading investment..?

I have summarized my impressions as below:

Positive
·         Very good support
·         Autostock holds courses regularly how to use their products
·         Good knowledge about stock trading, technical analysis etc.
·         Flexible. I was allowed to change robot during the license period (in the same price range)

Negative
·         Difficult to implement the trading robots on the trading platform, I was depending on Autostock’s help a lot (And updates came quite regularly so I had to contact them often for help. A more techie guy would probably not have the same problem as me J )
·         The trading results were not to my satisfaction L (Probably the most important factor of all above, I would most likely be happier in total having for instance bad support if I ended up with a lot of money in my pocket from the robots J )

As I mentioned the results were not that great. After this period using their trading robot strategies I have a loss of almost 900 USD, with an invested amount of about 15 000 USD. 

Description
SEK
USD
Invested amount to be used for robot trading (initial account status)
     100 000   
     15 385   
Current account status, after robots have been trading (about nine month)
       94 355   
     14 516   
Result
-       5 645   
-        868   

But it is important to have in mind that there are also a lot of “running costs” related to this kind of investment. You need to pay a license fee to be able to use the robots, license fee for the trading platform etc. These costs are often neglected “hidden” costs that people don’t think about! This is what it looks like to me this far:

Description
SEK
USD
Comment
Nordnet Autotrader- trading platform cost
         3 980   
          612   
The yearly fee was 612 USD it but could also have been paid quarterly. Buying a one-year license gave me a "package" with the trading robot Coda. And the platform is needed to use the trading robots
Server cost
         3 321   
          511   
Since the robot only trades when I have my computer on at home, I chose to buy the service from Autostock to have the trading platform (and the robots) installed on a server that is online 24/7. Thereby I wouldn't miss out any trades. Cost: 31 USD/month
Robot "Coda"
0
0
Free of charge when I bought the trading platform
Robot "ACDC"
         2 485   
          382   
Paid quarterly. Yearly cost: 612 USD. I received a 40 USD discount when I bought the trading platform for one year
Total / Break-even figure
         9 786   
      1 506   
 

As you can see, the robots would have to generate a profit of 1 500 USD before I would actually have made any profit from the robot trading (which with my initial investment amount equals to about a 10% profit generation), when considering all trading related costs. And considering my results above from using the robots (-900 USD), I don’t need to say that this does not add up to break-even on this investment. So actually I didn’t lose 900 USD, I lost 2 400 USD in total!

So due to the high trading related costs, a fairly high amount of invested money for trading would be needed to generate a break-even figure (since if you would only invest 1 500 USD the robot would have to generate a 100% profit to break even) - and the trading robots would also need to perform well over time. Another reason to have the robots trading with a significant amount of money is that the “transaction cost” (stock market commission) when trading could actually eat up the profit, if too small amounts are traded!

The stock markets the past year has performed quite well, so in hindsight I would have been better off investing in an index fund rather than these trading robots. An index fund would also have much lower “running costs”, in some cases zero.

Next postings…
I have found a stock market signal provider for buying/selling stock futures that shows really good results (I know, basically same story as the robots above – but this time hopefully the results will be consistent over time. I am a trading optimist and I do believe in auto-trading. Sooner or later I WILL find a great auto-trading product. Please email me if you have any suggestions! J ). I intend to test this signal provider for a few months and will tell you if it actually works or not in a posting later on.

I have stopped using the Autostock products for the moment. Some of the money I have released from Autostock I have invested in a very interesting alternative product that I will write about soon. I will also write about some successful alternative investments of mine very soon. More of these teasers in my upcoming posters… So stay tuned and subscribe to my blog (at the top right on my blog) - don’t miss out on more interesting stories!

4 comments:

  1. Hi Jafor, thanks for sharing your thoughts about the blog and I am happy that you enjoy the reading! Next posting will prolly be about a carbon credit investment I have made, so stay tuned!

    ReplyDelete
  2. I been into automated forex trading with metatrader 4 for a while... seems easy money but its not:
    * back testing of a robot does generally not correlate well to future performance. At least use price feed history from your own broker (rarely available).
    * performance on demo account does correlate very well to real account.
    * don't use grid or martingale robots
    * having a server with metatrader is not as easy as it seems. And messing around with various robots.
    * In retro respect I would choose social investment services suchas signalstart.com and darwinex.

    ReplyDelete
  3. Hi Otto, thanks for your comments. Good reflections, agree! I am launching the social investment network Investor Compass which could be of interest to join for you. Please read my next post, will be posted today! Br, Christian

    ReplyDelete
  4. Hi, thanks for your comment. If you have robot systems that have worked for you, please register and rate them on www.investor-compass.com to share your experiences with others. Best Regards, Christian

    ReplyDelete