Does your trading software force you to be a bad trader?

Elsewhere on my blog I have listed trading software that I have used in the past. These days I write my own software to get the precise market view that I want, along with a few metrics that I have designed myself and wish to keep secret.

Looking back, I sometimes wonder if third party software forces people to trade in a specific manner. Certainly, using a third party application "out of the box" won't get the best out of the software. You will have to examine all the features and set up the software for the precise market view that you are looking for.

Most third party software is set to update at a default update speed, typically at the 1 second rate. Such an update rate may force traders to become what is known as scalpers, who usually enter a market for a short period of time, typically less than a few minutes, before closing out their trade. Scalping is a valid trading methodology but I would only recommend to those with the right hardware and speed of Internet connection to help them get to the front of the market regularly.

Trading at the 1 second level is essentially noise trading (especially during the last ten minutes of a pre-race betting market) and it takes a lot of skill to determine a trend (if there is one) from noise. I wonder how many traders slow down the update rate for their software and investigate longer trend signals?

I know that some traders will have charts running at a different rate to get a trend but with a 1 second trading ladder next to it. Some of those traders might get spooked by a sudden movement on the ladder and trade out for a loss when there was no need to do so. This is a framing problem where you are looking at the same market but in two different time scales, which is going to be very confusing.

So, have a go at slowing down the update rate on your trading software. You might find a new niche in which to trade, away from the herd (or rather, the sheep and a small number of wolves).

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