The Transition to Automation, 08/18/05



When moving discretionary systems to automation it is not necessary to make 'all-or-nothing' transitions: find a balance between automation and discretion to optimize returns.

For instance moving 50% of system contracts to automation and leaving 50% in discretion allows scaling and trading around a core position which has been established by the automated system. An example might be moving 50 contracts of a full 100 contract system position to automation and trading the remaining 50 contracts w/ discretion.

Also, scaling into a new automated system, first with one contract and then working up to a full automated position after a series of trades has passed allows a good shakeout of the automated system and will allow any bugs to be fixed at minimum expense.

Henry Carstens
Vertical Solutions
carstens@verticalsolutions.com