Jacob Holm Will Teach You How To Go From Manual to Machine Trading

Jacob Holm is the Co-Founder of Statera Trading.  Statera means balance in Latin, which is something that is highly valued by Jacob and his partner, Blayn Marshall, in both trading and their everyday lives.

In this episode of How To Trade It, Casey and Jacob discuss the transition from manual trading to automated trading, the importance of backtesting, and the qualities that make for a great trader. You don’t want to miss it! According to trading expert, Jacob Holm, the ability to adapt is one of the most important skills you can have as a trader. Tune into this episode of How To Trade It to learn more! #AutomatedTrading #Forex #ExpertAdvisor #StateraTrading Share on X

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You’ll want to listen to this episode, if you are interested in hearing Jacob discuss…

• [01:25] Transitioning from manual to automated trading
• [03:09] Developing your own Expert Advisor
• [04:51] The one thing we discovered immediately
• [06:33] Converting strategies
• [08:32] The best feeling you can have
• [10:20] Monitoring the strategies
• [11:47] The BEST type of strategy?
• [13:36] Sustainability is essential
• [15:16] A solid money management system
• [17:30] Avoiding over optimization
• [20:08] MetaTrader
• [21:39] Reliable backtesting
• [24:12] Getting started
• [28:09] If I lost all my money tomorrow…
• [33:19] 0.3% risk per trade
• [38:24] Getting connected with Jacob

Machine Trading

Expert Advisors (EA) are computer programs developed to automate the process of trading in financial markets, primarily in the forex market. These EAs are also known as forex robots, algorithmic trading systems, or simply trading bots. Expert Advisors are built on top of the MetaTrader platform, which is the most popular trading platform among forex traders. EAs operate based on predefined trading rules and criteria that are coded into them.

Using EAs in trading can have several benefits, as well as drawbacks. Here are some of the pros and cons of using EAs instead of manual trading:

Pros of Using Expert Advisors:

1. Automation: Expert Advisors automate the process of trading, which eliminates the need for manual intervention. This can save a lot of time and effort, especially for traders who want to execute multiple trades simultaneously.
2. Objectivity: EAs are programmed to follow a specific set of rules and criteria, which makes them highly objective. They do not suffer from emotions such as fear, greed, or anxiety that can affect manual trading decisions.
3. Backtesting: Expert Advisors can be tested and optimized using historical data. This can help traders to evaluate their strategies and make improvements based on past performance.
4. 24/7 Trading: Expert Advisors can monitor the markets 24/7, which is not possible for manual traders. This means that they can identify and execute trading opportunities even when the trader is not actively monitoring the market.

Cons of Using Expert Advisors:

1. Lack of Flexibility: Expert Advisors are programmed to follow a specific set of rules and criteria, which can limit their flexibility in responding to changing market conditions. This can lead to missed opportunities or losses if the market moves in an unexpected direction.
2. Technical Issues: Expert Advisors rely on technology, which means that they can be affected by technical issues such as connectivity problems, power outages, or software bugs. These issues can lead to missed trades, delayed execution, or even system crashes.
3. Dependence on Historical Data: Expert Advisors rely on historical data to make trading decisions. This means that they may not be able to adapt to new market conditions or unforeseen events that are not reflected in historical data.
4. Lack of Intuition: Expert Advisors do not have intuition or the ability to make subjective decisions based on their experience and knowledge of the market. This means that they may miss out on trading opportunities that require a more nuanced approach.

In conclusion, using Expert Advisors in trading can be beneficial in terms of automation, objectivity, backtesting, and 24/7 trading. However, they also have drawbacks such as lack of flexibility, technical issues, dependence on historical data, and lack of intuition. Ultimately, the decision to use EAs or manual trading depends on the individual trader’s preferences and goals. Traders who choose to use EAs should be aware of the risks and limitations and should always monitor their performance to ensure that they are achieving their desired outcomes.

Pareto Principle

The Pareto principle, also known as the 80/20 rule, is a principle named after the Italian economist Vilfredo Pareto. The principle states that roughly 80% of the effects come from 20% of the causes. This principle has been observed in various fields, including economics, business, and trading.

As it relates to trading, the Pareto principle suggests that a small number of trades or market conditions may account for the majority of a trader’s profits or losses. In other words, a trader’s success or failure may be attributed to a relatively small number of trades or market conditions.

For example, a trader may find that a few trades account for the majority of their profits while the remaining trades result in small gains or losses. Alternatively, a trader may find that a particular market condition or event accounts for the majority of their gains or losses.

The Pareto principle can be applied to various aspects of trading, including trade selection, risk management, and market analysis. By identifying the trades or market conditions that account for the majority of their profits or losses, traders can focus on improving their strategies and avoiding trades that do not contribute significantly to their success.

Traders can use various tools and techniques to analyze their trading data and identify the trades or market conditions that are most significant. For example, they can use performance metrics such as profit factor and expectancy to evaluate their trades and identify those that contribute the most to their success. They can also use tools such as heat maps and correlation matrices to identify market conditions that have a significant impact on their trading.

In summary, the Pareto principle suggests that a small number of trades or market conditions may account for the majority of a trader’s profits or losses. By identifying these significant trades or market conditions, traders can improve their strategies and focus on the factors that contribute most to their success.

Backtesting

Backtesting is a method used in trading to test the effectiveness of a trading strategy or investment approach using historical data. It involves simulating the performance of a trading strategy over a period of time using past market data to determine how profitable it would have been if it had been used in the past.

The goal of backtesting is to evaluate the performance of a trading strategy and to identify any weaknesses or flaws that could result in significant losses in the future. By backtesting a trading strategy, traders can gain insight into how well the strategy would have performed in different market conditions and make any necessary adjustments to improve its performance.

To conduct a backtest, traders typically use historical market data to simulate trades using their trading strategy. This process involves setting entry and exit points, calculating stop-loss and take-profit levels, and assessing the overall risk-to-reward ratio of the strategy.

Once the simulation is complete, traders can analyze the results of the backtest to determine how well the strategy performed in different market conditions. They can also evaluate the strategy’s win-loss ratio, average return, drawdowns, and other performance metrics to determine its overall effectiveness.

It’s important to note that backtesting has limitations and potential pitfalls. Historical market data may not accurately reflect future market conditions, and past performance is not a guarantee of future success. Traders should also be careful not to over-optimize their strategy for past market conditions, as this could result in poor performance in the future.

Bio:  Jacob bought his first stock when he was 14 years old with help from his parents. Later, when he was old enough to open his own trading account, he started trading the forex markets. 

Today he trades both manually and automated trading strategies. He bought his first commercially available EA in 2014 and has been fascinated by automation, algorithmic trading and building. 

Additionally, Jacob is an entrepreneur and has run other companies and been involved in other ventures. He has been working at some of the biggest brands in the world and with hundreds of clients over the last few years.

Resources & People Mentioned

• Pareto Principle
• TICK data
• Expert Advisor Assessment – FREE

Connect with Jacob Holm

• Website:       https://stateratrading.com/
• YouTube:     https://www.youtube.com/channel/UCvYwqFbpqqkGNy2PqFbLqkw   
• Facebook:    https://www.facebook.com/stateratradingofficial1/
• Instagram:  https://www.instagram.com/stateratrading/

Connect With Casey Stubbs

• Website:      https://caseystubbs.com
• Website:      https://tradingstrategyguides.com/
• YouTube:    https://www.youtube.com/TradingStrategyGuides
• YouTube:    https://www.youtube.com/caseystubbs
• Twitter:       https://www.twitter.com/caseystubbs
• Facebook:   https://www.facebook.com/TradingStrategyGuides
• LinkedIn:    https://www.linkedin.com/in/caseystubbs/   

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Disclaimer: Trading carries a high level of risk, and may not be suitable for all investors. Before deciding to invest you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment. Therefore, you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.