When traders look into learning algorithmic trading, they have to choose not only a trading platform, but also a programming language. There are many options on the market, and while some use their own platform specific coding language, others use python or C++.
So why should you then not use python in algorithmic trading? Well, the answer is quite simple. You should not use python in algorithmic trading because finding trading strategies isn’t about how complex things you build, but rather how many ideas you have time to test. There are alternatives to python on the market that will let you build strategies far quicker.
These also come with the benefit of being very easy to learn for beginners, while still offering all the features most traders will ever need.
Let’s have a closer look at why we believe that you should go for another option than python, when beginning your algorithmic trading career!
One of the most common misconceptions among new traders is that a good strategy is a complex strategy. Traders who have come to a stage where they are profitable, know that reality is quite the opposite. In other words, they don’t need an advanced coding language like Python!
The best strategies, more often than not, are those that are very simple. When you design a trading strategy, you want to use as few conditions as possible. Complex strategies with numerous conditions are far more prone to curve fitting than simple strategies. This means that a simple strategy continues to work in out of sample more often than a complex strategy.
In fact, some of our best strategies consist of as few as one or two rules, sometimes not even optimizable! These types of edges exist for sure, and finding them is only a matter of testing enough ideas! This means that for these types of strategies, python adds very little value, since it can be coded much more easily, and quicker, with an easier coding language.
Just to give you a better idea of what you can do with as little as 2 conditions in a trading strategy, have a look at these two trading strategies! The first one trades the RB futures market, while the second trades the S&P 500!
Hopefully, these images succeed in getting the message across!
As we already have touched on, you really want to be able to test as many ideas as you possibly can. Finding edges that can form algorithmic trading strategies is hard, but not impossible. It requires that you continue testing idea after idea until you eventually find an edge!
This is where speed comes into play! An easy coding language that’s faster than python enables you to quickly jot down ideas without wasting time on complicated coding exercises. The time that would have been spent on programming can now be spent on testing more strategies, yielding more trading strategies for you to trade in the long run!
In fact, this is especially crucial when it comes to new traders, who don’t have strategies to trade. They need to be able to run through as many tests as they can, to quickly find strategies that can start generating money for them. Algorithmic trading is hard as it is, and making it even harder by imposing an additional barrier in the form of a somewhat heavy coding language, is unnecessary!
As a new trader, you need to take in many new concepts and facts. And if that wasn’t enough, you often need to tackle emotionally challenging experiences, such as drawdown and loss of faith in trading itself. If you don’t know python well from the beginning, your main focus, in the beginning, will probably become learning how to code. This removes attention and focus from the other areas of trading that are critical for your success.
In this regard, python isn’t the best choice for a new trader. While it is comparably easy to learn when compared coding languages like C++, it will take a lot of time to master!
In the end, it does not matter how hard you made it to code the strategy. What matters is the logic that you coded, and that is made more easily in other coding languages.
The goal of this article isn’t to make the point that python is a substandard or a bad coding language. It’s not!
However, we believe that there are better alternatives to python when it comes to algorithmic trading.
According to us, the best coding language for algorithmic trading right now is Easylanguage, which comes with the TradeStation trading platform. This is a coding language that most of our students in our algorithmic trading course use, and it has enabled them to learn to trade much faster, since they haven’t had to struggle too much with learning how to code!
As its name implies, Easylanguage is very easy to learn. Someone new to it will be able to learn to code their ideas very fast, and will soon build their own strategies.
However, the simplicity of Easylanguage doesn’t mean that you are confined to only basic ideas. While Python sure has greater capabilities, you will hardly miss anything if you choose to go with Easylanguage. We use Easylanguage ourselves, and find that it does close to anything we want from it!
If you know Easylanguage, you also know Powerlanguage!
Powerlanguage basically is the same as Easylanguage, and both languages are cross-compatible. The difference lies in that Powerlanguage is used by Multicharts, which is another great trading platform.
While Tradestation is a trading platform, broker, and data provider, Multicharts only is a trading platform. However, that means that you are free to choose your broker as well as data provider, and can customize your experience to your liking!
In other words, contrary to what you might have believed, learning Easylanguage does not mean that you are at the whim of the developers at one trading platform only! You may switch from TradeStation to Multicharts, and keep all your strategies as they are! Issues seldom arise when moving code from one platform to the other!
As a new trader, you shouldn’t focus on coding! Nobody will build a strategy simply because of their great coding skills. Instead what counts, is how fast and efficiently you are able to test and discard ideas.
While python is a great coding language, it cannot hold up with the speed of Easylanguage/Powerlanguage, since the latter is so much easier!
If you are interested in algorithmic trading we recommend that you have a look at our MASSIVE 10 000 words long guide to algorithmic trading!
-- by Håkan Samuelsson from blog therobusttrader
Håkan is a trader with more than 20 years of experience in trading and the markets. For more than 10 years he has been trading his own account full-time from home, after leaving his career as a prop trader in the US where he also traded his own money! The Robust Trader is a continuation of Håkan’s Swedish blog which is why we can offer services with such long track records! Håkan Samuelssons is a graduate of the Royal Institute of Technology in Stockholm (KTH) where he earned a Master’s Degree in Engineering.
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