[OldSchool]

Trading costs have to part of your model, but at Interactive Brokers for example you only pay $0.005/share (with a $1 minimum) to trade. At that rate you can try to trade for an average of pennies per share (including winners and losers). When an algorithm fizzles, my experience is that it stops making small amounts of money per trade on average and starts losing small amounts of money per trade on average, with more volatility.

As you see then, you may automate trading itself, but then your discretion is shifted from deciding what stock to buy or sell short to when to turn on or off an algorithm. The advantage I suppose is that an algorithm isn't necessarily directly tied to market direction.

[jscheel]

Ah, thanks for the explanation! I've stayed completely away from forex, so I don't know much about it.