If you must buy a trading system...

Nope, don't thinks so. Trading and driving are abstract concepts. Hard to explain...it's almost like the car or vehicle is created instantaneously to adapt to different conditions. You don't build 'A CAR' before you start driving and hope it is suited to every condition you encounter. It's more like a James Bond car that can morph into different vehicles, like a boat if you need to cross a river or a plane if you need to cross a gorge and a Ferrari if you need to impress some hot babes.

This is not a criticism to those who sell "Systems" whether Black Box or not, but even if one is sold with good faith and has proven to be profitable up to that date, there is absolutely no way of knowing how long into the future it will remain so.

I think everyone would agree that the Markets are dynamic and constantly changing, therefore to expect the purchased system to offer consistant and constant returns is naive.

Therefore, I fail to understand why anyone would want to pay a lot money for something which has a limited lifespan especially as the only way to know it has exceeded its own lifespan is when you keep constantly losing, which then raises the point as to what stage the system should be abandoned altogether.

At least when one sets out to develop their own system, as part of the learning process they will learn how to adapt to new Market conditions and hopefully keep the system performing in one form or another,or at the very least understand why it is not performing.

Why do you think I hate them so much! I suppose you've never tried learning to trade properly

Hi

This sort of scrutiny needs to be applied to signal sellers,private fund managers trying to sell fund management services on forums,unregulated brokers,trading educators,automated trading software developers and seminar sellers etc

OILFXPRO

@new_trader,

I don't think you hate them...I only suppose that you don't know, what's real "un-emotional" system trading...

But perhaps I'm wrong - I don't know you...I only know your messages in this thread...

bye,
zentrader

zentrader,

You have a financial interest in your opinion whereas I have nothing to gain or lose (apart from my stratospheric popularity) from my opinion. I just hope people reading this thread are smart enough to understand the implications of this. If you want to be successful, and I mean REALLY successful in trading, you need to put in the time and effort. There are no shortcuts.

But you have absolutely nothing to worry about because you will earn much more selling your canned trading systems then you ever will actually trading them. Makes sense doesn't it?

Has it not occurred to you that Monte Carlo generated drawdowns will only give you a certain percentage of the picture (and not the whole picture). If this is the case then it is wrong and there is a possibility (however remote) that the drawdown can be higher, because you are testing with fixed assumptions and parameters.

If you play a statistical game you get drawdowns, and there is no logical reason that those drawdowns won't be 100%. Lazy people use systems because they don't know any better and/or they have not entertained the idea that there are other ways of making money in the markets.

I believe that there is system obsession with the public due to our instant gratification society. People just don't want to put in the work or tread the proper route because, well, it too painful for most. They want easy money, and they want it instantly.

@new_trader, temptrader,

my approach isn't fundamental. I think there are many ways to play the markets, whether you use discretionary or systematic trading.

Using strictly systematic trading has the same input of time and effort, but for the developer and not for the (potential) buyer of the system.

Monte Carlo Simulation methods are only an add-on to the conventional (systematic) system development process, which can lead to a more robust system setup. I described this in a Traders' article a year ago:
http://www.zentrader.de/mcs_article_traders2007.pdf

And it's clear that there's no 100% reliability in trading. There's always the possibility of a "black swan":
Amazon.com: The Black Swan: The Impact of the Highly Improbable: Nassim Nicholas Taleb: Books

bye,
zentrader