If you must buy a trading system...

Mathemagician · Mar 14, 2008, 4:17pm

Quote:

Originally Posted by temptrader

jj,

I did state "if" in the sentence. That is a big "if" for most people of course.

I did see that. Even if following blindly, emotions still run high.

jj

charliechan · Mar 14, 2008, 7:37pm

Quote:

Originally Posted by temptrader

Systematic trading can take all of your emotions out of the equation if you follow blindly. .

i disagree too mm.

if the systematic trader goes through a larger than expected drawdown than the testing/building suggested, simply because vol or trend have changed dramatically vs test data, then that will cause emotion - perhaps the feeling of lack of confidence in the system and then ultimately action - find/build another model. as it's ditched, it starts to work again (perhaps?). that causes more emotion...

PKFFW · Mar 15, 2008, 1:13am

Quote:

Originally Posted by temptrader

I don't get this: if he/she trades it everyday why sell it to anyone? Nobody gives away money for free (apart from charitable organizations and the odd anomalies here and there). Or else they could be using you as their guinea pig so they feel that you're part of the experiment too . . . Only those that sell something like this have a deep insecurity about the system itself........

Oh I love it when someone states their own opinion as if it were the undeniable truth of the universe.

The above is nothing but your own opinion.

I know a number of people who give away money for free. Quite substantial amounts of money too. So much so that I'd be willing to bet the amounts are far more than you or I make in many years.

In fact it has been my experience that many wealthy successful people share the common trait of generosity. Of course not all do and of course the ones that do not are the ones the media focus on. Miserly, selfish old scrooge is a far better news story than the good smaritan in todays world.

The fact that you would not sell or give away your methods is not proof that no one esle would. It is simply a reflection upon you and how you would act if you ever get to a consistently profitable trading state. There are many reasons why someone who successfully trades may wish to give their method away or sell it. Not the least of which is the satisfaction earned from helping others to take control of their financial future.

Quote:

Originally Posted by temptrader

...I can nearly 100% guarantee that anyone who sells systems never do full time trading to consistent profitability. ......

....And if you were making that much money you won't be shouting to everyone about it..

Again, nothing but your own opinion.

Quote:

Originally Posted by temptrader

Again, do your own research. But then, we are assuming that the person selling is honest? Why should he be, what's in it for him to be? He can give you even more BS in the process to confuse you....

You are assuming the seller is not honest. That is just as much an assumption as is assuming they are honest. Your assumption may serve your circumstances better than the other assumption but it is no more valid or based in fact.

I agree with doing your own research though.

Quote:

Originally Posted by temptrader

You never get your money back period. Why would the seller bother to stump up money in advertising, promoting etc. . . and make himself/herself open to a possibility of all that hard work going to waste? Nah, they'll get you in the small print.

Again an assumption stated as fact. Again a reflection upon how you would act in that given circumstance.

I personally have bought a "trading method" in the past. Upon the completion of the 90 day money back guarantee I returned the material and received a full refund(minus postage) no questions asked.

I would agree it is rare that refunds are honoured, however your assertion that you never get your money back is not valid.

Quote:

Originally Posted by temptrader

If anyone is thinking of buying a system my advice is DON'T - none of them work. Look for the free ones and play around with them with paper trades if you are curious (and they are nothing but pieces of curiosity), but ALL of them are sold by people who ultimately cannot trade (or think it's too risky to put their own money on the line), which is why they are for sale.

Again nothing in this part but your own opinion.

Quote:

Originally Posted by temptrader

As a biological mathematician I have a cynical view of life in general, and the one thing that the natural world has taught me is that nothing is ever given away for "free". In human life, money is the one resource that separates you from having a 9 - 5 obligation 5 days a week, and a life of time mostly on your own terms. The steps to get to the latter situation is NEVER given away "freely" or so easily.

The highlighted portion would be obvious to anyone reading your posts. It must be said again though, your cynical opinion is not fact.

I agree that the vast majority of system sellors out there on the internet are snake oil sales men. Does that mean they all are? No.

By all means urge others not to buy trading systems or methods. Just realise that the reasons you are giving and obviously believe in so pationately are nothing more than your opinions and therefore may not prove true, helpful or valid to others.

Cheers,
PKFFW

PKFFW · Mar 15, 2008, 1:27am

I think a distinction needs to be made between buying a "system" or "method" and buying a course that purports to teach one how to trade.

The former, I would agree, is generally a waste of money. Not necessarily always, but generally.

The latter can also be a waste of money in many cases. However, if one does ones due dilligence there is no reason why the latter could not be a very economical and practical way to learn the mechanics of trading. It would, of course, then be up to the individual to practice the mechanics enough to be competent and profitable at trading.

The car analogy is an apt one for both these situations.

Buying the former would be much like riding in a taxi. You must trust the driver to get you to your destination safely. You have no control over how he gets you there, what route he takes, what speed he drives at, whether he crashes or not etc etc. Riding in a taxi will not likely teach you much about how to drive. You may(though even this is unlikely) pick up the basic idea by watching the driver but you are very unlikely to then be able to drive the car yourself should the need arise.

Buying the latter would be much like going to a driving instructor and having them teach you how to drive. The instructor can teach you the mechanics of driving. How to operate the clutch, brake, accelerator etc. What the road signs mean, how to indicate, what dangers to be aware of etc. At the end of the course you should have some basic competancy in driving. It would then be up to the individual to practice those mechanics until they reach a level of proficiency they are happy with.

Cheers,
PKFFW

new_trader · Mar 15, 2008, 4:29am

The problem is this: Driving is not a 'secret' art. It is in everyone’s best interest to drive safely. The rules are clearly laid out for everyone to follow and police strictly enforce them. In other words, driving is mostly a cooperative activity. I say mostly because there are plenty or ar$eholes on the road. This is in complete contrast to trading which is not a cooperative activity, it is mostly (Hedge funds are a group of investors cooperating) a competitive activity. It is a relentless war for profits.

The paradox is this: In order to program an automated trading system you need to have a complete understanding of how to trade in the first place. But, if you have a complete understanding of how to trade you will know that trading cannot be automated! Now, before you jump down my throat, let me say that knowing what must be done is no guarantee of success either. This is where mastering yourself comes into the equation.

Mathemagician · Mar 15, 2008, 7:20am

Quote:

Originally Posted by new_trader

The paradox is this: In order to program an automated trading system you need to have a complete understanding of how to trade in the first place. But, if you have a complete understanding of how to trade you will know that trading cannot be automated!

Actually, you only need to have one halfway decent idea. Lots of very simple and quite easily automated ideas are halfway decent. Combine several halfway decent ideas and all of a sudden you've got yourself a pretty good trading program.

Don't believe me? Here's an example of a simple idea that is halfway decent:

Take a simple 50 day moving average and a 200 day moving average. Go long when the 50 is over the 200. Go short when the 50 is under the 200. That's it. Apply this idea to a broad selection of global futures markets, deduct $115/round turn for commissions and slippage, and apply halfway decent portfolio construction and position sizing. The result is attached. Obviously it's not a holy grail or anything but it's a damn sight better than most people can do and it does prove that a simple, easily programmable idea can produce results over time.

jj

Trader333 · Mar 15, 2008, 8:18pm

One thing that is certainly happening on T2W and that is there is excellent teaching and mentoring happening on Technical Trader. This is where Grey1 is more than happy to help others (including live sessions) where he explains in complete detail trades taken and the exact reasons for taking them. Recently there was around 30 of us that attended an 8 hour live trading web seminar and everyone found it a great education.

Paul

nine · Mar 16, 2008, 1:05am

I've cleaned up a number of posts in an argument not related to the original topic.

Please stay on topic: "If you must buy a trading system..."

Quote:

Originally Posted by tss42

There is nothing wrong with buying a system, as long you know what you are getting into and what to expect. We are talking about end of day systems only.

Checklist:
1. Is the system fully disclosed or a black box? Don't bother if it's a black box because you'll ditch it as soon as you hit a few losses.

2. Is it completely mechanical or does the seller claim to use his/her 'feel'? Don't bother if it's the latter. Assuming the seller has indeed developed a 'feel' of the market and is not lying, what makes you think you can develop that as well?

3. Ask the seller if he/she trades it everyday. Don't bother if they don't. If they trade it, for how long have they been trading it?

4. Ask where the seller's main income comes from: trading, selling courses, or some other source?

5. Ask if the seller will show you an audited account statement (hiding confidential information like their broker account number etc) over a period of 6 months, taken within the last year. Getting an account statement doesn't imply you are on to a winner, but it's better than none. This single question will weed out most of the scammers (except the serious crooks who happily falsify account statements).

6. If you have met the seller on a forum, ask for the names of a few other customers on the same forum, so you can contact them. Check when these members have joined the forum.

7. Find out what market it trades, using what vehicle, how often, which side (long, short, both), how much capital is needed to operate the system, how much time it needs every day, and (very important), if this is a one-sided system, i.e. trades only on the long or the short side then see what sort of market the system has had recently. In other words, long-only systems pop out of every corner in a roaring bull market, only never to be heard of again in a bear market. Don't get caught in th hype.

8. Get all the vital statistics, from real trades, not from simulated back tested results, both historical and for each year:
Number of winners v. losers
Average profit to average loss
Net ROE for each year
Compounded cumulative ROE since the beginning
Maximum historical drawdown
Maximum drawdown each year
Number of winning months v. losing months each year

9. Get the equity curve of the system (of real trades, not of simulated back tests).

10. Find out the conditions of refund. Most mechanical systems will have a 6-months or 1-year no-profit guarantee, i.e. if you follow the rules, log all your trades for that period and can't show a profit then you get your money back. This is why it's important not to buy a system based on the seller's 'feel'. You'll never get your money back.

If at any point of this questioning the seller gets a bit shirty and starts talking about 'trust' or 'honesty', simply walk away. If they cannot provide answers to straight question, they don't deserve your cash. There are plenty of fish in the pond.

Once you have done all the due diligence and are happy that you can handle the drawdown and the losses, go for it.

Once you start paper trading the system, chances are the system will go straight into a drawdown, completely against what the seller has told you so far. One thing you should never do is to give up at this stage and try something else. There are two reasons for this:
First, you never get your money back if you give up.
Second, the extended periods of drawdown are extremely useful to build you as a trader. What makes you think you'll not have a drawdown when you finally trade profitably? This tough period prepares you for that, so thank your stars that you are getting that opportunity before actually burning any real money. In addition, these losing periods tells you a lot about the system you are testing, why it is not performing, what is missing etc. All this information is useful. After all, it's not stopping you from trying to find your own system and paper trade it in parallel.

Mar 15, 2008, 1:27am	#60
PKFFW Veteran Member Member Since Jan 2006 535 Posts	Re: If you must buy a trading system... I think a distinction needs to be made between buying a "system" or "method" and buying a course that purports to teach one how to trade. The former, I would agree, is generally a waste of money. Not necessarily always, but generally. The latter can also be a waste of money in many cases. However, if one does ones due dilligence there is no reason why the latter could not be a very economical and practical way to learn the mechanics of trading. It would, of course, then be up to the individual to practice the mechanics enough to be competent and profitable at trading. The car analogy is an apt one for both these situations. Buying the former would be much like riding in a taxi. You must trust the driver to get you to your destination safely. You have no control over how he gets you there, what route he takes, what speed he drives at, whether he crashes or not etc etc. Riding in a taxi will not likely teach you much about how to drive. You may(though even this is unlikely) pick up the basic idea by watching the driver but you are very unlikely to then be able to drive the car yourself should the need arise. Buying the latter would be much like going to a driving instructor and having them teach you how to drive. The instructor can teach you the mechanics of driving. How to operate the clutch, brake, accelerator etc. What the road signs mean, how to indicate, what dangers to be aware of etc. At the end of the course you should have some basic competancy in driving. It would then be up to the individual to practice those mechanics until they reach a level of proficiency they are happy with. Cheers, PKFFW

Mar 15, 2008, 4:29am	#61
new_trader Legendary Member Member Since Jan 2006 5,340 Posts	Re: If you must buy a trading system... The problem is this: Driving is not a 'secret' art. It is in everyone’s best interest to drive safely. The rules are clearly laid out for everyone to follow and police strictly enforce them. In other words, driving is mostly a cooperative activity. I say mostly because there are plenty or ar$eholes on the road. This is in complete contrast to trading which is not a cooperative activity, it is mostly (Hedge funds are a group of investors cooperating) a competitive activity. It is a relentless war for profits. The paradox is this: In order to program an automated trading system you need to have a complete understanding of how to trade in the first place. But, if you have a complete understanding of how to trade you will know that trading cannot be automated! Now, before you jump down my throat, let me say that knowing what must be done is no guarantee of success either. This is where mastering yourself comes into the equation. __________________ "It always pays a man to be right at the right time." -Jesse Livermore CLICK - My Trading Journal \| SEARCH: soundmoneyproject \|

Mar 15, 2008, 8:18pm	#63
Trader333 Content Editor Member Since Jan 2003 7,546 Posts	Re: If you must buy a trading system... One thing that is certainly happening on T2W and that is there is excellent teaching and mentoring happening on Technical Trader. This is where Grey1 is more than happy to help others (including live sessions) where he explains in complete detail trades taken and the exact reasons for taking them. Recently there was around 30 of us that attended an 8 hour live trading web seminar and everyone found it a great education. Paul

Thread Tools	Search this Thread
Show Printable Version Email this Page	Search this Thread: Advanced Search

Similar Threads
Thread	Thread Starter	Forum	Replies	Last Post
LSS Trading System	Darryl James	Technical Analysis	11	Jul 19, 2012 11:37am
My "Psycho" System!! Good System For Your Trading Arsenal	mazdaz	Forex	18	Jun 19, 2011 3:49pm
where to put the trading system	g500	General Trading Chat	4	Dec 5, 2007 3:51pm
Trading System – help	blackjack	Trading Systems	5	Sep 20, 2005 1:38pm
My very own trading system	L33bets	Trading Systems	18	Sep 8, 2004 6:36pm

Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)