All Systems lead to Failure?

[Pazienza]

I couldn't care less of what you think of my opinion, but I'll elaborate anyway. Why do I believe systems based on technical analysis are destined to fail? Simply because there are no axioms in TA. By this I mean no two (or more) technical indicators result in the same outcome in market movement every single time. If there were ever a case of axiom trading then TA traders would be raking it in; it’ll be akin to finding a new law in physics or chemistry, where you’d know the outcome 100% of the time, but it’s not. Given the fact that TA trading is at best based indicators used to form educated guesses, it is more than likely any system based on TA must have its parameters changed through time – hardly a definition of a system.

The best systems are ones which are governed by constants, but since nothing is constant in the markets every system will have to change at some point. Here lies my point; the only constant (or system) is the trader himself – his discipline and his emotions. If you can keep the two at a constant then you are more likely to be successful in trading instead of wasting your time searching for the holy grail.

PS: Silence is Golden. My post count is not a reflection of my trading experience. Intelligence should tell you this.

:smart:

Hi Zod,

I agree with a lot of what you say, despite the fact that your low post count means that you are not fit to lick the boots of people with more than 100 posts.

I think that your point about keeping emotion and discipline as two "constants" is an excellent one and very neatly made.

 

[forker]

How does someones post count reflect their trading experience? I am neither for or against this Zod chap but let's get real.. Shall we all pull out our c0c-ks and measure our performance in bed by our girth and length?

 

[Blaiserboy]

My experience has been that TA systems work well in the long run..... however, as markets change their faces from time to time there has to be some modifications or adjustments....

Simplicity is , to me, really important in system trading.... too much TA in a system can lead to huge difficulty...

 

[traderman1]

I couldn't care less of what you think of my opinion, but I'll elaborate anyway. Why do I believe systems based on technical analysis are destined to fail? Simply because there are no axioms in TA. By this I mean no two (or more) technical indicators result in the same outcome in market movement every single time. If there were ever a case of axiom trading then TA traders would be raking it in; it’ll be akin to finding a new law in physics or chemistry, where you’d know the outcome 100% of the time, but it’s not. Given the fact that TA trading is at best based indicators used to form educated guesses, it is more than likely any system based on TA must have its parameters changed through time – hardly a definition of a system.

The best systems are ones which are governed by constants, but since nothing is constant in the markets every system will have to change at some point. Here lies my point; the only constant (or system) is the trader himself – his discipline and his emotions. If you can keep the two at a constant then you are more likely to be successful in trading instead of wasting your time searching for the holy grail.

PS: Silence is Golden. My post count is not a reflection of my trading experience. Intelligence should tell you this.

:smart:

Good post. :smart:

 

[DionysusToast]

What you've regurgitated is the usual tired, throwaway comment about systems.. it's as much use as the "no-one would ever sell a profitable system" line.

So to recap, retail traders should avoid mechanical trading, they should avoid TA as well. So what's left, fundamental trading? I'm sure most retail traders would thrive with that approach.

My thoughts are different. I comment from a day traders perspective.

Retail traders should avoid mechanical trading until they are profitable using non-mechanical methods.

Retail traders should avoid textbook TA that focuses on bars/minutae. I still consider it minutae if you are analyzing a single 1 week bar. Ignoring Textbook TA does not mean you ignore the way price moves.

Retail traders should focus on how an instrument behaves. If they are day trading, they should focus on how an instrument behaves day to day. For instance, the ES and the Bund behave very differently indeed.

 

[wackypete2]

How does someones post count reflect their trading experience? I am neither for or against this Zod chap but let's get real.. Shall we all pull out our c0c-ks and measure our performance in bed by our girth and length?

Only need 4 posts for THAT

Peter

 

[Pazienza]

My thoughts are different. I comment from a day traders perspective.

Retail traders should avoid mechanical trading until they are profitable using non-mechanical methods.

Retail traders should avoid textbook TA that focuses on bars/minutae. I still consider it minutae if you are analyzing a single 1 week bar. Ignoring Textbook TA does not mean you ignore the way price moves.

Retail traders should focus on how an instrument behaves. If they are day trading, they should focus on how an instrument behaves day to day. For instance, the ES and the Bund behave very differently indeed.

Indeed . Personally, I could only get this by spending many (and I do mean many) hours at the screen.

I focus on the eminis and agree with a lot of what you're saying, although I do use pretty much conventional price action. I see this as a good way of looking at how price behaves although I can understand people disagreeing.

I like them (especially YM and NQ, more so than ES) because when they are "behaving" they really are very easy to trade. Equally, it is often easy to stay out when you should - today there was nothing at all (for me) and it was clear that I had to tread carefully.

Nice markets to trade intraday, just need patience really.

 

[Pazienza]

What you've regurgitated is the usual tired, throwaway comment about systems.. it's as much use as the "no-one would ever sell a profitable system" line.

So to recap, retail traders should avoid mechanical trading, they should avoid TA as well. So what's left, fundamental trading? I'm sure most retail traders would thrive with that approach.

Let me be clear, I have no problem with someone who claims that they have a profitable mechanical "system".

I do think that most retail punters are unlikely to come across one and that the search for such a system is usually just costly in terms of money and time. You might be able to design one, but I think that you're most unlikely to be able to buy one.

Can any system truly be called mechanical anyway (in the retail arena)? You still have to have the discipline and belief to stick to it, and so there can be a significant psychological element even with an "A crosses B, always do C" approach.

I know I couldn't do this, so for me at least a mechanical system couldn't work.

 

[meanreversion]

Let me be clear, I have no problem with someone who claims that they have a profitable mechanical "system".

I do think that most retail punters are unlikely to come across one and that the search for such a system is usually just costly in terms of money and time. You might be able to design one, but I think that you're most unlikely to be able to buy one.

Can any system truly be called mechanical anyway (in the retail arena)? You still have to have the discipline and belief to stick to it, and so there can be a significant psychological element even with an "A crosses B, always do C" approach.

I know I couldn't do this, so for me at least a mechanical system couldn't work.

Fair comment. I think one of the reasons that retail punters fail to find a system is a) they have unrealistic expectations and b) (amazingly) they have no metric or method to differentiate between systems. You see it all the time on t2w, comments along the lines of "no-one would sell a good system" but then the person behind the remark will refuse to define their definition of "good", whether it's volatility of returns, win rate, return divided by max drawdown, etc.

(In addition I've seen a remark to the effect that the higher the win rate, the more "robust" the system. But if you suggest a system with a 99% win rate, the reaction is always negative!)

There is also a blurring between "discretionary" and "mechanical". Even discretionary traders have rules, and mechanical traders employ discretion in choosing parameters and markets.