Cutting Edge Methodologies.

[SOCRATES]

On these boards there are lots of discussions about systems.

Few realise that a system is an inert entity.

Nothing can happen until something is done with a system to make it function.

This act of making a system function is really a method.

There are many kinds of methods.

Some methods end up yielding failure, others not, some yield unreliable results and others end up yielding cutting edge success.

Forget about the systems, is it the method, the application of the method, or the applicant of the method ?

I hope this thread is not going to be derailed. Many thanks to the moderators in advance for the sterling work you are currently doing in preventing off topic posting that leads to the closure of threads once they become interesting.

 

[jacinto]

Dear All,

I would like this thread to develop in a civil way. I do not want this thread derailed, so please abstain of inflammatory comments.

I will moderate it heavily and apply the guidelines to the letter

thank you

Edit:
these are the guidelines
http://www.trade2win.com/boards/faq.php?faq=faq_site_guidelines#faq_item_site_guidelines

 

[jacinto]

that was the first post deleted CV. wish to test me, go ahead. next time it is an infraction

Edit:

as of now, any attempt to derail this thread will get a direct infraction and no warning.

 

[peto]

On these boards there are lots of discussions about systems.

Few realise that a system is an inert entity.

Nothing can happen until something is done with a system to make it function.

This act of making a system function is really a method.

There are many kinds of methods.

Some methods end up yielding failure, others not, some yield unreliable results and others end up yielding cutting edge success.

Forget about the systems, is it the method, the application of the method, or the applicant of the method ?

I hope this thread is not going to be derailed. Many thanks to the moderators in advance for the sterling work you are currently doing in preventing off topic posting that leads to the closure of threads once they become interesting.

I fail to understand the distinction you are making between a method and a system. You seem to be saying a method is the "act of making a system function". Pressing the buttons when the system tells you to you mean? If so then what do you mean by "the application of the method". If method is pressing buttons then what does this further distinction refer to?

Perhaps I have misunderstood what you mean by "system". Some definitions would be helpful.

 

[BroadSword]

In my opinion to win consistently, you need what is commonly refered to as an 'edge' by which I mean an advantage in the particular arena in which you are operating.

If you have a genuine edge then you will profit if you apply it properly, whatever 'apply it properly' means in terms of how your edge operates, for example, it may mean understand fully and believe in your method and therefor take all qualifying trades without deviation from the method, and hence profit over time.

As to whether it is the application or the applicant, proper application will come from (but needn't only come from) an applicant who understands intuitively the edge, and can apply it knowing it will work, hence someone who has no issue with the method and just gets on with it.

So, application is of course needed, but in reality, it is the skillful etc applicant who creates that application.

 

[trendie]

......
Forget about the systems, is it the method, the application of the method, or the applicant of the method ?
......

the more I trade, the more I can relate to your last sentence, Socco.

I wonder if thats because while we are busy looking for systems, what actually happens is that we acquire an understanding of the markets behaviour without knowing it; through screen-watching.
this leads to "knowing" when a trade is going to work or not, and intuitively knowing when to take a trade or not. this can lead to two different people using the same "system" and getting different results.

 

[dbphoenix]

Some definitions would be helpful.

True. System, strategy, method, plan, approach, etc. Without determining the basis for discussion, you're most likely to end up with a series of monologues which are at cross-purposes with one another.

Db

 

[black bear]

On these boards there are lots of discussions about systems.

Few realise that a system is an inert entity.

Nothing can happen until something is done with a system to make it function.

This act of making a system function is really a method.

There are many kinds of methods.

Some methods end up yielding failure, others not, some yield unreliable results and others end up yielding cutting edge success.

Forget about the systems, is it the method, the application of the method, or the applicant of the method ?

I hope this thread is not going to be derailed. Many thanks to the moderators in advance for the sterling work you are currently doing in preventing off topic posting that leads to the closure of threads once they become interesting.

Twice in one day I have found myself agreeing with him, I must be ill

well nearly

Any method that can be wrote down and implemented by someone with less knowledge and understanding and requiring no discretion is a system. if its a good system it will produce profit and must I would have thought be judged to contain an Edge. How long the Edge would last if the system is widely used I suppose depends on

well I for one dont know :?:

I was told if you can"t write your method down with exact entry and exit conditions, stop placements etc You have not got a method

The method must be built on a sound foundation (known verified facts)

I use the word must (I require it or I will not pursue it further)

Thats all I know :| or think I know :?:

Enlighten me

 

[Priceman]

On these boards there are lots of discussions about systems.

Few realise that a system is an inert entity.

Nothing can happen until something is done with a system to make it function.

This act of making a system function is really a method.

There are many kinds of methods.

Some methods end up yielding failure, others not, some yield unreliable results and others end up yielding cutting edge success.

Forget about the systems, is it the method, the application of the method, or the applicant of the method ?

I hope this thread is not going to be derailed. Many thanks to the moderators in advance for the sterling work you are currently doing in preventing off topic posting that leads to the closure of threads once they become interesting.

Socrates, I commend you for starting something interesting that could become a great DIALOGUE. What I'm saying is; I'd like to see you enter into the reasoned debate on the subject instead of your usual 'no that's way off the mark' comments to people's responses. You are asking others to comment and reply to what you've started here so the least you can do is give clear, concise thinking of your take.

Anyway for what it's worth my thinking....

The markets are a living breathing changing organism. They change by the minute depending on the 'players'. There is news, fundys, technicals, etc, etc. You just have to see what's unfolding in front of your eyes. (Let's not get started on the 'everything is known in advance debate!)

All three things are important from your question;
1- method (system , edge, whatever it's called; your advantage). You have to have something that works more often than it doesn't.
2/3- Application of the method and applicant are pretty much together. Pull the trigger when X happens. Are you in control of yourself enough to apply the method/ system/ edge. Get out when Y happens. It's about expecting something to happen and dealing with the outcome should it happen or not happen.

What you have said above is all semantics at the end of the day and I don't believe a system is necessarily inert.

Got the makings for great debate here.... come on lads get stuck in.

 

[Charlton]

Some definitions ?

True. System, strategy, method, plan, approach, etc. Without determining the basis for discussion, you're most likely to end up with a series of monologues which are at cross-purposes with one another.

Db

Db

To start this off I will attempt a definition and perhaps Socrates would provide his own definitions.

Forget about the systems, is it the method, the application of the method, or the applicant of the method ?

System - easiest to use an oft-quoted simple example as an illustration. (it doesn't really matter what this is). Record moving average of a price over time and compare current price to the moving average
Method - buy when current price crosses MA to the upside and sell when it crosses MA to the downside
Application of the method - Produce chart showing MA and price. Create alert if Price crosses MA. Go to broker's screen, enter and submit order in a timely fashion
Applicant of the method - Skill-set - is applicant able to run the charting software properly ? Does he know how to place appropriate orders correctly ? Does he have any psychological hang-ups preventing the order placement.

I am aware that this is a very simplistic and very mechanistic definition, but it might act as a skeleton that could be fleshed out.

Charlton

 

[Crap Buddist]

Forget about the systems, is it the method, the application of the method, or the applicant of the method ?

That is responsible for the results? hmm are we looking to pin it down to the definitive singular reason for the outcome of the results? If yes I'd say the individual is responsible (applicant of the method), he or she governs the choice, including, the method, the application of it and even him herself.

What choice should the individual make with regard to selecting or developing his method, the application of it and himself ?

what are the choices available?

Is the applicant aware that he is (or can be ) Free to choose ?

 

[JTrader]

kevin21 demonstrated this. He and his dad use/d the exact same indicator based system. He kept winning and his dad kept losing....

 

[Market Wizard]

Forget about the systems, is it the method, the application of the method, or the applicant of the method ?

There are many systems out there that produce profitable results, but not profitable for all the traders using them. They in their minds are using exactly the same system or method, but the difference here is the applicant of the method. Here in lies an opportunity to personalise any system to suit ones own personality.

This is where the system fails. I think the method exists within the system as a series of rules or procedures. I think it is all about 'getting the ducks in the right order' that will determine whether a method is followed correctly or not.

 

[TWI]

Forget about the systems, is it the method, the application of the method, or the applicant of the method?

The system is both the application and the applicant. The only way to work towards achieving efficient execution of the method is through continuous accurate measurement to see where the aplication is impacted by the applicant. Results can be quite alarming.

When people tell me they have developed a system that shows great consistent returns over x months/years of backtesting but they have not yet traded it with real money, my main concern is not that the system may fall apart due to changes in the markets price characteristics but rather that the developer will be unable to follow the system. I think it is like investing in a start up business. You invest in the person rather than investing in the idea.

 

[barjon]

Forget about the systems, is it the method, the application of the method, or the applicant of the method ? [/COLOR]

I think I agree with Gamma here. All three - and it becomes increasingly hazy as you move along the trio.

One can draw up a crystal clear method. Applying that method is less clear due to: slippage; liquidity; temporary and brief excursions of bid or offer to trigger level; more signals than margin; etc; etc and that haziness then involves the intervention of the applicant where personal frailties can turn the haziness into a veritable fog.

good trading

jon

 

[Hoggums]

Forget about the systems, is it the method, the application of the method, or the applicant of the method ?

Actually I think the systems should be added to this as well, through inadequate back testing. For many, it doesn't matter how good the application is by the applicant, they never evaluated drawdowns and margin requirements, focussing solely on pips produced and ignoring money management. They only consider highs/lows for the day and not what order they came in and for those spreadbetting ignore what happens in out of market hours. Many fail to take account of slippage and spread. So they try to implement a system that can never work.

But it all comes down to the applicant in the end. He's the one with the idea for a system, whether he fails to adequately analyse the system before implementation or whether he doesn't implement the plan properly, you follow it all back to the grey matter in his head.

 

[0007]

"Forget about the systems, is it the method, the application of the method, or the applicant of the method ?"

Take the finest & best eg.: camera / F1 racing car / cricket bat / building materials / garden etc etc and then use the finest & best techniques. You will end up with results spanning fantastic to rubbish. The variable is the user. I rest my case.

 

[Citizen2007]

If the method and the system are good then it makes no difference who the applicant is, they should be able to follow it precisely.

The key difference between a good method and a bad one being clarity of the process. If the process is clearly defined and can have only one opinion, then how can the executor of the process fail?

Only if the system/method designer is unclear and unprecise.

 

[TWI]

If the method and the system are good then it makes no difference who the applicant is, they should be able to follow it precisely.

The key difference between a good method and a bad one being clarity of the process. If the process is clearly defined and can have only one opinion, then how can the executor of the process fail?

Only if the system/method designer is unclear and unprecise.

If method is fully automated, so removing the applicant then this is close to true. For all others it is invariably not.

 

[JTrader]

Forget about the systems, is it the method, the application of the method, or the applicant of the method ?

First of all you need a good/half-decent system, before you can hope to implement it successfully. You then obviously need a competent driver of the car to ensure that the successful funtionable method is not de-railed.