If you must buy a trading system...

[Chorlton]

IMO There's a big difference between giving your money to someone else to trade with and buying a Black Box system to trade yourself.

If the first instance, you fully acknowledge and accept the fact that someone else will take the responsibiltity to (hopefully) make you a profit.

However, with the latter choice, you're basically trying to convince yourself that you are in full control but unfortunately the reality is somewhat different. If one really wants to take responsibitity for ones own actions then they need to accept that it will be a long and frustrating journey (unless one is extremely lucky) but hopefully the results will be worth it.

Taking this mid-way approach of buying a "black-box" system is just a lazy way out...

All IMO,

Chorlton

 

[Mathemagician]

Chorlton, the analogy that is often used is that most people would rather drive a car off a cliff than ride comfortably in a bus that safely reaches its destination. Most people desperately need the illusion of control.

jj

 

[Splatter]

IMO There's a big difference between giving your money to someone else to trade with and buying a Black Box system to trade yourself.

If the first instance, you fully acknowledge and accept the fact that someone else will take the responsibiltity to (hopefully) make you a profit. ...

All IMO,

Chorlton

While I'm new to T2W, I'm not new to trading nor am I new to the TradeStation forums (I use the same name there as well). I thought it might be helpful for others to know that while I am myself a daytrader as well as a fulltime software developer who owns more than one software house, I have placed real, non-insignificant money with Mathemagician in his short-term leased systems.

I've done this for two reason: First is that I believe that we succeed financially by placing money effectively in diversified non-correlated systems. Secondly, I placed money with him because he's the real deal. I've seen the EC's, I've seen the research, and most importantly, I've seen the live results.

His systems are not blackbox systems that I trade myself. These systems are his strategies, traded professionally by an exceptional broker.

Regards,
Joey

Aut viam inveniam aut faciam.

 

[Chorlton]

Chorlton, the analogy that is often used is that most people would rather drive a car off a cliff than ride comfortably in a bus that safely reaches its destination. Most people desperately need the illusion of control.

jj

Good analogy but I would add that if one uses "Black Box" Systems then the "car" in question does not actually have a connection between the steering wheel & the wheels but instead is actually being steered by somebody else via remote control ......

 

[new_trader]

"There is nothing wrong with buying a system, as long you know what you are getting into and what to expect" followed by 11 buts.

Those who would learn how to trade avoid developing their own strategies as if they were avoiding smallpox. Why?

Yes, it's because only the lazy, the naive and the dunces who think you can actually program a winning ‘system’ into a software package.

 

[zentrader22]

Trading Systems...

@all,

first: I'm system developer and trader and I sell my system ( www.zentrader.de - trading system development and monte carlo simulation methodology ... ). And even worse: yes it's a black box system...and for that there is a reason: the system contains (my) intellectual property and that's not for free.

But I agree, that it's always better to develop and trade your own system. Unfortunately not all traders or system developers are able to develop robust profitable mechanical trading systems.

So the decision is - like always in this world - build or buy. If you want to drive a fast car, it's always better to buy a Porsche than to build your own car, if your engineering skills are not sufficient for that hugh task!

And believe me, in this latter case it's far cheaper to buy than to build...

Only my two cents,
zentrader

 

[new_trader]

@all,

first: I'm system developer and trader and I sell my system ( www.zentrader.de - trading system development and monte carlo simulation methodology ... ). And even worse: yes it's a black box system...and for that there is a reason: the system contains (my) intellectual property and that's not for free.

But I agree, that it's always better to develop and trade your own system. Unfortunately not all traders or system developers are able to develop robust profitable mechanical trading systems.

So the decision is - like always in this world - build or buy. If you want to drive a fast car, it's always better to buy a Porsche than to build your own car, if your engineering skills are not sufficient for that hugh task!

And believe me, in this latter case it's far cheaper to buy than to build...

Only my two cents,
zentrader

You car analogy is misapplied. Trading is analogous to driving and not which vehicle you use.

"If you want to drive a fast car, it's always better to learn HOW TO DRIVE yourself"

That's better!

 

[zentrader22]

Trading Systems...

@new_trader,

concerning discretionary trading you are right!

But my analogy applies only to "system trading" using so-called mechanical systems.

And in that situation of systematic trading (ideally "trading without emotions") the quality of the used system (or car...) is the important part!

bye,
zentrader

 

[Splatter]

You car analogy is misapplied. Trading is analogous to driving and not which vehicle you use.

"If you want to drive a fast car, it's always better to learn HOW TO DRIVE yourself"

That's better!

Nope, that's wrong and over-simplified. In reality both analogies are at work -- the driving and the engineering.

 

[new_trader]

@new_trader,

concerning discretionary trading you are right!

But my analogy applies only to "system trading" using so-called mechanical systems.

And in that situation of systematic trading (ideally "trading without emotions") the quality of the used system (or car...) is the important part!

bye,
zentrader

No, it's only about driving the car. You are providing an automated driving package for people who are terrified of crashing and as a result never bother trying to learn how to drive properly or safely. I was terrified the first time I ever drove on a main road. Up until that time I only drove my dad's car up and down a very quiet dead end road. But with more and more practice and experience I grew confident driving on any road, in all weather conditions, regardless of the type of car or traffic conditions. Not only that, I’ve driven in different countries too. Even in America where they drive on the wrong side of the road! Do you see or not see?

 

[Crap Buddist]

Wise trader once said....

Manage both time & money wisely, else both will run out.

 

[zentrader22]

Trading systems...

@new_trader,

it seems, that you have never tried system trading and i talk about 100% system trading.

In this case there is no special trading experience necessary, because you have only to tranfer the long and short signals of your system into your trading platform (in totally automated trading even this last action of control will be triggered without you).

Clearly you have to know what you trade concerning risk and money management.

The only thing you have to control concerning the kernel system are the backtest or monte carlo simulation generated drawdowns. If they exceed in real trading the tested range,the system perhaps is broken. But that's a system immanent property of mechanical systems. You can't predict the future system behaviour as you can't predict your own future - that's the risk of life!

bye,
zentrader

 

[new_trader]

Nope, that's wrong and over-simplified. In reality both analogies are at work -- the driving and the engineering.

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.

 

[Chorlton]

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.

 

[new_trader]

@new_trader,

it seems, that you have never tried system trading and i talk about 100% system trading.
zentrader

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

 

[oilfxpro]

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

 

[zentrader22]

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

@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

 

[new_trader]

@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?

 

[temptrader]

it seems, that you have never tried system trading and i talk about 100% system trading.

In this case there is no special trading experience necessary, because you have only to tranfer the long and short signals of your system into your trading platform (in totally automated trading even this last action of control will be triggered without you).

Clearly you have to know what you trade concerning risk and money management.

The only thing you have to control concerning the kernel system are the backtest or monte carlo simulation generated drawdowns. If they exceed in real trading the tested range,the system perhaps is broken. But that's a system immanent property of mechanical systems. You can't predict the future system behaviour as you can't predict your own future - that's the risk of life!

bye,
zentrader

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.

 

[zentrader22]

Trading systems...

@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