Will ANY System Work?

StockBaron

Junior member
21 0
I've looked at a number of commercial trading systems and the thing that strikes me is that they all seem to have taken what was once a simple idea (be it MA X-over, MACD, Stochastic etc) and overlaid that with sufficient gloss and marketing to justify their price tag. Just my personal take on it.

However, if you take ANY basic system or setup, be it buying above most recent highest high (selling below most recent lowest low) and perhaps, as a maximum, pulling in volume as a secondary confirmation,

AND

use a sensible risk/reward and money management system that you adhere to absolutely - wouldn't that work just as well? (Better in fact, because you'd have the commercial systems' purchase price in your trading account too).

Or am I being rather naive? Has anyone on these boards bought a packaged trading system and successfully used it and has and IS making consistent profits with low drawdown?
 

jmreeve

Well-known member
432 13
`Pluralitas non est ponenda sine necessitas.'
(Plurality should not be posited without necessity.)

Occam
 

DaveGos

Active member
100 1
Stockborn

In my experience Risk Reward and Management is 95% of successful trading, I only became profitable when I realised this and consistently applied my rules.
 

oatman

Senior member
2,879 22
You're probably about right. All of these things seem to work at some time but none of them all of the time. The answer is to recognise a change in the market and be flexible.
 

TWI

Senior member
2,535 254
In my experience, the simpler and more moronic you can make your system the better is will be in the long run. All this hype in commercial systems is IMO total bollocks, it is just not that easy, nobody will hand you money you have to earn it and that mean working out how to trade for yourself. I have seen many new traders grow from being shown the same basics into being consistently profitable, suprising thing is that no two trade in exactly the same way. People have to develop a way that keeps them in their confort zone.
Apart from anything else if you are not sure why you are taking descisions it is highly unlikely you will be able to follow any system for long.
 

tomorton

Legendary member
8,315 1,307
StockBaron - I think you're absolutely right. As long as the basic system is well based (ie not phases of the moon or sheeps' entrails) it should produce valid objective entry and exit points. The management of the risk and money resources is where the subjectivity creeps in, and hence the need to understand one's own psychology.

You read occasionally of traders (and proprietory systems) who ostensibly have a portfolio of say 11 indicators, and when they all agree, they open a trade. One - I can't believe its essential or helpful to have a large number of TA signals, I can't believe they actually have a compound effect on signal reliability.

And secondly the trader who needs so much reinforcement and confirmational data doesn't sound like someone who has the psychological pressures of position sizing and management under control. So they take a great entry point and screw it up?
 

damianoakley

Established member
542 57
There are literally hundreds of systems that you could use to profitably trade the markets. The system you choose to trade with will depend on your personality. You can only trade a strategy that you believe in.

As stated earlier on this page, most systems with sound principles will work at some time or another as the mood of the markets goes through it's different trending and consolidating cycles. It is sound money management that will help make the most money in profitable times, and lose the least money when things aren't going your way.

Most systems for sale are purely ideas for entry strategies. They rarely talk about the things that will really contribute to profits, like risk-reward, exits, and position-sizing.

If you gave the same entry strategy to 10 different people and made them trade it for 3 months, you would probably get 10 different outcomes, even though the 10 people had exactly the same signals to trade. This is because each person would use their own money-management techniques to suit their own personality and comfort-levels.

Going back to the question in the original post: Most systems with sound principles WILL work as long as they have sound money-management techniques applied.
 

Rognvald

Established member
916 15
Damn!
I was just about to market my new killer app software package for futures trading

"Sheeps'entrailaiderPro"


:)
 

BBB

Experienced member
1,071 3
Dont worry Rog, there's a sucker born every minute.

How much is it by the way? lol
 

Rognvald

Established member
916 15
A treasure beyond price!

A little googling found this gem in witchcraft

"Sheeps entrails burnt with sulphur will provide more information
straight from the dark one himself"

Sounds about right for futures trading??
 

jmreeve

Well-known member
432 13
The point I was making (albeit obliquely) is that simplicity is better
and complexity should never be added to a trading system unless it can be demonstrated to have a definite benefit. Most comercial systems fail on this simple principle.

To answer the question; will any system work if you use money management? No, the system must have positive expectancy. Otherwise applying money management will only make you loose money more or less quickly. Finding a system that has positive expectancy and that is robust is difficult. Otherwise we would all be rich.
 

TWI

Senior member
2,535 254
I would be interested to know if "Sheepsentrailer Pro" also comes with a woolly jumper.
 
 
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