I imagine that there are rather few people in this world who can "easily" earn 100% to 200% per annum from trading, position or otherwise. Let's try to be serious, shall we? Besides, I did not refer exclusively to intraday systems in this thread.
Has anyone made consistent trading profits with a purchased system?
- Thread starter Thunderdog
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I imagine that there are rather few people in this world who can "easily" earn 100% to 200% per annum from trading, position or otherwise. Let's try to be serious, shall we? Besides, I did not refer exclusively to intraday systems in this thread.
walther adds to the pair of "character/temperment" descriptors of thunderdog.
He suggests that cynical to sceptical range can be increased to include realistic. the spectrum is actually quite broad for learning to consider the opportunities that abound and are documented.
When most people are choosing, they are screwed as we all know. They are unable to make wise choices and that usually never changes either.
A person needs to simply learn to rank all approaches under consideration a a first step. The organization that does Consumer Reports is a good one to consider as an example. Take a look at Business Week occasionally as they do stuff. (The top 50 for example is the current one.)
Several people I know do as I do for practice. We track different systems that are public; we rank them; and we often compare notes on how each one can be improved. Why? Well, to keep sharpe primarily. It looks like there is a continuum of preformance. It is not possible to pick up a feature of one and dump it into the next one on the ranking list to make a change in performance. Things do not work that way it turns out.
To compare differing opportunities you need a basis. To develop a basis you need to know how to make money in many ways or you need to understand how extensive the money making opportunity is. Better to know both. ET is continually struggling with a wide range of matters. Here, there is no common ground to speak of either. Too bad for everyone.
"Knowing how to know" is a requirement for success anywhere. Since figuring out how well all the various systems work out there is on the table, it may be a good idea to get down "knowing how to know".
Anyone, it turns out, can go through establishing the process required to learn how to make money. It is a rational set of questions. If a person is able to not crap out at the beginning, they usually do not have to be taken over by repeated failure, the death nell, of becoming very very wealthy.
In this sort of quest, there is no overriding scepticism nor cynicism. Almost anyone can build a path (CPM, GANNT, etc.). What is reality? It is just taking steps to to get from here to there. You have to be able to know when you are learning something correctly. In ET we see, daily, a plethora of wrong answers. Most of them come from people doing wrong things and not knowing that they are wrong.
The first 20 things that a person corrects that he does wrong, go a long way towards being able to setting up a foundation for beginning to learn how to make money.
If you do not know of any systems that work, then you can conclude that you are unable to figure out the minimum required to be able to make objective choices. This is an easy personal assessment to make. Make it and find out one thing. You are simply unprepared at this point in life. Operating systems successfully is definitely not rocket science. However, if a person comes from a place of not having any success, or worse, having a record of failure, then probably nothing is going to change in the future.
A good tool for this costs less than 3 dollars. Get a stud and saw it in half for a friend. Each of you can hit the other with it until you agree that you need to get with the program and stop crapping away your time. You need to learn "knowing how to know" for making money. So far, it may be that you do not even know when you are wrong. ET is populated to the extreme with people who need to buy a "share a stud" with someone else.
He suggests that cynical to sceptical range can be increased to include realistic. the spectrum is actually quite broad for learning to consider the opportunities that abound and are documented.
When most people are choosing, they are screwed as we all know. They are unable to make wise choices and that usually never changes either.
A person needs to simply learn to rank all approaches under consideration a a first step. The organization that does Consumer Reports is a good one to consider as an example. Take a look at Business Week occasionally as they do stuff. (The top 50 for example is the current one.)
Several people I know do as I do for practice. We track different systems that are public; we rank them; and we often compare notes on how each one can be improved. Why? Well, to keep sharpe primarily. It looks like there is a continuum of preformance. It is not possible to pick up a feature of one and dump it into the next one on the ranking list to make a change in performance. Things do not work that way it turns out.
To compare differing opportunities you need a basis. To develop a basis you need to know how to make money in many ways or you need to understand how extensive the money making opportunity is. Better to know both. ET is continually struggling with a wide range of matters. Here, there is no common ground to speak of either. Too bad for everyone.
"Knowing how to know" is a requirement for success anywhere. Since figuring out how well all the various systems work out there is on the table, it may be a good idea to get down "knowing how to know".
Anyone, it turns out, can go through establishing the process required to learn how to make money. It is a rational set of questions. If a person is able to not crap out at the beginning, they usually do not have to be taken over by repeated failure, the death nell, of becoming very very wealthy.
In this sort of quest, there is no overriding scepticism nor cynicism. Almost anyone can build a path (CPM, GANNT, etc.). What is reality? It is just taking steps to to get from here to there. You have to be able to know when you are learning something correctly. In ET we see, daily, a plethora of wrong answers. Most of them come from people doing wrong things and not knowing that they are wrong.
The first 20 things that a person corrects that he does wrong, go a long way towards being able to setting up a foundation for beginning to learn how to make money.
If you do not know of any systems that work, then you can conclude that you are unable to figure out the minimum required to be able to make objective choices. This is an easy personal assessment to make. Make it and find out one thing. You are simply unprepared at this point in life. Operating systems successfully is definitely not rocket science. However, if a person comes from a place of not having any success, or worse, having a record of failure, then probably nothing is going to change in the future.
A good tool for this costs less than 3 dollars. Get a stud and saw it in half for a friend. Each of you can hit the other with it until you agree that you need to get with the program and stop crapping away your time. You need to learn "knowing how to know" for making money. So far, it may be that you do not even know when you are wrong. ET is populated to the extreme with people who need to buy a "share a stud" with someone else.
I bought Indigo in late 1998 when I was very much a novice. It was a clever black box that completely bamboozled those like me with little experience. You could optimize the hell out of the systems and really fool yourself. They marketed it at the perfect time, when the bubble was inflating. Naturally some people had some luck with it initially and that just helped the sales. The losers, as always, seldom spoke up and figured they had screwed up somehow. Made the guy who developed it a lot of money. When the complaints started flowing to the SEC, then he got a very tiny slap on the wrist (had to make his disclaimer more prominent...I'm sure that really hurt him bad).
Now I have my own systems. Since I developed them, and understand them, I am much more confident in trading them.
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I imagine that this site could be of some help to those considering buying a system. However, I still think that it would be useful to hear from real people who used their own real money and experienced real fills and real slippage trading their bought systems. Such "evidence" may be anecdotal and inconclusive, but I think it would add an important dimension to simply following systems in real time and gauging hypothetical results.
Hrmm...
OK... here's the deal.
Pre-requisite. You will notice that one single system / 1 market does not make consistent profits. System fades / has cycles / good and bad time / etc... For example, the infamous Aberration is a simple simple trading logic that just utilizes multiple market diversification.
1. You need to know quite a few things about system portfolio to actually create a consistant profits with any system.
2. By the time you are proficient about system portfolio, you know somethings about developmenting systems. Because they are both extremely relative.
3. So eventually, you'll end up developing your own set of systems to trade.
4. Purchasing vendor system is still valuable. It shows a glimpse of the developer's logic which can be enhanced through your logic and perspective. It's only for educational use, IMHO / 2 cents.
OK... here's the deal.
Pre-requisite. You will notice that one single system / 1 market does not make consistent profits. System fades / has cycles / good and bad time / etc... For example, the infamous Aberration is a simple simple trading logic that just utilizes multiple market diversification.
1. You need to know quite a few things about system portfolio to actually create a consistant profits with any system.
2. By the time you are proficient about system portfolio, you know somethings about developmenting systems. Because they are both extremely relative.
3. So eventually, you'll end up developing your own set of systems to trade.
4. Purchasing vendor system is still valuable. It shows a glimpse of the developer's logic which can be enhanced through your logic and perspective. It's only for educational use, IMHO / 2 cents.
Your question sounds simple enough, but it contains a couple gotchas. There are systems that have been around a long time that have made money. But all systems have rough periods, and sweating out those rough periods is more than most investors can tolerate. Traders' risk and reward preferences vary hugely.
I believe that purchased systems can be a useful starting point for learning about system characteristics. If your objective is to learn, buying a system could be a smart move. If you're trying to avoid doing the work or feeling the heat, buying systems could be like dancing in a mine field.
You bring up a good point Thunderdog and it is something that people should definitely be aware of. Slippage can be a very significant factor with some systems and must be accounted for. I mostly trade medium to long term systems where slippage isn't critical but if you are looking at a day trading system then you must be very careful when looking at any hypothetical results. A breakout daytrading system may experience very large slippage and you should be sure that such is accounted for in the backtested results. On the other hand, a countertrend system may have almost no slippage due to its very nature. You must also take into account how you are going to be executing the trades and what effect that will have on the slippage. I trade one daytrading system that was developed for the S&P back in 1993 and up until the emini was available you would get quite a bit of slippage with this system because of having to send an order to the pit often in a fast moving market. Commissions were also far more expensive then. Now I have the same system fully automated via TradeStation and trading 5 eminis in place of each big S&P contract and I very rarely have any slippage. In fact, I probably have positive slippage enough to offset any negative slippage in the long run. The point is, this same system now provides much better returns because of better execution and cheaper commissions. All of these things must be carefully considered and planned before purchasing any system if you intend to be successful. If you don't intend to have something that can provide instant automated executions then you should probably stick to EOD systems that only require entering stop orders each morning.
A few people have noted that buying a system can be a good learning experience and perhaps the first step on the road to personal system development. That may well be. Similarly, getting mugged can be a learning experience in that it teaches you, first hand, which neighborhoods to avoid at night. But surely there is a better way. Since there are systems for sale that run into the thousands of dollars and since it is reported that most such systems are glorified derivatives of moving average crossover systems, how is that unlike being mugged?
And as for black box systems, I imagine that the only thing to be learned from them is not to trade with your eyes closed.
And as for black box systems, I imagine that the only thing to be learned from them is not to trade with your eyes closed.
Of course there is a better way. It is called developing thousands of systems and backtesting them.
The infrastructure needed to do this _correctly_ is not commercially available.
I think the idea of this thread is a good one. FWIW, when I was a programmer at a hedge fund, part of my job was to take "published" systems, or systems that we purchased, program them and see if they held up to rigorous scientific testing. Not 1 in a 1000 did.
nitro