Most people who advise would-be futures traders advise them to trade using a system. In fact these advisors will state that one of the primary reasons for traders losing money is either not having a system or not following the system. A glance through futures magazines or other publications will reveal
a heavy concentration of articles about systems and advertisements for systems. Many of us receive advertisements through the mail or over the telephone for systems. So it is true that systems are the backbone, so to speak, of futures trading. Very few people approach futures trading without some kind of system, and that behavior is encouraged by the futures industry.
Why is that? Is is because system trading is profitable? I don't think so. Of all the commercially available systems, how any of those do you think are actually profitable in real time trading even assuming that the trader will religiously follow each signal? How many personally developed systems allow the trader to profit? Well, the presence of forums like these, and the great
number of "new" systems that come out each year argues against ANY of the systems actually being profitable. After all, if you could just plunk down some money, buy a system, trade it and make money, what would there be to discuss? It would seem to me that IF system trading is profitable, then with the great number of systems available, the discussion about how to make money trading would be a moot point, because instead of trying to figure out how to trade profitably, traders would instead be following their systems and making money. Obviously, if 90% of traders lose money, and they are virtually all using systems, then either the "magic system" hasn't been marketed yet or system trading in general is not profitable. (Of course that assumes that we ignore the con line that "most people don't have the proper discipline.") So we have dispensed with the idea that system trading is promoted because the promoters believe it is profitable. But that still leaves us with the question of why system trading is promoted.
To answer that question, we can go again to gambling for an illustration. Systems are also very popular in gambling, not with the occasional vacation gambler, but with the devoted gambler, who is not unlike the devoted futures trader except in the minds of those traders who imagine themselves to be somehow "better" than "mere" gamblers. Of them I say let them wallow in their own fantasy. But for people who have an open mind and are not afraid to face facts from some other related activity, gambling illustrations can be
very beneficial.
Casinos love system gamblers. In fact if you are a system gambler, the casino will go out of its way to do anything necessary to make you happy. They will give you free rooms, food, entertainment, and sometimes even free transportation. Obviously they don't do that just because they want to be
nice to you, they do that because they know they will profit handsomely from a system gambler.
Let's look at two gamblers, Joe and John. Joe is on a vacation, and he decides to pass some time by gambling. So he is walking by a craps table or a 21 table and decides to try his luck. He may buy in for several hundred dollars, play a while, lose some money, say "This sucks," pick up the rest of his chips, and walk away. The next day he may try again, and this time he may make a few dollars. But he will probably leave town losing only a little
money. Of course the casinos were glad to have him, but he is really a "small fish." John, however, is another story. John is a system gambler. He comes to town with several thousand dollars and armed with a system. All the casino personnel know him by name, because he has been there so many times before. However, unlike futures traders, John most likely realizes
that his system will not negate the house advantage, but he likes to gamble and realizes that he can gamble most effectively with a system. John will buy in at a table for perhaps $2000, and he won't just make a few bets like Joe did, he will play for hours each day. Now the casino knows that over the long run, they will profit by the house percentage on every dollar placed in
action. Even if John plays only the "best" bets, and even if he hedges, and even if he calls bets "off" sometimes, he might well place that $2000 on the table ten times or more during the day. That is the same to the casino as placing $20,000 on the table, for the house percentage is on the amount bet--each time a bet is made--not on the amount a person buys in with. In
other words that $2000 is recycled over and over again. With that $2000, it is very possible that John can make $20,000 or more worth of bets. The casino likes John, and he probably never has to pay for a room, food, show, or companionship. They like John so well because they know that they will eventually grind him down due to the house advantage, no matter what system
he uses. From the perspective of the casino, the benefit of a system is that it keeps a "trader" in action a long time, and gives them a large number of "trades" over which to realize the house advantage. Casinos are not afraid of systems, even card counting systems, because, after the initial panic, they have learned over the years that the supposed benefits of card counting
turned out to be a paper tiger. This is illustrated in the growing number of casinos that advertise "Single Deck 21" to draw the card counters to their demise.
Anyway, the futures industry likes system traders for the same reason the casinos like system gamblers. Trading a system involves commitment. If you can get a trader to "believe in" a system, you can bet that he will make a large number of trades. Since the futures industry makes its money mostly
off of slippage and commissions, the more trades someone makes, the better. There is a lot more slippage and commission to be made off of 100 trades than 10 trades. Really, the futures industry is a relatively small industry, and there are relatively few traders. Thus the industry must make the most out
each trader. The best way to do that is to maximize the number of trades each trader makes, and the best way to do that is to get him to trade a system.
a heavy concentration of articles about systems and advertisements for systems. Many of us receive advertisements through the mail or over the telephone for systems. So it is true that systems are the backbone, so to speak, of futures trading. Very few people approach futures trading without some kind of system, and that behavior is encouraged by the futures industry.
Why is that? Is is because system trading is profitable? I don't think so. Of all the commercially available systems, how any of those do you think are actually profitable in real time trading even assuming that the trader will religiously follow each signal? How many personally developed systems allow the trader to profit? Well, the presence of forums like these, and the great
number of "new" systems that come out each year argues against ANY of the systems actually being profitable. After all, if you could just plunk down some money, buy a system, trade it and make money, what would there be to discuss? It would seem to me that IF system trading is profitable, then with the great number of systems available, the discussion about how to make money trading would be a moot point, because instead of trying to figure out how to trade profitably, traders would instead be following their systems and making money. Obviously, if 90% of traders lose money, and they are virtually all using systems, then either the "magic system" hasn't been marketed yet or system trading in general is not profitable. (Of course that assumes that we ignore the con line that "most people don't have the proper discipline.") So we have dispensed with the idea that system trading is promoted because the promoters believe it is profitable. But that still leaves us with the question of why system trading is promoted.
To answer that question, we can go again to gambling for an illustration. Systems are also very popular in gambling, not with the occasional vacation gambler, but with the devoted gambler, who is not unlike the devoted futures trader except in the minds of those traders who imagine themselves to be somehow "better" than "mere" gamblers. Of them I say let them wallow in their own fantasy. But for people who have an open mind and are not afraid to face facts from some other related activity, gambling illustrations can be
very beneficial.
Casinos love system gamblers. In fact if you are a system gambler, the casino will go out of its way to do anything necessary to make you happy. They will give you free rooms, food, entertainment, and sometimes even free transportation. Obviously they don't do that just because they want to be
nice to you, they do that because they know they will profit handsomely from a system gambler.
Let's look at two gamblers, Joe and John. Joe is on a vacation, and he decides to pass some time by gambling. So he is walking by a craps table or a 21 table and decides to try his luck. He may buy in for several hundred dollars, play a while, lose some money, say "This sucks," pick up the rest of his chips, and walk away. The next day he may try again, and this time he may make a few dollars. But he will probably leave town losing only a little
money. Of course the casinos were glad to have him, but he is really a "small fish." John, however, is another story. John is a system gambler. He comes to town with several thousand dollars and armed with a system. All the casino personnel know him by name, because he has been there so many times before. However, unlike futures traders, John most likely realizes
that his system will not negate the house advantage, but he likes to gamble and realizes that he can gamble most effectively with a system. John will buy in at a table for perhaps $2000, and he won't just make a few bets like Joe did, he will play for hours each day. Now the casino knows that over the long run, they will profit by the house percentage on every dollar placed in
action. Even if John plays only the "best" bets, and even if he hedges, and even if he calls bets "off" sometimes, he might well place that $2000 on the table ten times or more during the day. That is the same to the casino as placing $20,000 on the table, for the house percentage is on the amount bet--each time a bet is made--not on the amount a person buys in with. In
other words that $2000 is recycled over and over again. With that $2000, it is very possible that John can make $20,000 or more worth of bets. The casino likes John, and he probably never has to pay for a room, food, show, or companionship. They like John so well because they know that they will eventually grind him down due to the house advantage, no matter what system
he uses. From the perspective of the casino, the benefit of a system is that it keeps a "trader" in action a long time, and gives them a large number of "trades" over which to realize the house advantage. Casinos are not afraid of systems, even card counting systems, because, after the initial panic, they have learned over the years that the supposed benefits of card counting
turned out to be a paper tiger. This is illustrated in the growing number of casinos that advertise "Single Deck 21" to draw the card counters to their demise.
Anyway, the futures industry likes system traders for the same reason the casinos like system gamblers. Trading a system involves commitment. If you can get a trader to "believe in" a system, you can bet that he will make a large number of trades. Since the futures industry makes its money mostly
off of slippage and commissions, the more trades someone makes, the better. There is a lot more slippage and commission to be made off of 100 trades than 10 trades. Really, the futures industry is a relatively small industry, and there are relatively few traders. Thus the industry must make the most out
each trader. The best way to do that is to maximize the number of trades each trader makes, and the best way to do that is to get him to trade a system.
but single deck blackjack, the house will always lose against card counters.
