Quote from WaveTrader2004:
The wackers haven't got a chance as this business contains the smartest brains walking on this planet and if anyone even thinks for a second they are going to beat them with a system I have some bad news for them.
It is impossible.
BBG
I do very much agree with your former comments, and the fact that this business consists of the smartest brains and toughest mo-fo's that have never failed at anything else in their lives, is self-understanding.
However, I do disagree with your notion that a "system" cannot result in consistent profits. That is, of course, nonsense.
This is not to speak from the position of other experienced system traders (who I am sure would agree), but from my own experience. Yes, I am a 90% discretionary trader, though my discretionary reasoning is 90% systematic. Does that make sense? Probably not.
But what does make sense is that, all discretionary judgment trading aside, I have been working on developing parameter-or rule-based trading systems for several years now, and I can assure you that there are some very good ones. I also personally have a selection of a few quantitative, 100% rule-based, "mechanical" systems, which I constantly work on improving, and use very frequently, with good returns. Incidentally, due to low tolerance for noise, they work best on the two most efficient markets in the world (ES and BUND), which totally invalidates your point. And no, they are not based on MA crossovers, stochastics or any of that laggy TI crap. They are purely quantitative and statistic-based, and they sure do work. Let's face it, the market has amazing tendencies to repeat what has happened in the past. Enough tendencies to make a very good living out of it, even from a totally mechanical standpoint.
By the way, your theory (that systems cannot be profitable) is actually a hypocrisy, because it basically assumes market efficiency / statistical non-predictability. Nothing could be further from the truth. If it were true, you couldn't be making money.
Last but not least, you might not want to hear this, but your own trade entry and exit decisions are nothing but the progressions of complex rule-based boolean "IF-THEN" decision algorithms in your brain. You call it experience, you call it a vast set of rules and wisdoms. But at the end of the day, it's nothing but a complex set of rules, permanently stored in your brain. If those rules were to be coded into a system complex enough to mimick even just the most important parts of a good trader's decision-making processes, then the coded system will likely outperform the trader. Why? Because while the coded system may still lack lots of fine details, it certainly has the advantage of leaving emotional intervention from the trader out of the game. And mechanical rule-based decision algorithms are getting more and more complex every day, particularly in the field of finance and AI. This may sound futuristic, but you will see this happen more and more in your time. And if you don't accept it, you will fall by the wayside just like everyone else. Maybe 5-10 years from now, maybe longer if you're really lucky. You better believe it.
Take it from somebody who does a lot of research and application - in both systematic and discretionary trading.
Best Regards,
Scientist
))