Trading System vs Trading Method: how different and what differences?

[ehorn]

Quote from ehorn:

A trading method is a procedure, technique, or way of doing something, esp. in accordance with a definative plan.

For example, here are a few simple procedures (or methods (M1-Mn)):

M1) Obtain Final Universe
M2) Calculate and Sort Hotlist
M3) Monitor Volume
Mn) ...

A trading system is a coordinated body of methods or a scheme or plan of procedure; organizational scheme, or an assemblage or combination of things or parts forming a complex or unitary whole.

An example of a simple system (S1) might consist of the following assemblage of methods:

S1a) Perform M1
S1b) Perform M2
S1c) Perform M3
S1n) Perform Mn

 

[QQQShort]

Quote from OddTrader:

Method is subset of system? Or System is a subset of method? Or else?

My first reaction is that method is a subset of system.

 

[dtrader98]

Quote from QQQShort:

My first reaction is that method is a subset of system.

I would tend to agree with that.
While the terms are closely synonymous, with regards to trading, the above distinction can be clarified.

A system is comprised of methods or rules.
You might for instance have a method for entries, a method for exits, and a method for risk management. All such methods can be incorporated into a system.

Much the same way as a program system is comprised of instances or sub-routines.

 

[OddTrader]

Here is my thesis:

Strategy=rules with procedures;
Procedure=Sequences of rules;
Method={a set of strategies(=rules and procedures) for analysing prices, analysing volume, decison-making logics, what-if analyses, etc.};
System={a set of methods individually and collectively designed for entry, exit, reversal, stop-loss, profit taking, sizing, risk/money management, limitations, secrets, myths, etc. };

We usually call stop-loss strategy/method, seldom call it stop-loss system.

A method itself alone cannot be (back/forward-)tested to provide a complete view/ statistics of system performance. Neither with an incomplete system.

Usually system would be fully/ highly mechanical/objective, with most operationally defined rules, no matter how(ever too) rigid.

Method can be either mechanical or nothing mechanical at all (i.e fairly flexible/subjective), even with some unwritten intuitive rules on-the-fly. Proprietary trading has a relatively high degree of subjectivity for its trading methods.

Just 2 cents, or less!

 

[hausse]

I tend to agree to your description. Some use the term "methodology" for discretionary decision making.

A system can be coded and objectively tested. It never leaves the user in doubt about what to do in any given situation. No room for interpretation, gut feel, intuition, x-factor, self-deception and delusion. Very nice when one has systems that are profitable.

 

[OddTrader]

Quote from hausse:

I tend to agree to your description. Some use the term "methodology" for discretionary decision making.

A system can be coded and objectively tested. It never leaves the user in doubt about what to do in any given situation. No room for interpretation, gut feel, intuition, x-factor, self-deception and delusion. Very nice when one has systems that are profitable.

Many times Yes basically and good points; however may not be absolutely, I think.

 

[MGJ]

• 
  POLONIUS: What do you read, my lord?
  HAMLET: Words, words, words.

W. Shakespeare, Hamlet, Act 2, scene 2, 191-192

Neatly captures the essential difference between "Trading System" and "Trading Method", methinks.

 

[fearless9]

Quote from OddTrader:

Here is my thesis:

Strategy=rules with procedures;
Procedure=Sequences of rules;
Method={a set of strategies(=rules and procedures) for analysing prices, analysing volume, decison-making logics, what-if analyses, etc.};
System={a set of methods individually and collectively designed for entry, exit, reversal, stop-loss, profit taking, sizing, risk/money management, limitations, secrets, myths, etc. };

We usually call stop-loss strategy/method, seldom call it stop-loss system.

A method itself alone cannot be (back/forward-)tested to provide a complete view/ statistics of system performance. Neither with an incomplete system.

Usually system would be fully/ highly mechanical/objective, with most operationally defined rules, no matter how(ever too) rigid.

Method can be either mechanical or nothing mechanical at all (i.e fairly flexible/subjective), even with some unwritten intuitive rules on-the-fly. Proprietary trading has a relatively high degree of subjectivity for its trading methods.

Just 2 cents, or less!

Dear OddTrader,

If that is your 2 cents worth, please do'nt come near me with your 5 cent package.
I am on overload already and trying to recover.

Anyway, here is my half a cent worth.

If you are a consistently profitable Trader then whatever you are doing is producing consistent profits and you will be amazed just how little you focus on the things that DO NOT matter, whilst giving 100% attention to the things that really DO matter.

The perceived difference between method and system is the sort of discussion that can fill a misdirected and searching mind for hours whilst the price continues to print out wave after wave of consistent opportunity before their very eyes.

regards
f9

 

[OddTrader]

Quote from fearless9:

Anyway, here is my half a cent worth.

Nothing really serious in this thread. Just take it easy!

 

[OddTrader]

Quote from MGJ:

• 
  POLONIUS: What do you read, my lord?
  HAMLET: Words, words, words.

W. Shakespeare, Hamlet, Act 2, scene 2, 191-192

Neatly captures the essential difference between "Trading System" and "Trading Method", methinks.

Nice words!