All trading systems fail

Market conditions cant change that much though, can they?
If someone traded an instrument intraday over a period of, say, 12 months, wouldn't they have traded in all kinds of environments? flat days, choppy days, trend days, news days etc.
How much can a market change?
If someone in the above situation was profitable, id find it hard to believe that 'market conditions' would change enough in the future to ruin their methodology. Price just goes up and down.
 
then have different systems for different markets....if you can clearly see a chop why would you trade a trend system?
 
1: The majority of trading systems "purchased" fail ....

key phrase here is purchased. the purpose of a sellable system is not to address the nature of the market, but to understand the mentality of the purchaser.

A trading system developed by the user, as per redarts comment, are built to address the market and its behaviour. Such systems are designed to make money for the developer, since they should go out of their way to deal with outlier events, rather than evade them.
 
oildaytrader said:
The majority of trading systems purchased fail because market conditions change over time and traders become too reliant upon the systems.

http://hubpages.com/hub/FOREX--CURRENCY-TRADING-SYSTEMS-FOR-SALE

http://www.fxfisherman.com/forums/f...s/3595-buying-trading-systems-discussion.html
Click to expand...

I would say most of the systems out there are based on some sort of technical analysis. So it's mainly to do with fear and greed and how those emotions affect the price action by forming certain patterns that can help traders predict future price moves. All this is OK so far as there are no interventions from big players and it seems there are lots of them (interventions) at the moment. Just recently BOJ bought billions of $ and I don't think they would stop any time soon (as long as they see JPY being too strong). Also some other currencies may be subject to some sort of interventions.
IMO All this makes it difficult for technical analysis.
How long is it going to last? - If I'm not mistaken last time BOJ intervention lasted for more than a year.
 
redart said:
Market conditions cant change that much though, can they?
If someone traded an instrument intraday over a period of, say, 12 months, wouldn't they have traded in all kinds of environments? flat days, choppy days, trend days, news days etc.
How much can a market change?
If someone in the above situation was profitable, id find it hard to believe that 'market conditions' would change enough in the future to ruin their methodology. Price just goes up and down.
Click to expand...

Let us assume the market becomes extremely volatile with an equal increase in uncertainty, and this lasts for years.As an example, it moves up 100 to 200 pips a day and down , and then down 100/200 pips within minutes, and it moves up and down upto 200 pips several times a day .We would have increase in trend failures, stop losses would get hit more frequently and none of the trading systems would make money.

Most trading systems are devised by amateurs and learners , if they knew how to trade , they wouldn't use systems,and most non purchased systems also fail.
 
oildaytrader said:
Most trading systems are devised by amateurs and learners , if they knew how to trade , they wouldn't use systems,and most non purchased systems also fail.
Click to expand...

But no matter what method you employ, it could still be considered a 'system' couldn't it?
Even if your a fundamental type trader, you'd still be trading based on a set of rules and would need certain conditions to be met before you make the trade...?....
 
redart said:
But no matter what method you employ, it could still be considered a 'system' couldn't it?
Even if your a fundamental type trader, you'd still be trading based on a set of rules and would need certain conditions to be met before you make the trade...?....
Click to expand...

It would be classed discretionary trading IMHO.
 
oildaytrader said:
The majority of trading systems purchased fail because market conditions change over time and traders become too reliant upon the systems.
Click to expand...

It's a shame you spent $1mio developing your systems isn't it, if they're going to fail.

The writing in the link is amateurish, which is why it probably appeals to you. Let's think about the statement "the majority of trading systems fail".

Define "fail". Let's say I purchase 3 systems, 2 of which I switch off after losses of 20% but the third makes 200%, then most of these systems have failed but I'm still nicely in profit.

Actually I'm bored even responding to your post, ODT. You've never said anything vaguely insightful, relevant or meaningful in the past and I doubt you're about to start now.
 
Markets are driven by fundamentals, not technicals - a concept the majority seemingly fail to grasp.

In addition, would you use the same Options strategy in a volatile market as you would in a flat period? Would you trust a Black Box system in turbulent economic conditions if it had run a successful strategy in a bull market for a number of years? The majority of autmoated systems are designed on a backtest, which are likely to bear little or no correlation to future events given the nature of the recent credit crunch etc...

Many are now switching back to a system that is part automated but leaves the final execution decision to a human being. Probably the best compromise. No one standalone automated system will work in every type of market.

To return to the original point, no computer system can read and evaluate the likely implications from every type of ongoing newsflow, which will be the catalyst for market movements. To some extent you can program in the analysts expectations on figures that move markets (such as non-farms for example) and program in an automated response according to the whether or not these expectations are met, but however complex your system and however many probabilities you can pre-program, in the end you will never cover them all. A terrorist strike for example?

It gets a little complex but you get the idea.
 
Jsc Good post and agree entirely when taken in the context of a longterm TF (daily/weekly).

The lower the TF gets, in my view, boundaries are blurred, FA & TA bias become swayed towards TA more, but never entirely shaking off the influence of FA.

Its one of the reasons I prefer a shorter trading timespan, as fundamentals for the last few years have lagged or thrown up nasty surprises. Then again it could also be argued that sentiment driven short term TA has merely broken the FA connection in an illogical fashion...

Any TF has its advantages and disadvantages, neither are necessarily better. Its just a case of trader personality.

Just to reiterate, I do largely agree apart from the TF issue.
 
An excellent point. :clap:

Perhaps one solution would be to create ones own manual alert system that scans all chosen and pre-defined TA parameters against a range of TF in order to trade on an intraday basis? Particularly if swing trading... ;)

(y)
 
Most "systems" fail because they're crap. Most bought systems fail because 99.9% of them are sold by scammers for the purpose of making money for the scammer - they are not intended to produce profit for the sucker.

If you trade a system, you will almost certainly fail. Why would you expect to succeed if you will not take the trouble to study the market and yourself, but instead lazily follow a set of arbitrary rules?

System followers (even when they have not actually been scammed) will fail because they look for certainty where there can be none.

A system for trading is as likely to be successful as a system for driving or diplomacy. One must adapt.

Fortunately price behaviour can be read and it cannot change. One just has to be willing to do a little work.

Or if you prefer you can wait for your stochastic to cross out of overbought...:rolleyes::whistle:lol:
 
jsc said:
Markets are driven by fundamentals, not technicals - a concept the majority seemingly fail to grasp.
Click to expand...

This point is completely irrelevant - the old debate is totally redundant, as anyone who has studied the market can attest.
 
jsc said:
An excellent point. :clap:

Perhaps one solution would be to create ones own manual alert system that scans all chosen and pre-defined TA parameters against a range of TF in order to trade on an intraday basis? Particularly if swing trading... ;)

(y)
Click to expand...

Cheers (y)
Good idea, but way past my ability, I just try and trade what I see on a few instruments.
About the closest I get to alerts is SMS RNS alerts for AIM position / swing trades.
Discretionary screen watching for me, mostly because I don't know how to do anything else if I'm honest :)
 
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