Why are traders so reluctant to give out their system? I know the initial reaction, but just consider this entire post before you flip your wig. To me it seems that the there are as many systems out there as stars in the sky, but from what I'm gathering by reading posts on the site is that finding a profitable trader is like finding a diamond in the rough. It all seems to boil down to psychology & discipline. Now, I'm not really asking what your trading system is. Because it seems like many here would correlate that to "what's your social security # & DOB?", but what I'm looking to understand is this. Hypothetically speaking, if you give the imaginary top trading system to 100 traders (who are trading in the same market at the same time with the same amount of capital in a very liquid market) & said, "here, this system has an edge, just follow the rules." How many would be successful? In other words, how many people actually have what it takes to actually follow the system to make it profitable?
The reason I don't post my systems here is because there are so many people on these forums who need their rabies shots. No matter what people write on here, there are always those who want to tell them that it can't be done, they had better stop doing it, it won't work, they are idiots or losers, etc. Why would I want to post systems that I know are profitable just to have a bunch of people rudely tell me that they do not work? Or ask me to post my returns, which are not their business? I do not need to prove anything to a bunch of strangers--I know what my equity curve looks like. (You may wonder what I am doing here. There are plenty of good ideas floated on this forum, buried amidst tons of trash. If I surf around for a couple of hours a week and get one or two good ideas a year that work for me, to me it is worth the time. Sort of like reading a financial book that contains one sentence or one paragraph that enables you to make money. It's well worth the time.) As for giving the systems away, you are absolutely right. I have no problem with that. I could put them in a full page ad in the New York times and nobody would follow them anyway. They would invent their own tweaks that eviscerate the system, or would find that my methods aren't psychologically comfortable or intuitive for them. I have told plenty of friends what I do, and none of one of them wants to do it.
200 ma cross has outperformed buy and hold by about 6% pa over the last 90 years (assuming you go short when prices crosses the 200 ma from above) It is a proven, back tested methodology that produces profits well in excess of the risk free rate in the long run. There are countless edges available but people have serious issues related to how their mums didn't love them or their uncle touched them up as a kid that prevents people from trading to make money. Most people are trading for other reasons. There was a study that showed random entry, with random exit of random asset over random timeframes broke even before costs in the long run. Therefore, it concluded that most traders/investors hard work and effort at finding an edge/mindset/ studying TA or funnymentals had a negative effect on randomness. This is like saying someone who plays red/balck on roulette over 10,000 spins somehow ends up with 2,000 red and 8,000 black.
There is no such thing as an edge. What happens is an amateur trader discovers something that works (and calls it an edge) before he discovers or learns more as to how a whole market works and how it is all available to him. Your first question is missing. It is where is the most money in a market? Then comes the question, what does my system need to do to extract some or a major part of it? The ET context is the amateur trader with limited capital. So answering the first question, the money is in the gyrations, namely the swings up and down, occuring open to close. The sum of the swings is the maximum points a market offers each day. And you are going to daytrade. Within this first question choose a market offering a lot of points (eg CL). What system you want is answered by devising or adopting a methodology that extracts money from the daily swings.
I wasted several years trying to develop system based on indicators in Tradestation and other platforms. The story was the same each and every time. I would find a system that would backtest profitable in 10 years of historical data and 3 - 4 years of forward data. Each and every time the system would work for a few months and then suddenly start breaking down fast, generating a high number of consecutive losers. I almost gave up for good, actually I was very disappointed and very tired of this situation. I then decided to go discretionary and test my TA and fundamental analysis skills. I spent two years away from backtesting and systems. At the end of the day I ended up where I started despite all the physical stress and strain watching the market real-time on multiple displays and TV at the same time. Then I discovered price action and I got a program that finds systems while I am sleeping. I spent a year reading probability theory and statists. I have found out that the key to trading success is not primarily the system but how you use its signals to measure various probabilities about its future actual performance. I am saying all these because you are still thinking in terms of systems, when you should be thinking in terms of meta-systems. Even a crap of a system can provide to you valuable information about the market if you have a meta-system.
I have always found it interesting that new traders want me to part with my trading method that took me seven years to develop and have traded it for past sixteen years profitable. It only took me $105k in losses, although some of that was commodities long term, and years off my life. One might ask why did I have so much in losses, cause I was lazy and bullheaded, I should have never ventured away from stocks as it took seven years away from accumulating wealth. Have I made up the losses, absolutely. For one, new traders would never understand how I trade. I have mentored approx a dozen through the years for free, but it takes them several months to a year before they are ready to trade. I make it incredible difficult before they are allowed to trade, no sense in trading if you cant be profitable from the gate. Many profitable traders are not afraid to reveal their methods to new traders as their 1-2 contracts won't matter, but in the Internet, you can't tell if they are a newbie or a brokerage house reading the post. If brokerage houses came in with 1000-2000 lot orders and are half second in front of me, guess who doesn't get filled. I am sure the mindset of a newbie has not changed since I started 29 years ago, trying to make methods that have the greatest profits. Greatest profits equal huge drawdowns much more risk. I spent years trying to make this tougher than it is, forget about redesigning the wheel. I now concentrate on lowest weekly losing percentages, how to get to a breakeven stop as quickly as possible. I trade for breakeven all day long, then it is a risk free trade and the market will say when I get money. I don't try to beat the market, I let the market give me what it feels like.
I posted this a while back: Why not share your winning strategy? Hello, I have been spending several hours everyday reading everything related to trading and one thing that puzzles me is this secrecy concerning people's winning strategies. What is the problem with sharing and helping other people out? I am just starting in trading and would appreciate someone sharing a basic system of trading that can generate 20-30 points a week. I guarantee you that if I was successful at it, I would not hesitate to share it. Now, wait a minute, I realized that one can not exactly duplicate anyone's results. And it is for this reason and the fact that we are talking about a gazillion$$$ market with millions and millions of traders that I don't understand the reluctance to share a successful systems. I do want to thank all of you that take the time to inform and educate the members of this forum. Especially a knucklehead newbie like me. Thanks Why not share your wife/girlfriend? Hello, I have been spending several hours everyday reading everything related to getting laid, and one thing that puzzles me is this selfishness concerning people's hot young girlfriends. What is the problem with sharing and helping other people out? I am just starting in sexual activity and would appreciate someone sharing their hot wife or girlfriend that can generate 2-3 ejaculations a week. I guarantee you that if I had a woman of my own, I would not hesitate to share her. Now, wait a minute, I realized that one can not exactly duplicate anyone's pussy. And it is for this reason and the fact that we are talking about a world with billions and billions of men that I don't understand the reluctance to share a hot young girlfriend. I do want to thank all of you that take the time to service and fellate the members of this forum. Especially a frustrated, horny and freeloading newbie like me. Thanks