Category:Trading System

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«It is a great mistake to speculate before you have data. Theory and facts are the two sides of the same coin: they must agree».
(A. C. Doyle, 1859-1930)


A systemic trader develops a trading system and monitors the market with a neutral eye. He follows his system without asking too many questions, or, at least, until the internal conflict prevents him to be in control. Do not underestimate this problem.
Gary Bielfeldt, one of the famous Wall Street traders, based his trading philosophy on specialization, exactly the opposite of diversification.

As per Bielfeldt: "the best thing that anyone can make when approaching the financial markets for the first time, is to learn how a trading system works. This will lead him to realize the importance of learning on when to let profits run and how to cut losses."

Trading systems or automatic trading systems are for many traders the point of arrival which represent the most advanced and complex operational methodology.

To many investors, the trading systems are mere incomprehensible witchcraft, something reserved for trading maniacs or for experts of complicated programming codes. Fortunately, the reality is quite different.

The development languages are extremely simple and at the same time they allow high sophistication. However, after a while, you realize they are unnecessary. Even using a trading system, simple, logical and coherent factors work just fine.

Some traders, who obviously do not properly know trading systems, wonder why a professional trader, knowledgeable and already successfully operating in discretionary trading, should move on to a trading system. This question has an obvious answer: trading systems are never wrong!

The novice trader cannot understand this answer immediately. Time will help metabolize and understand its hidden implications.

One mistake may correspond to a gain, and a loss may concur with a right thing. A trading system is never wrong because even when it loses (and sooner or later it will, mark these words), it always loses following certain rules, and therefore it never fails. At the most, money will be lost, but without making mistakes.

The greatest threat to the trading system developer is to create a beautiful, profitable system, which only works on paper; a beautiful project that does not exceed the actual tests. After some time, field practice will allow us to understand why a strategy is not working. Once the unnecessary is eliminated we just have to get to work.

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