Futures Trading Systems
"The System's Important
But There's Far More To It"
The system traders take all the profits from the futures markets – regularly and continuously. These beneficiaries are an elite group of professional traders who have established sound practices over the past few decades.
Why has this happened?
With his famous Turtle trading experiment, Richard Dennis proved beyond doubt that successful futures trading could be taught. Ever since that time, in the 1980’s systematic trading has held sway.
The supremacy of methodical trading has been reinforced by the fast developing technology, which allows traders to delegate the donkey work to their computers. This same advance in technology makes it much easier than it used to be for individuals wishing to trade their own money to join the successful trading group.
Trading systems have improved since the early days but the major advances have been in maximising gains whilst containing risk within tolerable limits. Traders still refer to their system rules as their systems but that is only part of the story. Of course, the system rules are very important and must show they possess what is known as positive expectation before success is possible.
But exploitation of gains and containment of losses is down to the methods employed by the system traders. These methods are also embedded in the specialized trading software that they use.
But what about those system rules – aren’t they the secret of success for all futures trading systems?
Frankly they aren’t that special – although some systems rules may get a lot of publicity. It is quite possible for any trader wishing to do so, to produce his own rules. In fact many traders prefer this to using rules that are commonly used or can be purchased.
It is true that markets become used to systems traded on them - but even so, some ‘old hat’ systems in the public domain still perform well. Traders who produce their own system rules prefer to feel that nobody else is going to do exactly what they will do.
Whatever you are comfortable with is what matters! If you know about the First Commandment of Trading, you will understand this.
Whatever their source, all futures trading systems must be thoroughly evaluated to confirm that they are capable of meeting the trader’s requirements. This is done by rigorous step testing procedures, against the traders goals for return and risk limits.
Handsome is as handsome does and every system is assessed on how it performs in these tests. Reputation counts for nothing as far as the successful system trader is concerned.
Copyright David Bromley 2006
All Rights Reserved.