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Traders and Their Systems

  • Post #1
  • Quote
  • First Post: Feb 8, 2007 5:43am Feb 8, 2007 5:43am
I was hoping for someones opinion or input on this subject...

Basically I have found a strategy which seems to be working quite well for me but i am a bit nervous about putting to much hope into it as I have read on many threads that a Trader always needs to adapt and change their system.

My issue is what if it takes you so long to find a system that works and just when you get to grips with it the market changes and you have to find a new system... In essence you can never be truly profitable or consistent cos you always are changing your system...

So my question is this a myth... Can you actually find one system and stick with it through the years and be truly profitable....

Just for your information I trade based on support and resistance and I trade the breakouts of these lines.... I wait for a close and then for the market to move a few pips further in my breakout direction then I enter... Can I use this forever?
Quoting Ricardo Mendez
I was hoping for someones opinion or input on this subject...

Basically I have found a strategy which seems to be working quite well for me but i am a bit nervous about putting to much hope into it as I have read on many threads that a Trader always needs to adapt and change their system.

My issue is what if it takes you so long to find a system that works and just when you get to grips with it the market changes and you have to find a new system... In essence you can never be truly profitable or consistent cos you always are changing your system...

So my question is this a myth... Can you actually find one system and stick with it through the years and be truly profitable....

Just for your information I trade based on support and resistance and I trade the breakouts of these lines.... I wait for a close and then for the market to move a few pips further in my breakout direction then I enter... Can I use this forever?
Support and resistance are 2 concepts of trading that will more than likely be around forever so it sounds like you have the basis for a long lasting system. People that use more technical indicators that don't have a foundation in the basics that never change are more susceptible to having their system weaken over time.

Good luck!

GirlFlyer
Ricardo,

I always say, "you don't find the system, the system finds you". First you need to identify and embrace all of your mental characteristics (the good, the bad, and the ugly). Then work from there... I know it's a bit difficult to understand, but if this peeks your curiosity I'll try to give an example. Otherwise you may just think that what I'm saying is complete B.S. and of little value to you.

Either way good luck.

MM
Thanks guys for your feedback... I think I understand what you are saying about the system finds you but If you would like to elaborate it would be much appreicated.

In answer to my origional question once I find the system which I believe I have is it possible to use it forever?
Quoting Ricardo Mendez
Thanks guys for your feedback... I think I understand what you are saying about the system finds you but If you would like to elaborate it would be much appreicated.

In answer to my origional question once I find the system which I believe I have is it possible to use it forever?
As trading is all to do with what YOU bring to the table I would say that, for now, get rid of the self-doubt.
If you think you've found a method that you're comfortable with, stick with it until you are sure it's the method that's wrong, NOT YOU.
One of the problems I found when I first arrived at this Forum was uncertainty in what I was doing at that time. As I read more and more, I became more confused until I understood that I had to make a method my own.
Having tried once, and failed, I moved on, cleared all the junk off my screen, and am now happy with what I'm forward testing at the moment.
Any who, to cut a long, boring post short, all prices trend for a while, always have, always will. Then they consolidate,always have, always will. Then they trend again,always have, always will. They'll stop, or consolidate at resistance/support and then they will breakout,always have, always will.
So it seems to me you have as good a method as anyone here.

Stick with it
You basically want to know if you will continually make money, and if your system will sustain market variations. If you have to ask this question, you probably haven't found your system... or your system hasn't found you.

If I may:

I'm impatient and have a nasty habit of pushing the buy and sell button often.

I cannot accept when I'm wrong on a trend direction or haven my stops taken out.

I love guessing tops and bottoms... rarely with any accuracy (trends can be so relentless.)


So there is my dirty laundry list. Every trading book or course I ever read specified all of the above characteristics as those of failed traders. I tried to make the adjustments but was not able to change the individual that lives inside of me. After a while I started going down the list and one by one I tailored all the info that I had acquired over the years. Turns out that after thousands of hours of price watching, book reading, and critical thinking I had all the ammo I needed. The way I should trade (along with my dirty laundry list) became evident.

The poison was the cure, and my edge. That's what I mean about the system finding you. You like breakouts, and that's great. A better question is why you like breakouts. When you find the answer you might also find that there is a different methodology or approach that would be more suitable for your personality.

The bottom line is your system needs to do 2 things for you:
1. Make you money
2. Give you the "warm fuzzies" every time you open AND close a trade.

Does this make any sense? I am a bit crazy.

MM
Quoting mr.marketz
Does this make any sense? Yes I am a bit crazy.No

MM
i also have the tee-shirt
Hi!

I think that there are certain setups, which work most of the time and for a long time. You just need to be aware of time and place, where they occur. If your setup gives you an edge and you know, how to play it, play it!

the rest is money management (which I wont go further into) and Discipline.
Nothing less, nothing more.

Happy trading

Bluefish

P.S. Dont doubt a system before you even acctually tried to apply it.
System is always good and market is always right.

P.P.S. Just trying to help. Dont get it the wrong way.
Thanks people... I just want to clarify one thing.... I know many of you say because of the self doubt it means I havent found my system.

Well to be honest I really do believe in my system and it does work... My only doubt is in the longevity and this is simple because I have not traded for years on end and hence do not know the real story.

What I know about systems ability to last are only from what I have read in forums such as this and that is the reason I asked the question...

I was sort of hoping for someone to say "I have traded my system for the last 10 years and have had no reason to change"
Quoting Ricardo Mendez
Thanks people... I just want to clarify one thing.... I know many of you say because of the self doubt it means I havent found my system.

Well to be honest I really do believe in my system and it does work... My only doubt is in the longevity and this is simple because I have not traded for years on end and hence do not know the real story.

What I know about systems ability to last are only from what I have read in forums such as this and that is the reason I asked the question...

I was sort of hoping for someone to say "I have traded my system for the last 10 years and have had no reason to change"
I appreciate your response, but I'm not sure how many here have been trading that long.
I still feel my earlier comments apply. Your system is based more on mormal market behaviour, I think, rather than X crosses Y and RSI is moving up/down etc.
Support/resistance will always be a factor in any commodity situation. There's a point where folk won't buy/sell at a price until they perceive value has changed and then they'll come back into the market. Can't ever see that changing, even for my 'proper' business - selling clothes.
If you really feel comfortable with what you're doing, you're more than half way there, in my book.
Hi Ricardo

Just to let you know that any system is only as good as the person using it.

I have been messing around with systems for years and haven't really been given them enough chance to work before moving onto the next one.

Most systems do not work simple because of the person using it.

Through my experiences I have learnt that you have to lose to win in this game and you must discipline yourself to follow whatever system you are using exactly as laid out. My problem was wanting to win all the time and jumping from one system to the next.

I have now turn the corner in creating my own system and my confidence now is high even when I lose as I know the system will be in profit every month even if it is not profitable every week.

A good system has to move in the direction of the market at all times any type of guessing will ultimately fail. This is what I use to do before using all sorts of indicators etc and when I lost money I would get angry with the market and try and recover it immediately- big mistake!

Now that I have this confidence I can now do my set up in the morning and a few slight adjustments during the day and no need to worry if I lose.

One finally tip I will leave with you is this never, never be greedy. This is what kills a lot of people in trading. Set up a threshold of the amount of pips you want to achieve in a day- this must be a high hit rate figure for the currency you are using. Then choose that amount for your daily figure.

Do not make the mistake that because a currency trades 100 pips that you can get that amount every day. These are things the most of us know already but do not us it to our advantage. This high pip range only occur maybe 20% of the time.

Anyway I will stop rambling on now- all the very best and discipline yourself with your system as it will work forever if you can master yourself.
With God its impossible to lose
Hi Ricardo
If you have doubts about trading a breakout strategy, and has it got a long-term future, then I suggest you read this article paying particular attention to the paragraph that states
Quote
99% of my success has come from trading and working breakouts. Primarily larger breakouts. Why? They work!
There's some other stuff worth looking at in the main thread http://www.forexfactory.com/showthread.php?t=3691 but it was that article that caught my eye as it was very relevant to your original post.
i have been trading the same way for almost 3 years now and i see no real reason it would change

good luck
Hey Ricardo
We always hear of people updating their systems, but thats usually after a good period to keep up with the volatile markets. If you have a good system, then go with your gut feeling. Every system will eventually need updating, but its not every week or month that you will have to update it.


good trading and bon success
when i started my journal, i have come to fully understand what Van Tharp said about 'Bias in your system development'. It means that you looked at past history, days, months, or maybe couple of years if you're diligent, and try to implement a system to capture the 'behavior' of a pair for that few years!

This is why these systems don't last long and constantly needed tweaking because the system was biased from the beginning

I think the best way to formulate trading systems is to get a foundation going. You have to understand price acceptance and rejection (s/r) concept. If you want to use indicators, you must understand it's formula inside out. If you ask most people who use indicators like rsi, stoch, cci, etc. they wouldn't be able to give the formulas without looking into investopedia

Understand the general characteristics of trend and ranging markets. Then figure out what YOUR criteria would be for a trending or ranging markets.

I think we should work inward. Meaning get some general ideas going first such as the market conditions and setups. Then move into the details of the system like s/l, tp, position sizing. etc.

peace
Working towards CME membership
Quoting Ricardo Mendez
Thanks people... I just want to clarify one thing.... I know many of you say because of the self doubt it means I havent found my system.

Well to be honest I really do believe in my system and it does work... My only doubt is in the longevity and this is simple because I have not traded for years on end and hence do not know the real story.

What I know about systems ability to last are only from what I have read in forums such as this and that is the reason I asked the question...

I was sort of hoping for someone to say "I have traded my system for the last 10 years and have had no reason to change"
Ricardo. Dont worry about the system lasting forever. All that matters is that its working now..right now. let forever take care of itself. I accidentally found a pattern in the charts 2 weeks ago and I still can't believe that its that easy to trade. Just keep looking at the charts and the only system that works is the one you discover on your own. All roads lead to the same destination..UP or DOWN. Its really that simple.
PS
You have to get your trading psychology right before you enter a trade.
BigDog.
Quoting Ricardo Mendez
I was sort of hoping for someone to say "I have traded my system for the last 10 years and have had no reason to change"
You got it. Exactly what you want. I have traded my system for the last 10 years and have had no reason to change it. Hope you feel better now. GL.
Quoting Ricardo Mendez
Thanks people... I just want to clarify one thing.... I know many of you say because of the self doubt it means I havent found my system.

Well to be honest I really do believe in my system and it does work... My only doubt is in the longevity and this is simple because I have not traded for years on end and hence do not know the real story.

What I know about systems ability to last are only from what I have read in forums such as this and that is the reason I asked the question...

I was sort of hoping for someone to say "I have traded my system for the last 10 years and have had no reason to change"
Hey Ricardo, I've been trading my system for > 20 years and it still generates more than it loses.
My system includes...
Finding horizontal range bound markets and watching for a breakout.
Finding Trending Markets and Entering on Pullbacks.
Finding Scalps that are there for the taking.
AND, If no one has said so yet, Welcome to the Factory.
....

In other words, My Game Plan Changes depending on whom I am playing against.
  •  Carlos
  • | Joined Sep 2005 | Status: Commitment, planning and discipline | 65 Posts
You must trade your system and you must have a predetemined method to stop trading your systems. They'll all have drawdown from time to time, as we all know this i only natural. I will back test my systems for an extended period of time, the time period depends on the time frame the system is traded from. Then i will find the maximum drawdown of the system over this period, multiply it my 1.5. Only once a drawdown exceeds this value will i stop trading, otherwise you must continue or let your emosions win, and we all know its your emosions which will kill your trading. Often just after a draw down a system will move back into profitability.

Systems move in cycles and if you stop trading at the bottom of one half you will miss the other side of the cycle, yes the profitable half!! An example will make this more clear. My breakout system will perform well in strong trending markets, but poorly in sideways market conditions. We all know that the best breakout trades occur after long period of consolidtion but if you were to stop trading after a normal drawdown then we would miss the most profitable trades. The novice trader would then see how the system is performing well and then start trading it again. BUT, we all know that after large moves the market moves back into consolidation and yes the system will move back into another drawdown.

The seasoned traders account has grown during this period, but the ill discilpined novice traders account has been hit hard. So, my point is while we all talk about having rules for entry and exits of individual trades, we must have predefined rules for when to stop trading system as to avoid the psychological pitfalls!!

Good luck
Thanks guys... You all have been a really great help...

I have got all of my tools I have read all the books I have practised for the last 6 months and Now I guess it is time to get serious....

My problem I'm sure evryone has shared at one point is that I am scared of being wrong.... I just read Trading in the Zone and he mentions that this is a common problem but one that can absolutely kill a trader...

I know... I have seen with my own eyes and in real time that my system is succesful and although it has losing days on the whole is a profitable system...

I am just struggling with my inner demons... I guess I am trying to make excuses as to why I shouldnt trade my system... or I guess it would be any system....

Although this is what I want more than anything.... I am a little cautious because these are my dreams and essentially failing at this means that I have failed and following a dream....
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