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Trading System versus Trading Strategy: Gaining a Profitable Edge

  • Poll

  • Which is more important, trading system or trading strategy?
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  • #1
  • First Post: Edited Aug 17, 2017 3:50am Aug 16, 2017 10:03am | Edited Aug 17, 2017 3:50am
Most traders use a significant part of their early trading years looking for the 'Holy Grail' of trading. Much of this search is about getting the one trading system that will provide a windfall for all trading seasons.

Does it really matter which trading system you use? Is there really that one trading system that can answer all trading needs? Is trading system more important than trading strategy? Between a trading system and a trading strategy, which one is more important to gain a profitable edge in the market? Should you be concerned more about your trading strategies than your trading systems?

I personally value trading strategies over trading systems. What about you? But do we all share the same definition for what a 'trading strategy' is? How would you define a 'trading strategy'? In this thread, I am not talking about 'automated strategies' or EAs. For me I see EAs as part of trading systems.

Contributors to this thread should be respectful of others and abide by FF’s code of ethics for members.You may post illustrations and share trading stories, videos, anecdotes etc. that show or demonstrate the relative importance of trading system and trading strategy.

Trade safe and prosper.

KP
Do your homework, follow the footprints of smart money
  • #2
  • Edited 1:08pm Aug 16, 2017 11:52am | Edited 1:08pm
I see a trading system as basically an integrated method or set of methods, including tools, for trading; whereas I see a trading strategy as how such trading system is used to gain advantage in the market. The differences in how traders use a particular system or similar systems are primarily at the root of the differences in the results they get as traders, even under similar trading conditions.

Trade safe and prosper.

KP
Do your homework, follow the footprints of smart money
  • #3
  • Aug 16, 2017 12:21pm Aug 16, 2017 12:21pm
Let's put it this way. You can take a disciplined trader and give him a mediocre system and he can be profitable and you can take an undisciplined trader and give him an extremely profitable system and he will likely fail. Part of strategy is the discipline to stick to it and that can make or break a trader in this game.
  • #4
  • Aug 16, 2017 12:37pm Aug 16, 2017 12:37pm
Thanks mate! That's part of the issue.

Trade safe and prosper.

KP

Quoting Madinvestor
Let's put it this way. You can take a disciplined trader and give him a mediocre system and he can be profitable and you can take an undisciplined trader and give him an extremely profitable system and he will likely fail. Part of strategy is the discipline to stick to it and that can make or break a trader in this game.
Do your homework, follow the footprints of smart money
  • #5
  • Aug 16, 2017 12:39pm Aug 16, 2017 12:39pm
Yeah, we need to identify the strategy which would be useful for us and later should modify it as per the requirements.
  • #6
  • Aug 16, 2017 1:04pm Aug 16, 2017 1:04pm
I hope I see where you are coming from regarding trading strategy. The perspective of 'trading strategy' I want us to focus on here, as indicated in Post #2, is not about 'automated strategies' or EAs. I really mean how you gain the edge with a system. Your personal way of making a system achieve success for you in the market. Yes, part of it may involve adapting a system.

Trade safe and prosper.

KP

Quoting GodfatherSam
Yeah, we need to identify the strategy which would be useful for us and later should modify it as per the requirements.
Do your homework, follow the footprints of smart money
  • #7
  • Aug 16, 2017 1:16pm Aug 16, 2017 1:16pm
That's why I am not a big fan of "systems." Not that they can't work, but that people put too much focus on developing a great system and not enough time into developing a great mindset. This leads to making things more difficult than they have to be and is the biggest part of the learning curve IMO.
  • #8
  • Aug 16, 2017 1:20pm Aug 16, 2017 1:20pm
A lot of traders rush to the 'trading systems' sections of Forex trading forums. I know you know why.

Trade safe and prosper.

KP

Quoting Madinvestor
That's why I am not a big fan of "systems." Not that they can't work, but that people put too much focus on developing a great system and not enough time into developing a great mindset. This leads to making things more difficult than they have to be and is the biggest part of the learning curve IMO.
Do your homework, follow the footprints of smart money
  • #9
  • Aug 16, 2017 1:49pm Aug 16, 2017 1:49pm
Quoting Madinvestor
You can take a disciplined trader and give him a mediocre system and he can be profitable and you can take an undisciplined trader and give him an extremely profitable system and he will likely fail.
where have you seen someone turn a bad strategy into a profitable one ? if you dont have an edge, no matter what you bring whether MM, discipline etc this trader will still fail. Period.
  • #10
  • Aug 16, 2017 1:51pm Aug 16, 2017 1:51pm
Quoting metta87
{quote} where have you seen someone turn a bad strategy into a profitable one ? if you dont have an edge, no matter what you bring whether MM, discipline etc this trader will still fail. Period.
I said mediocre, not bad. There's a big difference.
  • #11
  • Aug 16, 2017 2:28pm Aug 16, 2017 2:28pm
Quoting Madinvestor
{quote} I said mediocre, not bad. There's a big difference.
by saying
Quoting Madinvestor
{quote} You can take a disciplined trader and give him a mediocre system and he can be profitable
i assume by mediocre you mean a losing strategy, right ?if not can you tell me whats the big difference btw a mediocre and a bad strategy in your mind
  • #12
  • Aug 16, 2017 2:37pm Aug 16, 2017 2:37pm
Quoting metta87
{quote} by saying {quote} i assume by mediocre you mean a losing strategy, right ?if not can you tell me whats the big difference btw a mediocre and a bad strategy in your mind
You made an incorrect assumption. This is simple. By mediocre I mean smaller edge. By bad, that would be no edge whatsoever.
  • #13
  • Aug 16, 2017 2:46pm Aug 16, 2017 2:46pm
Quoting Madinvestor
{quote} You made an incorrect assumption. This is simple. By mediocre I mean smaller edge. By bad, that would be no edge whatsoever.
indeed ! by mediocre i thought you were talking about a losing system. its all good then
  • #14
  • Aug 16, 2017 2:54pm Aug 16, 2017 2:54pm
Quoting metta87
{quote} indeed ! by mediocre i thought you were talking about a losing system. its all good then
No biggie! I will also emphasize that a winning system can be turned into a losing one by a bad trader though!
  • #15
  • Aug 16, 2017 4:00pm Aug 16, 2017 4:00pm
Quoting metta87
{quote} where have you seen someone turn a bad strategy into a profitable one ? if you dont have an edge, no matter what you bring whether MM, discipline etc this trader will still fail. Period.
Madinvestor was not talking about a bad or mediocre strategy but about a mediocre system. There is a big difference between a trading system and a trading strategy, imho. This is one thing we all need to be aware of. You will sweat and perhaps be frustrated to make a mediocre strategy win but you can make a mediocre system get some good results with very solid and well-honed strategy.

Trade safe and prosper.

KP
Do your homework, follow the footprints of smart money
  • #16
  • Aug 16, 2017 4:04pm Aug 16, 2017 4:04pm
Quoting Madinvestor
{quote} No biggie! I will also emphasize that a winning system can be turned into a losing one by a bad trader though!
Yeah, if your strategy is wrong or you don't know how to make that 'winning system' work. How to make that system work is central to a good trading strategy.

Trade safe and prosper.

KP
Do your homework, follow the footprints of smart money
  • #17
  • Aug 22, 2017 10:44am Aug 22, 2017 10:44am
Talking about the relative importance of trading system and trading strategy, check out the video below for a simple illustration.

Trade safe and prosper.

KP

Inserted Video
Do your homework, follow the footprints of smart money
  • #18
  • Aug 22, 2017 12:08pm Aug 22, 2017 12:08pm
What is a trading strategy for you ? What's the difference between it and a system ?
can you show a trading system then a trading strategy ?
  • #19
  • Aug 22, 2017 12:36pm Aug 22, 2017 12:36pm
Please refer to posts #s 2 & 6 above.

Trade safe and prosper.

KP

Quoting metta87
What is a trading strategy for you ? What's the difference between it and a system ? can you show a trading system then a trading strategy ?
Do your homework, follow the footprints of smart money
  • #20
  • Aug 22, 2017 1:50pm Aug 22, 2017 1:50pm
Quoting KeenPips
Please refer to posts #s 2 & 6 above. Trade safe and prosper. KP {quote}
thanks, sorry i was lazy i didnt read those 2 posts before posting. About my last question tho, can you show an example of a system and a strategy , something like charts or something.
in your post #2 you said
Quoting KeenPips
I see a trading system as basically an integrated method or set of methods, including tools, for trading; whereas I see a trading strategy as how such trading system is used to gain advantage in the market. {quote}
what i get from this is that the strategy you allude to is the discretionnary part in a trading system, like for example : you re trading a moving average cross but instead of trading every crosses, you decide for example to only do so in specific cases, like during london session, around round numbers or support and resistance etc... just an example. am i right ?
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