Examining the "system" idea logically

I was originally going to post this in the mouteki forum, but decided it would be better here, since it seems almost every single day there is some new "system" and they all assume the same thing, which I believe to be false.

The underlying assumption of any system that prescribes exactly when to enter/exit the market is that (at least enough to make a profit)mathematically the market stays within at least some certain parameters.

This is false, since the market does whatever direction it is pulled in. Do patterns exist - sure, similarities - yes, occasional or temporary success with a well constructed hard and fast system - definitely possible, I've done it. If the above assumption were true, people would be able to find all kinds of little patterns, things the market always does or almost always does, and then the market would adjust. Bottom line is that if there were a mathmatically set system that worked in the long run, the market would change. Therefore, there is no Holy Grail EA, or set every trade in stone system.

I am not saying that there aren't things we can do to make a profit. I have my own system, which relies on a combination of a few simple indicators, price action, fundamentals, and a lot of other things that make it all relatively subjective, although I have certain rules about when I do not buy/sell (like if the price is at an all time high, don't go long). This makes it into an ART. Proper subjectivity in all cases is central to a "system".

I might get hammered on this one, but if anyone can prove me wrong then they should already be a multi-millionaire. If you know for a fact that I am wrong and you are not a millionaire, then it could only be because you just discovered this magic holy grail EA and you don't yet have enough money to trade. If thats the case let me know and I will help fund your venture, for a small piece of the pie of course.

I guess the whole point of this long post is to allow us to examine the assumption that so many newbies and some not-so-newbies are making. After my first six months of trading and going through literally hundreds of EAs, and learning MQL, I realized that I assumed something false. I learned a ton during that time, but the most important lesson I learned was that the market conditions are by their very nature extremely subjective. I'm not trying to sound bitter, I really do love forex and I trade consistently profitable. I am just trying to inspire a discussion and maybe everyone can learn from it.

I won't shoot down alternate thinking, it is always welcome in my books. It sounds like, in your six months you have made a few discoveries that have you thinking outside the "general concensus", which believe me is a good thing. Do patterns exist? .. yep, but look at the statistical analysis by guys like Bulkowski and you soon realise, that while they exist, getting the direction right is sometimes no better than a 50/50 bet.

There is an underlying order to the market, it just takes some work to find it.

Just to set the record straight I said that I learned that in my first 6 months, not that I have been trading for 6 months. I have been trading for much longer than that. Thanks for the comment

consider it straightened ... best of luck

The underlying assumption of any system that prescribes exactly when to enter/exit the market is that (at least enough to make a profit)mathematically the market stays within at least some certain parameters.

This is false, since the market does whatever direction it is pulled in. Do patterns exist - sure, similarities - yes, occasional or temporary success with a well constructed hard and fast system - definitely possible, I've done it. If the above assumption were true, people would be able to find all kinds of little patterns, things the market always does or almost always does, and then the market would adjust. Bottom line is that if there were a mathmatically set system that worked in the long run, the market would change. Therefore, there is no Holy Grail EA, or set every trade in stone system.


I believe there is a dimension that needs to be added to the discussion. I agree that mkts are always changing and in response there are two approaches that system developers can adopt. A) to develop smart systems capable of dynamically adapting to mkt conditions via parameter adaptation or B) to understand the underlying statistics across the whole space of possible parameter settings based upon several years of data and to choose parameters that are capable of sailing in most seas but that have limited drawdowns when conditions become unfavourable. Or put another way - parameter settings that work well in most mkt modes but don't lose too heavily in the mkt modes that they aren't suited for.

Both ways can lead to consistent profits, not neccesarily the holy grail, but systems capable of making consistent profits.