Is a 100% systematic approach possible? | Forex Factory

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Is a 100% systematic approach possible?

  • #1
  • First Post: Dec 30, 2023 8:35am Dec 30, 2023 8:35am
Been trading/learning for 7 years now. In my journey i'm starting to lose faith in finding a Rigid system (systematic 100% same approach) and getting profit in the long run.

To summarize, once i get a system that work for 100trade.. it fall at 200 trades. once i get a system that works for 300 trades, i falls back to BE at 600trades.
I started doing some algo backtesting to get a bigger amount of trades and i foudn that even what a system works flawless for a whole 3 month with 1000 trades, it do badly on the next 3 or 4 months.. of course not on this order but you get my point. When get a bigger sample of trades, al rigid system crash at some point. Even a system worked nicely for year 2023 bad for year 2022.
Some systems works very nice for 3500 trades, but then it falls close to BE or even lost on next 3500 trades.

The only system that worked with a steady line were the grid/martin glade but those again worked for a small amount of time before you of course blow your account.

Maybe i'm looking the edge in the wrong place, not in the system/technical but i shouold be looking at other. I don't know.

Above test were on US30 with timframes from 5min for scalp startegies, and 1hr and Daily to see if the problem was the timeframes. All 3 gave me the same outcome. what work fine for 1000ish amount of trade it falls short on the next 1000ish.
  • #2
  • Dec 30, 2023 10:33am Dec 30, 2023 10:33am
[quote=booker21;14704085]

What exactly where you testing?
Did you review your data? Where did things go bad and where did things go good?
For example times of the day, results during News, Trending market vs ranging market and all that.
Im sure we all know just a harmonic pattern by it self will just fail, there is no edge. Same with most other patterns.

If you would ask me personally, i would say its more about the trade management + understanding where markets are on higher timeframes, having a higher timeframe bias.
Im a indicies trader, you mentioned you trade us30.
What i would recommend is looking into the VIX and UVXY for higher timeframe cycles and also try a low lotsize to blance ratio.
You dont want one News Event or one trend be the decission between losing or making a Lot.
I never made money just trading fixed SL and TP, thats why i say its about trade management, having lower lotsize Compared to balance to average price and dont get into big drawdowns from small moves.

Having room for error through low lotsize to balance ratio, while also having a high quality entry system that Includes higher timeframe cycles.
Most reversal traders would be shorting the us30 while it was keep going higher the last few weeks.
I had Tools that helped my stay out, dont get into random low quality trades. I truely wait for the highest quality trades only, even if that means Not trading for a few days.

I dont belive in Systematic trading with fixed SL and TP or thinking that you can trade like you are the casino through quantity with a small edge.

Would you short OIL at 20$ per Barrel in 2020 becouse you got a systematic entry signal?
There is a whole lot more then patterns and Systems. You need a understanding of the big picture. How war, policy, politics and other fundamentals can drive things.

Thats all just my View on it and what works for me.
In the end its not that easy, its more complex with more variables, diffrent things can work for diffrent people with diffrent mindsets
1k to 100k Copy Trading All Time Return: 367.9%
  • #3
  • Dec 30, 2023 10:45am Dec 30, 2023 10:45am
Quote
Would you short OIL at 20$ per Barrel in 2020 becouse you got a systematic entry signal?
There is a whole lot more then patterns and Systems. You need a understanding of the big picture. How war, policy, politics and other fundamentals can drive things.
This is what i meant. There is no profitable rigid system that will work year in and out. since fundamentals and stuff change that are above and more important than technical analysis o rigid systems.

This lead to the 2nd question on how do you back test this since the market is dynamic and your trading needs to be dynamic. How do you gain confidence or know what to do.
  • #4
  • Dec 31, 2023 12:36am Dec 31, 2023 12:36am
Quoting booker21
{quote} This is what i meant. There is no profitable rigid system that will work year in and out. since fundamentals and stuff change that are above and more important than technical analysis o rigid systems. This lead to the 2nd question on how do you back test this since the market is dynamic and your trading needs to be dynamic. How do you gain confidence or know what to do.
Hi booker

The problem with backtesting is you are given data from brokers that doesn’t match the real historical data that really happened.
For example I used to test Algo’s on IC Markets historical data and I could never get those test results to match my live results later on. After much research, I discovered the historical data was been manipulated just slightly enough to throw my optimisation results off course. The highs and lows were often out by a few ticks meaning on live data, sometimes price would fail to breakout a high and reverse while on test data, it would break the high setting off many breakout strategies before reversing. So you get no loss on Algo testing but a loss on the real market.
Its a bloody disgrace.
Professionals get around this crap by running portfolios of Algo’s together, and probably just actually get the correct data anyway.

I chat to many professional and profitable traders all the time and there is a common theme here most I talk to do (these are short term day traders mainly).
They only trade at the very best period of the day that suits your strategy. Most of them trade either the London / New York cross over or Just the New York Open for a short period because the volume is consistent during this period.

Therefore the volume needs to be consistent long enough to make any strategy work.
For example volume during the London session is about 3 times the volume you get during the Asia session and often the volume during the early New York session is 3 times more again (US30).

So only develop strategies that run in consistent volume periods at the same time of day.
Your results should start improving.

Cheers
Trading thin liquidity at the boundary of the charts
  • #5
  • Dec 31, 2023 1:19am Dec 31, 2023 1:19am
Also consider this.

There is no long term run strategy that is profitable year in year out.

In my time being associated with an Algo based prop firm, I noted the following. They run a group of strategies together normally within a portfolio of 5 Algo’s. There is always one main profit earning strategy at the top with the other 4 managing draw down issues. The result would be a profit of the portfolio at the end of 12 months but 3 of the strategies may have earned nothing or loss.

So stop thinking about one profitable Strategy and start building a portfolio of different strategies that support each other.

Good Luck
Trading thin liquidity at the boundary of the charts
  • #6
  • Dec 31, 2023 4:19am Dec 31, 2023 4:19am
Quoting booker21
Been trading/learning for 7 years now. In my journey i'm starting to lose faith in finding a Rigid system (systematic 100% same approach) and getting profit in the long run. To summarize, once i get a system that work for 100trade.. it fall at 200 trades. once i get a system that works for 300 trades, i falls back to BE at 600trades. I started doing some algo backtesting to get a bigger amount of trades and i foudn that even what a system works flawless for a whole 3 month with 1000 trades, it do badly on the next 3 or 4 months.. of course not on...
i'd take a few steps back if I were you - what's everyone else doing, what does it look like, and then where and how do I compete? If you're quanting it, advances in machine learning is a good place to start and ask yourself whether it's realistic to do what they're doing and do it better.

figure out in broad strokes what the industry is doing, then figure out your advantage. This place is awash with wishful thinking but if you're serious about it, terrify yourself first at the level of sophistication adopted by quant funds, understand how MMs operate, big orders execute, option markets etc then slowly figure out where to look and how to look.

Sounds a bit nebulous I know so real world eg. - reference prices are usually EBS/Reuters. What's the variance? Where's retail stop hunted? What does the size and magnitude tell you? one strategy right there.

Agree with 95% of what Rick wrote but without sounding like a massive dick, there are things that have always worked but noone's handing them over, and the one quant fund I know that's active in this area is more secretive than a drug cartel.
  • #7
  • Dec 31, 2023 4:40am Dec 31, 2023 4:40am
Quoting triphop
{quote} there are things that have always worked but noone's handing them over, and the one quant fund I know that's active in this area is more secretive than a drug cartel.
How are you supposed to find those things out if no one hand them over? How did people that know these things discovered them?

Are you talking about Renaissance Technologies?
  • #8
  • Dec 31, 2023 5:13am Dec 31, 2023 5:13am
Hi,

Ask yourself, if you don't find something, could it be maybe because you're not looking for the right thing ?

I think the problem lies in your first sentence, "...finding a Rigid system..."

You look for something rigid, I read solid, consistent, reproducible, etc... while in fact only chaos is constant in these markets where you have to live with macro economics, geopolitical risks, black swans, manipulation, you name it, well, you see, you cannot apply something rigid to something that is constantly changing is character just all the time, that's why you observe what you observe. I have been there...

It took me time to understand it as well, among others, I developed 2 systems that were really profitable until the moment I went live with them, the first one just stopped working the day I came live with it, the second worked for some months more and it stopped also, it was not a question of data, I continued back-testing them and they showed exactly the same behavior after the fact and saw they stopped working at the moment I saw it when I went live with them, so the only conclusion possible to this was that the market had changed its character.

The solution...

Find the system that you are the more confident with and rework it to make it "flexible", forget about the well known rules and make your own rules for it as long as they give you room and flexibility to trade with confidence.

This is I think the way to go,
Good luck.
Simplicity is the Ultimate Sophistication.
  • #9
  • Dec 31, 2023 10:52am Dec 31, 2023 10:52am
Quoting oculus
{quote} How are you supposed to find those things out if no one hand them over? How did people that know these things discovered them? Are you talking about Renaissance Technologies?
literally just told you, so I’m not sure what I can say!

Rentech— no. All decent strategies have a liquidity limit, and if the returns are stellar they don’t open to the public, and never report their returns . Rentech while massive and hugely successful don’t fall into that category
  • #10
  • Jan 3, 2024 2:57pm Jan 3, 2024 2:57pm
Quoting broketrader
Hi, Ask yourself, if you don't find something, could it be maybe because you're not looking for the right thing ? I think the problem lies in your first sentence, "...finding a Rigid system..." You look for something rigid, I read solid, consistent, reproducible, etc... while in fact only chaos is constant in these markets where you have to live with macro economics, geopolitical risks, black swans, manipulation, you name it, well, you see, you cannot apply something rigid to something that is constantly changing is character just all the time,...
How do i test and back test a none rigid system? what I'm going to trade based on gut? (it fail me miserably). And i tried to be more discretionary and while some times i get good results, i end up asking.. if that just luck? i mean, i have seen many system trade for over 1000x trades and be profitable just to see then 1000x next trade and be unprofitable. Is like I'm losing faith in everything and i just feel profit is a random coin toss.

What rules to follow? do i even follow any rules? how i can be confident? all this are question i make myself when i try discretionary trading instead of that rigid system.
  • #11
  • Edited 3:49pm Jan 3, 2024 3:32pm | Edited 3:49pm
Quoting Thomas.
I dont belive in Systematic trading with fixed SL and TP or thinking that you can trade like you are the casino through quantity with a small edge.
Thomas...

The edge is not defined by the trading style. Both are equally good or bad.

Based on my own research, the proportion of successful traders is more on the side of those who trade a very clear systematic rule-based approach.

Do you know the saying "the house always wins" ? This means casinos.

Casino = systematic (makes money at the end of the day)
Casino visitors = often in form of a discretionary "gambler", bets $100 here, $200 there... (goes home broke at the end of the day)

See: https://en.wikipedia.org/wiki/Renaissance_Technologies

Quote
Renaissance Technologies LLC, also known as RenTech[4] or RenTec,[5] is an American hedge fund based in East Setauket, New York,[6] on Long Island, which specializes in systematic trading using quantitative models derived from mathematical and statistical analysis.

Quote
Renaissance's flagship Medallion fund, which is run mostly for fund employees,[10] is famous for the best track record on Wall Street, returning more than 66 percent annualized before fees and 39 percent after fees over a 30-year span from 1988 to 2018

Now look at the entire Forex Factory Retail Trading army, the majority of which are discretionary chart readers, and see how many track records you can find that have 30 years of consistent performance

It looks to me like most discretionary traders would be actually much better off taking a systematic approach. The number of unsuccessful traders would probably be lower. The reason most people trade manually seems to be because they do it for ego reasons like it's "cool" to be able to analyze charts all day and click on fancy buttons and draw some squiggly lines or even worse, look at indicators without even understanding them well. Probably also because most discretionary traders lack the technical skills to use a systematic approach.

Anyhow. To answer the author's question. Of course, 100% systematically can be successful. Bill Dunn, also 100% systematic, over 40+years of successful trading.
  • #12
  • Jan 3, 2024 4:09pm Jan 3, 2024 4:09pm
Quoting booker21
{quote} How do i test and back test a none rigid system? what I'm going to trade based on gut? (it fail me miserably). And i tried to be more discretionary and while some times i get good results, i end up asking.. if that just luck? i mean, i have seen many system trade for over 1000x trades and be profitable just to see then 1000x next trade and be unprofitable. Is like I'm losing faith in everything and i just feel profit is a random coin toss. What rules to follow? do i even follow any rules? how i can be confident? all this are question i make...
I don't pretend to hold the absolute truth as there are may paths to reach a goal but my answers would be like this,

  1. You test a non rigid system manually but of course you need (flexible) rules and some clear limits where you declare a trade failed.
  2. No, you don't trade based on gut, you need a system and rules that you understand and follow.
  3. Why you think it's luck when it works ? If you can reproduce it then it's not luck, instead of thinking if you had luck when you have a successful trade, or series of trades, save them in your trading book, study them, watch them from another perspective if you are not confident with your system. keep what works for you, remove what doesn't.
  4. Find the best rules that work for you, it's not only a question of confidence, it's also a question of having the more chances on your side and it's OK to have losses but if your rules work for 1000 trades and then not anymore I suspect that your rules fit too much the markets on which you backtest them and are not generic enough to digest any other kind of market... and this means that when the market changes your rules become obsolete.

Again, just trying to help from the perspective of my experience, I see myself in what you describe so I understand you. It's a journey that we all must take and there is no guarantee of success...

Simplicity is the Ultimate Sophistication.
  • #13
  • Jan 4, 2024 7:14am Jan 4, 2024 7:14am
Quoting booker21
Is a 100% systematic approach possible?
Sure my friend it is 100% possible. I'm algo trader, I don't trade manually only using bots.
And I think I know why you fail. Let me explain in examples.

Quoting booker21
Been trading/learning for 7 years now. In my journey i'm starting to lose faith in finding a Rigid system (systematic 100% same approach) and getting profit in the long run.
This make no sense. It is like to say "been watching how people swim but still not a Olympic winner". It doesn't matter how many years have you spent.

Let explain more.
Quoting booker21
Above test were on US30 with timframes from 5min for scalp startegies, and 1hr and Daily to see if the problem was the timeframes.
There are no timeframe on the market. Also it is not possible to trade 1 asset for a while. This is your problem. You don't understand how market works. That's why you think there are some magic timeframes and that it is possible to trade 1 asset. It is not. It is possible to trade that US30, but when the market is ready for that. But it is, let's say, 10% of all the time. But you are trying to trade 100% of that time. It is not possible, that's why any strategy will fail.

I can explain more with a language of math, but I'm too lazy for that. Better if you learn the things yourself. Imagine you have to deliver some goods. Is it good to drive when the day is good, or it is good to drive at night, in heavy rain and with no lights on? What is the probability that your will arrive good in first and in seconds cases? See?

p.s. tip: try to start your back-testings (useless) not from "first oj July" or any other start of the month, but shift random few days. You will see dramatic changes.

Stay green!
Observer effect
  • #14
  • Jan 14, 2024 1:11am Jan 14, 2024 1:11am
My 2 cents. I know that others have other experiences.

I am a robot trader. For many years I experienced the same - exactly the same as you. One problem of backtest is, that you tend to curve fitting. I have concluded, that it is not possible for me to allways trade the same instrument with the same strategy.

I have stopped automatic back testing as it leads nowhere for me. I use paper back test, where I look at the charts for a short periode back and then the forward testing will show if I am right.

I now trade "the instruments of the day", selecting them from a top/down analysis. On my robots I have 2 buttons - Up and/or Down, which restrict the direction of the trades as well of not trading at all. This way I can every day very easy set which instruments should be trading that day. And this way I am flexible to market changes.
MetaTrader 4 - so many advantages.
  • #15
  • Jan 17, 2024 12:44am Jan 17, 2024 12:44am
I assume it's possible to be consistent and systematic in a long run on 100% but to reach such a level of self composure will cost a lot. You will literally need to take your time, maybe even health, to comply with the system you have developed.
I do my best to comply with the strategy, to be disciplined, but sometimes anyway deviate from the set vector, you know? Sometimes the feeling of burning out makes me think like it's not something I should devote time and blah, blah, blah. These are very subtle things that everyone should work on.
  • #16
  • Dec 16, 2025 6:38am Dec 16, 2025 6:38am
[quote=booker21;14707533]{quote} How do i test and back test a none rigid system? what I'm going to trade based on gut? (it fail me miserably). And i tried to be more discretionary and while some times i get good results, i end up asking.. if that just luck? i mean, i have seen many system trade for over 1000x trades and be profitable just to see then 1000x next trade and be unprofitable. Is like I'm losing faith in everything and i just feel profit is a random coin toss. What rules to follow? do i even follow any rules? how i can be confident? all this are question i make myself when i try discretionary trading instead of that rigid system.[/quote

What great questions!
I hope you find your answers.

As you mentioned a coin toss, interesting enough a coin toss is 50% profitable. This beats most traders as it lands at break even. No win, no loss scenario but still ahead of the vast amount of losing traders.
Since markets change over time, this random approach gets you in 50%, always. Now if only you could add a little bit of edge to bring that to a 55%. Now you are profitable, assuming that you can manage risk.

All the best to aspiring profitable traders!
  • #17
  • Dec 16, 2025 1:41pm Dec 16, 2025 1:41pm
You seem to assume the market is a static beast that never changes. It changes constantly, with new variables always thrown in. For example, Trump tweets, 100% new variable that is virtually impossible to predict.
I have traded for over 30 years, and constantly refine what I do.
I optimize my bots ( YES Bots, 3 of them, all do different things ) at the end of every month, just to see if there are any small tweaks that should be made...
And 1000s of trades, hmmm the words Over Trading spring to mind.....
Im only here for the Guzzoline...
  • #18
  • Last Post: Dec 18, 2025 12:16pm Dec 18, 2025 12:16pm
2025 proved that sometimes not all systems are adaptable to market regime, I've seen too many traders lose their edge this year and blow their accounts because they stayed committed to one system. It's one of the limitations that traders can experience. Some believe that trading wasn't designed for the retail trader, its debatable, but what has proven itself consistent is that systems can lose their edge when the market regime changes.

Personally what has worked best for me has been creating systems that are designed to adapt and integrating them into very strategic algorithms, they turn on and off based on the market conditions.
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