This so called "self-destruction" of trading systems... | Page 7 | Forex Factory

Options

Go to
Permalinks
Print Thread

Similar Threads

Top 100 best Trading Systems: post good Trading Systems here 62 replies

Broker Challenge "NDD/STP" vs. True "ECN" and "Mkt Mkr" broker talk 46 replies

Dealing with "Invalid Price", "Requote", "Server Busy" in MT4 3 replies

Are the best systems also the systems that fail most spectacularly? 55 replies

Systems, Systems and Systems... 1 reply

This so called "self-destruction" of trading systems...

  • #121
  • Mar 19, 2007 11:32am Mar 19, 2007 11:32am
The Turtle method is trend-following in nature therefore the reason why multiple markets were traded is because you would be limited finding trends at any one time if you were only trading a select amount of markets.

Which some may call diversification.
  • #122
  • Mar 19, 2007 11:49am Mar 19, 2007 11:49am
You have to understand there is a lot of misinformation about the turtle methodology being passed around as e-books and pay service websites.

If you go to the Elite Trader forum (but then come right back to FF ) there is a few of the original turtles who occasionally post. Why not go directly to the source for your information?

I've spoken to two original turtles and they were very willing to answer my questions.
  • #123
  • Mar 19, 2007 2:51pm Mar 19, 2007 2:51pm
Quoting merlin
if there is a system that takes advantage of an inefficiency in the market, then yes, absolutely, if you share the system it will ruin it.
So theorically a simple trendline breakout for instance should not be working anymore since million of traders are acting on it, right?

How about a simple MACD with its default parameters, millions of traders are using it every single day, so how come it didn't lose its power over the years?

How about people who simply buy/sell when the 200 day moving average has been violated, don't you think this simple system should be worthless by now, since "too many" traders are acting on it?

Quoting merlin
think about it, the inefficiency is only worth a certain amount of money
There is plenty on the Forex, trillions of dollars changing hands every single day and the FX market couldn't care less even if all the members of all the forex forums on the internet start using the same exact system. The FX market can absord any "extra" activity you throw at him. Also, don't forget that thousand of newbies are entering this market every day. For every trader using system X there are at least 2 newbies who are NOT using system X.

You have been in this forum longer than me Mr. Merlin and you are certainly familiar with all the forex systems posted here at FF, did any system ever stop working because "too many" people were acting on it? If so which one?
  • #124
  • Mar 19, 2007 2:58pm Mar 19, 2007 2:58pm
Quoting FXTerminator
...
Should I assume you agree with my synopsis then?
  • #125
  • Mar 19, 2007 3:00pm Mar 19, 2007 3:00pm
Quoting Darkstar
Should I assume you agree with my synopsis then?
No, end of story and case closed.
  • #126
  • Mar 19, 2007 3:01pm Mar 19, 2007 3:01pm
Quoting FXTerminator
No, end of story and case closed.
So then you CAN provide the exact location of the diversification requirement in the turtle trading method document?
  • #127
  • Mar 19, 2007 3:33pm Mar 19, 2007 3:33pm
I just read the turtle's method in the pdf Darkstar found and I was surprised at how simple it was. For all the hype it was just a simple breakout method and I found nothing that impressed me as unique and creative.

Their method of position sizes based on the average daily volatility I did find interesting though. That's the smartest part of their method.
  • #128
  • Mar 19, 2007 3:39pm Mar 19, 2007 3:39pm
Quoting aicccia
I just read the turtle's method in the pdf Darkstar found and I was surprised at how simple it was. For all the hype it was just a simple breakout method and I found nothing that impressed me as unique and creative.

Their method of position sizes based on the average daily volatility I did find interesting though. That's the smartest part of their method.
People make a lot of money trading breakout systems. Breakouts more often than not lead to trends, and trends offer enourmous rewards for very little risk. The only people who make it difficult are the ones who think it has to be difficult.
  • #129
  • Mar 19, 2007 4:14pm Mar 19, 2007 4:14pm
Quoting aicccia
I just read the turtle's method in the pdf Darkstar found and I was surprised at how simple it was.
Winning trading systems are ALWAYS simple, while systems with 20 or more parameters and a long list of rules and filters always fail sooner or later, when they encounter their first long serie of "adverse" data!

Dennis (the man behind the Turtle system) and his pal made 200 millions with this simple system, very similar in nature to another extremely simple but powerful system, the Donchian Dual Channel system.

But like any trend following system, the Turtle system needs extreme diversification so that it can capture 1 or 2 large, outsized moves once or twice a year. This year it's going to be copper and coffee futures, the next year soybean and cotton and so forth.


Quoting aicccia
Their method of position sizes based on the average daily volatility I did find interesting though. That's the smartest part of their method.
That's the heart of their system, position sizing + proper diversification = big bucks.

But so far no one has been able to earn money with the Turtle system on the FOREX market, because all the currencies are highly correlated, positively or negatively.
  • #130
  • Mar 19, 2007 4:18pm Mar 19, 2007 4:18pm
Quoting hidethereal
The only people who make it difficult are the ones who think it has to be difficult.
How true my friend, how true.
  • #131
  • Mar 19, 2007 4:52pm Mar 19, 2007 4:52pm
Quoting FXTerminator
But like any trend following system, the Turtle system needs extreme diversification so that it can capture 1 or 2 large, outsized moves once or twice a year.
So now all trend systems need diversification?

And you still haven't pointed out where we can find this diversification requirement for the turtles. I'll give you that it needs to be in many markets to capture the best moves, but that is very different from the system failing without diversification. Why couldn't someone trade it on 1 pair? They may have several losing years in a row, but then they would get one outsized winner to make up for it no?

Ohh and just incase you forgot what you said, let me pull it back up for you.

Quoting FXTerminator
the turtle system needs extreme diversification to make money!
Quoting FXTerminator
The whole Turtle system is about DIVERSIFICATION. No diversification, no trading edge, simple as that. You obviously don't have a clue what this Turtle system is all about and I am certainly not going to just sit here and answer any more UN-INFORMED comments like that.
  • #132
  • Mar 19, 2007 5:19pm Mar 19, 2007 5:19pm
Quoting Darkstar
So now all trend systems need diversification?

And you still haven't pointed out where we can find this diversification requirement for the turtles. I'll give you that it needs to be in many markets to capture the best moves, but that is very different from the system failing without diversification. Why couldn't someone trade it on 1 pair? They may have several losing years in a row, but then they would get one outsized winner to make up for it no?

Ohh and just incase you forgot what you said, let me pull it back up for you.
I know this wasn't asked to me but I have an answer.

You can theoretically trade the turtle system without diversification however in doing so you decrease your chances of catching a trend. You could also be waiting years for the trend to develop. The turtle methodology used diversification to catch the market that was trending and then employ their position sizing techniques which created huge returns.

What your suggesting (if you are even suggesting it), trading only one market, would be like fishing in a lake with one fish. You might catch it, but your going to be their a while.
  • #133
  • Mar 19, 2007 5:25pm Mar 19, 2007 5:25pm
No systems can match up to your experience..and with experience comes confidence.

There is no easy way out, folks come in and go out of FOREX..cos they come looking for eay ways to make money... in life or FOREX, everything is hard, except that..and you will live longer

Short cuts will ruin you..boy i learned the hard way and still paying for it
  • #134
  • Mar 19, 2007 5:53pm Mar 19, 2007 5:53pm
Quoting Darkstar
So now all trend systems need diversification?

And you still haven't pointed out where we can find this diversification requirement for the turtles. I'll give you that it needs to be in many markets to capture the best moves, but that is very different from the system failing without diversification. Why couldn't someone trade it on 1 pair? They may have several losing years in a row, but then they would get one outsized winner to make up for it no?

Ohh and just incase you forgot what you said, let me pull it back up for you.
The only reason you persist on that line of questioning is that you obviously don't have a single clue what the Turtle system is really all about.

Go to google and type those keywords, exactly as given:
"Turtle system" + diversification

and see how many websites and forums are talking about the need for diversification when trading the Turtle system. That diversification is precisely why only few people are trading this system, because there are not a lot traders who can afford to trade 10 or 20 non-correlated future contracts at the same time, the total margin requirement is simply way too high for 90% of the futures traders.

That said, I will not anwer any more questions/comments about the turtle system, this is not what this thread is about.
  • #135
  • Mar 19, 2007 6:05pm Mar 19, 2007 6:05pm
Quoting hidethereal
You can theoretically trade the turtle system without diversification...

This was my point exactly. Mr. Terminator basically said that witchazel and I were complete idiots for not understanding that the edge derived from the turtle system could ONLY be captured through diversification. As you have pointed out this is plainly not the case.

He called us idiots yet again when it was suggested that the method only required diversification to increase the yield. It was only AFTER I posted the exact rules and called him out on his mistakes that he switched to the current theme of argument.

The fact of the matter is he was wrong, called us stupid for disagreeing with him, and when faced with the cold hard truth of his mistakes, he conveniently avoids or tries to shift the subject. No acceptance that he made a mistake, no apology for his inappropriate comments. And sadly, this is only one example of many which can be found by examining his strikingly few posts.

In my humble opinion FXTerminator is a braggart, a liar, and is here for no better purpose then to cause the community grief. The sole purpose of this argument was to highlight why I have come to those conclusions so the rest of the community can judge him for themselves.

Sorry for the interruption. Enjoy the remainder of your discussion.
  • #136
  • Mar 19, 2007 6:09pm Mar 19, 2007 6:09pm
Quoting Darkstar
This was my point exactly. Mr. Terminator basically said that witchazel and I were complete idiots for not understanding that the edge derived from the turtle system could ONLY be captured through diversification. As you have pointed out this is plainly not the case.

He called us idiots yet again when it was suggested that the method only required diversification to increase the yield. It was only AFTER I posted the exact rules and called him out on his mistakes that he switched to the current theme of argument.

The fact of the matter is he was wrong, called us stupid for disagreeing with him, and when faced with the cold hard truth of his mistakes, he conveniently avoids or tries to shift the subject. No acceptance that he made a mistake, no apology for his inappropriate comments. And sadly, this is only one example of many which can be found by examining his strikingly few posts.

In my humble opinion FXTerminator is a braggart, a liar, and is here for no better purpose then to cause the community grief. The sole purpose of this argument was to highlight why I have come to those conclusions so the rest of the community can judge him for themselves.

Sorry for the interruption. Enjoy the remainder of your discussion.
Ok, feel better now?

Good, now we can move on to something else.
  • #137
  • Mar 19, 2007 6:17pm Mar 19, 2007 6:17pm
Quoting FXTerminator
Ok, feel better now?

Good, now we can move on to something else.
Getting close. From here on out, every time you start a senseless arguement with someone I'll be directing them to this thread. When you have nobody left to feed your ego, I imagine you'll move on. Then I will be happy.
  • #138
  • Mar 19, 2007 7:34pm Mar 19, 2007 7:34pm
The way I see it, is yes it is to increase the yield. The yield beyond on a few currency markets that might be TRENDING at the moment.

That is what the Turtle method was about: TREND-FOLLOWING.

The currencies do trend. Very good sometime. But as pointed out, they are for the most part correlated, therefore you would want to trade across a broad spectrum of correlated and non-correlated markets. I.E. currencies, commodities, metals, equities and bonds.

Which the last time I looked meant Diversification.
  • #139
  • Mar 19, 2007 9:13pm Mar 19, 2007 9:13pm
M:"if there is a system that takes advantage of an inefficiency in the market, then yes, absolutely, if you share the system it will ruin it. think about it, the inefficiency is only worth a certain amount of money, so you will have to share this money with all the people who are exploiting the inefficiency with you."

 fxt:"So theorically a simple trendline breakout for instance should not be working anymore since million of traders are acting on it, right?
How about a simple MACD with its default parameters, millions of traders are using it every single day, so how come it didn't lose its power over the years?
How about people who simply buy/sell when the 200 day moving average has been violated, don't you think this simple system should be worthless by now, since "too many" traders are acting on it?"

 B: Obviously you do not understand what a market inefficiency is. But please, don't let that stop you from continuing .

 fxt: "You have been in this forum longer than me Mr. Merlin"

B: Actually, longer than anyone. Merlin is Member Number 00,000,001. He Initiated this Forum.

 fxt: "and you are certainly familiar with all the forex systems posted here at FF"

B: I don't think Merlin is looking for a New System or Grail and therefore his only concern may be that the Forum is healthy.

 fxt: "did any system ever stop working because "too many" people were acting on it? If so which one?"

 B: As mentioned before, check out the "News" threads. Not only should you find systems that failed due to popularity, if you read with an Open Mind, you should also discover some clues as to "Market Inefficiencies"

 M: however, if you have a system that uses discretion, you can share it without harm, because you are not targeting an inefficiency (as mechanical systems do).
this is my opinion, but i share this opinion with the best traders in the world. all you have to do is read the market wizards books to see this.

 B: I think I will leave my response to this one for later as it really should need no explanation.
  • #140
  • Mar 19, 2007 9:30pm Mar 19, 2007 9:30pm
Quoting Bemac
M:"if there is a system that takes advantage of an inefficiency in the market, then yes, absolutely, if you share the system it will ruin it. think about it, the inefficiency is only worth a certain amount of money, so you will have to share this money with all the people who are exploiting the inefficiency with you."

fxt:"So theorically a simple trendline breakout for instance should not be working anymore since million of traders are acting on it, right?
How about a simple MACD with its default parameters, millions of traders are using it every single day, so how come it didn't lose its power over the years?
How about people who simply buy/sell when the 200 day moving average has been violated, don't you think this simple system should be worthless by now, since "too many" traders are acting on it?"

B: Obviously you do not understand what a market inefficiency is. But please, don't let that stop you from continuing .
Oh really now?

Well let me refresh your memory, this is basic technical analysis 101 stuff:

Trendlines work and exist BECAUSE, and only because the market is inefficient.

MACD and moving averages work BECAUSE, and only because the market is inefficient, otherwise we wouldn't be able to extract one penny from the market, those trendlines and indicators would simply point to random entry points.

Quoting Bemac
B: I don't think Merlin is looking for a New System or Grail and therefore his only concern may be that the Forum is healthy.
These comments are way off-topic, re-read my simple question to Mr. Merlin.

Quoting Bemac
B: As mentioned before, check out the "News" threads. Not only should you find systems that failed due to popularity
News Trading is NOT a system!

PS: Readers sorry, I don't know why my letters are coming out red.
0 traders viewing now